How droll of them, how cute. Then, Karl Rove made the giggling boys in the White House change it to "OIF" -- Operation Iraqi Freedom. But the 101st Airborne wasn't sent to Basra to get its hands on Iraq's OIF.

"It's about oil," Robert Ebel told me. Who is Ebel? Formerly the CIA's top oil analyst, he was sent by the Pentagon, about a month before the invasion, to a secret confab in London with Saddam's former oil minister to finalize the plans for "liberating" Iraq's oil industry. In London, Bush's emissary Ebel also instructed Ibrahim Bahr al-Ulum, the man the Pentagon would choose as post-OIF oil minister for Iraq, on the correct method of disposing Iraq's crude.

And what did the USA want Iraq to do with Iraq's oil? The answer will surprise many of you: and it is uglier, more twisted, devilish and devious than anything imagined by the most conspiracy-addicted blogger. The answer can be found in a 323-page plan for Iraq's oil secretly drafted by the State Department. Our team got a hold of a copy; how, doesn't matter. The key thing is what's inside this thick Bush diktat: a directive to Iraqis to maintain a state oil company that will "enhance its relationship with OPEC."

Enhance its relationship with OPEC??? How strange: the government of the United States ordering Iraq to support the very OPEC oil cartel which is strangling our nation with outrageously high prices for crude.

Specifically, the system ordered up by the Bush cabal would keep a lid on Iraq's oil production -- limiting Iraq's oil pumping to the tight quota set by Saudi Arabia and the OPEC cartel.

There you have it. Yes, Bush went in for the oil -- not to get more of Iraq's oil, but to prevent Iraq producing too much of it.

You must keep in mind who paid for George's ranch and Dick's bunker: Big Oil. And Big Oil -- and their buck-buddies, the Saudis -- don't make money from pumping more oil, but from pumping less of it. The lower the supply, the higher the price.

It's Economics 101. The oil industry is run by a cartel, OPEC, and what economists call an "oligopoly" -- a tiny handful of operators who make more money when there's less oil, not more of it. So, every time the "insurgents" blow up a pipeline in Basra, every time Mad Mahmoud in Tehran threatens to cut supply, the price of oil leaps. And Dick and George just love it.

Dick and George didn't want more oil from Iraq, they wanted less. I know some of you, no matter what I write, insist that our President and his Veep are on the hunt for more crude so you can cheaply fill your family Hummer; that somehow, these two oil-patch babies are concerned that the price of gas in the USA is bumping up to $3 a gallon.

Not so, gentle souls. Three bucks a gallon in the States (and a quid a litre in Britain) means colossal profits for Big Oil, and that makes Dick's ticker go pitty-pat with joy. The top oily-gopolists, the five largest oil companies, pulled in $113 billion in profit in 2005 -- compared to a piddly $34 billion in 2002 before Operation Iraqi Liberation. In other words, it's been a good war for Big Oil.

As per Plan Bush, Bahr Al-Ulum became Iraq's occupation oil minister; the conquered nation "enhanced its relationship with OPEC;" and the price of oil, from Clinton peace-time to Bush war-time, shot up 317%.

In other words, on the third anniversary of invasion, we can say the attack and occupation is, indeed, a Mission Accomplished. However, it wasn't America's mission, nor the Iraqis'. It was a Mission Accomplished for OPEC and Big Oil.

On June 6, Penguin Dutton will release Greg Palast's new book, Armed Madhouse: Dispatches from the Front Lines of the Class War. View his investigative reports for Harper's Magazine and BBC television's Newsnight at www.GregPalast.com.

What makes the story significant is the high rank of the source. His name, officials tell NBC News, was Naji Sabri, Iraq's foreign minister under Saddam. Although Sabri was in Saddam's inner circle, his cosmopolitan ways also helped him fit into diplomatic circles.

In September 2002, at a meeting of the U.N.'s General Assembly, Sabri came to New York to represent Saddam. In front of the assembled diplomats, he read a letter from the Iraqi leader. "The United States administration is acting on behalf of Zionism," he said. He announced that there were no weapons of mass destruction and that the U.S. planned war in Iraq because it wanted the country's oil.
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But on that very trip, there was also a secret contact made. The contact was brokered by the French intelligence service, sources say. Intelligence sources say that in a New York hotel room, CIA officers met with an intermediary who represented Sabri. All discussions between Sabri and the CIA were conducted through a "cutout," or third party. Through the intermediary, intelligence sources say, the CIA paid Sabri more than $100,000 in what was, essentially, "good-faith money." And for his part, Sabri, again through the intermediary, relayed information about Saddam's actual capabilities.

The sources spoke on condition of anonymity because of the sensitive nature of the case.

The sources say Sabri's answers were much more accurate than his proclamations to the United Nations, where he demonized the U.S. and defended Saddam. At the same time, they also were closer to reality than the CIA's estimates, as spelled out in its October 2002 intelligence estimate.

For example, consider biological weapons, a key concern before the war. The CIA said Saddam had an "active" program for "R&D, production and weaponization" for biological agents such as anthrax. Intelligence sources say Sabri indicated Saddam had no significant, active biological weapons program. Sabri was right. After the war, it became clear that there was no program.

Another key issue was the nuclear question: How far away was Saddam from having a bomb? The CIA said if Saddam obtained enriched uranium, he could build a nuclear bomb in "several months to a year." Sabri said Saddam desperately wanted a bomb, but would need much more time than that. Sabri was more accurate.

