On a road lined with shabby tents and shacks, squatted by tea sellers, phone merchants and car salesmen, Risan al-Mana occupied the raised brick platform where Ba'ath party leaders used to take the salutes of the coerced and terrified "volunteer" brigades. Then he turned it into a sales office for a dubious trade in used cars from Kuwait. So much for Saddam, and his all-powerful Ba'ath party, Mr al-Mana laughed. They were consigned to the scrapheap of history.

So was the old Safwan, or at least the version I visited a few weeks before the war that would end Saddam's brutal career. The town, a sad and flyblown place, had been sinking into lethargy for 12 years, ever since the border was closed after the Kuwait war. It had one teahouse, where the most vigorous motion was the clicking of domino tiles. The town's inhabitants, under closer than usual surveillance because they lived in the border area, were the most terrified people I had ever seen, frozen into silence by the sight of my government minder.

By the time I returned to Safwan it was nearly six months since US forces had roared across the border from Kuwait, and I was no longer required to travel with a minder. From the border towns of Safwan and Umm Qasr, the US columns had advanced north along the Euphrates river, rising from the flat, featureless desert to the isolated stands of palm trees and the fertile plains before curving eastwards to Baghdad. On April 9, they entered the capital's Firdowz Square, where a crowd looped a noose around a statue of Saddam and broke it off at the knees.

The moment, recorded by a legion of cameras, came to symbolise the end of the regime. But what has risen in its place? Are the forces which now occupy and control Iraq building the foundations of the modern state they promised, or laying the foundations for another version of the old, repressive regime? My route, as I retraced the road to Saddam's ruin, took me through the southern heartland of the Shias, the despised and neglected majority of Iraq. It crossed sectors controlled by British, American, Italian, Romanian, Dutch, Bulgarian and Polish troops. It led past charred and contorted Iraqi army vehicles sinking into the sands, government buildings and army installations reduced to powder. But there was a more fundamental destruction.

Iraq under the US-led occupation is a fearful, lawless and broken place, where murder rates have rocketed, 80% of workers are idle and hospital managers despair at shortages of IV sets and basic antibiotics. Police are seen as thugs and thieves, and the American and British forces as distant rulers, more concerned with protecting their troops than providing security to ordinary Iraqis. The governing council they created is simply irrelevant. A mile away from one of the richest oilfields on earth, the queues at petrol stations stretch for hours. "We completely underestimated how broken this system was," says Andrew Alderson, the financial officer of the British-led administration in Basra.

Gratitude at having been freed from Saddam has given way to resentment and mistrust in a part of Iraq that could never remotely be considered as Ba'ath country. Compared with Baghdad, the south is an occupation success story. Apart from Basra, where there have been sporadic attacks on British forces, the foreign troops in the south operate in relative security.

None of the towns has a night curfew and, aside from in Basra, there was relatively little looting at the end of the war. In Nassiriya, the first town in Iraq with 24-hour electricity, Italian soldiers patrol without helmets. There has never been an attack on US forces there.

And for good reason. Almost every person I met along the way had had a member of their immediate family jailed or executed by the regime, or had been jailed themselves. Some were exiled, but returned in the wake of the US invasion with their hopes for a new Iraq.

All were thankful to be rid of Saddam, but months after that cataclysmic event they detect few dividends from the occupation. "You have done very little for the people of Iraq," says Salaam Daoud Salaam, an English teacher in Basra. "Yes, you removed that man from power - a very good thing. But what about the rest? We haven't felt that meaning of liberty. It lasted just for a few days, but then our suffering is coming back."

Benefits, when they did arrive - a partial restoration of electricity, and a gradual reduction in crime - were seen as miserly and overdue, a betrayal of the promises made by Britain and America to build a new Iraq, prosperous, modern, and free.

Saddam's Republic of Fear, the mechanism of iron controls that held the state together, was gone, but its replacement is a violent chaos. The void created by the defeat of Saddam's highly centralised one-party regime has empowered religious extremists, political gangs, tribal chieftains, criminals and speculators, the venal and the corrupt. These are the men profiting in the new Iraq. The knock at the door at night is no longer a member of Saddam's secret police, but it could very well be an armed robber, an enforcer from a political faction, or an enemy intent on revenge.

