Who wins in the Fallujah handover?

As marines cede control of the city to a new Iraqi security force, local insurgents are calling it a victory over occupiers.

Iraqi insurgents are celebrating their "victory" in Fallujah - broadcasting it from mosques while residents rejoice in the streets - as US marines over the weekend pulled back forces encircling the city.

Marine commanders, too, are lauding the deal, which empowers soldiers of Saddam Hussein's former army to take over security, forestalling an all-out assault on Fallujah that promised to be bloody.

But even as the Marines gamble on the promises of an untested former Republican Guard general and his fledgling unit of some 1,200 soldiers, they are weighing the costs of their solution. Among them: Concerns that widespread perception of a US defeat may fuel more unrest in Iraq; and that the Marines have ceded control of an estimated 200 foreign fighters, holed up in the city they call the "nexus of evil" of Iraq's insurgency.

"Is it going to be seen as an encouraging sign for the resistance?" asks a senior US Marine officer, who requested anonymity. The guerrillas, he adds, could say: "We fought the US military machine to a draw, come join us, get on the winning team."

Despite plentiful US intelligence about the presence of foreign fighters in Fallujah during the conflict, Maj. Gen. Jassim Mohammed Saleh, the Iraqi first tipped to lead the new force, told the Reuters news agency Sunday that "there are no foreign fighters in Fallujah, and the local tribal leaders have told me the same."

US officers think otherwise. "Of the things we're giving up [with this deal], the ability to control the fate of the foreign fighters is a big minus," says the senior US officer. Fallujah is "the last urban sanctuary you could hide in without people disturbing you - loading a car with explosives without any one bothering you."

Though these fighters may have slipped away, there may still be a silver lining, says the officer. "If we got the foreign fighters out of the sanctuary, and on the move, they're more vulnerable," he says. "Now you've got them on the run."

Military leaders here say they have halted an offensive that would almost certainly have further galvanized anti-US sentiment, already hardening in the past month. If it works, there is an Iraqi face on efforts to quell the Fallujah insurgency - a result that the US says has always been its endgame, as it eyes the June 30 handover of sovereignty to Iraqis. Over the weekend, marines cut their area of control from one-fourth of the city to just 10 percent.

Lt. Gen. James Conway, the top US Marine officer in Iraq, praised the "formation of a military partnership" that could bring a "lasting, durable climate of peace."

The former Iraqi soldiers "share in our sense of urgency in stabilizing Fallujah and are willing to share in the danger in making that happen," General Conway said.

Media characterizations that the deal is the "first stage of a Marine 'withdrawal' or 'retreat' " are wrong, Conway added. "Let me tell you that both of those are dirty words in the vocabulary of a marine - and nothing could be further from the truth."

That wasn't the view from some on the ground in Fallujah, however. "God has given this town victory over the Americans," blared loudspeakers from one mosque minaret, Reuters reported. "This victory came by the acts of the brave mujahideen of Fallujah who vanquished the American troops."

"The reasons for the resistance go back to the American provocations, the raids, and the abolishing of the army, which made Iraqis join the resistance," said General Saleh, adding that he had so far found 1,200 members for his force.

Gen. Richard Meyers, chairman of the Joint Chiefs of Staff, cast doubt on Saleh's final appointment, telling ABC news Sunday that Saleh, along with another Iraqi general, still need to be vetted.

Some marines have bristled at the pullback, after ramping up for an offensive that appeared inevitable a week ago.

"No one wants to give up territory that they paid for with blood," says one junior Marine officer, who declined to give his name.

"I think [the Marines] are frustrated," says another. "If this fails, they're going to have to go right back in there."

It is not yet clear how the new force, dubbed the 1st Battalion of the Fallujah Brigade, will fit into the new Iraqi Army. Also uncertain is the degree of influence the former soldiers have over various insurgent groups.

The Iraqi generals, Conway says, "understand our view that [foreign fighters] must be killed or captured. They have not flinched."

Questions still remain about the makeup of this new security force. Background checks through US databases, which officers here admit are "incomplete," yielded "a few hits," said Conway. "Most of these guys may not be squeaky clean, but they're pretty clean." Any evidence that they have "blood on their hands of any sort ... could crash and burn the program," Conway added.

Still, the Iraqi officers - who were first identified by an intermediary that came to the Marines on April 20 with an offer to help end the Fallujah standoff - were "rumored to be involved in anticoalition activities, involved enough to have some credibility with the people fighting us in Fallujah," says the senior US officer. "Bringing in an exile from Amman or London wouldn't have worked. It had to be someone from their side."

Opting for the deal may have saved US and Iraqi lives, despite other negative repercussions, says Charles Heyman, a senior defense analyst for Jane's Consultancy Group in London.

"Not going in [militarily] shows an outbreak of common sense - it was the right decision," says Mr. Heyman. Still, he says, it's likely to embolden the resistance. Many Arabs now say that "Fallujah is an Arab Alamo. "We are only 24 hours into 'Free Fallujah,' and it is already moving into myth status ... that will do a lot for insurgency in Iraq and across the Arab world."