BAGHDAD (Reuters) - Boxes full of toasters, washing machines and freezers are stacked high in front of Hashim Nur al-Moussawi's electrical equipment emporium on the edge of the Shorja market in central Baghdad.
But enter his shop and it is virtually empty, a bullet hole through his plexi-glass office window the only clue to what has befallen this once-successful Iraqi entrepreneur.
"They looted my store and kidnapped my son," the 62-year old laments. "I had to close my shop for months and pay a heavy ransom. Now the security situation is better, but I'm struggling to repay my loans. I'm in financial crisis."
Moussawi is one of hundreds of residents in this bustling district enjoying the benefits of improved security but he complains that the cuts in violence have not ushered in a promised economic revival or better government services.
Violent attacks in his neighborhood, which until a year ago was the scene of fierce sectarian fighting that killed hundreds, have fallen significantly over the 12 months.
U.S. troops rumble through daily in their Humvee military vehicles and walk the streets on foot. Green-camouflage-clad neighborhood security units, U.S.-backed "Sons of Iraq," man the main squares and thoroughfares to keep order.
Last year's increase in U.S. troop levels had the goal of making streets like those surrounding the Shorja market safer, and in that it has clearly delivered.
But the "surge" also aimed to create what U.S. officials have called "breathing space" -- a security dividend that would create jobs and growth "magnets" and allow the Iraqi government to provide essential services to all areas and communities.
The experiences of Moussawi and other residents of this neighborhood show the struggle to achieve these goals -- vital to making life tolerable for Iraqis -- will be a long one.
Sabar Leftah, the owner of a rug dealership just down the street, is happy the area has become safer. But he says recent clashes in Sadr City, a sprawling Shi'ite slum several miles (km) to the east, have made customers nervous again.
"The year started out better, but business has taken a turn for the worse again. Students are afraid to come, the curfews have hurt, more people are staying away," Leftah says.
In nearby Fadhil, an old, predominantly Sunni Arab neighborhood, residents are thankful al Qaeda insurgents no longer roam the narrow maze-like streets.
But there is also frustration that promised improvements in public services have not followed.
The United Nations said in February that 40 percent of Iraq's 27 million people have no safe water. Despite vast oil wealth, which should fuel economic growth of 7 percent this year, the U.N. has appealed for $265 million in aid for Iraq to address food, shelter, water and sanitation deficiencies.
Rivers of fluorescent green waste buzzing with flies run down the centre of Fadhil's dirt streets. The tightly packed, low-slung houses are riddled with bullet holes: some are completely blown apart by rockets or explosives.
"The sewage system just broke again and the water is no good," says Um Sara, a 31-year old mother of three, who throws up her arms in frustration as she leans out her doorway in a brightly coloured flowery dress.
Jalal Salah, owner of a tiny grocery on nearby al-Kifah street, complains that he has not had power since 2006 and must rely on private generators: "They keep promising to address this and nothing happens."
Things are happening -- just not as fast as some of Baghdad's citizens had hoped.
At a district council meeting last Thursday, a group of two dozen neighborhood representatives discussed plans to add 370 public workers and provide $3 million in equipment -- including computers, trucks, radios and bulldozers.
If the proposal is accepted, U.S. government money would fund the first three months of the project, with the Iraqi government taking over after that.
Major John Schulz, a U.S. civil affairs officer, said in the past, local leaders struggled to get their needs addressed and funded by the government.
"We're focusing on certain neighborhoods that the government higher up has ignored," he said. "You may have a situation where the guy at the power switching station doesn't like a neighborhood so they simply don't get power."
One recent project was to spruce up al-Sibaa square on what U.S. forces describe as a "fault line" between the Sunni enclave of Fadhil and heavily Shi'ite neighborhoods to the west.
With sectarian violence raging, the square had become an ugly dumping ground for trash and a hang-out for alcoholics.
Now a gleaming white fountain, mounted on lion statues, sits in the middle and boys kick a soccer ball around, giving the square an oddly sanitized look in an area scarred by fighting and poverty.
"We're making progress but it will take time," says Schulz. "The hope is that we can help make this a better country, but it may take 10 to 20 years."
Editing by Mark Trevelyan