On the issue of chemical weapons, the CIA said Saddam had stockpiled as much as "500 metric tons of chemical warfare agents" and had "renewed" production of deadly agents. Sabri said Iraq had stockpiled weapons and had "poison gas" left over from the first Gulf War. Both Sabri and the agency were wrong.

Here, let us examine the top disasters of the third year in American Iraq.

1. The Shiite religious parties, having won a majority in parliament, took over the Ministry of the Interior and drew, for its special police commandos, on members of the Badr Corps. Badr is the paramilitary of the Supreme Council for Islamic Revolution in Iraq, and it was trained by Iran's Revolutionary Guards. These special commandos set up secret prisons and tortured Sunni Arabs they suspected of being in the guerrilla resistance to the new order.

2. The constitution drafted by the elected parliament enshrines Islam as the religion of state and stipulates that the civil parliament may pass no legislation that contravenes the established laws of Islam. It hints that clerics and ayatollahs will be appointed to court benches. The constitution has brought Iraq to the brink of being an Islamic Republic, with potentially harmful effects on the rights of women, gays, Christians and others. Since the Shiite religious parties had won the January 30, 2005 elections, this outcome was predictable.

3. The constitution allows provinces to establish provincial confederacies. This provision reflections the model adopted by the Kurds in the north, which is now attractive to Shiite parties in the south. These confederacies can claim 100 percent of the revenues from all future petroleum, natural gas and other natural resource finds. The loose, weak federal government, like the early American state under the Articles of Confederation will be robbed of sovereignty (and income) by ambitious provincial elites. It is possible that these provincial confederacies may break up the country.

4. The US military used Kurdish and Shiite troops to attack the northern Turkmen city of Talafar in August. Kurdish troops, drawn from the Peshmerga militia, were allowed to paint lasers on targets in the city, which were then destroyed by the US air force. Entire neighborhoods were destroyed, and much of the population was displaced for some time. Shiite troops and local Shiite Turkmen informants were used to identify and interrogate alleged Sunni insurgents. Turkey was furious at the attack on ethnically related Turkmen and threatened to halt its cooperation with the US. Although the attack was allegedly undertaken to capture foreign forces allegedly based in the city, only 50 were announced apprehended. The entire operation ended up looking like a joint Kurdish-Shiite attack on Sunni Turkmen, backed by the US military. Turkmen and Kurds do not generally get along, and Turkmen accuse Kurds of wanting to ethnically clense them from Kirkuk. The entire operation was politically the worst possible public relations for the US in northern Iraq, and seems unlikely to have put a signficant dent in the guerrillas' capabilities.

5. All three Sunni Arab-majority provinces rejected the new constitution by a sound margin, two of them by a two-thirds majority. The Kurdish and Shiite provinces overwhelmingly approved the charter. Iraq thus has a permanent constitution that is absolutely unacceptable to the country's most powerful minority.

6. British government leakers revealed that George W. Bush told British PM Tony Blair in April, 2002, that he was seriously considering bombing the HQ of the Aljazeera satellite news channel. Bush's reputation, already low in the Arab world, took another hit.

7. Iraqi petroleum exports fell to an average of only 1.8 million barrels a day during the past year, down from 2.8 million barrels per day before the war. In recent months the exports have been as low as 1.1 million barrels a day.

8. Guerrillas have managed to surround and cut off Baghdad, the capital and a population center with 1/4 of the country's inhabitants, from much fuel and electricity.

9. Widespread hopes, fanned by the Bush administration, that Sunni Arab participation in the parliamentary elections would lead to a reduction in guerrilla violence proved completely untrue. The various Sunni Arab lists garnered 58 seats of 275. The Sunni Arabs have now adopted a two-track strategy, working in parliament to play the Kurds and the Shiites off against one another while its paramilitary wing continued to blow things up with unrelenting ferocity.

10. Guerrillas in Samarra on February 22 blew up the Askari Shrine, holy to Shiites because of its association with the hidden Twelfth Imam, whose Second Coming many await. The Sunni Arab guerrilla movement has been trying to provoke popular attacks and sectarian reprisals, but this is the first time it met with a measure of success. Enraged Shiites attacked 100 mosques, damaging between two and four dozen, killing some Sunni clerics, and murdering hundreds of Sunnis. Iraqi clerics, both Shiite and Sunni, helped bring Iraq back from the brink of hot civil war. The US troops in the country proved generally unuseful in this crisis.

In a dilapidated maternity and paediatric hospital in Diwaniyah, 100 miles south of Baghdad, Zahara and Abbas, premature twins just two days old, lie desperately ill. The hospital has neither the equipment nor the drugs that could save their lives. On the other side of the world, in a federal courthouse in Virginia, US, two men - one a former CIA agent and Republican candidate for Congress, the other a former army ranger - are found guilty of fraudulently obtaining $3m (£1.7m) intended for the reconstruction of Iraq. These two events have no direct link, but they are none the less products of the same thing: a financial scandal that in terms of sheer scale must rank as one of the greatest in history.

