For most people in Britain and the US, Iraq is already history. Afghanistan has long since taken the lion's share of media attention, as the death toll of Nato troops rises inexorably. Controversy about Iraq is now almost entirely focused on the original decision to invade: what's happening there in 2010 barely registers.

That will have been reinforced by Barack Obama's declaration this week that US combat troops are to be withdrawn from Iraq at the end of the month "as promised and on schedule". For much of the British and American press, this was the real thing: headlines hailed the "end" of the war and reported "US troops to leave Iraq".

Nothing could be further from the truth. The US isn't withdrawing from Iraq at all – it's rebranding the occupation. Just as George Bush's war on terror was retitled "overseas contingency operations" when Obama became president, US "combat operations" will be rebadged from next month as "stability operations".

But as Major General Stephen Lanza, the US military spokesman in Iraq, told the New York Times: "In practical terms, nothing will change". After this month's withdrawal, there will still be 50,000 US troops in 94 military bases, "advising" and training the Iraqi army, "providing security" and carrying out "counter-terrorism" missions. In US military speak, that covers pretty well everything they might want to do.

Granted, 50,000 is a major reduction on the numbers in Iraq a year ago. But what Obama once called "the dumb war" goes remorselessly on. In fact, violence has been increasing as the Iraqi political factions remain deadlocked for the fifth month in a row in the Green Zone. More civilians are being killed in Iraq than Afghanistan: 535 last month alone, according to the Iraqi government – the worst figure for two years.

And even though US troops are rarely seen on the streets, they are still dying at a rate of six a month, their bases regularly shelled by resistance groups, while Iraqi troops and US-backed militias are being killed in far greater numbers and al-Qaida – Bush's gift to Iraq – is back in business across swaths of the country. Although hardly noticed in Britain, there are still 150 British troops in Iraq supporting US forces.

Meanwhile, the US government isn't just rebranding the occupation, it's also privatising it. There are around 100,000 private contractors working for the occupying forces, of whom more than 11,000 are armed mercenaries, mostly "third country nationals", typically from the developing world. One Peruvian and two Ugandan security contractors were killed in a rocket attack on the Green Zone only a fortnight ago.

The US now wants to expand their numbers sharply in what Jeremy Scahill, who helped expose the role of the notorious US security firm Blackwater, calls the "coming surge" of contractors in Iraq. Hillary Clinton wants to increase the number of military contractors working for the state department alone from 2,700 to 7,000, to be based in five "enduring presence posts" across Iraq.

The advantage of an outsourced occupation is clearly that someone other than US soldiers can do the dying to maintain control of Iraq. It also helps get round the commitment, made just before Bush left office, to pull all American troops out by the end of 2011. The other getout, widely expected on all sides, is a new Iraqi request for US troops to stay on – just as soon as a suitable government can be stitched together to make it.

What is abundantly clear is that the US, whose embassy in Baghdad is now the size of Vatican City, has no intention of letting go of Iraq any time soon. One reason for that can be found in the dozen 20-year contracts to run Iraq's biggest oil fields that were handed out last year to foreign companies, including three of the Anglo-American oil majors that exploited Iraqi oil under British control before 1958.

The dubious legality of these deals has held back some US companies, but as Greg Muttitt, author of a forthcoming book on the subject, argues, the prize for the US is bigger than the contracts themselves, which put 60% of Iraq's reserves under long-term foreign corporate control. If output can be boosted as sharply as planned, the global oil price could be slashed and the grip of recalcitrant Opec states broken.

The horrific cost of the war to the Iraqi people, on the other hand, and the continuing fear and misery of daily life make a mockery of claims that the US surge of 2007 "worked" and that Iraq has come good after all.

It's not only the hundreds of thousands of dead and 4 million refugees. After seven years of US (and British) occupation, tens of thousands are still tortured and imprisoned without trial, health and education has dramatically deteriorated, the position of women has gone horrifically backwards, trade unions are effectively banned, Baghdad is divided by 1,500 checkpoints and blast walls, electricity supplies have all but broken down and people pay with their lives for speaking out.


Even without the farce of the March elections, the banning and killing of candidates and activists and subsequent political breakdown, to claim – as the Times did today – that "Iraq is a democracy" is grotesque. The Green Zone administration would collapse in short order without the protection of US troops and security contractors. No wonder the speculation among Iraqis and some US officials is of an eventual military takeover.

The Iraq war has been a historic political and strategic failure for the US. It was unable to impose a military solution, let alone turn the country into a beacon of western values or regional policeman. But by playing the sectarian and ethnic cards, it also prevented the emergence of a national resistance movement and a humiliating Vietnam-style pullout. The signs are it wants to create a new form of outsourced semi-colonial regime to maintain its grip on the country and region. The struggle to regain Iraq's independence has only just begun.