Talk about outsourcing. The first two acts of former Central Intelligence Agency asset turned Prime Minister Iyad Allawi were to call a US air strike on an alleged safe house in Fallujah, and to sign a martial-law order to be imposed on an Arab "sovereign" state by a Western, Christian army. Saddam Hussein also imposed martial law on Iraq. Last year, the talk in Baghdad was that the Americans wanted an "American Saddam". Now they have one. No wonder "sovereign" Iraq looks like your average Arab dictatorship - again: it could be Egypt, it could be Syria.

Weary, secular Iraqis are now contrasting the two unsavory propositions with which they have been presented. On one side, there's the virtually independent enclave of Fallujah, half an hour away from Baghdad and under control of hardline Taliban-like mujahideen militias. On the other side, "democratic" Iraq with its inbuilt Patriot Act - where everyone is potentially subjected to martial law, curfews, a ban on demonstrations, phone-tapping, the opening of mail, the freezing of bank accounts and the appointment of the military to rule parts of the country. Iraq's Patriot Act was appropriately announced to the Iraqi population by Bakhtyar Amin, the new minister of justice and human rights.

Some Iraqis may welcome their Patriot Act because it supposedly tackles the security nightmare bequeathed by the Americans. People in Baghdad still remember Saddam Hussein's ultra-harsh security state: it was ugly, but there was plenty of security. But Baghdad sources tell Asia Times Online that many people are wondering whether the Patriot Act will be enough to save Allawi's Iraq. Much of the Sunni triangle - including the major cities of Fallujah, Ramadi, Samarra and Baqubah - is now controlled by the resistance. These cities are nothing less than autonomous republics.

The pseudo-state
General Richard Myers, chairman of the US Joint Chiefs of Staff, has said that at least 145,000 US troops may stay in Iraq for as many as five years. Muqtada al-Sadr, the firebrand Shi'ite leader, says the resistance has to increase because the occupation is not over yet. Allawi is caught in the middle.

The British tried to rule Iraq by proxy in the 1920s, via their embassy. The scheme failed. Adam Hochschild, a professor at the University of California, Berkeley and also the author of King Leopold's Ghost: A Story of Greed, Terror and Heroism in Colonial Africa, has compared the new Iraq with the Bantustans of South Africa during apartheid, a scheme that also failed. Washington may want a "pseudo-state", says Hochschild, "a willing home for the permanent military bases the Pentagon is building in the country; an oil reservoir safely under US influence; and a strategic ally against militant Islam, all with the facade, at least, of democracy. On the other hand, with its vast oil wealth and restive population, at some point Iraq could take a very different path, and embody the religious fervor of its Shi'ite majority, demand that US forces leave, try to cancel reconstruction contracts with US firms, and reverse the privatization of state assets now under way."

The main contractor
The heavy silhouette of Allawi, the heir of a Shi'ite merchant family from Nassiriyah, configures him as an Arab version of Tony Soprano - without the charm.

According to Dr Haifa al-Azzaoui, a former exile who now writes for the Arab media, Allawi's Baghdad diploma in neurology is "a fake, and provided by the Ba'ath Party before they sent him to London to spy on Iraqi students". A former hardcore Ba'athist in the 1960s - socialist and Arab nationalist - an exile for 32 years, the head of a political party with absolutely no popular base, and an honorable client of the Central Intelligence Agency (CIA), Britain's MI6 military intelligence and Saudi intelligence, it was Allawi who almost sent British Prime Minister Tony Blair to the unemployment line when he sold the notion that Saddam had weapons of mass destruction "operational in 45 minutes".

According to Professor Saadoun al-Douleimi, now director of the Iraqi Center of Research and Strategic Studies, Allawi was "an important member of the Ba'ath. He knew many things and he passed this information to MI6. That's why Mukhabarat [state security] agents tried to kill him" in 1978 in London. Allawi was seriously wounded and was evacuated by MI6 to be treated in a clinic in France.