At the start of the Iraq war, around $23bn-worth of Iraqi money was placed in the trusteeship of the US-led coalition by the UN. The money, known as the Development Fund for Iraq and consisting of the proceeds of oil sales, frozen Iraqi bank accounts and seized Iraqi assets, was to be used in a "transparent manner", specified the UN, for "purposes benefiting the people of Iraq".
For the past few months we have been working on a Guardian Films investigation into what happened to that money. What we discovered was that a great deal of it has been wasted, stolen or frittered away. For the coalition, it has been a catastrophe of its own making. For the Iraqi people, it has been a tragedy. But it is also a financial and political scandal that runs right to the heart of the nightmare that is engulfing Iraq today.

Diwaniyah is a sprawling and neglected city with just one small state paediatric and maternity hospital to serve its one million people. Years of war, corruption under Saddam and western sanctions have reduced the hospital to penury, so when last year the Americans promised total refurbishment, the staff were elated. But the renovation has been partial and the work often shoddy, and where it really matters - funding frontline health care - there appears to have been little change at all.

In the corridor, an anxious father who has been told his son may have meningitis is berating the staff. "I want a good hospital, not a terrible hospital that makes my child worse," he says. But then he calms down. "I'm not blaming you, we are the same class. I'm talking about important people. Those controlling all those millions and the oil. They didn't come here to save us from Saddam, they came here for the oil, and so now the oil is stolen and we got nothing from it." Beside him another parent, a woman, agrees: "If the people who run the country are stealing the money, what can we do?" For these ordinary Iraqis, it is clear that the country's wealth is being managed in much the same way as it ever was. How did it all go so wrong?

When the coalition troops arrived in Iraq, they were received with remarkable goodwill by significant sections of the population. The coalition had control up to a point and, perhaps more importantly, it had the money to consolidate that goodwill by rebuilding Iraq, or at least make a significant start. Best of all for the US and its allies, the money came from the Iraqis themselves.

Because the Iraqi banking system was in tatters, the funds were placed in an account with the Federal Reserve in New York. From there, most of the money was flown in cash to Baghdad. Over the first 14 months of the occupation, 363 tonnes of new $100 bills were shipped in - $12bn, in cash. And that is where it all began to go wrong.

"Iraq was awash in cash - in dollar bills. Piles and piles of money," says Frank Willis, a former senior official with the governing Coalition Provisional Authority. "We played football with some of the bricks of $100 bills before delivery. It was a wild-west crazy atmosphere, the likes of which none of us had ever experienced."

The environment created by the coalition positively encouraged corruption. "American law was suspended, Iraqi law was suspended, and Iraq basically became a free fraud zone," says Alan Grayson, a Florida-based attorney who represents whistleblowers now trying to expose the corruption. "In a free fire zone you can shoot at anybody you want. In a free fraud zone you can steal anything you like. And that was what they did."

A good example was the the Iraqi currency exchange programme (Ice). An early priority was to devote enormous resources to replacing every single Iraqi dinar showing Saddam's face with new ones that didn't. The contract to help distribute the new currency was won by Custer Battles, a small American security company set up by Scott Custer and former Republican Congressional candidate Mike Battles. Under the terms of the contract, they would invoice the coalition for their costs and charge 25% on top as profit. But Custer Battles also set up fake companies to produce inflated invoices, which were then passed on to the Americans. They might have got away with it, had they not left a copy of an internal spreadsheet behind after a meeting with coalition officials.

The spreadsheet showed the company's actual costs in one column and their invoiced costs in another; it revealed, in one instance, that it had charged $176,000 to build a helipad that actually cost $96,000. In fact, there was no end to Custer Battles' ingenuity. For example, when the firm found abandoned Iraqi Airways fork-lifts sitting in Baghdad airport, it resprayed them and rented them to the coalition for thousands of dollars. In total, in return for $3m of actual expenditure, Custer Battles invoiced for $10m. Perhaps more remarkable is that the US government, once it knew about the scam, took no legal action to recover the money. It has been left to private individuals to pursue the case, the first stage of which concluded two weeks ago when Custer Battles was ordered to pay more than $10m in damages and penalties.

But this is just one story among many. From one US controlled vault in a former Saddam palace, $750,000 was stolen. In another, a safe was left open. In one case, two American agents left Iraq without accounting for nearly $1.5m.

Perhaps most puzzling of all is what happened as the day approached for the handover of power (and the remaining funds) to the incoming Iraqi interim government. Instead of carefully conserving the Iraqi money for the new government, the Coalition Provisional Authority went on an extraordinary spending spree. Some $5bn was committed or spent in the last month alone, very little of it adequately accounted for.

One CPA official was given nearly $7m and told to spend it in seven days. "He told our auditors that he felt that there was more emphasis on the speed of spending the money than on the accountability for that money," says Ginger Cruz, the deputy inspector general for Iraqi reconstruction. Not all coalition officials were so honest. Last month Robert Stein Jr, employed as a CPA comptroller in south central Iraq, despite a previous conviction for fraud, pleaded guilty to conspiring to steal more than $2m and taking kickbacks in the form of cars, jewellery, cash and sexual favours. It seems certain he is only the tip of the iceberg. There are a further 50 criminal investigations under way.

Back in Diwaniyah it is a story about failure and incompetence, rather than fraud and corruption. Zahara and Abbas, born one and a half months premature, are suffering from respiratory distress syndrome and are desperately ill. The hospital has just 14 ancient incubators, held together by tape and wire.

