Four years after the invasion of Iraq, American troops battle it out with insurgents on Haifa Street in downtown Baghdad … paying the price for four years of military and political miscalculations.

In a last desperate gamble to save what many see as a losing war, a ‘surge' of over 25,000 extra troops are being rushed to Baghdad … Lose the Battle for Baghdad, and you lose Iraq.

This is the story of what went wrong … how America got trapped on these streets…as told by some of the top commanders in the war and the New York Times correspondents who are covering it:

"There is nothing down the road that I can see," says John Burns, the Times Baghdad bureau chief, "except gigantic levels of bloodshed -- a war that would spread across Iraq's borders, draw in the neighbours, destroy America's power and prestige, in the region and in the world."

For decades, Saddam Hussein's iron-fisted rule held down the simmering tensions between the two warring sects of Islam … the Sunnis and Shias … locked in a deadly embrace in a single country. The Sunni insurgency claimed the lives of thousands of Shia civilians … but for almost three years after the American invasion, the Shiites held back. "The Americans couldn't stop the Sunni insurgency," says the Times Dexter Filkins. "They were never able to bring it under control. The result of that is that the Shiites finally, they finally let slip the dogs of war." - Excerpt from Battle for Baghdad

To eventually get out of Iraq, the Americans have to rely on Iraqi security forces that hardly inspire confidence. Only a third to a half of the soldiers even bother to report for duty – some are on leave, many have deserted and others are ‘phantom soldiers' … put on the roster so corrupt commanders can collect their pay. And nobody really trusts all the soldiers who do show up. The top commanders - most of them Sunnis from Saddam's old army – are wary of the rank and file, most of them Shia.

And the Americans are nervous about both. "You really cannot tell if it's a new face who they're tied to, who they're tied with, what sectarian sect or religious or what group," says one U.S. intelligence officer. "And so you really have to watch your back."

Iraq is awash with arms … and Washington insists a growing part of the lethal arsenal used by the Shiite militias is coming from Iran. But Iraqi Prime Minister Nouri Al-Maliki has made no secret that his sympathies lie with his fellow Shia rulers from Iran.

"You have to think of what an extraordinary thing it is that the United States has effected the rise to power in Iraq of a government that is an expression of Iranian, religious, clerical influence," says John Burns. "What could better express the irony of what George Bush has accomplished in Iraq than that?" - Excerpt from Battle for Baghdad

At its peak, the daily carnage in Baghdad claimed the lives of 200 civilians a day … 34,000 in the past year… the equivalent of a 9-11 attack on the city every month …And many of the bodies show signs of the work of death squads. The only thing that is more frightening than the killings is who is carrying them out. Special Iraqi police forces and paramilitary units of the Shia government are always racing through the streets of Baghdad … but instead of protecting the citizens, they are terrorizing many of them.

"We have consistent reports that the militias and death squads operate and can operate with collusion or with the support of the security forces," says Gianni Magazzeni, who ran the U.N. human rights office in Baghdad. "Impunity continues to prevail in today's Iraq, unfortunately we see this because there are no accountability for the crimes that are committed everyday."

The fear of death at the hands of government-sanctioned death squads has led to a stunning reversal … The Sunnis and their leaders who had long opposed the American invasion that drove them from power are now begging the Americans to stay and protect them.

"The Americans who went to war to topple a Sunni minority tyrant are finding themselves ever more drawn, in effect, to an alliance with the Sunni Arab minority against a newly empowered, ambitious and often vengeful Shiite religious led government," says John Burns. - Excerpt from Battle for Baghdad

Four years after American troops entered the capital, Baghdad is a city gripped in fear Those who can afford it -- politicians and foreign diplomats take shelter behind blast walls and heavily-guarded bunkers. The rest have to fend for themselves. Baghdad is fracturing into many civil wars… Sunnis and Shias fighting each other … and amongst themselves… all of them fighting the Americans…

"That's the American dilemma in Iraq now: they can't stay forever because they are an occupier; they can't leave because that would only mean full-scale civil war," says Michael Gordon, the Times chief military correspondent. "We can't stay, we can't go."

Gone now is any talk of bringing a flourishing democracy to Iraq. All that is left is the slim hope that by the summer of 2007 the surge of troops can bring enough calm to give Iraq's warring factions a chance at reconciliation.

"Maybe the Iranians become more active with their Shiite partners in Iraq, and then as the Sunni minority becomes more and more threatened," says Dexter Filkins. "Then you have you know countries like Saudi Arabia coming to the aid of the Sunnis. So it becomes this battle ground for all the regional players and a real, real blood bath."

The time to avoid that bloodbath is fast running out … and the clock that is ticking is not in Baghdad, but back in Washington…

"Is it likely that an American surge could be sustained through the 2008 election?" says the Times John Burns. " If the American military commanders know that, Moqtada al-Sadr knows it, the Sunni insurgents know it, al-Qaeda know it … You only have to read the al-Qaeda websites to see this. They laugh. They're already laughing as the surge builds up because they say, this has no support in the United States."