Allawi created al-Wifaq (Iraq National Accord) as a political party in February 1991 to position himself for the post-Saddam era - without knowing that Saddam would be spared by the legions of George Bush the elder. Thirteen years later, Allawi turned into a strong "American Saddam" contender when the first choice, Pentagon favorite Ahmad Chalabi, turned out to be less than trustworthy. Chalabi and Allawi are cousins by marriage. Both are secular Shi'ites. Allawi was born in 1944, Chalabi in 1945. But while Chalabi maneuvered the Americans to commit de-Ba'athization in 2003, Allawi did the opposite in 2004, recruiting back his old comrades-in-arms.

"With Allawi, it's like the CIA is marrying Iraq," says a Baghdad intellectual. European diplomats in Brussels prefer to note his old-school but very sound strategy to climb to power: first infiltrating the debris of the Iraqi secret services and then putting them back into place while allying himself with former Ba'ath Sunni generals so he can reconstitute the army in his image. In Baghdad, Allawi is called "Saddam without a moustache". Exactly what Washington wants.

But the point is what Iraqis want. They want two things from Allawi: restoration of order and security, and getting rid of the US occupation as soon as possible. Allawi and his party, though, have absolutely no popular base. He has to do what the Americans - via US Ambassador John Negroponte at the US Embassy - tell him to do. Bringing back the Mukhabarat and Saddam's spies is a tremendously unpopular move - as well as a virtual death warrant to democracy.

Allawi now controls the unelected interim government's budget of roughly US$20 billion a year. Half of this is oil income, which will inevitably fall, drastically, because of non-stop sabotage by the resistance. Foreign aid is not exactly flowing in. Allawi's system does not have the infrastructure to collect taxes. And Allawi needs at least $30 billion to make his government work. Conclusion: this government will be impotent. Negroponte - in his fortress-embassy - will control the $18.4 billion in US Agency for International Development funds at the "Program Management Office". Defense Secretary Donald Rumsfeld keeps controlling the military. Sovereignty? That's more like a Mesopotamian tragedy: to prove his credibility, Allawi could not possibly rely on the occupation army his countrymen want him to throw out.

The trumpeted "reconstruction" is seen by most Iraqis as an extension of the occupation: one more foreign invasion, this one by US multinationals. That's why the "reconstruction" is a key target of the resistance. US contractors are protected by thousands of mercenaries. Twenty-five percent of reconstruction contracts go to security: this is money not being spent on hospitals, schools, roads and US-bombed telephone exchanges. So what the average Iraqi sees is a surrealist situation of contractors spending fortunes to arm and insure themselves against the Iraqis they were supposed to help in the first place.

The Fallujah effect
The security nightmare in Iraq won't be contained. The Fallujah effect can generate a reaction that could spill over into Jordan - via the towns of Zarqa, Irbid and Maan - and into the West Bank and Gaza in Palestine.

Jordan's King Abdullah is not exactly popular in a country that is almost 60% Palestinian (the natives are Arab Bedouins) and an ally of the United States and Israel to boot. Irbid in Jordan is a Palestinian-majority town. Maan in Jordan is an important Salafi crossroads. The political opposition in Jordan is basically constituted by Salafis and the Muslim Brotherhood: this in essence is the ideology predominant in Fallujah.

That's the reason King Abdullah has offered Jordanian troops to Allawi's Iraq: so he can have a shot at preventing radical Islam from expanding west from Fallujah toward Jordan.

Washington tried 19th-century-style colonialism in Iraq. It failed. Now it's trying a remix of 1970s Latin America - with proxy hardcore security forces subjected to the US. It will fail - as it did in Latin America. The United States may be militarily strong in Iraq, but politically it is a midget - as Fallujah demonstrates. Only one desired effect by the White House is already on: the war - at least in this summer silly season - is slowly disappearing from US television. The resistance - and not only in Fallujah - will certainly bring it back.