Zahara is in a particularly bad way. She needs a ventilator and drugs to help her breathe, but the hospital has virtually nothing. Her father has gone into town to buy vitamin K on the black market, which he has been told his children will need. Zahara starts to deteriorate and in desperation the doctor holds a tube pumping unregulated oxygen against the child's nostrils. "This treatment is worse than primitive," he says. "It's not even medicine." Despite his efforts, the little girl dies; the next day her brother also dies. Yet with the right equipment and the right drugs, they could have survived.

How is it possible that after three years of occupation and billions of dollars of spending, hospitals are still short of basic supplies? Part of the cause is ideological tunnel-vision. For months before the war the US state department had been drawing up plans for the postwar reconstruction, but those plans were junked when the Pentagon took over.

To supervise the reconstruction of the Iraqi health service, the Pentagon appointed James Haveman, a former health administrator from Michigan. He was also a loyal Bush supporter, who had campaigned for Jeb Bush, and a committed evangelical Christian. But he had virtually no experience in international health work.

The coalition's health programme was by any standards a failure. Basic equipment and drugs should have been distributed within months - the coalition wouldn't even have had to pay for it. But they missed that chance, not just in health, but in every other area of life in Iraq. As disgruntled Iraqis will often point out, despite far greater devastation and crushing sanctions, Saddam did more to rebuild Iraq in six months after the first Gulf war than the coalition has managed in three years.

Kees Reitfield, a health professional with 20 years' experience in post-conflict health care from Kosovo to Somalia, was in Iraq from the very beginning of the war and looked on in astonishment at the US management in its aftermath. "Everybody in Iraq was ready for three months' chaos," he says. "They had water for three months, they had food for three months, they were ready to wait for three months. I said, we've got until early August to show an improvement, some drugs in the health centres, some improvement of electricity in the grid, some fuel prices going down. Failure to deliver will mean civil unrest." He was right.

Of course, no one can say that if the Americans had got the reconstruction right it would have been enough. There were too many other mistakes as well, such as a policy of crude "deBa'athification" that saw Iraqi expertise marginalised, the creation of a sectarian government and the Americans attempting to foster friendship with Iraqis who themselves had no friends among other Iraqis.

Another experienced health worker, Mary Patterson - who was eventually asked to leave Iraq by James Haveman - characterises the Coalition's approach thus: "I believe it had a lot to do with showing that the US was in control," she says. "I believe that it had to do with rewarding people that were politically loyal. So rather than being a technical agenda, I believe it was largely a politically motivated reward-and-punishment kind of agenda."

Which sounds like the way Saddam used to run the country. "If you were to interview Iraqis today about what they see day to day," she says, "I think they will tell you that they don't see a lot of difference".

March 15 was another defining moment in America's downward moral-spiral in Iraq. Eleven members of an Iraqi family were killed in a wanton act of slaughter executed by American occupiers. Photos taken at the scene show the lifeless bodies of young children, barely old enough to walk, lying motionless in the back of a flatbed truck while their fathers moan inconsolably at their side.

What parent can look at these photographs and not be consumed with rage?

The US military openly admits it attacked the house in Ishaqi where the incident took place. Reuters reports that, "Major Ali Ahmed of the Ishaqi police said US forces landed on the roof of the house in the early hours and shot the 11 occupants, including five children."

"After they left the house they blew it up", he said. "The bodies, their hands bound, had been dumped in one room before the house was destroyed," (policeman) Hussein said. Police had found spent American issue cartridges in the rubble." (Reuters)

The autopsy report at the Tikrit hospital said, "All the victims had gunshot wounds to the head".

Iraqi policeman Farouq Hussein noted, "It is a clear and perfect crime without any doubt".

The evidence provided by Reuters suggests that we have entered the "My Lai phase" of the Iraq war, where the pretensions about democracy and liberation are stripped-away and replaced with the gratuitous butchery of women and children. The carnage in Ishaqi illustrates the growing recklessness and desperation of Washington's failed crusade.

Military spokesman Major Tim O' Keefe justified the attack saying they were searching for "a foreign fighter facilitator" for Al Qaida in Iraq. He added, "Troops were engaged by enemy fire as they approached the building. Coalition Forces returned fire utilizing both air and ground assets….Two women and one child were killed. The building was destroyed."

In fact, 11 women and children were killed and there's no evidence to verify that the house was being used as an Al Qaida safe-house.

The US military made similar claims after bombing raids in January and December when a total of 17 family members were killed.

The grim fact is that is that the lives of Iraqi women and children are of no real consequence to US officials. As General Tommy Franks boasted, "We don't do body counts". The victims of American aggression are simply dismissed as collateral damage undeserving of any further acknowledgement.

The story has received scant attention in the establishment media, which prefers to highlight the stumbling oratory of our Dear Leader as he reaffirms our commitment to western "pro-life" values.

In truth, George Bush is as responsible for the deaths of those children as if he had put a gun to their heads himself and shot them one by one.

At present, we have no way of knowing how frequently these attacks on civilians are taking place. The Pentagon strategy of removing independent journalists from the battlefield has created a news-vacuum that makes it impossible to know with confidence the extent of the casualties or the level of the devastation. The few incidents like this that find their way into the mainstream create a troubling picture of military adventurism and brutality that is no longer anchored to any identifiable moral principle or vision of resolution. It is simply violence randomly dispersed on a massive scale; traumatizing the Iraqi people and bringing the United States into greater disrepute.

