The ornate medal sits in a congressional safe, unclaimed by its owner. When Tony Blair arrives in Washington this week for talks with President George W Bush, he will not be dropping by Capitol Hill to pick up the honour he was awarded by Congress almost a year ago.

It is, by most accounts, a handsome gong — a large, heavy golden orb with the prime minister’s portrait engraved on one side and a flattering inscription on the other. It took months of discussion to settle on the final design — and at one point the engravers at the US Mint requested photographs of Blair that did not show his teeth.

Yet all that work has so far proved for nought. Neither Washington nor London was in a mood last week for presentation ceremonies. The renewed eruption of violence in Iraq has cast a sinister pall over the transatlantic alliance.

Officially, Blair cannot receive his medal because Congress will be closed for Easter recess. Neither side can say when an award ceremony might be scheduled. The medal has become an embarrassment as Bush and his most loyal ally struggle to convince the world that they deserve any kind of reward for their efforts in Iraq.

The transformation of the Iraqi conflict from a low-grade guerrilla insurgency to a potential religious bloodbath has shaken allied commanders and raised serious doubts about stability in Baghdad after the proposed handover on June 30 to an interim civilian government.

British and American officials both insisted last week that Blair’s meeting with Bush at the White House on Friday was not an emergency response to crisis, but a routine encounter that had been several weeks in planning.

Yet it was clear that the two leaders are facing urgent choices as they prepare for a crucial step in the tortuous drive to replace Saddam Hussein with a democratic regime.

Crack down too hard on Moqtada al-Sadr, the renegade Shi’ite sheikh whose ragged militiamen were behind much of last week’s violence, and other Iraqi Shi’ites might join the fray. Fail to control the violence, and plans for the handover might collapse, taking Bush’s prospects for a second presidential term with them.

“It’s dangerous,” a senior Washington official admitted yesterday. “If we mishandle this we lose not only Moqtada, who is a loony and a hothead, but also the rest of the Shi’ite community. And that’s a slide towards disaster.”

The most significant sign of Washington’s concern at the abrupt worsening of violence in Iraq came on Wednesday afternoon, when the Pentagon rolled out its biggest guns for a routine operational briefing.

As Donald Rumsfeld, the defence secretary, and General Richard Myers, chairman of the joint chiefs of staff, approached the lectern together, it was a reminder of the days when the country was officially at war and the Pentagon gave daily briefings on the advance of troops on Baghdad.

The war was supposed to be over, but Rumsfeld was pressed back to briefing duty to reassure Americans shaken by nightly television reports of heavy fighting in Iraq, with a consequent surge in US casualties.

Today’s enemy was “nothing like an army”, Rumsfeld insisted. “You have a mixture of a small number of terrorists, a small number of militias, coupled with some demonstrations and some lawlessness . . . it’s certainly not a popular uprising.”

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