(CNN) -- A year after President Bush ordered nearly 30,000 additional U.S. troops into Iraq, American and Iraqi officials said there has been a drop in violence and some baby steps toward political reconciliation, but they see no cause for celebration.
A U.S. soldier patrols an Iraqi neighborhood in an area west of Baghdad earlier this month.
"There have been significant steps forward. There's been quite a bit of progress against al Qaeda in Iraq and against other extremist elements," said Gen. David Petraeus, the top U.S. military commander in Iraq, speaking in an interview last week with a radio station.
"But having said all that, again I want to be very cautious upfront and note that there's nobody here doing victory dances in the end zone or talking about 'turning the corner' or 'seeing lights at the end of the tunnel,' " Petraeus said. "There's still a lot of hard work still to be done."
Bush announced his deployment plan in January 2007 aimed at stopping the violence long enough for Iraq's Sunnis and Shiite leaders to work out some kind of power-sharing agreement.
U.S. troops began arriving the next month when the Baghdad security crackdown called Fardh al-Qanoon, or Operation Enforcing the Law, started.
Neighborhoods were walled off, and U.S. troops took up permanent posts alongside a bulked-up number of Iraqi security forces.
As more troops arrived, they established belts around Baghdad and uncovered locations where insurgents took shelter, assembled car bombs and staged attacks, the U.S. and Iraqi militaries said.
U.S. and Iraqi officials said the troop increase has resulted in significant declines in violence and improvements in the performance of many Iraqi soldiers.
At the same time, reporters in Baghdad note that the city remains a perilous and unhappy place to live.
Residents still fear and brave attacks and are on edge for a dramatic suicide bombing or another wave of attacks and kidnappings.
The sewage system is crumbling. The electric and water service is patchy, and the water quality is poor, with cholera rearing its head late last year. The disease has died down since, but authorities said it may appear again during hotter weather.
Military officials, however, have been reporting signs of improvement. Watch how life has improved in infamous Fallujah »
Gen. Abboud Qanbar, head of the Baghdad security plan, on Saturday said the operation has reduced violence in the capital by 75 percent to 80 percent. The crackdown also has allowed displaced people from the war to return home, he said.
Rear Adm. Gregory Smith, a U.S. military spokesman briefing reporters Sunday, said there were 11 terrorist attacks a day in Baghdad last month compared with 28 in February -- and a peak of 46 in June. And more weapons caches are being seized, he said, in part because of tips from Iraqis fed up with indiscriminate violence that often targets innocents.
An example of the improvement is on Baghdad's once-volatile Haifa Street.
On a recent walk through the area, CNN's Michael Holmes saw a bustling market, a big difference from a year ago.
Residents' chief concern is that violence can re-assert itself and destroy the new mood. But for now, they said, their neighborhood is vastly improved.
"This place was abandoned -- no shops, nothing," said store owner Jasim Muhammad Saleh. "The terrorists kept weapons here. There was a lot of killing. Now it's a meeting place for honest, good people to shop."
Such drops in violence have led to steps toward political reconciliation, according to government officials, even though many observers said they believe some of the touted legislative developments in recent weeks have been superficial.
Recent legislation paved the way for some former members of Saddam Hussein's Baath Party to return to public life. Last week, parliament passed laws addressing amnesty for some detainees, provincial powers and a budget.
"We are indeed seeing the signs of that political surge," said Ryan Crocker, U.S. ambassador to Iraq, speaking to reporters last week. "Putting all of that together would have been just unthinkable six months ago."
Leaders also have been bringing more disaffected Sunni Arabs -- a minority group that once prevailed under Hussein's leadership -- into Iraq's political fold.
Thousands of Sunnis have been enlisted in anti-al Qaeda in Iraq groups now called Sons of Iraq. These Sunnis -- many of whom are former insurgents -- are helping U.S. and Iraqi forces in their fight against the predominantly Sunni al Qaeda in Iraq. The trend -- called the "awakening" movement -- first emerged among Sunni tribes in Anbar province, west of Baghdad.
Another key factor in the drop in violence came in August when popular cleric Muqtada al-Sadr suspended the activities of his Mehdi Army, a hard-line and popular Shiite group, for six months. Al-Sadr on Friday extended the cease-fire for another six months, his office said.
The move has helped reduce assassinations and battles sparked by Shiite infighting in Baghdad and the southern Shiite heartland.
Shiite militants who have rejected the cease-fire, as well as the arms and training from neighboring Iran, remain a problem for the military. But the U.S. and Iran, longtime adversaries, have engaged in talks hosted by the Iraqi government that have worked to address the violence.
Casualty numbers also are down because of the demographic shifts that have made mixed neighborhoods either all Shiite or all Sunni. Dozens of areas have become brutally sealed-off cantons as a result of sectarian fighting.
With progress reported in the Baghdad region, the U.S. and Iraqi military lately have turned their attention on a new hot spot -- the northern city of Mosul, where some Sunni militants are believed to have migrated.
A diverse city of more than 1 million Kurds, Shiites, Sunnis and Christians, much of the city is peaceful. But there are pockets that resemble battlefields, places where hard-core insurgents are hoping to set up shop.
A research paper issued last week by Anthony Cordesman of the Center for Strategic and International Studies summed up the state of affairs in Iraq.
"No one can spend some 10 days visiting the battlefields in Iraq without seeing major progress in every area," the report said. "If the U.S. provides sustained support to the Iraqi government -- in security, governance, and development -- there is now a very real chance that Iraq will emerge as a secure and stable state."
He said improvements are needed in many areas: bettering governance, countering corruption, developing rule of law, staging legitimate elections, defusing ethnic hot spots such as Kirkuk and the Turkish-Iraq border, and "moving towards full development and sustained employment, and for a fair sharing of petroleum wealth and resources."
"Serious threats can still bring defeat or paralysis over the coming years, although this seems significantly less likely than during the fall of 2007," Cordesman said.
But he added, "It will take strong U.S. involvement throughout the life of the next administration to succeed, and it may well take U.S. aid through 2016."
All the brigade combat teams deployed during the troop increase are expected to leave Iraq by summer without replacement, Lt. Gen. Carter Ham, director of operations for the Joint Chiefs of Staff, said last week. Ham said it is likely that the number of U.S. troops will be a little bit larger than the 132,000 or so on the ground before the increase began.
The military said it hopes the added number of Iraqi soldiers and the Sons of Iraq members will help sustain the progress. Petraeus recommended a "pause" in troop withdrawals after their forces return home, which Defense Secretary Robert Gates said is a good idea.
A senior U.S. military official in Baghdad said recently that Petraeus feels strongly there should be a period of review before he makes any decisions about additional troop withdrawals.
The official said there is "no determined length" of the pause, but Petraeus wants to "let the dust settle" from the first round of reductions so he can assess the security situation. E-mail to a friend