Faced with sporadic attacks, the U.S. Army has come up with some unorthodox policies to placate Fallujah (search) -- handing over security to the locals, compensating people for homes damaged in raids and paying blood money to the families of American-inflicted casualties.

Thanks to the experiment, Fallujah, a conservative and deeply tribal Sunni Muslim (search) city of 200,000 people, is no longer the dangerous place it was for U.S. soldiers as recently as mid-July. But anger remains strong.

"We will fight them to the death if they keep humiliating us," said Farhan Siyam al-Jomaili, a local clan chief.

Much like other cities in the "Sunni triangle" -- a swath of territory on the Tigris (search) and the Euphrates (search) rivers north and west of Baghdad where Saddam Hussein (search) enjoyed strong support -- Fallujah is a deeply insular and fiercely proud community.

Feuds and blood vendettas are common among the tribes and clans of Fallujah, where the words "honor" and "revenge" are used perhaps more than anywhere in Iraq. Only a few women are seen in public. Most restaurants have prayer rooms and many men wear beards, a hallmark of Muslim piety.

Against this backdrop, the killing by U.S. soldiers of 18 people and the wounding of 78 in Fallujah in April -- U.S. officials said the soldiers were fired on first -- left a scar on the community so deep that its U.S.-backed mayor realized that only with blood money could the soldiers put an end to the cycle of violence.

"If you kill one of them, they must kill one of you -- or even two," said Fallujah's mayor, Taha Badawi.

His suggestion of blood money seems to have worked.

Attacks against U.S. forces in Fallujah and its outlying districts -- which raged sporadically from May through early July -- have dropped markedly. It has been nearly two weeks since an American was killed in the area.

"The city has become much calmer since they left the city and started paying compensation," police Lt. Tahseen Ali said.

As of Tuesday, according to local officials, blood money had been paid to 26 families who suffered losses in the April killings: usually $1,500 for a fatality and $500 for an injury. The compensation scheme now includes anyone killed or injured by U.S. soldiers.

The al-Mohammadi family received $2,500 after soldiers killed Ahmed Makhlouf al-Mohammadi, a car mechanic and father of seven, at a checkpoint near his home west of Fallujah.

Traveling with three of his daughters, al-Mohammadi spun his car around when he spotted the checkpoint, fearful the soldiers would inappropriately touch his daughters during the search, said his nephew, Hossam al-Mohammadi.

He was shot four times in the back of the head, his car overturning several times before it came to rest in a ditch. The girls escaped injury.

"Last week, two American armored cars came to our house, soldiers came out and handed us $2,500," Hossam al-Mohammadi said. "The soldiers were very polite."

The military also has begun to compensate Fallujah residents whose property was damaged during raids by U.S. forces searching for weapons, insurgents or former officials of the Saddam regime. The first such payment was made last week, the military said.

A notice on the door of a city council office invites applicants to claim compensation for "damages caused by members of the U.S. armed forces by mistake or through negligence."

Inside, 1st. Lt. Chris Haggard of the 3rd Armored Cavalry Regiment said interpreters give him summaries of claims, and a regiment commander makes the call. Over the past five days, 20 such claims have been received.

The U.S. military's show of goodwill, however, has not been met with universal approval.

Badawi, whose smart suits make him look more like a corporate executive rather than the mayor of a dusty provincial Iraqi city, said many former security agents have arrived in the city after the fall of Saddam's regime in April, and are enlisting residents to attack the Americans.

Last week, a small group of men armed with rocket-propelled grenades staged a late night pro-Saddam protest outside the main police station in a show of force made possible only by the departure of U.S. forces in mid-July from stationary positions in the city.

Not far from the mayor's office, Sheik Jassim Mishbil, a clan chief in his 70s, whispered emphatically that the Americans must leave altogether.

"These Americans have no credibility," he rasped. "If they came to remove Saddam Hussein, Saddam is gone. Why are they still here?"

Mishbil sat with about a dozen heads of local clans on a brutally hot morning in a room filled with cigarette smoke. All listened in silence as he spoke, then broke into a shouting match as they discussed life in their city.

"The Americans are polite and moral, but the Iraqis who work for them are scum," said Sheik Thamer Ibrahim Farahan, a burly clan chief.

"If the Americans continue to behave like this, the whole of Iraq will be holy warriors," said Sheik Ali Jassam. "To us in Fallujah, the most important thing is respect of our homes and sanctities."

But even some Fallujah residents who resent the Americans' presence say the latest measures have made the occupiers more palatable.

"We will hate America even if it turns our city, or the whole of Iraq, into gold," said Shaker Hamad, an 11-year veteran of the local police force. "But those who are attacking the Americans are working against our interests. We need stability to allow the Americans to do what they promised."