On Sunday, Iraqi soldiers, trained and controlled by coalition forces, opened fire on demonstrators here, forcing the emergency evacuation of the nearby Sheraton and Palestine hotels. As demonstrators returned to their homes in the poor neighborhood of Sadr City, the U.S. army followed with tanks and helicopters. As night fell, there were unconfirmed reports of dozens of casualties. In Najaf, the day was equally bloody: 19 demonstrators dead, more than 150 injured.

But make no mistake: This is not the "civil war" that Washington has been predicting will break out between Sunnis, Shiites and Kurds. Rather, it is a war provoked by the U.S. occupation authority and waged by its forces against the growing number of Shiites who support Muqtada al-Sadr.

Mr. al-Sadr is the younger, more radical rival of the Grand Ayatollah Ali al-Sistani, portrayed by his adoring supporters as a kind of cross between Ayatollah Khomaini and Che Guevara. He blames the U.S. for attacks on civilians, compares U.S. occupation chief Paul Bremer to Saddam Hussein, aligns himself with Hamas and Hezbollah and has called for a jihad against the controversial interim constitution. His Iraq might look a lot like Iran.

And it's a message with a market. With Ayatollah al-Sistani concentrating on lobbying the United Nations rather than on confronting the U.S.-led occupation in the streets, many Shiites are growing restless, and are turning to the more militant tactics preached by Mr. al-Sadr. Some have joined the Mahdi, Muqtada's black-clad army, which claims hundreds of thousands of members.

At first, Mr. Bremer responded to Mr. al-Sadr's growing strength by ignoring him; now he is attempting to provoke him into all-out battle.

The trouble began when Mr. Bremer closed down Mr. al-Sadr's newspaper last week, sparking a wave of peaceful demonstrations. On Saturday, Mr. Bremer raised the stakes further by sending coalition forces to surround Mr. al-Sadr's house near Najaf and arrest his communications officer.

Predictably, the arrest sparked immediate demonstrations in Baghdad, which the Iraqi army responded to by opening fire and allegedly killing three people. It was these deaths that provoked yesterday's bloody demonstrations.

At the end of the day on Sunday, Mr. al-Sadr issued a statement calling on his supporters to stop staging demonstrations "because your enemy prefers terrorism and detests that way of expressing opinion" and instead urged them to employ unnamed "other ways" to resist the occupation, a statement many interpret as a call to arms.

On the surface, this chain of events is mystifying. With the so-called Sunni triangle in flames after the gruesome Fallujah attacks, why is Mr. Bremer pushing the comparatively calm Shia south into battle? Here's one possible answer: Washington has given up on its plans to hand over power to an interim Iraqi government on June 30, and is now creating the chaos it needs to declare the handover impossible.

A continued occupation will be bad news for George Bush on the campaign trail, but not as bad as if the handover happens and the country erupts, an increasingly likely scenario given the widespread rejection of the legitimacy of the interim constitution and the U.S.-appointed government.

It's a plan that might make sense in meetings in Washington, but here in Baghdad it looks like pure madness. By sending the new Iraqi army to fire on the people it is supposed to be protecting, Mr. Bremer has destroyed what slim hope it had of gaining credibility with an already highly mistrustful population. On Sunday, before storming the unarmed demonstrators, the soldiers could be seen pulling on ski masks, so they wouldn't be recognized when they returned to their neighborhoods.

Meanwhile, Mr. al-Sadr is having his hero status amplified by the hour.

Yesterday afternoon, thousands of demonstrators filled Firdos Square. On one side of the plaza, a couple of kids climbed to the top of a building and took a knife to a billboard advertising Iraq's new army. On the other side, U.S. forces pointed tanks at the crowd while a loudspeaker told them that "demonstrations are an important part of democracy, but blocking traffic will not be permitted."

"Do you have any rooms?" we ask the hotelier.

She looks us over, dwelling on my travel partner's bald, white head.

"No," she replies.

We try not to notice that there are sixty room keys in pigeonholes behind her desk--the place is empty.

"Will you have a room soon? Maybe next week?"

She hesitates. "Ahh... No."

We return to our current hotel--the one we want to leave because there are bets on when it is going to get hit--and flick on the TV: The BBC is showing footage of Richard Clarke's testimony before the September 11 Commission, and a couple of pundits are arguing about whether invading Iraq has made America safer.

