The surge's successes and limits are both plainly visible on al-Kindy today. A well-stocked pharmacy has reopened. A new cell-phone store selling the latest in high-tech gadgets opened in December. A trickle of shoppers moved along the sidewalks on a recent chilly morning as a grocer, who asked that his name not be used, surveyed the local business climate. "Things are improving slightly," he said. "But not as much as we hoped." Indeed, if al-Kindy is coming back, it is doing so slowly, unevenly—and only with a lot of well-armed help. Sandbagged checkpoints stand at either end of al-Kindy, manned by Iraqi soldiers with machine guns. Iraqi police in body armor prowl back alleys and side streets to intercept would-be car bombers. U.S. military officials often point visitors to al-Kindy Street as a metaphor for what is working—and what remains undone. "We still have some work to do," says Lieut. General Ray Odierno, the No. 2 U.S. commander in Iraq. "I tell everybody we've opened a window. There's a level of security now that would allow [Iraqi politicians] to take advantage of this window in time, pass the key legislation to bring Iraq together so they can move forward. Are they going to do that? In my mind, we don't know."

One year and 937 U.S. fatalities later, the surge is a fragile and limited success, an operation that has helped stabilize the capital and its surroundings but has yet to spark the political gains that could set the stage for a larger American withdrawal. As a result of improving security in Iraq, the war no longer is the most pressing issue in the presidential campaign, having been supplanted by the faltering U.S. economy. Voters still oppose the war by nearly 2 to 1, but Democrats sense the issue could be less galvanizing as troops begin to return home. Republicans who supported the surge, like Arizona Senator John McCain, have been trying out tiny victory laps lately, but because the hard-won stability could reverse itself, both parties are proceeding carefully. Interviews with top officials in Baghdad and Washington and on-the-ground assessments by Time reporters in Iraq reveal why the surge has produced real gains—but also why the war still has the capacity to cause collateral damage half a world away.