The outgoing British commander of troops in Basra, Maj Gen Barney White-Spunner, has described the city as happy and more secure, a place where property prices are doubling and refugees are returning.
BBC Baghdad correspondent Crispin Thorold asks if Iraq's economic powerhouse really has changed that dramatically since government operations against the Mehdi Army earlier in the year.
In the days before the British officially handed over security control of Basra to the Iraqi government the House of Iraq launches new offensive against al-Qaeda fighters ...
Amnesty International slams rich countries on Iraq ... Commons Defence Select Committee issued a damning condemnation of the state of Iraq's second city.
The MPs argued that the British army had failed to secure Basra.
"The relative security of Basra is said to owe more to the dominance of militias and criminal gangs, who are said to have achieved a fragile balance in the city," concluded the report.
'Fragile balance'
Since then there has been a major shake-up of the power structures in Basra.
The Iraqi security forces, with strong backing from the US and to a lesser degree from the British military, removed the Shia militia, the Mehdi Army, from the streets during operations in March and April.
Iraqi army checkpoints are in place throughout the city and locals say that the black-clad gunmen who terrified an entire population are nowhere to be seen.
"Basrawis realised what a nightmare, literally, that was," said Maj Gen White-Spunner.
"[Local people] have got better things to do now with their lives and I do not see Basra coming back under militia control. Those days are passed," he added.
Strolling couples
Many of the people we have spoken to in Basra agree with much of what the British general said.
Anecdotal reports suggest that violence against women has dropped dramatically.
Couples are walking arm-in-arm and enjoying the local parks.
In the evenings restaurants are busy and there are now regular buses to Baghdad, including overnight services.
There are even suggestions that some shops selling alcohol have quietly reopened.
"The situation in Basra is very stable," said Falih Hamood, from the Iraqi Red Crescent.
"Sunnis, Christians and other religious minorities are coming back."
Since March's military operations the Iraqi army has been operating checkpoints all over the city.
Barbers attacked
Like Baghdad's residents, Basrawis complain of the traffic jams these create, not the chaos that once dominated.
Some warn though that despite the undoubted improvements that this year has brought, there are still many reasons to remain concerned.
In the past few weeks gunmen travelling the city on motorcycles have attacked hairdressers (for shaving off men's beards) and alcohol shops.
"A few months ago some people tried to hold large parties in the city," said one young man.
"They had a band, which was playing music but they had to stop when they were attacked by the militias."
There are also fears that the provincial elections scheduled for later this year may bring political violence.
Widespread corruption
A local journalist warned that "there have already been a couple of assassination attempts against political and religious figures in Basra".
Throughout the country Iraqis argue that long-term stability can only be guaranteed when economic progress takes hold.
The British government says that investors are returning to Basra encouraged by the city's strategic importance in a major oil-producing region and as Iraq's gateway to the Gulf.
But corruption is still widespread.
"All the local people have bad relations with the politicians," said a translator in the city.
"Everyone knows that they are stealing money. When the roads are resurfaced the quality [of the tarmac] is very bad. We are seeing a big robbery."
More than anything else it is the militias that most Basrawis fear.
The Iraqi security forces may be on the streets, as are American soldiers, but many local people remain convinced that one day the militias will once again control the city.
"The militias are still there, they are just hidden," said one man.
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(BBC)
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