Under terms of the ceasefire agreement signed May 12 between the government of Prime Minister Nouri al-Maliki and representatives of the cleric, Iraqi troops can establish security checkpoints in the Shiite enclave and can search for and arrest "criminals."

The Iraqi army is drawing up plans to do just that, but how Sadr's Jaish al-Mahdi (Mahdi Army) reacts is an open question. Sadr lives out of the country and no one is quite sure how much control he still exerts over JAM (Jaish al-Mahdi) fighters. JAM fighters have also been told by leaders in Baghdad to keep their small arms and to remain at their posts.

Adding to the volatile mix are the so-called special groups – splinter cells of Iranian-influenced gunmen who U.S. military leaders say are mostly to blame for continued attacks on U.S. troops and Iraqi forces along the demarcation line between southern Sadr City's Jamilla and Thawra districts and areas north.

"Special groups take their orders not from al-Sadr. They take it from Iran," said Iraqi army Col. Yehea Resol Abdallah, commander of 3rd Battalion, 42nd Brigade, 11th Iraqi Army Division, which is in charge of the Jamilla district of southern Sadr City. "If they don't give up their weapons, they will die."

U.S. military officials say some of the special groups have received weapons, money and training from Iran.

"Over the course of the last several months we have publicly discussed numerous times, and shown numerous times, and have evidence on four separate occasions, on what we have found and continue to find: Iranian military weapons in the hands of criminals [special groups] in Iraq," Maj. Gen. Kevin Bergner said in Baghdad recently.

Tehran denies the allegations.

Sadr City is a Shiite slum area in northeast Baghdad and a Sadr stronghold. It was named after Sadr's father, a respected ayatollah who was assassinated during the regime of President Saddam Hussein.

As many as 40 percent of Baghdad's residents live in the area, although many fled for safety in recent weeks amid clashes between government forces and militiamen and resultant shortages of food and water.

Jamilla and adjacent Thawra mahallas (neighborhoods) have been a key battleground. The two areas are within 107mm and 122mm rocket range of Baghdad's International (Green) Zone, where Iraqi national government and U.S. offices are located. According to Iraqi sources, Jamilla has another, special significance for extremists.

According to an Iraqi intelligence official, JAM and special groups extort over $1 million monthly from the hundreds of traders at Jamilla market, a sprawling area of wholesale warehouses that supply Baghdad's merchants with bottled water, soft drinks, snack foods and canned goods.

"The businessmen are tired of it. They complain all the time. They don't want to keep giving them their money," Yehea said.

He and his men know Sadr City well. All are Shiites, and virtually all come from Sadr City themselves, although many have moved their families elsewhere because of death threats.

U.S. and Iraqi authorities say those threats played a role in some Iraqi soldiers and police abandoning their posts last month when militiamen attacked in force security checkpoints in southern Sadr City in retaliation for the government moving against Shiite militias in the southern City of Basra.

Yehea and his men, however, held and distinguished themselves in repelling repeated attacks, U.S. officers said.

"Col. Yehea is a very charismatic leader. He has a passion for what he does and it's very clear," said U.S. Amy Maj. Philip Halliburton, a military adviser who works with the Iraqi unit. "I see a pride of country, a 'let's do this for the country' attitude, and that translates into the unit."

Yehea believes a push into the main part of Sadr City is necessary and inevitable.

"We must have IA [Iraqi army] units over there, this is what I've heard from my leadership," he said. "There is no way to stop this. If we were to stop, we'd give them a chance to reorganize."

Iraqi military forces are already drawing up plans for entering Sadr City and have been consulting with U.S. military forces, U.S. and Iraqi forces said.

Details of the plans, however, cannot be revealed for security reasons, but "it will be all Iraqi," a source said.

"The coalition forces will only support [with] helicopters if needed."

Meanwhile, a U.S.-built concrete barrier wall to control entry to southern Sadr City from northern neighborhoods is nearing completion, despite daily attacks by Shiite extremists using automatic rifles and rocket propelled grenades.

"I don't think it [the ceasefire] has really changed anything along Route Gold [nickname of the road running alongside the wall]," said Lt. Col. Brian Eifler, commander of the 1st Battalion, 6th Infantry Regiment. "We still have people coming up, taking potshots at us, planting IEDs [improvised explosive devices], trying to blow up our guys."

The wall is being built along al-Quds street, the northern edge of Thawra and Jamilla. It's made of 12-foot-high concrete barriers, each weighing 12,000 pounds.

When completed it will stretch three miles and force those who want to enter or leave the two districts to do so through two or three major crossing points where Iraqi security forces search vehicles for weapons and contraband.