It was the home of Iraq's political elite, filled with tree-lined canals and Italianate buildings constructed around Saddam Hussein's most spectacular palaces. For most Iraqis, the Tashri (search) quarter was a forbidden place — a miniature city of the privileged and the powerful.

Now Tashri is teeming with U.S. soldiers sleeping in bedrooms once occupied by Iraqi generals and discussing the future of Iraq from one of Saddam's largest palaces.

Troops park their trucks and tanks under palm and mimosa trees to escape the heat, while senior officers walk down the cool, marble hallways of conference centers that Saddam once used to meet foreign diplomats and senior Baath Party (search) leaders.

When Saddam's regime fled Baghdad ahead of the U.S. invasion, American forces moved in.

Soldiers in full combat gear guard the roads leading into Tashri, just as Iraqi soldiers did before U.S. forces captured the quarter April 7 in the first day of the battle for Baghdad.

A combat engineer unit has taken over the buildings surrounding the command center, including the Olympic-sized swimming pool and the indoor rifle range. An infantry company has moved into a former Baath Party office building across the street.

Col. David Perkins, commander of the 3rd Infantry Division's 2nd Brigade Combat Team, established his headquarters in the New Presidential Palace, the first of several palaces his men captured that day.

While the right side and upper floors of the building, on the Tigris River (search), were destroyed by an air strike, Perkins set up shop on the left side. His staffers have cleared out other rooms, cleaned out desks, set up cots and settled in, stringing field telephones from room to room.

A few hundred yards up a six-lane boulevard, past the Baath Party headquarters and through one of the four major arches in the quarter, is the Old Palace. The four-story, 200-yard-long building was designed in a Roman style and has six 10-foot tall busts of Saddam wearing a Mogul helmet adorning the roof.

Most believe Saddam never stayed at this complex: It was far too obvious and would have made him an easy target for Americans or anyone else out to get him. He did, however, have a safe house — a one-bedroom apartment, reportedly — nearby.

War planners deliberately left the building untouched by U.S. air strikes. Now Jay Garner, the retired lieutenant general heading the Office of Reconstruction and Humanitarian Assistance, has taken the building as his headquarters. He will administer Iraq from the palace until a new government takes over the country.

Further north on the Tigris, Saddam's closest advisers and generals lived in an elaborate planned neighborhood, their homes circled by ornamental canals and lakes stocked with carp. The architecture was Venetian, the lakes had rowboats and paddle boats.

There was clearly a pecking order in the neighborhood. The highest-ranking families lived in huge mansions, while lesser officials occupied three-bedroom villas.

"The smaller places aren't that fancy, but some of the bigger ones are like Babylon," says British Lt. Col. Stuart Gordon, working with U.S. commanders.

Spc. Ashley Beatty of Raeford, N.C., was impressed at first with the hand-carved, gilded furniture bearing Saddam's monogram, found in a Foreign Ministry conference center now used as the Civil-Military Operations Center.

After a few days, she stopped paying attention.

"We just sit in them like they're folding lawn chairs, only a little more comfortable," said Beatty, 22. She now sleeps in one of the homes beside the palace, sharing a room with three other soldiers.

When Beatty heard she was going to live in Tashri, which the military calls "the palace complex," she let her imagine run wild. But she found that reality didn't meet expectations.

"I expected to have my own bed with silk sheets," she said. "That didn't happen."