June 30 (Bloomberg) -- U.S. combat troops, under agreement with the Iraqi government, abandoned the country’s cities today amid public celebrations and private concerns over Iraq’s future security.

The government declared today a national holiday. Official cars were decorated with streamers and flowers. Martial music and history documentaries filled television screens.

U.S. and Iraqi officials both greeted the end to American urban combat positively. “We feel confident in the Iraqi security forces continuing the process of taking over the security tasks in their own country,” General David Petraeus, who heads U.S. forces in the Middle East and Central Asia, said yesterday in Cairo. On the eve of the pullout, U.S. military officials in Baghdad handed a symbolic gold key to the Defense Ministry building to Iraqi counterparts.

Iraq’s Foreign Minister Hoshyar Zebari, in remarks broadcast on Iraqi television, said the Iraqi government “is confident of the capabilities of our armed and security forces to handle security issues and control the situation despite the attacks and explosions.” The country has been hit by a series of car and suicide bombs that killed about 250 people in the past two weeks.

The American pullout is a step toward a complete U.S. withdrawal from all of Iraq at the end of 2011. The schedule was set under an agreement reached last November between the Bush administration and the Iraqi government of Prime Minister Nuri al-Maliki. President Barack Obama wants to reduce U.S. troop strength in Iraq, currently at 131,000, to no more than 50,000 by August, 2010.

Afghanistan Venture

In the interim, he plans to shift military resources to Afghanistan. There, U.S. and NATO allies are fighting the al- Qaeda global terrorist network and the Taliban, a militant Islamic movement which ruled the country until late 2001 and hosted al-Qaeda leader Osama bin Laden, mastermind of the Sept. 11, 2001, attacks on New York and Washington.

A stable Iraq would ease the way for Obama’s Afghanistan venture, alleviate anxiety over possible unrest in the oil-rich Persian Gulf region and reverse an outflow of 2 million Iraqi refugees to neighboring countries. In Iraq, feelings were mixed both about the withdrawal and the future end to U.S. military involvement.

In the oil-rich Kirkuk area, anti-U.S. and anti-government rebels are still operating. Kirkuk is also beset by bitter ethnic feuding between Iraqi Arabs and the Turkmen minority on one side and Iraqi Kurds, another minority, on the other.

Simmering Tensions

Arabs and Turkmen say that Kurds, a minority that controls an autonomous region in northeast Iraq, want to add the Kirkuk area to their domain and have moved Kurdish residents southward to bolster their claim. Kurds were driven out of the Kirkuk area during crackdowns carried out under Saddam Hussein and say they are only reclaiming what was their homeland.

Along with simmering tensions between the Shiite Muslim majority and Sunni Muslim minority elsewhere in the country, the Arab-Kurdish rivalry is considered a key potential flashpoint.

“As the Americans leave, we will kill each other more and more,” said Amar Naser, a Sunni village elder in Nasiryah, a cluster of houses and dusty farmland 24 kilometers (15 miles) south of Kirkuk.

A 28-year-old engineer, Ihab Hikmat Towfiq, who was visiting Naser for lunch, took issue. “We need a free country, and for that, the foreigners must go,” he said.

Americans Out

A few miles north in Taza, a town largely populated by Turkmen, Mayor Talib Hadi said it was high time the Americans left. He said U.S. overseers in Iraq erred after overthrowing Hussein when they dismantled the Iraqi army. The U.S. is “to blame for our troubles,” he said.

On June 20, Taza was hit by a truck bomb that killed 82 people living in a neighborhood of mud and cinderblock houses. U.S. officials blamed the blast on al-Qaeda operatives.

Taza’s Turkmen police chief, who identified himself as Colonel Jangueez, said that once the U.S. gets out of the way, problems with the Kurds will evaporate. “This is the beginning of Iraqis taking control,” he said.

In Daquq, a Kurdish town 40 kilometers south of Kirkuk, the view was the polar opposite. “There’ll be war when the Americans leave. The U.S. should stay forever,” said Major Mahmud Ali As’ad, police commander in the town. “We want our rights. The Iraqi people don’t think in the correct way.”

Outside his office, police had adorned a pair of squad cars with blue and red ribbons to mark today’s urban withdrawal. Ali As’ad wasn’t celebrating: “Officially, we have to rejoice,” he said. “Really, we aren’t happy. The future doesn’t look good.”

To contact the reporter on this story: Daniel Williams in Kirkuk at dwilliams41@bloomberg.net.

Last Updated: June 30, 2009 01:46 EDT