By Paul Reynolds
World Affairs correspondent, BBC News website
The confrontation between British troops and Iraqi police and militia in Basra shows not only that the cosy image of the British presence in Iraq has faded but that the mission of the troops is becoming unclear.
A timetable for handover to Iraqi security forces is in doubt
The troops are supposed to be holding the ring while Iraqi security forces are built up.
But if the Iraqis to whom the British are due to hand over security control are themselves unreliable, the strategy is gravely weakened.
Security is one of the two hinges on the door marked "exit". The other is constitutional government.
Neither hinge has been screwed into place. Until they are, the door will not open and the British government will not declare a timetable for withdrawal. Nor does the Iraqi government show any signs of asking the British, let alone the Americans, to leave.
Under the most optimistic timetable offered by the British government, troops could start a drawdown next year. But first the constitution must be approved in October, a new government elected in December and the local security forces must show an ability to control their areas.
Earlier this year, the British plan was to hand over security in two southern provinces by December and the other two next year. Now it appears that this plan is up in the air.
The situation for the British troops is getting more threatening as local Shia militias vie for influence and power - the troops are getting drawn into the conflict.
The way that police in Basra handed over the two captured British soldiers to a militia does not bode well.
It has long been obvious that insurgents and militias have infiltrated the Iraqi security forces. In Basra, numerous reports have spoken of police being subject to outside influences.
Now Iraq's National Security Adviser Muwafaq al-Rubaie, in an interview about the events in Basra, has admitted this to the BBC.
He said: "Our Iraqi security forces in general, and these in
particular and in many parts of Iraq, I have to admit that they
have been penetrated by some of the insurgents, some of the
terrorists as well."
The situation for the British troops is getting more threatening as local Shia militias (separate from the Sunni-led insurgency of the al-Qaeda leader in Iraq, Abu Musab al-Zarqawi) vie for influence and power. The troops are getting drawn into the conflict.
One threat comes from the Mehdi Army, a militia controlled by the radical Shia cleric Moqtada Sadr. He has always opposed the occupation.
A local Mehdi commander Ahmed al-Fartusi, suspected of organising attacks on British forces, was arrested by British troops a week ago and it is that arrest which probably prompted his supporters to confront British troops. They found a ready cause when two undercover British soldiers were captured by the Iraqi police.
The very fact that an undercover operation was under way shows how precarious the security situation in Basra has become. The softly-softly approach has its limits.
The British fear was that the two soldiers would be held as hostages for al-Fartusi. Hence the rapid operation to free them.
But another more shadowy threat has been reported recently.
This is said to come from a fighter named Abu Mustafa al-Sheibani. The Americans and British claim he is backed by Iran, which wants to exert its influence in southern Iraq.
Little is known about him beyond a report in Time Magazine based on intelligence briefings in Baghdad.
Al-Sheibani is suspected of being responsible for roadside bombs which killed three British soldiers in July and possibly more recent attacks which have seen three other soldiers killed this month.
The bombs used by his group are said to be similar to those of Hezbollah, the Lebanese group supported by Iran.
It is not clear if al-Sheibani's small force (put at fewer than 300) is a one-off threat which can be contained or the start of a more general movement.
Desmond Swayne, a British Conservative party MP who has served as an army officer in Iraq cautioned against too much pessimism:
"There's been a great deal of reconstruction in Basra. There has been trouble on and off in Basra going back to the summer of 2003.
"There have always been incidents and this week's events obviously are deeply regrettable and very worrying. But remember nothing is ever quite as bad as first reported."
It is an old dilemma. It happened in Northern Ireland where the troops were at first welcomed as saviours by the Catholic/nationalist people but then became targets for those who wanted them out.
It happened when Britain was leaving Aden in the 1960's. There, too, the idea was to hand over to local security forces but the plan broke down when irregular groups took over.