There were no Al Qaida fighters in the home in Ishaqi. The attack was just another lethal blunder by a blinkered military fighting an invisible enemy.

"The killed family was not part of the resistance; they were women and children," said Ahmed Khalaf. "The Americans promised us a better life, but we only get death."

The tape shows the bloodied and bullet-marked homes that had been allegedly stormed by the Marines, and includes comments by local residents.

"This is my father," a boy says on the tape. "He didn't do anything wrong. Why did they kill him?"

'These Are Children'

The video shows the bodies of some of the dead, including one of three children killed.

"These are children," one man on the tape says. "Are you telling me these are terrorists?"

It all started when a roadside bomb hit a convoy of 12 Marines in Haditha, killing 20-year-old Lance Cpl. Miguel Terrazas.

The official press release said simply: "A U.S. Marine and 15 Iraqi civilians were killed yesterday from the blast of a roadside bomb."

Prompted by Magazine

Military officials now acknowledge the Iraqis were not killed by the bomb - but, they now say, by crossfire as U.S. Marines stormed the surrounding homes.

The military did not launch an investigation until two months after the incident, when Time magazine showed officials the video and eyewitness testimony.

"We launched an investigation of our own with the help of a human rights group," said Aparisim Ghosh, a writer for Time. "We spoke to some eyewitnesses. And it turns out all the people killed were killed by the Marines in small arms fire and, in a few instances, by an explosive that was tossed into the home by the Marines themselves."

Senior Pentagon officials would not comment on the details of the case but said they take the allegations very seriously, which is why they've launched the criminal investigation.

It still is not clear the Marines used excessive force, but the locals seem to have made up their minds.

"They came and started shooting all of a sudden," one local said. "They didn't even knock on the door. They killed them wholesale."

According to a military spokesman, the Marines involved still are deployed in Iraq.

But the details of what happened that morning in Haditha are more disturbing, disputed and horrific than the military initially reported. According to eyewitnesses and local officials interviewed over the past 10 weeks, the civilians who died in Haditha on Nov. 19 were killed not by a roadside bomb but by the Marines themselves, who went on a rampage in the village after the attack, killing 15 unarmed Iraqis in their homes, including seven women and three children. Human-rights activists say that if the accusations are true, the incident ranks as the worst case of deliberate killing of Iraqi civilians by U.S. service members since the war began.

In January, after TIME presented military officials in Baghdad with the Iraqis' accounts of the Marines' actions, the U.S. opened its own investigation, interviewing 28 people, including the Marines, the families of the victims and local doctors. According to military officials, the inquiry acknowledged that, contrary to the military's initial report, the 15 civilians killed on Nov. 19 died at the hands of the Marines, not the insurgents. The military announced last week that the matter has been handed over to the Naval Criminal Investigative Service (NCIS), which will conduct a criminal investigation to determine whether the troops broke the laws of war by deliberately targeting civilians. Lieut. Colonel Michelle Martin-Hing, spokeswoman for the Multi-National Force--Iraq, told TIME the involvement of the NCIS does not mean that a crime occurred. And she says the fault for the civilian deaths lies squarely with the insurgents, who "placed noncombatants in the line of fire as the Marines responded to defend themselves."

Because the incident is officially under investigation, members of the Marine unit that was in Haditha on Nov. 19 are not allowed to speak with reporters. But the military's own reconstruction of events and the accounts of town residents interviewed by TIME--including six whose family members were killed that day--paint a picture of a devastatingly violent response by a group of U.S. troops who had lost one of their own to a deadly insurgent attack and believed they were under fire. TIME obtained a videotape that purports to show the aftermath of the Marines' assault and provides graphic documentation of its human toll. What happened in Haditha is a reminder of the horrors faced by civilians caught in the middle of war--and what war can do to the people who fight it.

Here's what all participants agree on: At around 7:15 a.m. on Nov. 19, a U.S. humvee was struck by a powerful improvised explosive device (IED) attached to a large propane canister, triggered by remote control. The bomb killed Terrazas, who was driving, and injured two other Marines. For U.S. troops, Haditha, set among date-palm groves along the Euphrates River, was inhospitable territory; every day the Marines found scores of bombs buried in the dirt roads near their base. Eman Waleed, 9, lived in a house 150 yards from the site of the blast, which was strong enough to shatter all the windows in her home. "We heard a big noise that woke us all up," she recalls two months later. "Then we did what we always do when there's an explosion: my father goes into his room with the Koran and prays that the family will be spared any harm." Eman says the rest of the family--her mother, grandfather, grandmother, two brothers, two aunts and two uncles--gathered in the living room.

According to military officials familiar with the investigation, the Marines say they came under fire from the direction of the Waleed house immediately after being hit by the IED. A group of Marines headed toward the house. Eman says she "heard a lot of shooting, so none of us went outside. Besides, it was very early, and we were all wearing our nightclothes." When the Marines entered the house, they were shouting in English. "First, they went into my father's room, where he was reading the Koran," she claims, "and we heard shots." According to Eman, the Marines then entered the living room. "I couldn't see their faces very well--only their guns sticking into the doorway. I watched them shoot my grandfather, first in the chest and then in the head. Then they killed my granny." She claims the troops started firing toward the corner of the room where she and her younger brother Abdul Rahman, 8, were hiding; the other adults shielded the children from the bullets but died in the process. Eman says her leg was hit by a piece of metal and Abdul Rahman was shot near his shoulder. "We were lying there, bleeding, and it hurt so much. Afterward, some Iraqi soldiers came. They carried us in their arms. I was crying, shouting 'Why did you do this to our family?' And one Iraqi soldier tells me, 'We didn't do it. The Americans did.'"