For men with strong nerves, like Mr Mana and his nephew, Yusuf al-Ghanem, there is still money to be made. One of the features of the new Iraq is the porosity of its borders, not only with Kuwait, but Iran, Saudi Arabia, Jordan and Turkey, and the explosion of smuggling: sheep and stolen oil to Kuwait, drugs from Iran, and guns and extremists from several directions. Mr Mana has exploited the postwar chaos to do a roaring trade in used cars from Kuwait.

Most of his models are from the 1980s. A Chevrolet Caprice - the car of choice for Iraqis - sells for perhaps $800 (£500), and he moves up to 15 cars a week. That's a substantial amount of money in today's Iraq, but it carries enormous risks.

A number of the drivers bringing the lorries from Kuwait have been murdered and robbed of their cargo. Nearly every day Mr Mana is asked to moved on by the British forces, who control the southern zone of Iraq, threatened with death by business rivals, or visited by the local Iraqi police. "They think we are doing business in an illegal way but they should know that in Iraq, everything is illegal," he says.

Such annoyances are part of the price of doing business in today's Iraq. It is, he says, "a time of great danger, but also of opportunity".

The dangers are readily apparent in Basra, Iraq's second city after Baghdad. It also ranks second in terms of its problems: a capricious electricity supply, kidnappings, carjackings and revenge killings, marauding tribesmen from the countryside, a more generalised lawlessness and economic paralysis.

The day I arrived in Abul Haseeb, on the south-eastern edges of the city, the mourning canopies had gone up, and the Sunni minority was preparing to bury five members of the Augebi clan. The mood was less one of grief than revenge.

The gang that had descended on the small plot of palm trees belonging to the Augebi clan some nights before had not bothered to hide their faces or their names. Armed with AK-47s, and with a captured member of the clan in tow, they burst into the hut of Shaab Ahmed Ismail al-Augebi, 52, dragging him out with his two adult sons, and a boy, Ibrahim, 13.

It was five days before all five bodies turned up, horribly mutilated. Three had been splashed with acid and dumped in a pit of diesel and water at a fertiliser plant 15 miles away. The motives for the attack remain murky, but Assad, one of Shaab's surviving sons, swiftly turns accuser. "The main reason they came here is because we are Sunni. We pray at the mosque and we wear beards," he says, and then names the gang leader, an enforcer from the Islamic Dawa party, one of the most powerful Shia groupings of the new Iraq. "It's hell now, what we are living through," he says.

In the party's offices in the heart of town, a property purloined from the departed Ba'athists, the local Dawa chief is noncommittal. "A lot of gangs and bad people are using the name of Dawa party," says Hassan al-Saadi. "But they are not Dawa." However, he goes on to warn of the dangerous import from Saudi Arabia of the radical Wahabi strand of the Sunni faith, and suggests the Augebis are followers.

Whatever the force behind the murders - thugs from the Dawa party, the fallout from a struggle between radical Shias and Sunnis, or personal enmities that have yet to come to light - it is clear to all what the murders could produce: revenge and more killing, the explosion of tensions barely contained since the war.

The murders are deemed sufficiently provocative to appeal to the mediation services of a higher authority.

That is definitely not the British, whose forces control the sector and are nominally the rulers here, but a local religious leader, or more properly, his brother, Abdul Radha al-Moosawi. Beneath the huge glittering chandelier of the Moosawi mosque, a collection of domes that is the largest in Basra, Mr Moosawi, an urbane man who normally devotes his energies to the family's date farm, is unusually ruffled. "This has a deep danger if you look in all directions. It will have a very bad effect," he sighs. "I believe the target is to destroy the social fabric of the people."

Longing for the stability of old is never far from the surface in Iraq, and understandable in the present chaos. But it is not mere nostalgia. My next stop is beneath a burlap tent where a tribal chieftain, Ali al-Ghazi, is holding court, peeling off $100 bills for supplicants and overseeing the preparations for lunch for 300. In these parts, near the town of Nassiriya, there is no more powerful authority.

