SAMARRA, Iraq - Samarra has been on the precipice enough times as Iraq appeared to tumble over that tensions here, like arguments at the edge of a cliff, bear close watching.

So when the standoff between Samarra’s Sunni mayor and the commander of the Shiite-dominated Iraqi forces stationed in the city escalated late last month, American officers at their small base near the Tigris River took notice.

At issue were the concrete blast barriers known as T-Walls. Some 30,000 of them line Samarra’s bullet-pocked streets, and the Americans were paying a local contractor to begin removing a selected few from the edges of the city.

But the Iraqi commander, the politically connected Gen. Rasheed Flahe Muhammed, had his own ideas.

Late one night, the T-Walls protecting the mayor’s office were hauled away. Sitting between other buildings still hidden behind their grey parapets, the office now looked oddly out of place, like an obvious target.

The message was hard to miss, and the mayor, Mahmood Khalef Ahmad, a former fighter pilot in the Saddam-era Iraqi air force, had not.

"It’s not a mistake when someone sends their bodyguard to take down my walls," he said as a TV in the corner replayed the carnage of a massive bombing in Baghdad. "The next time, the same people who took the walls, they will come back with bullets."

As elsewhere, declining violence in Samarra has in some ways only intensified the political battle for Iraq — a contest for power and economic control that often plays out amid sectarian undertones and a dark recent events. Indeed, many analysts and most Iraqis now view political divisions as a greater danger to the country than the insurgency.

And while U.S. officials say the players in the contest would be ill-served by a return to violence, Samarra remains a powder keg.

The city’s famed Golden Mosque, one of the holiest sites in the Shiite world, was destroyed by a series of rigged charges in 2006, setting off a wave of retaliatory attacks and accelerating Iraq’s descent into civil war.

The city’s mostly Sunni residents, meanwhile, see the Iraqi troops sent to the city after a second bombing of the mosque in 2007 as an occupation force presaging a Shiite takeover.

With the Americans planning for a major drawdown next year, and a total exit of combat troops from Iraq by the end of 2011, U.S. units see preparing local officials and the Iraqi security services to function in their absence as the core of their mission. But disputes like the one over T-Walls in Samarra — at once intensely local and fueled by national rivalries — point to a larger, persistent problem.

The players in the game for Iraq don’t want to get along.

"Security is good," said Iraqi Army Col. Ghayath Sami Shawqi, who works closely with the Americans at their joint base and is not affiliated with the main Iraqi command in the city. "The problems are all on the political side."

Feint and parry

U.S. Army Lt. Col. David Indermuehle, the senior American at the Samarra Joint Coordination Center , spent hours meeting with Ghayath and other U.S. officers as they plotted their response to the small yet worrying crisis of the mayor’s T-Walls.

Doing nothing would humiliate the mayor and undermine a city government struggling to gain credibility. But ordering the contractor to replace the walls, Indermuehle felt, would risk open conflict with Rasheed and complicate the Americans’ larger goal — trying to mediate some kind of reconciliation between the Iraqi command and the local government.

"We couldn’t just let it go," Indermuehle said. "But we didn’t want a direct confrontation, which would also be counterproductive."

In the end, they decided that Ghayath, the Iraqi officer, would send a message to the contractor that, if the Americans found out, they wouldn’t be happy, and probably wouldn’t pay him. For now, they would leave it at that.

It was a play — one part diplomacy, two parts money — well-used by American units in recent years. Their third option, force, was largely taken off the table by last summer’s security agreement with the Iraqi government, and in any case most commanders have bought into the logic that, in Iraq, the most direct approach is often the least effective.

But if the episode illustrated the way the military uses reconstruction projects and the lucrative contracts that come with them as a sort of diplomatic lever, it came as the American influence begins to wane.

Preparing for their exit, American units are beginning to scale back their spending, and their days of coaxing mayors and generals away from the edge are numbered.

"We’re buying them time," said Capt. Ryan Canady, a company commander, echoing a maxim of recent years. "What they do with that time, ultimately, is up to them."

Money as a weapon

The use of money to tamp down violence in Iraq is well-established. Most analyses of the war view as a key turning point the military’s decision to begin paying tens of thousands of Sunni men, many who were insurgents, to join U.S.-funded security groups now known as the "Sons of Iraq."

Commanders also view reconstruction projects, often used to reward cooperative local leaders and lure those on the fence, as an important tool.

But using short-term, largely small-scale projects to build a legitimate local government remains problematic for several reasons.

For one, the local officials whose legitimacy the funds are meant to bolster are, by and large, either tribal leaders or American appointees with an unclear role in the Iraqi system. Local elections have not been held since the American invasion and many officials have little public support.

"They were not elected, and they are not legitimate," said Nabil Jassim, owner of a small currency exchange shop in Samarra. "If there is an election, they will all be thrown out."

