NAJAF, Iraq, July 6 — Like posters advertising a rapper's latest release, Moktada al-Sadr's hectoring, finger-pointing portrait is plastered across the old quarter here.
The 10th-century Imam Ali shrine, one of the most revered sites in Shiite Iraq, where once pilgrims came by the millions to kiss the giant wooden doors, is under the control of his ragtag militia. His men, even after bruising battles with American troops, still guard the checkpoints leading to the old city. His recruits, some too young to shave, stand sentry at the shrine gates, barking at women old enough to be their mothers.
At 23, with no more than a primary school education and a short stint as a soldier in Saddam Hussein's army, Mustafa Jabbar says he and his wife stand ready to be martyrs for Mr. Sadr's movement. If need be, he said, they will volunteer their first born as well, a baby boy, now 45 days old. "I will put mines in the baby and blow him up," Mr. Jabbar said. He has named the baby Moktada.
Mr. Sadr's dominion over this sacred centerpiece of Iraq's Shiite heartland is nothing short of extraordinary. The shrine is a no-go area to the Iraqi police. The fledgling Iraqi Army has not ventured anywhere near. American soldiers, once under orders to arrest the renegade preacher in connection with the murder of a rival cleric, are posted on the fringes of town, unable to enter the city center under the terms of the truce struck with the Mahdi Army.
On this scorching afternoon, many shops around the shrine remained shuttered. The hotels in town were closed or empty or bombed out. Even with an end to fighting, Najaf's economy, dependent on the waves of Shiite pilgrims from as far as the Indian subcontinent, was sagging.
All day long, pallbearers marched into the shrine's courtyard, carrying coffins on their shoulders. Shiites from all over the country covet a burial place near the shrine, where Ali, the seventh-century Shiite master, is entombed. Their chants could be heard throughout the day: "God is great. There is no God but Allah." Out front, vendors sold blond-haired dolls and toy guns.
Like Falluja in Sunni territory, how to manage Najaf, and the enfant terrible who has seized some of its most precious real estate, today represents a crucial test of Iraqi government authority.
For Iraq's new prime minister, Iyad Allawi, much is at stake. Mr. Sadr, 31, is a neophyte cleric with unalloyed political ambition and widespread popular appeal, particularly among disaffected Shiite youth. How Mr. Sadr is handled by this government also matters to other Shiite leaders, including Grand Ayatollah Ali al-Sistani, Iraq's most powerful Shiite cleric.
The stalemate cannot go on forever, Najaf's American-appointed governor, Adnan al-Zurfi, maintains. "They need to finish this story pretty quickly," Mr. Zurfi said, referring to Mr. Sadr's movement. "We need to finish this story pretty quickly."
Two delicate imperatives are the key to doing that: the demobilization of Mr. Sadr's scrappy but devoted Mahdi Army, and the fate of the arrest warrant against him.
Since taking the official reins on June 28, Mr. Allawi has made no mention of the arrest warrant. Rather, in behind-the-scenes negotiations with Mr. Sadr's group, government officials and Shiite political leaders are weighing the possibility of either letting the matter lie low for the time being or compelling Mr. Sadr to face charges before a Shariah, or Islamic, court, where, as the scion of a prominent clerical family, he is likely to get a sympathetic hearing.
Meanwhile, efforts are under way to nudge him into the political mainstream. Here in Najaf, where two months of fierce fighting between American troops and Mr. Sadr's militia has all but dried up the pilgrim traffic and crippled the local economy, rival Shiite leaders are also counting on his popularity to wane.
Mr. Sadr, sources close to the negotiations say, would prefer to appear before a court only after an elected government takes over. Publicly, through a spokesman, he has lambasted Mr. Allawi's cabinet as "illegitimate."
[At Friday Prayer on July 9 in Kufa, Najaf's twin city, a statement delivered on behalf of Mr. Sadr characterized the Allawi government as having been "installed by the occupier" and issued this defiant warning, "Any attack to any member of the resistance, be it Sunni or Shia, will be considered an act of aggression against the entire Iraqi people." ]
Judging from his muddled, sometimes contradictory statements, Mr. Sadr appears to be treading a fine line himself when it comes to defining his relations with the new government. He has dismissed it as a pawn of the American occupation, but he has not ruled out cooperation either.