The town straddling the Euphrates saw the first serious clashes of the war on March 23, when US convoys were ambushed and 18 troops were killed. A few months before the war, Mr Ghazi threw in his lot with the US invaders. His men, equipped with Thuraya satellite phones from the Americans, fed information on Iraqi troop positions to the CIA, and his brother, Taysir, took two bul lets in the shoulder around the time the convoy was attacked. Now, it is payback time.

After suffering in a neglected backwater during Saddam's time, Nassiriya's new rulers have yet to appoint a provincial governor, or to consolidate a new police force. The local elected council has no money. That has given the Ghazis and other tribal leaders a free run as arbiters of disputes, and dispensers of justice according to the ancient tribal laws of revenge and retribution. In the months since the war, the clans have sanctioned the revenge killings of about 50 Ba'athists in Nassiriya. There would have been far more but for the new-fangled notion of settling old scores with cash.

The system of keeping order is imperfect. The day I met the Ghazi clan, a local businessman turned a gun on the manager of the local television station, demanding it put his advertisement on air. A few days before that, a local enforcer from an Islamist party, meant to be providing security to the town hospital, rampaged through the wards, beating up two male nurses and firing shots in the air outside the cardiac care unit.

"You can sit in the hospital from 7pm to midnight most nights and watch the emergency room turn into a bazaar," says Imad al-Din, the deputy manager. "Some people come injured after fights. Some people come injured after trying to stop someone stealing their car. Some people come as drunkards."

The atmosphere of lawlessness is even chipping away at the authority of the tribes as a younger generation grows impatient with the rituals attached to avenging old injury. At the Ghazi tent, an elderly chieftain notes with dismay: "The young people are so hasty nowadays. They don't follow the rules."

Still, the Ghazis are not about to jump to attention when the police come calling. "They don't deserve our respect," Taysir says, and describes two episodes when police officers questioned the rightful ownership of vehicles driven by members of the tribe. "I told them that if they don't give back the car, we will take one of theirs," he says.

The Nassiriya police see little choice but to acquiesce. They say they are afraid to patrol without enforcers from the tribes or the city's political factions. "Every time we try to make an arrest they threaten to kill us," admits one police captain. So the police back off.

No one dares to challenge the threat to the emerging institutions of Iraq. Instead, the power of the tribes is being reinforced and legitimised. On this day, a handful of important visitors make their way to Mr Ghazi's tent: two British representatives from the provisional administration, and Mowaffak al-Rubaie, a physician who returned from London to become a member of the Iraqi governing council. "The centre has no influence, not compared to the previous regime, so we are trying to give them that sense that there is a government," Mr Rubaie says. "What I came here for first is to show that the IGC cares."

What he came for second was to formalise a tribal role in the police force, or at least extract a promise from the tribes to obey the law. Mr Ghazi is unimpressed. "We, we will keep order and security in our region," he says, and dismisses the IGC. "We have no need for them. They have need for us."

The resurgence of traditional forces has dismayed Iraqis, and disoriented those exiles who returned believing they could rebuild lives interrupted. "I spent the last 20 years outside Iraq, and now it's a different country. It has been a big shock," says Adil al-Ageli, an official in the local administration of Najaf. The Agelis were among thousands of Iraqis expelled by Saddam, who branded them foreigners because their families trace their roots to Iran. Almost all of the acquaintances and friends who arrived with Mr Ageli in the first optimistic days after the war have returned to Syria and Iran, convinced they no longer have a home.

For Mr Ageli's son, Ali, the dislocation is intense. The child is dismissive of the family's original home in the holy city of Najaf. By the standard of today's Iraq, Najaf is having a revival, with Shias eager to practise their faith after the repressions of Saddam. In the town's market, TV sets blare images of men beating their chests and chanting, and the pilgrims from Iran, India and inside Iraq throng to the shrine of Imam Ali, despite the devastating car bomb attack at its portals in August, which killed scores of people and a leading Shia cleric.

But for Ali, there is only chaos. There are no sports teams, no public parks, no friends. "I don't like the children here. I can't like them. I met adults, and I liked them because they tell me what I can and cannot do, what is yes and what is no, but the kids my age don't care about any of this," he says. "They are so rough."