They should try finding a hotel room in this city, where the US occupation has unleashed a wave of anti-American rage so intense that it now extends not only to US troops, occupation officials and their contractors but also to foreign journalists, aid workers, their translators and pretty much anyone else associated with the Americans. Which is why we couldn't begrudge the hotelier her decision: If you want to survive in Iraq, it's wise to stay the hell away from people who look like us. (We thought about explaining that we were Canadians, but all the American reporters are sporting the maple leaf--that is, when they aren't trying to disappear behind their newly purchased headscarves.)

US occupation chief Paul Bremer hasn't started wearing a hijab yet, and is instead tackling the rise of anti-Americanism with his usual foresight. Baghdad is blanketed with inept psy-ops organs like Baghdad Now, filled with fawning articles about how Americans are teaching Iraqis about press freedom. "I never thought before that the Coalition could do a great thing for the Iraqi people," one trainee is quoted saying. "Now I can see it on my eyes what they are doing good things for my country and the accomplishment they made. I wish my people can see that, the way I see it."

Unfortunately, the Iraqi people recently saw another version of press freedom when Bremer ordered US troops to shut down a newspaper run by supporters of Muqtada al-Sadr. The militant Shiite cleric has been preaching that Americans are behind the attacks on Iraqi civilians and condemning the interim constitution as a "terrorist law." So far, al-Sadr has refrained from calling on his supporters to join the armed resistance, but many here are predicting that the closing down of the newspaper--a nonviolent means of resisting the occupation--was just the push he needed. But then, recruiting for the resistance has always been a specialty of the Presidential Envoy to Iraq: Bremer's first act after being tapped by Bush was to fire 400,000 Iraqi soldiers, refuse to give them their rightful pensions but allow them to hold on to their weapons--in case they needed them later.

While US soldiers were padlocking the door of the newspaper's office, I found myself at what I thought would be an oasis of pro-Americanism, the Baghdad Soft Drinks Company. On May 1 this bottling plant will start producing one of the most powerful icons of American culture: Pepsi-Cola. I figured that if there was anyone left in Baghdad willing to defend the Americans, it would be Hamid Jassim Khamis, the Baghdad Soft Drinks Company's managing director. I was wrong.

"All the trouble in Iraq is because of Bremer," Khamis told me, flanked by a line-up of thirty Pepsi and 7-Up bottles. "He didn't listen to Iraqis. He doesn't know anything about Iraq. He destroyed the country and tried to rebuild it again, and now we are in chaos."

These are words you would expect to hear from religious extremists or Saddam loyalists, but hardly from the likes of Khamis. It's not just that his Pepsi deal is the highest-profile investment by a US multinational in Iraq's new "free market." It's also that few Iraqis supported the war more staunchly than Khamis. And no wonder: Saddam executed both of his brothers and Khamis was forced to resign as managing director of the bottling plant in 1999 after Saddam's son Uday threatened his life. When the Americans overthrew Saddam, "You can't imagine how much relief we felt," he says.

After the Baathist plant manager was forced out, Khamis returned to his old job. "There is a risk doing business with the Americans," he says. Several months ago, two detonators were discovered in front of the factory gates. And Khamis is still shaken from an attempted assassination three weeks ago. He was on his way to work when he was carjacked and shot at, and there was no doubt that this was a targeted attack; one of the assailants was heard asking another, "Did you kill the manager?"

Khamis used to be happy to defend his pro-US position, even if it meant arguing with friends. But one year after the invasion, many of his neighbors in the industrial park have gone out of business. "I don't know what to say to my friends anymore," he says. "It's chaos."

His list of grievances against the occupation is long: corruption in the awarding of reconstruction contracts, the failure to stop the looting, the failure to secure Iraq's borders--both from foreign terrorists and from unregulated foreign imports. Iraqi companies, still suffering from the sanctions and the looting, have been unable to compete.

Most of all, Khamis is worried about how these policies have fed the country's unemployment crisis, creating far too many desperate people. He also notes that Iraqi police officers are paid less than half what he pays his assembly line workers, "which is not enough to survive." The normally soft-spoken Khamis becomes enraged when talking about the man in charge of "rebuilding" Iraq. "Paul Bremer has caused more damage than the war, because the bombs can damage a building but if you damage people there is no hope."

I have gone to the mosques and street demonstrations and listened to Muqtada al-Sadr's supporters shout "Death to America, Death to the Jews," and it is indeed chilling. But it is the profound sense of betrayal expressed by a pro-US businessman running a Pepsi plant that attests to the depths of the US-created disaster here. "I'm disappointed, not because I hate the Americans," Khamis tells me, "but because I like them. And when you love someone and they hurt you, it hurts even more."

