In the past week, car bombings and other insurgent attacks against US and Iraqi forces have returned to pre-June 28 handover levels. But kidnapping, too, is emerging as one of the most effective weapons for eroding confidence in the interim Iraqi government and slowing reconstruction.
The low-cost and low-risk tactic is being used to barter lives for political goals.
Such blackmail has already driven the Philippines and a number of private contractors, including Russian and Turkish firms, from the country. It is also driving up security and insurance costs for companies doing everything from fixing Iraq's sewers to providing mail service to US troops, leaving far less money for the infra- structure improvements that Iraq so desperately needs.
"People here are demanding improvements in basic services, water, and electricity, not to mention jobs,'' says Wamidh Nadhmi, a political science professor at Baghdad University. "They're not seeing any improvements, so the prospects for instability and violence go up."
It's a simple, ugly cycle that neither the US nor its Iraqi partners have been able to break.
Carefully targeted violence disrupts contracting work, slowing the pace of reconstruction and driving up costs. As the restoration of basic services like power and water is stalled, the pool of dissatisfied Iraqis willing to participate in the insurgency grows.
"These tactics to me point to a machine that not only knows Iraqi society and when and where to strike, but to people who have a political objective - and part and parcel of their objective is stopping development work,'' says Isam al-Khafaji, director of Iraq Revenue Watch, which tracks US spending here. "This is why so little has been spent. So far, they're winning."
Mr. Khafaji says increasing insurgent activity in towns like Ramadi, Samara, and Baqubah, - all in the Sunni triangle - are signs that the "get tough" approach promised by Prime Minister Ayad Allawi may be backfiring.
Violence against contractors and government officials has been rising since last year, but the latest round of kidnappings has likely been boosted by the Philippines' decision to withdraw its 50-man military contingent from Iraq to save the life of Filipino trucker Angelo de la Cruz, who was released last Tuesday.
Since then, at least 13 new hostages have been taken, including the head of an Iraqi government construction company, two Jordanian truck drivers, an Egyptian diplomat, and eight foreign contractors.
On Friday, Mohammed Qutb, the third-highest official at the Egyptian Embassy in Baghdad, was kidnapped in Baghdad by a group calling itself the "Lions of God Battalion" while leaving a mosque after evening prayers. This occurred as Mr. Allawi embarked on a trip in which he has urged Egypt and other Arab states to contribute troops to the Iraq effort.
Mr. Qutb had led hostage negotiations earlier this month that led to the release of an Egyptian truck driver in exchange for a pledge from his Saudi employer to leave Iraq, and pictures of him greeting the freed hostage were widely printed in Iraq.
"There is no way to budge to terrorists and give them what they want," Allawi said Sunday in Damascus, Syria, the AP reported. "The only way to deal with terrorism is to promote justice and to close ranks, and we hope Egypt and the Egyptian government will act accordingly." Egypt has promised it will not send troops to Iraq.
Last week, three Kenyans, three Indians, and an Egyptian working as truck drivers for Kuwait and Gulf Link Transport, were taken hostage by a group calling itself the "Holders of the Black Banners," which in videotaped statement threatened to behead one hostage every 72 hours - with the first victim to be killed Monday evening - if the company didn't pull out of Iraq.
On Monday, the group said it was delaying its murder plans to give negotiations more time. The company says it is committed to bringing the men to safety but hasn't promised to pull out yet.
The kidnappings are almost always done by what seems to be a new group. The murderers of US businessman Nick Berg called themselves the Tawhid and Jihad group, which is thought to be controlled by the Jordanian militant Abu Musab Zarqawi, who US officials claim has been behind much of the violence here. But US officials say it isn't clear whether the kidnappers are in different organizations, or if the same people use different names.
Jihad websites with links to Al Qaeda urge insurgents to use a host of different and confusing group names when announcing their activities, both to make the movement seem larger and to make them harder to catch.
The Philippines was caught up in wave of domestic revulsion at the kidnapping, since many citizens know someone who could be Angelo de la Cruz. The English-speaking Philippines has more than 7 million workers abroad, leading President Gloria Arroyo to describe him as the country's "everyman."
But the decision to bend to his kidnappers' demands, and similar withdrawals by foreign companies terrorized by militants here, clearly demonstrated to the insurgents the advantages of hostage taking in a chaotic environment like Iraq's.
Australian Foreign Minister Alexander Downer, whose government is a staunch ally of the US effort in Iraq, sharply criticized the Philippines in a Sunday interview with an Australian television station. "You have to stand up to these people, because if you don't, you empower them,'' he said.
The risks have clearly been surging for private contractors. So far in 2004, at least 86 private contractors from 18 different countries have been killed by insurgents in Iraq, compared to at least 16 killed last year.
Over the weekend, the decapitated body of a Bulgarian truck driver kidnapped recently was pulled from a river here, and officials said a second Bulgarian kidnapped with him was also probably dead.
Foreign workers aren't likely to pull out of Iraq entirely. As shown by the broad number of nationalities killed in private jobs here - far broader than the US-led coalition - thousands have been and will continue to be lured by lucrative job opportunities, despite the danger.
While hiring more Iraqis for jobs like truck driving might seem to be a solution, some Iraqi drivers have also been taken and killed - most notably six Shiite truck drivers kidnapped and executed in Fallujah last month.
Monday, gunmen also opened fire on five women who work as cleaners for US firm Bechtel in the southern city of Basra, killing two and wounding two others, one survivor said. The women were waiting for a bus to take them to work when they were attacked.
Another problem for contractors, analysts say, is they're not certain which Iraqis to trust, worried that they might hire someone who will feed information to insurgents and make their operations more vulnerable.
But a US official estimates that about 20 percent of US reconstruction spending here now goes to private security - meaning much less money to be spent on laying water pipes and dredging sewage canals. In difficult operating environments like Nigeria and Sudan, oil companies typically spend about 5 to 8 percent of costs on security.
To critics of the interim government, the latest kidnappings are symptomatic of Allawi's lack of legitimacy, and they worry that violence will only get worse.
Mr. Nadhmi, the political science professor, says he believes that elections in January are already looking unlikely, unless things turn around fast.
"What we have is people who don't have deep roots here trying to engage a deeply fragmented society,'' says Nadhmi, a critic of the process that brought Allawi to power. "He's seen as coming to power supported by US tanks, and that's going to make it very difficult for him."
• Material from wire services was used in this story.