TIME was unable to speak with the only other survivor of the raid, Eman's younger brother, who relatives say is traumatized by the experience. U.S. military officials familiar with the investigation say that after entering the house, the Marines walked into a corridor with closed doors on either side. They thought they heard the clack-clack sound of an AK-47 being racked and readied for fire. (Eman and relatives who were not in the house insist that no guns were there.) Believing they were about to be ambushed, the Marines broke down the two doors simultaneously and fired their weapons. The officials say the military has confirmed that seven people were killed inside the house--including two women and a child. The Marines also reported seeing a man and a woman run out of the house; they gave chase and shot and killed the man. Relatives say the woman, Hiba Abdullah, escaped with her baby.

According to military officials, the Marines say they then started taking fire from the direction of a second house, prompting them to break down the door of that house and throw in a grenade, blowing up a propane tank in the kitchen. The Marines then began firing, killing eight residents--including the owner, his wife, the owner's sister, a 2-year-old son and three young daughters.

The Marines raided a third house, which belongs to a man named Ahmed Ayed. One of Ahmed's five sons, Yousif, who lived in a house next door, told TIME that after hearing a prolonged burst of gunfire from his father's house, he rushed over. Iraqi soldiers keeping watch in the garden prevented him from going in. "They told me, 'There's nothing you can do. Don't come closer, or the Americans will kill you too.' The Americans didn't let anybody into the house until 6:30 the next morning." Ayed says that by then the bodies were gone; all the dead had been zipped into U.S. body bags and taken by Marines to a local hospital morgue. "But we could tell from the blood tracks across the floor what happened," Ayed claims. "The Americans gathered my four brothers and took them inside my father's bedroom, to a closet. They killed them inside the closet."

The military has a different account of what transpired. According to officials familiar with the investigation, the Marines broke into the third house and found a group of 10 to 15 women and children. The troops say they left one Marine to guard that house and pushed on to the house next door, where they found four men, one of whom was wielding an AK-47. A second seemed to be reaching into a wardrobe for another weapon, the officials say. The Marines shot both men dead; the military's initial report does not specify how the other two men died. The Marines deny that any of the men were killed in the closet, which they say is too small to fit one adult male, much less four.

According to the military officials, the series of raids took five hours and left at least 23 people dead. In all, two AK-47s were discovered. The military has classified the 15 victims in the first two houses as noncombatants. It considers the four men killed in the fourth house, as well as four youths killed by the Marines near the site of the roadside bombing, as enemy fighters. The question facing naval detectives is whether the Marines' killing of 15 noncombatants was an act of legitimate self-defense or negligent homicide. Military sources say that if the NCIS finds evidence of wrongdoing, U.S. commanders in Iraq will decide whether to pursue legal action against the Marines.

The available evidence does not provide conclusive proof that the Marines deliberately killed innocents in Haditha. But the accounts of human-rights groups that investigated the incident and survivors and local officials who spoke to TIME do raise questions about whether the extent of force used by the Marines was justified--and whether the Marines were initially candid about what took place. Dr. Wahid, director of the local hospital in Haditha, who asked that his family name be withheld because, he says, he fears reprisals by U.S. troops, says the Marines brought 24 bodies to his hospital around midnight on Nov. 19. Wahid says the Marines claimed the victims had been killed by shrapnel from the roadside bomb. "But it was obvious to us that there were no organs slashed by shrapnel," Wahid says. "The bullet wounds were very apparent. Most of the victims were shot in the chest and the head--from close range."

A day after the incident, a Haditha journalism student videotaped the scene at the local morgue and at the homes where the killings had occurred. The video was obtained by the Hammurabi Human Rights Group, which cooperates with the internationally respected Human Rights Watch, and has been shared with TIME. The tape makes for grisly viewing. It shows that many of the victims, especially the women and children, were still in their nightclothes when they died. The scenes from inside the houses show that the walls and ceilings are pockmarked with shrapnel and bullet holes as well as the telltale spray of blood. But the video does not reveal the presence of any bullet holes on the outside of the houses, which may cast doubt on the Marines' contention that after the IED exploded, the Marines and the insurgents engaged in a fierce gunfight.

There are also questions about why the military took so long to investigate the details of the Haditha incident. Soon after the killings, the mayor of Haditha, Emad Jawad Hamza, led an angry delegation of elders up to the Marine camp beside a dam on the Euphrates River. Hamza says, "The captain admitted that his men had made a mistake. He said that his men thought there were terrorists near the houses, and he didn't give any other reason."

But the military stood by its initial contention -that the Iraqis had been killed by an insurgent bomb- until January when TIME gave a copy of the video and witnesses' testimony to Colonel Barry Johnson, a U.S. military spokesman in Baghdad. After reviewing the evidence, Johnson passed it on to the military command, suggesting that the events of Haditha be given "a full and formal investigation." In February an infantry colonel went to Haditha for a weeklong probe in which he interviewed Marines, survivors and doctors at the morgue, according to military officials close to the investigation. The probe concluded that the civilians were in fact killed by Marines and not by an insurgent's bomb and that no insurgents appeared to be in the first two houses raided by the Marines. The probe found, however, that the deaths were the result of "collateral damage" rather than malicious intent by the Marines, investigators say.

