June 29 (Bloomberg) -- Iraqi government officials will mark tomorrow’s long-planned withdrawal of U.S. forces from their cities by taking the day off, decorating cars with flowers and broadcasting patriotic music.

After the celebration comes a sobering responsibility.

U.S. officers say that the Iraqis will be in exclusive control of major combat in urban areas, including the flashpoints of Baghdad, Mosul and Baquba, for the first time since the 2003 overthrow of Saddam Hussein. U.S. forces will ring volatile cities to prevent rebel infiltration, provide intelligence and fight if Iraqis request.

“This is a very important step in the withdrawal process,” said Major Gen. Robert L. Caslen, who heads the 25th Infantry Division and commands U.S. forces in northern Iraq. “If anyone was in doubt, this shows we’re not here to occupy,” he said in an interview in Kirkuk, hub city of Iraq’s northern oil fields.

The urban pullout is part of an accord signed by the Bush administration and the Iraqi government in November, which called for a complete withdrawal of U.S. forces by the end of 2011. President Barack Obama wants to pull out all but 35,000 to 50,000 soldiers by August 2010. About 131,000 American troops are now in Iraq, according to Pentagon figures.

A successful transition to Iraqi security control in the cities is essential to Obama’s plan for shifting forces to Afghanistan, where American and NATO allies are battling al- Qaeda and the Taliban. He is betting that a reconstructed Iraqi army can stand on its own inside Iraqi cities and, later, throughout the whole country.

Energy Contracts

Keeping violence under control is also central to Iraq’s plans for economic development. The country, which holds the world’s third-largest crude reserves, plans to award contracts worth $16 billion to foreign companies to help develop six oilfields and two natural-gas deposits later this week.

The risk is that as U.S. troops are reduced, Iraq will return to the violence of 2003 to 2007, when Sunni and Shiite Muslims engaged in communal bloodletting and al-Qaeda and its allies fought American troops using lethal roadside bombs.

Caslen viewed the potential dangers during a June 27 visit to Taza, 20 kilometers (12 miles) south of Kirkuk. On June 20, a suicide truck bomber blew up dozens of mud and cinderblock houses there.

Caslen inspected the razed area and then a cemetery where 82 victims, members of Iraq’s Turkmen minority, are buried in three rows, their graves marked by small wooden placards set atop broomsticks. An Iraqi policeman led a prayer in which he asked God to “uncover such plans before they can be carried out.”

Urban Assaults

Attacks in Mosul, Baghdad and other cities have taken 250 lives since June 14. Caslen said that al-Qaeda and insurgents want to “take advantage” of the June 30 deadline to show the U.S. is retreating in failure and that the Iraqi government can’t defend the population.

He doubts the blasts signify a permanent revival of large- scale insurgency or sectarian violence. “They can surge, but cannot sustain,” Caslen said of the attackers.

After June 30, the Iraqis “will be in control inside the cities and we will work with them outside to interdict the insurgents,” Caslen said. “This can be a model way to bring security for all Iraq.”

Three inter-related anti-U.S. groups operate near Kirkuk, said Major Charles Assidourian, 37, an intelligence officer: al- Qaeda, the Islamic State of Iraq and the Naqshabandi. All suffer from money, arms and recruiting problems. “We don’t think they will expand because of what happens June 30,” he said.

Future Planning

In windowless offices at the Kirkuk Regional Air Base, the central headquarters for the area, operations and intelligence officers have spent weeks planning for the post-June 30 transition and future American missions.

Their to-do list includes providing intelligence to the Iraqis, training Iraqi soldiers and police and rebuilding schools, farm irrigation and other infrastructure. U.S. forces will enter urban combat only if the Iraqis ask; in the countryside, the Americans will work with the Iraqi army.

The U.S. appears eager to keep a low profile to cement an impression that the Iraqis control their own destiny. When entering or leaving a city for non-combat missions and meetings, American troops will be escorted by Iraqi soldiers. Signs will be posted on U.S. military vehicles that say “Iraqi Partnership Provincial Approved Convoy -- Thank You for Your Patience.”

Throughout Iraq, American soldiers have abandoned small bases, taking equipment and even air conditioners with them, and decamped to sprawling facilities that include big airfields, lots full of armored vehicles, rows of tents and vans, dining halls and stores.

‘Blessed Day’

Iraqi Prime Minister Nuri al-Maliki has declared June 30 a public holiday and a “blessed day” to celebrate the Iraqi “victory.”

U.S. soldiers will be careful to stay as invisible as possible, said Major Christopher Norrie, 39, an operations officer.

Patrols just outside of town will go out only at night. Helicopters will fly outside of Kirkuk air space. “There will be a big show of sovereignty early. We want to let the Iraqis see it’s their country,” Norrie said.

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

Last Updated: June 28, 2009 19:46 EDT