Mr Ageli looks on, sad-eyed. He shares his son's misgivings, but he has sold their house in Syria and his savings have run out. In the meantime, he is disturbed by the growing rivalry between Shia clerics over control of the holy shrines of Najaf, and their coffers. A few mornings ago, the armed followers of a relatively upstart cleric called Muqtada al-Sadr turned up at a shrine in the adjoining town of Kufa. As pilgrims watched aghast, the thugs from Sadr's so-called Mahdi army beat and chased away the men who have been hereditary custodians for the site as long as anyone in Najaf can remember.

They then took control of the strongbox where donations from pilgrims are gathered, shearing off the three locks from the finance ministry, the community charitable trust and the keepers, which had served to regulate the funds for years. The bonanza was estimated to be worth several million dinars a week, enough for a steady supply of AK-47s. All of Najaf is talking about the affront.

Locals, or at least the wealthy ones, see Sadr's followers as an ill-bred rabble, because he draws much of his support from the poor slums of Baghdad. In the wake of the takeover, there is talk of a full-on battle for supremacy between the upstart cleric and more established religious leaders. "No one tried to usurp us, not even Saddam himself," says Ali al-Kufi, one of the hereditary keepers of the shrine.

But in the new Najaf, there was no one equipped to stop them - not the police, and certainly not the clerics, who are engaged in their own power grabs. "The destruction didn't happen only to Iraq as a state, but it touched their very souls," Mr Ageli sighs. "We can rebuild the state of Iraq, but for our souls there is no way." Ali seizes the moment: "Does this mean we can go back to Syria or Iran?" he asks.

After the social fragmentation of Basra, Najaf and Nassiriya, I had been looking forward to Hilla. Built near the ancient ruins of Babylon, the town lies on the eastern bank of the Euphrates, within striking distance of Baghdad. The US forces forded the Euphrates on March 31, moving swiftly to take the capital's airport on April 3, and consolidating their hold six days later. While Baghdad descended into violence and looting, the people of Hilla took their destiny into their hands. They looked to the future as well as the past, establishing a local administration and setting up a commission to excavate the mass graves outside town, perhaps the largest collection of Saddam's murdered victims.

Ask anyone in Hilla, and they will say: "You can't find a city better than this." Police patrol at every junction, the criminals are on the run. Power remains intermittent, but adroit management of supply has allowed the factories to get back to work. On the edges of town, the vast Babylon textile mills, with 2,800 employees, have rumbled back into production, although they are running at half capacity.

In the centre of town, at the blue and white-striped headquarters of the Babylon governate which houses the department of martyrs and missing persons, Captain Amer Mahmoud al-Shemari toils into the night. It is hard to know what prepared Mr Shemari for this job in his previous existence. He fled Iraq on a forged passport in 1985 after completing his military service. He returned two days before the start of the war, confident that Saddam would fall. During the intervening years, he lived in Jordan, Syria, Lebanon, Qatar, Oman, Iran and Dubai. He worked at a factory making oil soap (in Jordan), as a car mechanic (Syria), and as a secretary (Dubai).

During his first full month of work in Iraq, last May, he oversaw the first exhumation of Hilla's mass graves, a time when they were digging up 100 to 150 corpses a day. Most were young men, seized at random and killed without trial or mercy after Saddam's troops reasserted their control over Hilla following the 1991 uprising. But workers also dug up the corpses of old men, and of women clutching their babies in the folds of their now crumbling abbayas.

That particular grisly task has stopped now. Mr Shameri says he can not continue digging without proper equipment. There are about half a dozen additional gravesites around Hilla. At the first site unearthed, at the back of a farm north of Hilla, the unidentified dead have been reburied, with their bloodied scraps of clothes placed atop small mounds of earth.

In the interim, he is trying to notify families of the dead. On this evening, Saida Hathem al-Reda has arrived to pick up the black-bordered slip of paper that will at last enable her to obtain a death certificate for her husband, Mohammed Abid al-Tufaili. Like many of the thousands killed by the regime in Hilla in the dying days of the intifada, Mr Tufaili was not in the least political. He went out to buy groceries and never came back. His wife, an illiterate and unworldy village woman with four small children, made the rounds but there was no word until his body was recovered in June. "Every day I said tomorrow he will come," she says. Now that she is certain of his death, she says: "What kind of difference will it make?

What good does it do if I get angry or upset?"