The U.S. has paid relatives of the victims $2,500 for each of the 15 dead civilians, plus smaller payments for the injured. But nothing can bring back all that was taken from 9-year-old Eman Waleed on that fateful day last November. She still does not comprehend how, when her father went in to pray with the Koran for the family's safety, his prayers were not answered, as they had been so many times in the past. "He always prayed before, and the Americans left us alone," she says. Leaving, she grabs a handful of candy. "It's for my little brother," she says.

With reporting by With reporting by Aparisim Ghosh/ Baghdad

Accusations that U.S. troops have killed civilians are commonplace in Iraq, though most are judged later to be unfounded or exaggerated.

A U.S. military spokesman, Maj. Tim Keefe, said that the U.S. military has no information to support the allegations and that he had not heard of them before.

"We're concerned to hear accusations like that, but it's also highly unlikely that they're true," he said. He added that U.S. forces "take every precaution to keep civilians out of harm's way. The loss of innocent life, especially children, is regrettable."

Navy investigators announced last week that they were looking into whether Marines intentionally killed 15 Iraqi civilians - four of them women and five of them children - during fighting in November.

Report is unusual

But the report of the recent killings in the Abu Sifa area of Ishaqi, eight miles north of the city of Balad, is unusual because it originated with Iraqi police and because Iraqi police were willing to attach their names to it.

The report was compiled by the Joint Coordination Center in Tikrit, a regional security center set up with U.S. military assistance. An Iraqi police colonel signed the report, which was based on communications from local police.

Brig. Gen. Issa al-Juboori, who heads the center, said his office assembled the report on Thursday and that it accurately reflects the direction of the current police investigation.

He also said he knows the officer heading the investigation. "He's a dedicated policeman, and a good cop," he said. "I trust him."

The case involves a U.S. raid conducted, according to the official U.S. account, in response to a tip that a member of al-Qaida in Iraq was at the house.

Neighbors agreed in interviews that the al-Qaida member was at the house. They said he was visiting the home's owner, a relative. The neighbors said the homeowner was a schoolteacher.

According to police, military and eyewitness accounts, U.S. forces approached the house at around 2:30 a.m. and a firefight ensued. By all accounts, in addition to exchanging gunfire with someone inside the house, U.S. troops were supported by helicopter gunships, which fired on the house.

But the accounts differ on what took place after the firefight.

According to the U.S. account, the house collapsed because of the heavy fire. When U.S. forces searched the rubble they found one man, the al-Qaida suspect, alive. He was arrested. They also found a dead man they believed to be connected to al-Qaida, two dead women and a dead child.

But the report filed by the Joint Coordination Center, which was based on a report filed by local police, said U.S. forces entered the house while it still was standing.

"The American forces gathered the family members in one room and executed 11 persons, including five children, four women and two men," the report said. "Then they bombed the house, burned three vehicles and killed their animals."

The report identified the dead by name, giving their ages. The two men killed were 22 and 28. Of the women, one was 22, another was 23, a third was 30 and the fourth was 75. Two of the children were 5 years old, two were 3, and the fifth was 6 months old, the document said.

The report was signed by Col. Fadhil Muhammed Khalaf, who was described in the document as the assistant chief of the Joint Coordination Center.

A local police commander, Lt. Col. Farooq Hussain, interviewed by a Knight Ridder special correspondent in Ishaqi, said autopsies at the hospital in Tikrit "revealed that all the victims had bullet shots in the head and all bodies were handcuffed." Efforts to reach hospital spokesmen Sunday were unsuccessful.

Keefe, the U.S. military spokesman, said that he had seen photographs of the victims and had not seen handcuffs, which caused him to doubt the validity of the report.

Other Iraq news

Elsewhere in Iraq on Sunday, police found 14 more victims of alleged sectarian score-settling between Sunni Arabs and Shiites - men shot with their hands and feet bound and dumped in two Baghdad sewage-treatment ponds.

The discoveries raised the number of victims shot execution-style to well over 100 in just six days. On Tuesday and Wednesday, 87 victims were recovered, including 29 dug out of a mass grave on Baghdad's east side.

Nearly 1,500 U.S. and Iraqi soldiers sought to root out insurgents from farming villages an hour's drive north of the capital, and at least 21 other people died in insurgent and sectarian violence nationwide.

Iraqi politicians still had not formed a government more than three months after landmark elections for the country's first permanent post-invasion parliament, but they announced an agreement on naming a Security Council to deal with key matters while negotiations proceed.

The U.S. military said it released more than 350 detainees in Iraq on Saturday.

In a statement, the military said the releases were recommended by a review committee consisting of U.S. officers and Iraqi officials, which found no reason to hold them. All those released were men.

Information from The Associated Press is included in this report.

Copyright © 2006 The Seattle Times Company

Unseen by the outside world, silent populations are on the move, frightened people fleeing neighbourhoods where their community is in a minority for safer districts.

There is also a growing reliance on militias because of fears that police patrols or checkpoints are in reality death squads hunting for victims.

