Lying in the dust of a Mosul street, a bullet in his leg, the insurgent had plenty on his mind when American soldiers ran towards him. The engineer, who was in his thirties and fluent in English, had thrown a grenade at a US patrol and been shot down by a turret gunner as he tried to make his escape seconds earlier.

As the Americans gathered around him, one concern seemed paramount. “Don’t give me to the Iraqi Army, don’t give me to the Iraqi Army’,” he begged, according to the gunner.

Iraqi forces, American units, insurgent cells: every group has its own worry in Mosul in the run-up to the planned withdrawal of US forces from the city on June 30. The insurgents have the most to gain from an American pullout but realise that they will face harsher treatment if they fall into the hands of the remaining Iraqi forces.

“The Iraqi Army’s reaction will be much more extreme once we’ve gone — and they tell us that privately,” a US major said.

The June 30 deadline was set in the Status of Forces Agreement that was signed between Iraq and the US in November as part of the schedule by which America plans to leave Iraq by 2011.

Yet in Mosul, the second-largest city in Iraq and the so-called last bastion of al-Qaeda in the country, the date has caused concern. American and Iraqi commanders are wary that insurgent activity may intensify, which would have implications for the entire schedule of US withdrawal.

Despite numerous statements from Iraqi officials insisting that the withdrawal date refers to all US forces in Mosul, American troops are likely to remain amid concerns that the local forces are not yet fully equipped to police the city.

“We don’t want to see Mosul go backwards,” warned Colonel Gary Volesky, commander of the 3,500 US troops from the 3rd Heavy Brigade Combat Team, which is operating in the city. “If it slides it would look extremely poor for our overall efforts.”

Military operations and fiscal input have had a dramatic effect on the violence in Mosul. Nine months ago there were between 20 and 40 insurgent attacks each day. The figure has dropped to between four and eight.

Despite the new relative calm of the city worries remain. The Mosul police force is short of 5,300 men — more than 50 per cent of the intended number. The Iraqi Army, which has three brigades of troops in Mosul, lacks equipment and personnel. It will be reliant on the US for helicopters and intelligence experts. The ten-strong US advisory teams attached to each Iraq brigade are expected to stay on but the status of US special forces operations still has to be resolved.

The need for American money is most likely, however, to keep some US troops in Mosul after June 30.

The Iraqi Government allocated Nineveh province, of which Mosul is the capital, a budget of 277 billion dinar (£172 million) for 2009. Of this 220 billion dinar is required to pay contracts assigned in 2008, leaving only 57 billion dinar for projects this year, which are vital to undermining the insurgency.

By comparison Colonel Volesky has already spent $19 million (£12 million) in reconstruction across the province in the past three months as part of his commander’s emergency response programme.

“We haven’t killed our way out of this insurgency,” Lieutenant-Colonel Ben Matthews, who has employed 2,500 Iraqis in 28 projects, said. “We have bought ourselves out with other means. Employment and money are my biggest weapons. It’s like a free enterprise and trade thing I’ve got going against the insurgents.”

By law this money can be invested only in projects that have direct American oversight. If it insists that all Americans depart Mosul, not only will the Iraqi Government deprive its security forces of key US military assets but it will also deny Mosul its biggest source of reconstruction funding.

The issue is unlikely to be resolved until the deadline is close and it will be decided as much by pride as logic.

“Can we do it or not?” Lieutenant-Colonel Hussein, an Iraqi officer, mused in his headquarters in the city. “It’s a nervous issue. It’s like the final exam. Coalition funds and jobs are great but we want to prove that we can do it on our own feet.”

Heart of conflict

— Mosul was at the heart of many of the war’s key developments. In July 2003 Saddam’s sons, Uday and Qusay, were killed in a gunfight with coalition troops

— Mosul became a haven for the insurgency and al-Qaeda after the fall of Saddam. In 2004 insurgents launched attacks on police stations. Fighting was so fierce that US troops were diverted from Fallujah to help to retake Mosul

— The Iraqi Army launched a massive offensive against al-Qaeda in Mosul in 2008

Source: Times database

Times Recommends

• Google to digitise Iraqi artefacts
• Renault angers parents by naming new car Zoé
• Analysis: most lawless part of Philippines