The consensus was that violence will escalate even further and there is little chance of peace in the foreseeable future.

"The security situation had become a bit better because of these extra American troops, but now they cannot even protect Sheikh Abu Risha who was supposed to be their great ally, " said Rashid Hussein Mohammed, 33, a Sunni.

As The Selling of Our Country, a satirical programme about a corrupt government presiding over a disintegrating society, came on screen, the mood lightened. The appearance of the actors playing Premier Nouri al-Maliki, President Jalal Talabani and a succession of incompetent and venal ministers drew roars of laughter.

The production staff of the programme, shown on a satellite station based in London, all live abroad. It is claimed the Iraqi government want them extradited for sedition. AlMaliki, the customers in the cafe would have you believe, wanted them shot.

In Baghdad, President Bush's announcement this week of the withdrawal of just over 5,000 troops brought mixed reactions. Most in the streets wanted all the troops to go but there were others, mainly Sunnis, yesterday's enemy for the Americans, who felt that would leave them in the clutches of an Iranianinfluenced Shia government. There was, however, near unanimity in the view that no progress could be made until al-Maliki, seen as a bankrupt prime minister, is replaced, and also expressions of disgust that the US ambassador Ryan Crocker had recommended that Washington should continue to back him.

For Baghdad residents, the price they have paid for the fall in violence has been the brutal segregation of the city between Shia and Sunni, physically represented by a wall springing up in the al-Ghazaliyah neighbourhood, which this week brought protesters out on to the street.

Meanwhile Baghdad's infrastructure has continued to crumble. Four years after "liberation" and the arrival of a market economy, the electricity supply in the city has dwindled to around an hour a day with most households depending on generators powered by benzene. The price of the fuel has risen in three years from 50 dinars to 450 dinars, the spectacular inflation reflected in the price of many other commodities. Access to basic facilities has regressed . . . a recent Oxfam report said just 30% of people have access to clean water, compared to 50% two months ago.

In the Karada district, Saad Hamdi Faisal, a 24-year-old restaurant worker and a Sunni, wished the report by General David Petraeus and Ambassador Crocker had been more honest and of more use to the Iraqi people.

"We thought it will do something to change the government and lead to a new election which will help get rid of sectarianism. But everything will stay the same because al-Maliki, who is himself sectarian, stays in power."

Al-Maliki's support appears to have ebbed even among the Shia constituency. Mohammed Ali Hussein, 19, who manages a computer shop sees no signs of progress.

"What have we got? Shortages in everything except bombs. No, alMaliki must go and the occupation must end as well. Let us hope what Bush has said is a start."

And disenchantment with the government spans the class divide. At the Hunting Club, an establishment for Baghdad's elite whose membership has dwindled by 80% in the past two years because of the violence, general secretary Maksood al-Sanjary was gloomy.

"They say the situation is improving, but we have lost members and I cannot go outside my home after 6.45pm. I am a businessman so members of my family are targets for kidnapping. We have had club members kidnapped and killed."

But there is a silver lining for some, like Fadal Jassem Shwied, for whom the violence and uncertainty at least means employment. Cradling his AK47 rifle, the 32-year-old security guard said, "I cannot complain. Everyone needs someone like me now. I am sure the [Petraeus] report was prepared by the Americans to suit themselves but at the end, if they leave there will be civil war, street by street, and the country will be finished."