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TARMIYA, Iraq (Reuters) - Six months ago, the Iraqi town of Tarmiya near Baghdad was a lawless al Qaeda lair, a springboard for launching attacks on the capital.
Now, people can walk the streets. Markets have flourished and U.S. soldiers patrol in relatively safety. The key reason has been the creation of a Sunni Arab neighborhood security unit similar to scores that have been set up across Iraq.
But while Tarmiya shows how effective the U.S.-backed units can be, it highlights both the strains on a program the Shi'ite-led government appears wary of embracing and the growing frustration among some guards over their long-term future.
Such units, which the U.S. military calls "concerned local citizens," first emerged in western Anbar province in late 2006 when Sunni Arab tribal chiefs rebelled against al Qaeda because of its indiscriminate attacks and harsh interpretation of Islam.
Defeated in Anbar, the militants initially regrouped in places like Tarmiya, 30 km (20 miles) north of Baghdad. Last September, locals decided they had had enough.
"There were mass killings and slaughter, disgusting things. No one could walk alone," said Imad Jassim, whose father set up and paid for the 500-strong security unit in the town.
"Two of my brothers were killed. We could not accept the situation anymore, we had to fight."
The U.S. military credits the largely Sunni Arab security units with helping reduce violence in many parts of Iraq.
About 80,000 men -- including former insurgents -- have been recruited, with most paid about $300 a month by the military.
They man checkpoints and provide tips on militant hideouts.
Attacks in Tarmiya have shrunk from 18 a day to one or two a week, Lieutenant-Colonel Tommy Boccardi, the local U.S. commander, told Reuters during a visit to the town.
"Al Qaeda fears us ... but they fear the CLCs more because they know who they are," he said, referring to the tips the neighborhood police pass on to U.S. forces.
But while the units have good ties with U.S. forces, deep distrust exists with the Shi'ite-led government, which remains wary of supporting groups whose ranks include many insurgents who took up arms following the U.S.-led invasion in 2003.
Some Shi'ite politicians -- suspecting Sunni Arabs want to regain the dominance they had under Saddam Hussein -- fear the tribal units could turn their guns on Iraq's security forces, especially with U.S. troops starting to withdraw.
In Tarmiya, mistrust was heightened when police detained Jassim's father, a local tribal sheikh who set up the unit, over accusations he was involved in violence.
He remains in Defence Ministry custody, U.S. military officials said, even though he had been cleared of any charges.
The government, which says it values the CLC program, plans to integrate about 20 percent of the volunteers into the national police force while civilian jobs are found for the rest when they are not needed, a process that has dragged.
Officials have said most of the volunteers would be on the government's payroll by mid-2008.
That has not appeased suspicions on the ground in Tarmiya, where the volunteers man checkpoints in civilian clothing.
With AK-47 rifles dangling at their side, the only thing distinguishing them from militants is a pink ID card worn around their necks or reflective clothing so they can be identified by U.S. soldiers at night.
"Where do we stand now? We want to join the police but the Interior Ministry has hampered this," said Firas Shakir, a member of the unit in Tarmiya.
"We lost many people and defeated a group which even great states could not overcome," he added, referring to al Qaeda.
An end to cooperation could jeopardize hard-won security gains. But for the time being, U.S. commanders are confident the neighborhood groups won't turn against them.
"We see them staying friendly. As long as they see some vision for the future regardless of their sect or anything else ... they are staying," said Brigadier-General Will Grimsley, deputy commander of U.S. forces in Baghdad.
The neighborhood units have also come under increasing attack from militants, including al Qaeda.
Boccardi said the unit was taking casualties. Although it does not have accurate figures, the U.S. military says attacks on CLCs have doubled since October.
"Quite frankly, they are in battle," Boccardi said.
That doesn't appear to worry the volunteers in Tarmiya.
"Since we started this job here, we have vowed our life and ourselves for this country and for God," said Whalid Mohammed, manning a checkpoint near a large advertising board for cell phones, vandalized by al Qaeda supporters who had scrubbed off the face of a woman.
Their attitude has impressed their American allies.
"We see them attacked, we see them killed," said Grimsley.
"But they come back -- that's the real measure."
Editing by Dean Yates and Jon Boyle