He has ordered his militia men from outside Najaf to go home. But he has also defied appeals to disband. He has said he will cooperate with the Iraqi police, but less than a month ago his men stormed a police station in Najaf, freeing prisoners and opening up the precinct to looters. His comments about the Iraqi Army have been mixed.
"Today we don't have confidence in them," his spokesman, Ahmed al-Shebani, said in an interview Tuesday in an office on the grounds of the Imam Ali shrine. Then he softened his stance. "We consider the Iraqi Army as our own brothers," he said. "They are our citizens, and we will cooperate with them."
Mr. Shebani said his group remained "cautious" about the new government. But he also suggested for the first time that if only Mr. Allawi's government would present a timeline for the withdrawal of American troops from all of Iraq, the Mahdi Army would cooperate. Until now, Mr. Sadr has insisted on the immediate and outright withdrawal of foreign forces. "He has to force the occupation forces to leave, if not now, then in the future," Mr. Shebani said.
The government's first olive branch — an offer of amnesty for insurgents — Mr. Sadr has rejected outright. "Amnesty is for criminals," Mr. Shebani said flatly. "The Mahdi Army is not criminals. It is a popular resistance fighting for the independence of Iraq."
The most powerful weapon in the hands of Mr. Sadr, who has come to embody the anti-American resistance, is neither his militia (it suffered heavy losses in the April-May battles with United States troops) nor his clerical standing (he is not yet an ayatollah and therefore is unable to issue fatwas, or edicts). It is, rather, the mantle of family history: his father and uncle were both famously persecuted by the Saddam Hussein government.
Martyrdom is a hallmark of Shiite theology, and Mr. Sadr plays the martyr card exceptionally well. He has appeared before crowds in a white funeral shroud. He has said he in unafraid to die.
Such gestures have fed the fervor of young men like Mr. Jabbar. All five of Mr. Jabbar's brothers, natives of the Baghdad slum, Sadr City, which forms Mr. Sadr's base, signed up to join the Mahdi Army a year ago. He alone moved to Najaf with his wife, to stand at Mr. Sadr's side. "He is an honest man, a faithful man, and he is brave," Mr. Jabbar said of his leader. "For us, he represents the path Iraq must follow."
Mr. Jabbar, a man with deep-set eyes and a dirty T-shirt, sat in an alley that veers off the shrine. In normal times, these winding ancient paths, full of bookstalls and bakers, would be lined with Shiite pilgrims from across the world.
The Mahdi Army's one concession, made in exchange for the withdrawal of American troops from Najaf, is to squirrel away their guns and grenades. They have suffered heavy casualties. Yet Mr. Sadr has refused to dissolve the militia.
Whatever the means, it is clear that the key to disarming the Mahdi Army is to offer Mr. Sadr an exit strategy from the arrest warrant hanging over his head. On the one hand, said Salama al-Khafaji, a member of Dawa, a major Shiite political party, who is helping negotiate with the Mahdi Army, the government ought to insist that even a figure as popular as Mr. Sadr answer to the law. At the same time, Mrs. Khafaji warned, it must be done delicately, so as not to provoke what she called "the Iraqi street."
"Our main job is to create a role for them in the state," she said, referring to Mr. Sadr's movement.
Likewise, Governor Zurfi, who has openly called for the Mahdi Army to disband and quit Najaf, continues to advise against arresting Mr. Sadr. Even his detractors, Mr. Zurfi argued, would not countenance his humiliation, if not for his sake, then for his family's. "He represents the whole history of the Sadr family," Mr. Zurfi warned. "It's not about Moktada himself."
Would Mr. Sadr accept a renewed invitation into politics? A coy Mr. Shebani said Tuesday that his leader did not necessarily want a direct role in governing Iraq, nor, apparently, the accountability that comes with it.
"Sayeed Moktada Sadr," said Mr. Shebani, using the title bestowed on descendants of the Prophet Muhammad, "can mobilize the Iraqi people with one word. It's better for him to watch this government than to be a part of it."