The Americans are learning the universal language of insult. They catch on now when Iraqis in the seething Sunni Triangle flash them a backhanded V sign, which conveys roughly the same message as an extended middle finger back in the States. When Americans wish to demonstrate their contempt to the locals, they point to the soles of their feet, deeply offensive to Iraqis.

What the Americans still don’t know is who, exactly, they’re fighting. Last week, after four suicide-bombing attacks in the heart of Baghdad left more then 30 people dead, Brig. Gen. Mark Hertling, deputy commander of the First Armored Division, told reporters that the attacks were the work of “foreign fighters.” Yet just 24 hours earlier his division commander, Brig. Gen. Martin E. Dempsey, told a news conference that he had not seen “any infusion of foreign fighters in Baghdad.”

Foreigners or locals? Which is it? U.S. intelligence officials split the difference and suggested that Baathist dead-enders had hired foreign jihadists (or, possibly, local fanatics) to drive the suicide vehicles. But they couldn’t really know for sure. The level of confusion and guesswork was telling and unsettling. How can Americans know whether to support the occupation of Iraq if their own leaders don’t know what they’ve gotten into–much less how to get out?

President George W. Bush continues to proclaim that the escalating terrorism in Iraq, some 25 to 30 attacks per day, up from 15 to 20 in September, is actually a good sign. “The more successful we are on the ground, the more these killers will react,” the president told reporters. But that smacks more of campaign rhetoric (or wishful thinking) than strategic reality. With the economy taking off (a whopping 7 percent annual growth rate in the third quarter of 2003), Iraq may become the central issue of Bush’s re-election bid. Right now success or failure turns on some basic questions that the U.S. government is woefully unprepared to answer.

The intelligence community–the CIA, the DIA, the various branches of military intelligence–cannot decide whether it is fighting a ragtag resistance or a well-organized insurgency. The majority view, particularly at the CIA, holds that the terror campaign is the work of small, probably isolated, largely uncoordinated cells of anti-American fighters, for the most part diehard Saddam loyalists. Other intelligence officials suggest that Saddam himself is still running the show and that the persistent and escalating pattern of bombings suggests some kind of broader, coherent strategy to drive out the American “occupiers.” Last week administration officials tried to downplay reports of Saddam’s resurgence, suggesting that he was still too busy hiding to take much of an active role. CIA analysts were more confident that one of his top deputies, Izzat Ibrahim al-Duri, was supervising a surviving network of Fedayeen guerrilla fighters. Yet other reports suggested that al-Duri, a red-haired sadist who looks a little like the “Simpsons” character Krusty the Clown, is an invalid, dying of cancer.

Saddam’s secret police were apparently prepared to run a terror campaign against the American invader from the beginning. U.S. forces in Iraq have discovered stockpiles of as many as 500 “suicide vests,” bomb-laden garments similar to those used by Palestinian terrorists against Israeli targets. Explosives are not hard to come by; hundreds of Iraqi arms caches have been left unguarded. A month ago an Iraqi citizen approached some U.S. soldiers, offering to sell a shoulder-held SA-7 surface-to-air missile, the kind that can be use to shoot down commercial airliners. When the soldiers offered the man $250, he drove back with a truckload of missiles and collected a payment of $40,000. He told the GIs that he would have brought more but he couldn’t fit them all into his truck.

What are the ties, if any, between Saddam’s holdouts and the terrorist jihadis who slip across Iraq’s porous borders? The intelligence community is left mostly guessing. The CIA had been unable to penetrate Saddam’s police state with its own spies before the war. U.S. intelligence operatives have been stretched thin, many of them devoted to the so-far fruitless search for weapons of mass destruction. An internal Army evaluation, published last month by the Center for Army Lessons Learned in Fort Leavenworth, Kans., bluntly criticized Army intelligence for poor preparation and highlighted various technological and bureaucratic foul-ups. A communications network that was supposed to link intelligence teams and tap databases worked so poorly that it was “nonexistent.” The “lack of competent interpreters” was a constant problem. Interpreters were wasted on errands such as going off “to buy chicken and soft drinks,” the report stated.

