Inside Baghdad's Amber Zone

My driver slams the brakes. A Kalashnikov-wielding Iraqi sentry pops out the sunroof of a convoy of black Explorers speeding past us. He makes angry eye contact, shouts an order and waves us to the side of the road. Its the kind of adrenaline-soaked exchange that is routine in downtown Baghdad, where militia, police and security details bristling with weapons slalom through traffic with impunity.

But were not in Baghdad — or at least, not in a part of the city that most Iraqis would recognize. Instead, were inside the fortified International Zone, the 4-sq.-mi. palace compound largely built by Saddam Hussein which since 2003 has been home to the top U.S. diplomats and is still the only patch of Iraq deemed secure enough for most visiting dignitaries to see. The driver, a staff member of the U.S. embassy, rarely ventures into downtown Baghdad because of safety concerns.

And even within the palace walls, anxiety is rising. The U.S. hopes to hand over 75% of the country to Iraqi security forces by the end of the summer, including much of the International Zone. But trust in the Iraqis ability to maintain security is so low that many U.S. officials are hesitant to venture into the areas that are already under Iraqi control. They have even concocted a name for the turf that lies between the U.S.-controlled areas of the compound, known as the Green Zone, and the uneasy "Red Zone" of Baghdad: its called the Amber Zone — and it has become, in many ways, a microcosm of the dilemmas facing the Americans as they try to pull back from the rest of Iraq.

The entire International Zone (IZ), as the walled city is officially known, is still the ultimate responsibility of the Multi-National Force-Iraq, and no entrance is controlled by Iraqi forces alone. But Iraqi soldiers are the first line of defense for more and more of its acreage. The Amber Zones vague border begins in the westernmost tip of the Green Zone, where the Iraqi Ministry of Interior has taken over a complex. It then sweeps north and east, including the reopened al-Rasheed Hotel and the Convention Center where the Iraqi parliament meets, and past a warren of low buildings that houses two Iraqi army brigades called Camp Honor. The area ends at the northeasternmost edge along the Tigris River at the white columns of the Iraqi Ministry of Defense and the tree-lined streets around the Prime Ministers residence. Only the innermost cordon of U.S. Embassy officies and sensitive military installations are guarded entirely by U.S. troops.

As a result of more Iraqi ministries, officials and Army brigades taking over territory in the IZ, many U.S. officials in Baghdad say theyre retreating even further into their bunker. Embassy spokeswoman Elizabeth Colton disagrees, saying staff are actually moving more and more around the IZ these days, going to restaurants, having coffee in the lobby of the al-Rasheed Hotel. Nonetheless, posted security notices outside embassy offices declare in capital red letters a list of public restaurants within the secured IZ that are off limits for security reasons. And conversations with several embassy staffers who arent comfortable venturing into areas controlled by private contractors and Iraqis betray an unease about the changes at the checkpoints. A low-level U.S. embassy official who finds himself confining his movements more and more to the path between his trailer and his office, says that as more real estate is handed over to the Iraqi government, hes watching the IZ become "more amber than green."

That change might be less of a concern if the U.S. had more confidence in the Iraqi troops. But the recent rise in sectarian tensions has contributed to a deep uncertainty about which Iraqis the U.S. can trust — even in what was once the safest place in Baghdad. Sitting at a heavy oak desk in the Ministry of Defense, a senior Iraqi general concedes that his own troops, who guard the maze of blast walls leading into this corner of the Amber Zone, have questionable loyalties. The troops, he says, are underequipped, "not well trained, not professional," and "can be loyal to a political party" — rather than to the U.S.-backed national army they belong to. If such sectarian tendencies arent curbed soon, the U.S. may find itself watching the Amber Zone turn an even deeper shade of red.