When we leave the bottling plant in late afternoon, the streets of US-occupied Baghdad are filled with al-Sadr supporters vowing bloody revenge for the attack on their newspaper. A spokesperson for Bremer is defending the decision on the grounds that the paper "was making people think we were out to get them."

A growing number of Iraqis are certainly under that impression, but it has far less to do with an inflammatory newspaper than with the inflammatory actions of the US occupation authority. As the June 30 "handover" approaches, Paul Bremer has unveiled a slew of new tricks to hold on to power long after "sovereignty" has been declared.

Some recent highlights: At the end of March, building on his Order 39 of last September, Bremer passed yet another law further opening up Iraq's economy to foreign ownership, a law that Iraq's next government is prohibited from changing under the terms of the interim constitution. Bremer also announced the establishment of several independent regulators, which will drastically reduce the power of Iraqi government ministries. For instance, the Financial Times reports that "officials of the Coalition Provisional Authority said the regulator would prevent communications minister Haider al-Abadi, a thorn in the side of the coalition, from carrying out his threat to cancel licenses the coalition awarded to foreign-managed consortia to operate three mobile networks and the national broadcaster."

The CPA has also confirmed that after June 30, the $18.4 billion the US government is spending on reconstruction will be administered by the US Embassy in Iraq. The money will be spent over five years and will fundamentally redesign Iraq's most basic infrastructure, including its electricity, water, oil and communications sectors, as well as its courts and police. Iraq's future governments will have no say in the construction of these core sectors of Iraqi society. Retired Rear Adm. David Nash, who heads the Project Management Office, which administers the funds, describes the $18.4 billion as "a gift from the American people to the people of Iraq." He appears to have forgotten the part about gifts being something you actually give up. And in the same eventful week, US engineers began construction on fourteen "enduring bases" in Iraq, capable of housing the 110,000 soldiers who will be posted here for at least two more years. Even though the bases are being built with no mandate from an Iraqi government, Brig. Gen. Mark Kimmitt, deputy chief of operations in Iraq, called them "a blueprint for how we could operate in the Middle East."

The US occupation authority has also found a sneaky way to maintain control over Iraq's armed forces. Bremer has issued an executive order stating that even after the interim Iraqi government has been established, the Iraqi army will answer to US commander Lieut. Gen. Ricardo Sanchez. In order to pull this off, Washington is relying on a legalistic reading of a clause in UN Security Council Resolution 1511, which puts US forces in charge of Iraq's security until "the completion of the political process" in Iraq. Since the "political process" in Iraq is never-ending, so, it seems, is US military control.

In the same flurry of activity, the CPA announced that it would put further constraints on the Iraqi military by appointing a national security adviser for Iraq. This US appointee would have powers equivalent to those held by Condoleezza Rice and will stay in office for a five-year term, long after Iraq is scheduled to have made the transition to a democratically elected government.

There is one piece of this country, though, that the US government is happy to cede to the people of Iraq: the hospitals. On March 27 Bremer announced that he had withdrawn the senior US advisers from Iraq's Health Ministry, making it the first sector to achieve "full authority" in the US occupation.

Taken together, these latest measures paint a telling picture of what a "free Iraq" will look like: The United States will maintain its military and corporate presence through fourteen enduring military bases and the largest US Embassy in the world. It will hold on to authority over Iraq's armed forces, its security and economic policy and the design of its core infrastructure--but the Iraqis can deal with their decrepit hospitals all by themselves, complete with their chronic drug shortages and lack of the most basic sanitation capacity. (US Health and Human Services Secretary Tommy Thompson revealed just how low a priority this was when he commented that Iraq's hospitals would be fixed if the Iraqis "just washed their hands and cleaned the crap off the walls.")

On nights when there are no nearby explosions, we hang out at the hotel, jumping at the sound of car doors slamming. Sometimes we flick on the news and eavesdrop on a faraway debate about whether invading Iraq has made Americans safer. Few seem interested in the question of whether the invasion has made Iraqis feel safer, which is too bad because the questions are intimately related. As Khamis says, "It's not the war that caused the hatred. It's what they did after. What they are doing now."

Naomi Klein is a leading anti-sweatshop activist, and author of Fences and Windows: Dispatches from the Front Lines of the Globalization Debate? (Picador, 2002) and No Logo: Taking Aim at the Brand Bullies (Picador, 2000). Visit the No Logo website: www.nologo.org.

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