Mr Shameri tells her that atrocities will never be repeated. He says Iraq's new rulers - when they emerge - will be guided by the suffering of the past, and chart their way to a better future. "I am quite sure that nothing like these crimes will happen in the future because all the people in high positions have been damaged under Saddam Hussein so that they can feel what happened to the people," he says. "They will deal with others in a more compassionate way."

But it is difficult to see how the disorder fostered by the occupation is preparing the way for such an state.

At no point in my journey did Iraqis mention the US-appointed governing council as a potential force for good. Although southern Iraq is relatively quiet in the absence of any real authority, it is hard even here to sustain hopes for a stable future. At the casualty ward of Hilla's general hospital, gunshot and stab wounds have tripled since May. Nowhere is safe in the end.

The neighbourhood of Nuab Dubat is a dreary row of hovels built to house the soldiers from the adjacent Iraqi army base. One is the home of Ali al-Meyahi, who was a member of the Republican Guard, meant to be Iraq's premier force. Like the other 400,000 members of Iraq's army, he lost his job at the end of the war. Now he faces the prospect of losing his home. The base has been taken over by Polish soldiers, and the night before three mortars intended for those forces landed practically on Mr Meyahi's doorstep.

Shrapnel perforated the blue front door of his house, injuring his son Ahmed, 10, and daughter Safa, 12, who were sitting on the wooden bench at the back of the house. The children were only lightly wounded, but when a Polish soldier looms in the doorway, offering medical treatment at the military ambulance parked outside, Ahmed screams in terror.

Mr Meyahi shakes his head. In his 21 years in uniform, he says he was always a reluctant soldier, more so after the regime killed his uncle and a cousin in the purges of 1991. When he was ordered to defend Baghdad, he melted away during the night of shock and awe on March 21, and went home to await the peace. Instead, he lost his job, and watched his finances dwindle.

As the months passed, he sold the bedroom set and his wife's jewellery. The family's only assets now are the television and the refrigerator, gifts from his wife's parents. After half a lifetime serving the regime he dreaded, he does not fancy his chances in the new Iraq. "When the war started, we thought our dream would come true, that the coalition would come to liberate us. That is why we left fighting. We were looking forward to having a better situation, but what we have seen until now leaves us without hope," he says.

It's hard to shake off the despair that descends as I draw nearer to Baghdad, and the end of the journey. I stop in the town of Mohawil, 30 miles from Baghdad. Last April the troops paused here for just 37 minutes before pushing onwards to victory. The new mayor of Mohawil, Wasil al-Shameli, returned with them from exile in circumstances that he was not prepared to describe. But he offers his explanation for the violence and disorder that has descended on his country.

"It's true there was a horrible regime, but there were government departments, and offices working. But after the war and the looting, all the government institutions were destroyed, and it happened suddenly. It left Iraqis feeling naked," he says. "This was also complicated by the fact that we had an entirely military way of change. So of course we have a jungle now, and jungle law."

After an elegant dissection of the chaos of the present, Mr Shameli sketches an even more depressing scenario for the future. At his mayor's desk, beneath the empty picture frame that once held a portrait of Saddam, he says he has given up hope of building the political and legal institutions that could transform Iraq into a law-based society.

"It will not be a society of institutions because the Americans are allowing tribalism and religious extremists to take part in this society, so of course it will affect the future," he says. "If the forces of modernity retreat in the face of tribalism, it will create another dictator, another Saddam."

He pauses. "I am so, so sad. I am so sorry. I am one of those citizens who hoped to build another culture for Iraqi society. Now I have started to feel that we are returning to the 1920s."

There seems little more to say, and we take our leave. Mr Shameli invites us to return some day, but he isn't sure how long he will be mayor.

From Mohawil, it takes less than an hour to reach Baghdad. The car passes through a few crumbling towns, and soon an entire expanse of wrecked Iraqi army vehicles appears on the left side of the road, the detritus of the regime. It gives way to the brash concrete pillars of an American army post, and then we are speeding on one of the raised highways into Baghdad.

In Firdowz Square, since I was last there, a new statute has been erected in place of the toppled Saddam. It is a female figure rising from a green mass of algae to hold up a sun and a crescent moon. The sculptor has said it is meant to be a symbol of hope and renewal for the new Iraq.