BAGHDAD - The U.S. formally transferred control of the Green Zone to Iraqi authorities Thursday in a pair of ceremonies that also handed back Saddam Hussein's former palace. Iraq's prime minister said he will propose making Jan. 1 a holiday marking the restoration of sovereignty.
Under the new security agreement between Washington and Baghdad to replace a U.N. mandate for foreign troops in Iraq, the Iraqi government also now has control of American troops' actions and of the country's airspace.
The moves came amid a dramatic fall in violence over the past year. However, insurgents still stage daily attacks and could try to expand the fight now that U.S. troops cannot take unilateral action.
Two Iraqi soldiers and three policemen were killed in attacks Thursday. In the northern city of Kirkuk, Iraqi and U.S. troops killed three suspected al-Qaida gunmen during a raid, police said.
Many of the changes inaugurated on New Year's Day won't bring immediately visible results. The Green Zone, the country's government and military command center, remains ringed by concrete blast walls and off limits to most Iraqis. U.S. troops still man its checkpoints, although now as trainers rather than leaders.
But the Americans have moved out of the Republican Palace, the sprawling former headquarters of Saddam's regime that they took over shortly after the 2003 invasion. Prime Minister Nouri al-Maliki formerly took control of the building Thursday and exulted over the security pact under which U.S. troops are to leave the country by 2012.
"A year ago, the mere thought of forces withdrawing from Iraq was considered a dream," al-Maliki told reporters afterward. "The dream that no one had the right to think about became true."
He called for making Jan. 1 a national holiday called "Sovereignty Day." Iraq already officially observes New Year's Day as a holiday.
Also on Thursday, British troops turned over to Iraqi officials the airport in Basra, the country's second-largest city. Britain says it will withdraw its approximately 4,000 soldiers in Iraq by May 31.
"Iraq is taking another step toward the future, signaling to its citizens and the international community that it is indeed a new day for sovereign Iraq," U.S. Army Col. Steven Ferrari said at a separate ceremony handing over control of the Green Zone.
The Green Zone was the most potent symbol of the U.S. invasion and occupation.
The 4-square-mile area, which nestles into the start of an oxbow bend of the Tigris River, formally is called the International Zone. Sarcastically, it's called "The Bubble" because the foreigners who live and work there often have little contact with the shabby and violent city on the other side of the 13-foot-high, reinforced concrete blast walls around the perimeter.
But the sense of security is only relative. The zone was a favorite target for rockets and mortars fired by insurgents. In 2007, the attacks were so heavy that the U.S. Embassy ordered its workers to wear flak jackets and helmets anywhere outside.
Asked whether insurgents could resume attacks now that the area is under Iraqi control, Ferrari said, "Common sense says they'll probably test the Green Zone."
The walls and the seemingly endless series of checkpoints inside have been worrisomely porous. A suicide bomber attacked the parliament's dining hall in 2007, killing one person. Suicide vests wired with explosives have been found on the grounds.
Although Baghdad is calmer now, the Green Zone is full of unsettling reminders of war. Duck-and-cover bunkers dot sidewalks under lush date palms. Walls bear signs warning drivers not to stop for any reason and frequent speed bumps force vehicles to a near crawl.
Even before U.S. troops took control of the area in 2003 and put up the walls, the neighborhood had an air of intimidation. Saddam and his sons had lavish residences there and motorists who drove through understood they shouldn't stop.
Now, Iraqi officials have their eyes on making the area accessible, inspiring and educational, even though it's not yet clear when they will feel confident enough to take down the walls.
"It depends. There are many steps to take," Iraqi Security Minister Sherwan al-Waili said when asked about prospects for opening the zone.
In July, the National Investment Commission approved plans to build a $100 million luxury hotel in the zone.
And in the next couple of months, the Iraqi High Tribunal plans to open a museum in the zone detailing the brutality of Saddam's regime. It will include a replica of the hole-in-the-ground hideout where Saddam was captured in 2004, two years before he was executed, tribunal head Arif Abdul-Razzak Al-Shaheen told the newspaper Asharq al-Awsat last month.
Violence around Iraq plunged in 2008, with attacks declining to an average of 10 a day from 180 a year ago. The murder rate in November was less than 1 per 100,000 people - far lower than many cities in the world.
U.S. military deaths in Iraq plunged by two-thirds in 2008 from the previous year, a reflection of the improving security following the American counterinsurgency campaign and al-Qaida's slow retreat from the battlefield.
According to a tally by The Associated Press, at least 314 U.S. soldiers died in Iraq during 2008, down from 904 in 2007. In all, at least 4,221 U.S. military personnel have died in Iraq since the war began in 2003.