Muqtada al-Sadr has a polarizing influence in Iraq. Branded as a trouble-maker by the U.S., regarded with suspicion and fear by many Iraqi Sunnis and viewed with exasperation by the ruling Shia coalition, he has repeatedly tipped the country into episodes of violent chaos.

He is nonetheless revered by hundreds of thousands of poor Shias, for whom he is a beacon of integrity and consistency — the only man who has represented their interests in a system that they believe is otherwise corrupt and self-serving.

Despite recent military operations in Basra, Sadr City and now Amarra, al-Sadr is not beaten. He is a political figure as well as a religious one, which gives him a certain distance from the militia acting in his name.

And despite the military actions, there has been no final showdown with Muqtada Al-Sadr's militia, the Jaish al-Mahdi (JAM), or with their partners, the Iranian-backed Special Groups.

In Sadr City, a last-minute deal brokered in early May by the Iranians between al-Sadr and the government of Iraq (negotiated in Iran) saved face all around — and saving face is always an important consideration in the Middle East.

The deal was violated Tuesday by a bombing of a district council office that killed 10, including four Americans. Yet it remains unclear if JAM will still agree to the terms which hands control of the northern three-quarters of Sadr City to the Iraqi Army, and permits them to enter and patrol this Baghdad district, conducting searches and disarming the now-illegal militia.

And while it's generally agreed that U.S. and Iraqi forces killed about 700 militiamen in the two months of fighting before the truce, American troops have not been capturing significant JAM or Special Group militiamen — and the Mahdi Army numbers tens of thousands of volunteers.

So where have all the leaders gone?

To understand what is going on in Sadr City right now, it's worth remembering what happened at the start of the Iraq War.

When Coalition forces pushed their way up the country for the first time in 2003, they encountered pockets of fierce resistance, but on the whole, Iraq's army did not put up the fight that the U.S. military expected.

Many took the entirely prudent view that they were outgunned, and simply took off their uniforms and went home, beating a strategic retreat.

Many of them later joined with Al Qaeda in Iraq; the resistance to the U.S. invasion simply rolled out to an Iraqi timetable, not an American one.

That same pragmatism has been the consistent policy of al-Sadr's political and military activities in Iraq — from the very beginning.

U.S. troops fighting the Mahdi Army in all its incarnations over the past four years often remarked that the fighters were hopelessly untrained and unskilled, but terribly, foolishly brave.

With his fiery rhetoric and thunderous denunciations of foreign troops on Iraqi soil, al-Sadr can whip tens of thousands of young supporters into a frenzy. But just when it looks like there's going to be a final showdown, al-Sadr calls everything off and goes to ground.

His fighters put their weapons back in their hiding places and go home to wait for the next time they are called out to fight. This happened in 2004 in Najaf, and again in 2005. It happened this year in Basra, and then in Sadr City.

In Sadr City, it was clear by the end of April that after nearly two months of fighting there was danger of a civilian bloodbath. U.S. and Iraqi troops were fighting an improved Mahdi Army, which was supplemented by Iranian-trained Special Group fighters and better weaponry from Iran.

Shia militiamen fired at least 150 rockets and mortars into the Green Zone, causing more than 100 casualties. Close combat, misfired insurgent rockets and U.S. airstrikes destroyed large areas of Sadr City, including parts of Iraq's largest wholesale food distribution market, Jamila.

U.S. troops were preparing for a final push into this area of northeast Baghdad, home to more than two million impoverished Shia. The civilian toll was likely to be very high. But at the eleventh hour the Iraqi Government initiated talks with al-Sadr in Iran and reached a truce on May 10.

Until Tuesday’s bombing, that truce pretty much held.

U.S. and Iraqi forces were clear about why that is. They told FOX News the senior militia commanders had left the area, heading north to Diyala, south to the Shia-controlled areas in Wasit and Maysan, and across the border to Iran.

Those who stayed behind in Sadr City — the mid-level and junior fighters — were laying low and jockeying for position within the militia.

“JAM right now is trying to figure out what they are going to do,” said Maj. Travis Thompson, commander of Taskforce 1-6, which patrols the southern quarter of Sadr City.

