Smoking hookah pipes and drinking beer, Sarmad Ali joked and gossiped long into the night with a group of friends in Baghdad – a luxury they could not enjoy a few months ago because of the violence.

Slightly tipsy, the young men piled into a minibus and drove to Palestine Street, until recently a no-go area after dark but now filled with traffic and pedestrians. They pulled up outside a recently opened late-night restaurant, which serves sheep’s head on bread, a favourite dish for Iraqi men after a few drinks.

Such hangouts, called pacha restaurants, closed after the 2003 invasion because people were too scared to go out late in the evening. “We were surprised to see a pacha restaurant open again,” said Mr Ali, a 28-year-old contractor. “It is a clear sign that things are getting back to normal.”

Bloodshed in Iraq, still high by most standards, has dropped significantly since August thanks to the impact of a joint US-Iraqi security plan that has resulted in a huge rise in the number of American and Iraqi forces on the streets. The boom of a car bomb, mortar attack or roadside blast is noticeably less frequent.

In one of Baghdad’s central commercial districts yesterday evening, The Times saw shops with goods spilling out on to the streets, from washing machines to watermelons. People milled around, making purchases or chatting.

Muhammad Hassoon al-Rubaie, 32, runs a store in Karrada that sells spare car parts. Last year the threat of bombs or kidnappings was so great that he dared to open only for about one and a half to two hours a day, doing the rest of his business – when there was any – by telephone.

“Now the security is very good and there is a lot of safety,” he said. Now he is able to open from 8.30am until 4 or 5pm.

Mr Rubaie also said that in his free time he travels to areas of Baghdad that were out of bounds a few months ago because of the threat of sectarian violence. “I went to Adamiyah three nights ago and was surprised by how safe it felt,” he said.

Estate agents are also enjoying a rise in trade, with Iraqis who have moved overseas returning to buy or rent properties in Baghdad. “My business is better than it has been in two years,” said Beshar Abdul Rahman, a 39-year-old estate agent. “But all of this is not enough. There are still many problems with electricity and water.”

Baghdad, which once enjoyed 24 hours of electricity during Saddam Hussein’s time, has suffered since the invasion as the country’s limited power supply is spread more evenly throughout the country. During the hot summer months many people complained of having only one or two hours of electricity a day.

As the temperature eases, demand for power also wanes meaning that families and businesses enjoy more electricity than before.

Strolling through a small park on the bank of the Tigris, Martada Tah and his friend, Ayad al-Hosar, both 17-year-old students, said that they were planning to relax on the grass near an enclosure where mothers were pushing children on swings.

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