Iraq regains control of cities as U.S. pulls back

By Tim Cocks and Muhanad Mohammed

BAGHDAD (Reuters) - Iraq regained full control of its towns and cities on Tuesday, declaring the day a national holiday for Iraqis to celebrate the withdrawal of U.S. troops, six years after invading to topple Saddam Hussein.

Though some Iraqis fear the first step of a full U.S. withdrawal leaves them open to attack, the government declared "National Sovereignty Day" a holiday and held a military parade to flex its muscles at a still stubborn insurgency.

"This day, which we consider a national celebration, is an achievement made by all Iraqis," Prime Minister Nuri al-Maliki said in a televised address, as citizens drove around the streets in celebration.

"Our incomplete sovereignty and the presence of foreign troops is the most serious legacy we have inherited (from Saddam). Those who think that Iraqis are unable to defend their country are committing a fatal mistake."

In another sign of what he called the start of a new era, the Oil Ministry held an auction for eight oil and gas fields -- Iraq's first major investment by multinationals that were ushered out nearly 40 years ago under nationalization.

But there was a bloody reminder of the war unleashed by the 2003 U.S. invasion as the U.S. military said four U.S. soldiers based in Baghdad had died of combat-related injuries on Monday. It gave no further details.

SECURITY PACT

By midnight on Tuesday, all U.S. combat units must have left Iraq's urban centers and redeployed to rural bases, according to a bilateral security pact that requires all U.S. troops except for trainers and advisers to leave Iraq by the end of 2011.

The day's festivities included a parade in Baghdad's heavily fortified Green Zone government and diplomatic district, viewed by Iraqis as the ultimate symbol of the foreign military presence until local forces took control of it in January.

Thousands of Iraqi soldiers and police paraded on foot or in U.S.-donated Humvees, armored cars and tanks -- in the same compound, beside a monument to the Unknown Soldier, where Saddam's forces used to stage elaborate displays of power.

The state television channel, Iraqiya, has been running a countdown clock in a corner of its screen.

And across Baghdad, signs were draped on the ubiquitous concrete blast walls reading "Iraq: my nation, my glory, my honor."

"We still have important steps to take and we know our way forward is not easy," Interior Minister Jawad al-Bolani told Reuters at the parade.

"We need to develop our intelligence gathering and technical abilities, because the next war is an intelligence war."

The commander of U.S. forces in Iraq, General Ray Odierno, confirmed U.S. combat troops were fully out of the cities.