Meanwhile, the modest size of the projects allowed under what’s known as the Commander’s Emergency Response Program means they have barely made a dent in the miserable state of essential services in Samarra. Corruption — both real and perceived — further undermines the projects’ effect on public opinion.

"The Americans spent a lot of money — taxpayer money — to secure Iraq," said Mohammed Jassim Mohammed, a businessman who has several CERP contracts with U.S. forces in Samarra. "But a big part of that money didn’t go in the right place because the key leaders prioritize projects only according to what will benefit them the most."

Another businessman who has worked with the Americans, who asked not to be named because he didn’t want to jeopardize the relationship, put it another way.

"The Americans are getting robbed," he said. "But they’re in a kind of Catch-22. They know they’re getting robbed, but they can’t do anything about it because they believe they need the people who are robbing them to maintain security."

Many residents, meanwhile, said they didn’t believe the Americans had done anything in the city. Others conceded that they had done some small things, but remained unimpressed.

"Whatever the Americans do for us, they are still our enemy, to be honest," said Ahmad Nuri Kazir, who sells women’s lingerie from a cart near the golden mosque. "They are occupying our country and we hate them."

Iraqi complaints about corruption, however, often arrive like the bait on a hook. In order not to get ripped off, the speaker tells the Americans, deal only with me.

During a visit to the U.S. base, Samarra’s municipal director, Saleh Naifi, ended his remarks by telling a civil affairs officer that all U.S. projects should be coordinated through his office. But Naifi had just returned to work months after he was fired by the city council, which saw him as a toady of Rasheed. He had successfully appealed the firing to Baghdad.

Even some U.S. officers worry that dollars are fueling a dangerous political competition, with what the American doctrine calls MAWS — for Money as a Weapon System — being used mainly as a weapon by Iraqis against each other.

One American officer involved in reconstruction compared his job to playing poker with his eyes closed while those on the other side of the table could see his cards.

"Our intentions are pretty transparent," he said. "Theirs, in a lot of cases, aren’t."

But with few other options, it’s a game the American says they have to play.

A week passed after Indermuehle sent his initial message about the T-Walls.

Finally, during a meeting at the Samarra Operations Center, as the Iraqi command is known, a deputy to Rasheed mentioned to Indermuehle that the T-Wall contractor was asking about getting paid. Indermuehle casually responded that payment might be possible, but there was a problem with the T-Walls in front of the mayor’s office, which he said "must have been a mistake." The conversation turned to other subjects.

The next day, the contractor visited Indermuehle. At first, Indermuehle said, the contractor implausibly claimed the T-Walls had been taken down to make way for road paving. That was OK, Indermuehle responded, but everyone knew the T-Wall removal was being paid for by the U.S., and if something happened to the mayor, they would be blamed. Moreover, he said, the contract was clear, and payment wouldn’t be possible until the mistake was fixed.

The next day, the T-Walls reappeared.

Referring to the Iraqi general down the street, Indermuehle said, "What he knows now is that we’re not asleep, and we’re not so easily manipulated."

But while the T-Wall drama played out, other officers at the base were busy combing through the list of proposed projects left by their predecessors and culling those that likely wouldn’t be finished by spring, when the drawdown is expected to begin in earnest.

Since he’d arrived, Canady said, the Iraqis he dealt with treated him as if nothing were going to change anytime soon. They pitched projects. They asked what he could do for them. They seemed to view him as a sort of local politician in his own right.

"People call me ‘Naqeeb Jdeed’ — the New Captain," he said. "But from day one I’ve been correcting them. I’m not Naqeeb Jdeed. I’m the Last Captain."

CERP funding culled with troop levels

The Commander’s Emergency Response Program was designed as a way for U.S. units in Iraq to quickly fund small projects that would address immediate security concerns.

But in the absence of an over-arching reconstruction plan, CERP ballooned into a multi-billion dollar program that drew fire from U.S. lawmakers who said it lacked oversight and direction, and who complained that the Iraqi government needed to do more to pay for reconstruction.

Legislation passed last year included a number of restrictions on CERP funds and required military lawyers to review proposed projects.

Alongside that, CERP spending has declined dramatically, from $1.03 billion in fiscal 2008 to $339 million in fiscal 2009. That last figure, interestingly, was less than half the total allocated by Congress.

Military officials expect to get about $300 million in CERP funding this year, but ahead of troop reductions, some units are killing projects that won’t be finished by next spring.

Iraq, however, is still in desperate need of reconstruction. Core infrastructure remains degraded or damaged, basic services are meager or nonexistent, and unemployment is rampant.

U.S. officials hope improved security will spur private investment and an increased commitment by the UN, non-governmental organizations and other aid groups, but they say the Iraqi government still needs to do much more. Failure to improve quality of life, officials warn, will leave the door open of insurgent groups and militias.

"Ultimately," said Brig. Gen. Peter Bayer, the chief of staff for the U.S. operational command in Baghdad, "they’re going to have to solve a lot of these things themselves."

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