Baghdad, Iraq ? At the edge of a southern Iraqi city, a refugee family huddles in a tin shack, its hope of jobs and security gone. A northern businessman dreams of opening a store in Baghdad, but the violence puts him off. In the south, a young woman glances nervously around a crowded bus station, fearful a suicide bomb will steal her life even as she celebrates new freedoms.

Three years ago on Monday, aboard the USS Lincoln, “The tyrant has fallen and Iraq is free,” President Bush declared, standing underneath a banner proclaiming: “MISSION ACCOMPLISHED.”

Those two words have lingered uneasily since. A look at Iraq today shows that despite progress toward democracy, billions spent on reconstruction and the best efforts of its own people and an international coalition, the battle for Iraq’s future is far from over.

Building boom, then fall

The building boom in the small city of Kut in southeastern Iraq started soon after Saddam Hussein’s ouster in spring 2003, and lasted through his capture and into 2004. Jobs blossomed as empty lots filled with new apartment buildings and homes.

Then the construction dried up. Although Kut was relatively peaceful, private investors became nervous as the insurgency took hold. Now, says construction worker Mohammed Nasser Atwan, “out of 30 days in a month, there are 10 days of work” – not enough to feed his family of eight and pay the rent.

It is even tougher for the estimated 5,700 Shiites who fled this spring to Kut, leaving behind sectarian violence in Baghdad, Diyala and Kirkuk. Some live in donated tents, others in tin shacks on the edge of town.

Supporters of a radical Shiite cleric roam the streets. Weeds choke the Tigris River, disrupting irrigation because the Water Resources Ministry is paralyzed.

Lawyer: Freedom is here

Lawyer Hussein Ali says freedom has already arrived. From the holy city of Najaf in the south, a Shiite stronghold now relatively free of violence, the 39-year-old lawyer sees long strides that his country has made in three years.

Iraqis have twice voted for a national government and have passed a new constitution. Recently, political leaders in Baghdad broke a logjam, agreeing on a new prime minister who many hope will forge a united government and stabilize Iraq.

Ali said it’s time for U.S. troops to leave. Hussein Abdul-Zahra, a 35-year-old seminary student, agreed.

Iraq now has “very good achievements” from which it can move ahead without “regional and foreign interference,” a reference to the U.S. and Iran, Abdul-Zahra said.

The optimism in Najaf reflects the blossoming of Shiite political and religious hopes. The Shiites were brutally suppressed by Saddam, a Sunni.

But Shiite power has spawned a bitter backlash from Sunnis, who lost power and prestige when Saddam fell. Shiite militias, fighting in response, are accused of operating death squads.

The violence has sewed fear even in stable Najaf.

Violence grows

Soon after Bush landed on the aircraft carrier on May 1, 2003, for his “mission accomplished” speech, the U.S. military was struggling to keep control in Iraq. The Bush administration dissolved the Iraqi army, but found it had too few coalition troops to secure a country with a history of violence.

Saddam’s capture in December 2003, provided a burst of optimism. But a brutal attack on U.S. contract workers, burned in Fallujah in spring 2004, led to a U.S. siege of that city. It became clear the insurgency would be difficult to defeat.

The rest of 2004 and much of 2005 saw violence grow even as democratic institutions were being built. The U.S. handed over sovereignty, Iraq held its first free election, a new constitution was approved and then, in December, a permanent parliament was elected.

But Iraq’s vital oil industry, which has one of the world’s largest pool of reserves, continues to struggle. Production fell to about 2 million barrels a day last year, down from 3.5 million a day in 1990.

The top U.S. commander in Iraq, Gen. George Casey, said last week that the U.S. might be able to withdraw some troops later this year. But the army’s chief of staff in Washington, Gen. Peter Schoomaker, warned that “this is going to take time.”

Kurdish city growing

In the Kurdish city of Sulaimaniyah in the north, it is different.

There, apartment towers and villas sprout up. Workers come from around Iraq for jobs, many sleeping at construction sites.

Inflation is high and corruption suspected. But the people – safe in their pocket of security – think themselves lucky.

Saman Karim does not even feel as if he lives in Iraq. The student used to believe the war would open a new chapter – “Like Bush said … a model of democracy in the Middle East.”

Now he says the country has become worse. “It’s on the verge of civil war,” he said.

Saleh Ayoub, 59, sells cheap clothes and had hoped for a commercial boom across Iraq. He dreamed of opening a big store in Baghdad once Saddam fell.

But in the capital, tension grows. Residents hastily throw up roadblocks of wrecked cars and mounds of dirt to keep out attackers. A once-mixed Shiite-Sunni neighborhood is now Sunni only, its Shiite-owned homes abandoned.

“I’ve been to Baghdad once since the regime’s fall,” Ayoub said. “And I decided not to go back again.”