Districts where Sunni and Shia lived together for decades if not centuries are being torn apart in a few days. In the al-Amel neighbourhood in west Baghdad, for instance, the two communities lived side by side until a few days ago, though Shias were in the majority. Then the Sunni started receiving envelopes pushed under their doors with a Kalashnikov bullet inside and a letter telling them to leave immediately or be killed. It added that they must take all of their goods which they could carry immediately and only return later to sell their houses.

The reaction was immediate. The Sunni in al-Amel started barricading their streets. Several Shia families, believed to belong to the Shia party, the Supreme Council for Islamic Revolution in Iraq (Sciri), were murdered later the same day the threatening letters were delivered.

"The local Sunni suspected those Shias of being behind the letters," said an informant. "Probably they called in the local resistance and asked them to kill the Sciri people."

One effect of the escalating sectarian warfare is to strengthen the Sunni insurgency as their own community desperately looks to its defences.

It is not as if life was not already hard enough before the latest escalation in communal violence. Three years ago, most Iraqis were glad to see the overthrow of Saddam Hussein, even if they did not like the US occupation, because they wanted normal lives. They had been living in a state of war since 1980 when the Iraqi leader invaded Iran. They then had eight years of bloody conflict followed by the invasion of Kuwait, defeat by the US-led coalition, the Shia and Kurdish uprisings of 1991 and then 12 years of UN sanctions.

Instead of improving, life in Baghdad has become far more dangerous than it was under Saddam Hussein. Every facet of daily living is affected.

In the last few days, temperatures have started to soar in Iraq and people would normally be buying summer clothes. But in the shopping district of al-Mansur last week few people were on the streets. Many shops were closed because their owners are too frightened to leave their homes.

But even staying in your own house carries problems. In the torrid heat of the Iraqi summer people are dependent on air conditioning to make life tolerable. But Baghdad gets only three or four hours of electricity a day. Almost everybody has a generator, large or small, depending on what they can afford. But the price of petrol, still heavily subsidised by the government, tripled before Christmas. One friend called Mohammed complained: "Either I wait seven or eight hours in a queue to buy the fuel or I get it on the black market. But black market fuel means that I would have to spend $7-8 a day to run my generator and I simply can't afford that." Mohammed added that he had just spent 10 hours, 5 am until 3pm, queuing to buy a bottle of gas which he, like most Iraqis, use for cooking.

Iraqis have been compelled to find ways of going on living even in the most testing conditions but even their resolution is beginning to weaken.

Mohammed's brother had a job in a company selling air-conditioning units. Since this is the beginning of the summer on the Mesopotamian plain - one of the hottest places on earth - it should be a good business, but the brother has just lost his job. The company he worked for was owned by a Kurd. His life was threatened and he shut down the company before moving to Jordan with his family.

Iraqi political parties have now spent three months since the election on 15 December trying to form a government. But ask an Iraqi on the street what he wants from a new government and many reply: "What government? It never does anything for us." Supply of electricity, clean water and sewage disposal are all down from 2003. The only improvement is in electricity supply outside Baghdad but even this is sporadic. In Kurdistan, the only peaceful part of Iraq, electrical supply is currently only a few hours a day. Everywhere there are men beside the road selling black-market petrol smuggled in from Iran. Turkey has cut off supplies of refined fuel because it has not been paid.

All Iraq is suffering, but Baghdad and the central provinces are turning into a slaughter house. Normal life has long been impossible. The symbol of post-Saddam Iraq is the blast wall, giant grey concrete blocks placed end to end to create fortifications of medieval appearance. They have come to dominate Baghdad and most other Iraqi cities. They protect US positions, police and Iraqi army posts and all government buildings. They also strangle streets leading to traffic gridlock at notorious choke points.

Some Iraqis are living better than before 2003. Teachers and government officials are earning $200 a month where they used to earn $10.

There are also Kurds and Shia inhabiting provinces north and south that they wholly dominate. But elsewhere, Iraqis live lives of chromic insecurity.

In al-Khadra, a Sunni neighbourhood in west Baghdad, for instance, the insurgents are waging two wars at the same time, one against the Americans and the other against Shia militiamen, some of whom work for the Ministry of the Interior.

Last week, Sunni guerrillas attacked a car which they claimed was carrying CIA agents in a road tunnel and killed those inside. Two days later, they ambushed a convoy of vehicles of the Badr Group, the Shia militia. Four of the militiamen were killed and petrol was poured over their bodies and set alight. Soon afterwards, a bus was spotted abandoned by a highway. At first it was thought it might contain a bomb. Instead it had a more grisly cargo, the bodies of 18 Sunni tortured and killed. In districts such as al-Khadra, the civil war has already begun.

Police said more than 20 gunmen in five civilian cars arrived at dawn at the station in the city of Muqdadiyah, north of Baghdad.

They lobbed a mortar round at the station, then stormed it on foot, firing automatic rifles and rocket-propelled grenades. At least 17 police officers and a guard at a neighbouring courthouse were killed in the fighting. Ten of the attackers were also killed, police said.

The attackers set the police station on fire and detonated a series of bombs as they made their escape.

The attack left 13 others wounded, including police officers and civilians.

Most of the freed prisoners were suspected insurgents.

Muqdadiyah is about 95 kilometres northeast of Baghdad in the Sunni heartland.

On Monday, at least 39 people were killed in Iraq by insurgents and sectarian gangs.