America’s intelligence analysts are hobbled by a deeper misunderstanding. Why wouldn’t Iraqis want to trade in tyranny for freedom, they ask–and turn in the remnants of the old regime? It is true, as Bush administration spokesmen often point out, that Iraqis hardly yearn for Saddam’s return. Indeed, a majority want Americans to stay in the country long enough to provide some degree of stability and security. But American promises of democracy are very threatening to a significant minority. Ever since the days of British colonial rule after World War I, the Sunni Arabs, who make up perhaps only a quarter of the populace but dominate the metropolitan elite and urban middle class, have held power over the more populous but poorer Shiites and Kurds. In an American-created democracy, power would shift to the Shiites. It has hardly gone unnoticed in the Sunni community that 55 percent of the members of the new, U.S.-imposed Governing Council are Shiites.

Many Sunnis would like to drive out the Americans and restore not the wicked Saddam and his cronies, but a Sunni-dominated state. Like the Irish Roman Catholic sympathizers who “left their back doors open” to allow IRA fugitives to evade British troops during the Northern Ireland Troubles, the citizens of the Sunni Triangle around Baghdad are apt to at least passively support an insurgency. In some Sunni strongholds like Tikrit, Saddam’s old hometown, the populace is openly defiant.

There is no guarantee that the violence will not spread to the Kurdish north or the Shiite south. The Kurds feel very threatened by the 10,000 peacekeepers promised to the United States by Turkey, the Kurds’ ancient oppressors. The older Shiite ayatollahs have counseled patience, but some young extremist clerics are itching to impose an Islamic theocracy on Iraq. The anti-American resistance may have recruited, or hired, suicide bombers from the 1.5 million Shiites living in the slums of Sadr (formerly Saddam) City, the ghetto in the heart of Baghdad.

Rather than try to create a Western-style modern democracy, the Bush administration might be wise to find a way to accommodate the religious and tribal politics of Iraq. At least in the short term, an old-fashioned Chicago-style machine, dispensing patronage in return for favors, is a more viable model than one man, one vote. Indeed, some of the savvier American ground commanders already recognize this reality. Lt. Col. Hector Mirabile of the First Battalion, 124th Infantry Regiment, the Florida National Guard unit patrolling Ramadi, is a major in the Miami police force in civilian life. He appears to instinctively understand colonial policing as the British practiced it a century ago. “This is an ultratribal area,” Mirabile explained to NEWSWEEK. “We understand that there’s no winning this battle without winning the hearts and minds of the people, and you don’t do that without winning the sheiks.”

Mirabile described just what that entails: first handshakes, then tea, then 10 minutes of pleasantries. “And from there you talk business. Contracts are our No. 1 method of control.” Mirabile hands out lucrative contracts to rebuild schools or provide other community services (with a tidy profit, up to 20 percent, built in for the sheik). But if violence breaks out–like the mortar attack that occurred just the day before–“I’ll be calling on the sheik and asking, ‘Why did that happen?’ " says Mirabile. “If they can’t deliver, we’ll reduce their contracts. If he doesn’t help, we’ll go to him and say, ‘Your area is not really safe yet–people can’t work here.’ And he’ll say, ‘S–t, this is affecting the bottom line’.”

A practical way to keep the peace. But for Mirabile’s troopers, the culture gap still yawns in ways that feel not only alien but threatening. In their wrap-around shades and body armor, the soldiers look like creatures from outer space to the Iraqis (who generally do not wear sunglasses and suspect that the Americans’ Ray-Bans have been engineered to look through women’s clothes). After the mortar attack, “the police chief came over to talk,” says Sgt. William Sanchez, 33. “He was gonna give me that Arab kiss thing. I said, ‘I don’t kiss, buddy. How ya doin’?’ "

Specialist Jose (Psycho) Lopez, 21, struggles to know how to handle more threatening situations. “You see them standing there and they’re doing this…” He makes a slashing motion across his throat. “You see them, but what are you going to do? Kill them? I’ll grab them by the throat and slap them hard.” Maybe not the best way to make friends and cultivate informants.