MOST of Baghdad’s street lamps went on last week for the first time in years. It was a small improvement in the quality of life, but in the twinkling light the Iraqi capital looked a little less menacing and a lot more familiar.

Ahmed Chalabi, the former darling of American neoconservatives who lobbied hard for the overthrow of Saddam and later became deputy prime minister, toured the city with quiet satisfaction. The street lamps were the clearest sign yet that the reconstruction of Baghdad, a city of rubble, concrete and blast walls, is not a forlorn hope.

In a remarkable political comeback two years after he failed to win a seat in the Iraqi parliament, Chalabi has re-emerged as a key player who could determine whether President George W Bush’s effort to secure Baghdad succeeds. Earlier this month Nouri al-Maliki, the Iraqi prime minister, put Chalabi in charge of restoring essential services to the capital.

If 2007 was the year of security, 2008 will be “a year of reconstruction, a year of infrastructure repair and a year of — if there is going to be a surge — a year of the surge of the economy”, General Joseph Fil, the US commander in Baghdad, said last week.

“The Iraqi people have decided they are up to here with violence,” he said, and their demands for jobs, water and electricity have multiplied.

Chalabi’s role is to bypass the cumbersome government bureaucracy and work directly with Iraqi ministries and the US military to provide the basic services that are desperately needed but in short supply.

“I am not saying that I can fix the problems on my own. There are always risks that come with an enterprise like this, but we’ve got to face them,” Chalabi said, aware that his political career is once again on the line.

A close aide said: “It is a tricky situation politically for him. If things don’t improve, he will get the blame, but if he succeeds, others will take the credit.”

The Iraqi capital looks tired after the beating it has taken for the past 3Å years. The date and palm trees have lost their lush green hues and are covered with a layer of dust from the debris of streets shattered by bombs, grenades and missiles.

People carry on their business as quickly as possible by day before scurrying away to leave the streets deserted after 8pm.

This remains a city where sectarian violence can flare at any moment.

Yet the violence in Iraq is abating. The number of attacks against American troops has fallen to its lowest figure since the bombing of the Shi’ite Golden Mosque in Samarra in February 2006.

Last spring US troops were dying at a rate of 110 a month. Last month the figure was 38. Civilian deaths are down from 2,076 last January to 758 last month. More than 46,000 Iraqi refugees returned to their homes during October, although more than 2m remain abroad, according to the Iraqi Red Crescent.

The threat from Al-Qaeda has been virtually eliminated, according to Fil, who said roadside bombs were down 70% from their peak.

“Clearly, it will take some time for Baghdad to restore itself to what it was,” the general added. Stability was “within sight but not yet within touch”.

When an extra 30,000 US troops poured into Iraq last spring, General David Petraeus, the US commander in Iraq, promised that the surge would be accompanied by economic reconstruction.

Districts cleared of insurgents were supposed to see better rubbish collection, sewage disposal and jobs for residents, but only now is the US military in a position to start delivering on that promise.

The Bush administration hopes that improvements in the quality of life will persuade Iraqis to invest in political reconciliation, one of the most elusive components of the surge.

Chalabi, 63, is one of the few senior politicians in Iraq with connections across the sectarian divide. “The key is going to be getting concerned citizens — all the citizens — feeling that this government is reconnected with them,” Petraeus said recently.

Chalabi agrees. A Shi’ite, he was blamed for goading America to war on bogus intelligence about weapons of mass destruction and went on to be accused of passing US secrets to the Iranians. Yet he has become an indispensable Mr Fix-it in a nation where civil society has broken down.

He still sees Grand Ayatollah al-Sistani, the Shi’ite spiritual leader, and is relatively trusted by the radical cleric, Moqtadr

al-Sadr, who has sought his advice on several occasions during the past three years when his Mahdi Army has run into trouble. Sadr called a ceasefire in August, which appears to have had a dramatic effect on the number of sectarian killings in the capital.

Sunni tribal leaders who denounced Chalabi as a stooge of the Americans now visit his fortified compound in Mansour, a plush suburb of Baghdad, hoping his influence with the American military will secure them extra resources to fight the remnants of Al-Qaeda.

Chalabi lives outside the protective bubble of the international “green zone” and has cultivated the air of a can-do politician who is not beholden to any faction.

He travels the country in a heavily protected convoy, cajoling Sunni tribal leaders into taking back Shi’ite refugees and finding out what services are required in each area.

His latest reincarnation began when he was appointed last February to head a committee which aimed to win popular support for the troop surge. It was Chalabi’s job to arrange compensation for damage to Iraqi homes and cars caused by aggressive US security sweeps in the hope of maintaining the support of the local population.

Chalabi now presides over a committee on services that includes American monitors and oversees the work of eight ministries, including those responsible for oil and electricity.

The failure of Maliki’s government to deliver essential services such as clean water, petrol, healthcare and education has driven a wedge between Iraqi voters and their elected representatives.

“Right now any improvement is important for Iraqi civilians, even if they are still not getting 100% of that service,” Chalabi said.

Money is not the problem, he claimed. He suggested that after the scandals that plagued the interim government of Iyad Allawi early on in the occupation, many ministry officials have been too scared to spend in case they are accused of corruption.

Michael O’Hanlon, an expert on Iraq at the Brookings Institution in Washington, believes some trends are in the right direction. “Electricity production is finally up, roughly 20% over typical Saddam Hussein levels,” he noted, “not even counting the additional growth in the informal Iraqi electricity market, which probably adds another 20% to 30%.”

The data on water and sewage, however, was disappointing, and job creation remains weak. “At best, the economy is a wash, neither helping nor hurting our overall efforts to contain the violence and help construct a working political system,” he concluded.

Chalabi knows there is only a small window of opportunity for services to improve. As Fil warned last week, the lull in violence may not last.

“Baghdad is a dangerous place and Al-Qaeda, although on the ropes, is not finished by any means and they will come back swinging if they are allowed to,” the general said.

Additional reporting: Sarah Baxter, Washington

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