Leading Article: The damage now extends to British-US relations

Between Saturday night and yesterday morning, under cover of darkness, British troops left the headquarters they had shared with Iraqi police in Basra. This was the latest stage in the handover of Basra city to Iraqi forces. It cannot be long now before they vacate their remaining centre of operations at Basra Palace and withdraw to their base near the airport. With that, largely symbolic, departure, the city will be fully in Iraqi hands.

Even this transitional stage leaves many questions. The Prime Minister has cautioned against any expectation that the transfer of Basra will presage a quick withdrawal of all British troops. But we have to ask how useful the British presence in southern Iraq will be, once Basra itself is off our map. Encamped in one place, the troops will be an obvious target. How much of their energy will then be spent defending themselves and how much on security operations further afield?

We already have a partial answer to the second question: who will fill the security space British forces leave behind? This weekend it was members of the Shia militia, loyal to Muqtada al-Sadr, who moved into the building vacated by the British, ransacking the offices and evicting the police. Something similar will surely happen when the British leave Basra Palace. In other words, Mr Sadr's pro-Iranian, anti-American Mehdi Army will be the chief beneficiary, even though it is not they to whom British officers will formally pass the keys.

The growing ascendancy of the Mehdi Army across the southern provinces raises the third question: are we looking at a British victory or defeat? The official answer is that winning and losing are not what the handover is about; our troops have a job to do and they are doing it. Territory is handed over only when the British judge Iraqi forces to be ready. The withdrawal from Basra can thus be presented as proof of a mission accomplished. It is now for the Iraqis to decide their future.

But there is another way of looking at this, from the perspective of British interests. Muqtada al-Sadr is probably not the leader the British, still less the Americans, would have chosen to hold sway across the south of post-Saddam Iraq. This is where much of Iraq's oil is. Mr Sadr's ways are far from democratic. If our objectives in removing Saddam Hussein included improved Western access to Iraqi's oil and the promotion of democracy, then we have failed. If they also included containing Iran, we have failed miserably.

There was always a big discrepancy between Tony Blair's stated aims in invading Iraq – ridding the world of weapons that turned out not to exist – and the much broader aims set out by President Bush. But as Spain and other members of the US-dominated coalition withdrew their troops under domestic pressure, Mr Blair insisted that Britain had a responsibility to stay and see the mission through. Gordon Brown said something similar when he met Mr Bush at Camp David.

All the signs are, though, that the British-US alliance in Iraq is fraying. A retired US general, Jack Keane, who returned from Iraq last week, said that the British had lost control of Basra, which was descending into gang warfare. Mr Bush meanwhile resorted to a spurious Vietnam parallel to explain why the US would not, and should not, withdraw.

Against the background of these simmering differences, the killing of three British servicemen in Afghanistan as a result of US friendly fire could not have come at a worse time. It is becoming clear that the misguided Iraq adventure has gravely damaged not just Iraq, and not just long-standing US and British interests in the region, but transatlantic relations as well.