Local residents told FOX News they hoped the militia would not come back, but were hesitant to say more. Yet one man did speak to FOX News, who moved his family out of the area the day before — after his front door was peppered with gunfire as a warning.

“They are trying to destroy life inside Sadr City,” the Iraqi Police liaison officer told FOX News. “They said the government cannot do anything to stop them. They said, ‘We are the strongest power inside Iraq.’”

There is still a lot of fear in Sadr City, even in places where American and Iraqi troops are out in force.

Even in the comparatively wealthy market district of Jamila, where the Jaish al-Mahdi extorted millions of dollars every month from traders, people were too afraid to speak openly or for long. JAM spies are everywhere, they said.

The concrete security wall which U.S. forces put up to gain control of their corner of Sadr City is now antagonizing many locals, who say it's impossible to do business when movement of people and goods is so restricted.

Yet U.S. and Iraqi forces told FOX News they were getting a huge amount of information from locals, which was helping them break the militia cells still operating in and around Sadr City.

Iraqis survive by being nice to the person with the most power at any given moment in time. The fear for people in Sadr City — those without useful affiliations to the militia — is that the U.S. military will not be there for long.

The Iraqi Army is still inconsistently effective, and that means the only certainty is that JAM in some form will be back.

“This place was a large source of revenue for them,” Major Thompson told FOX News. “It was one of their strongholds. Our job is to make it more difficult, so we’re setting up a neighborhood guard, providing essential services, economic rebuilding.”

The one thing that will keep JAM at bay is if the local population stops backing them. But for decades, the Sadr Movement has been the only consistent support the people of Sadr City have had.

While its gangster element may have robbed the richer citizens of Sadr City, JAM’s charitable side gave food and clothing to the city's poorest. With good reason, the people of Sadr City don't trust the Iraqi Government which has done little for them over the years. The militiamen, then, are the devil they know.

In the rest of Sadr City, in parts outside U.S. control, the Iraqi Army is nominally in charge. But there are reports this control is more theoretical than real, and there’s no question that JAM has greater freedom to operate in the rest of Sadr City.

Around the edges of Sadr City, Shi'a militia are still planting IEDs and, of greater concern, a regular supply of EFPs (explosively formed penetrators). U.S. military vehicles are still getting hit, and in the Shia districts adjoining Sadr City and around Baghdad, there are ongoing combat operations bent on capturing Shia miltiamen.

Against this background, there have been three interesting developments in recent weeks.

The first was an announcement by Muqtada al-Sadr (who is still residing in Iran) that he is reforming his militia into a “largely peaceful” organization that will concentrate on “social services,” but with one new wing expressly dedicated to fighting US forces.

That wing is not permitted to target Iraqi forces, but as U.S. and Iraqi forces work together almost everywhere in Iraq, it would be a difficult charge to keep.

The second development is that Iraqi forces have launched a third military operation against Shi'a militia and the Special Groups, this time in Al Amarah, Maysan Province, on the Iranian border. This city has long been a stronghold of the Sadr movement, but also a center for traffic with Iran of both weapons and people.

It's also likely that many of the more senior JAM leaders from Sadr City shifted there when the truce was signed. Further disarming and surveillance may encourage them to seek a political solution rather than a military one.

Finally, a car bomb in the Hurriya district of Baghdad killed at least 63 June 18, wounding at least 75 more. Although it looked like an Al Qaeda attack, the U.S. military informed the press a day later that they believe it was actually the work of a Shia Special Group cell.

"Though vehicle-borne improvised explosive devices are a trademark of AQI, our intelligence, corroborated through multiple sources, is this atrocity was committed by a Special Groups cell led by Haydar Mahdi Khadum Al Fawadi,” reported the military.

“We believe he ordered the attack to incite Shia violence against Sunnis; that his intent was to disrupt Sunni resettlement in Hurriya in order to maintain extortion of real estate rental income."

If true, this is an unwelcome development in the sectarian and criminal infighting in Iraq. Even as the situation calms all over the country, the country still lacks an effective civic police force and the security it would provide.

There's a real danger that the insurgency will morph into a criminal class with its own vested interests in maintaining violent instability, and that vulnerable Iraqis will continue to suffer.