(Bloomberg) -- "You shouldn't think that everything will be all right here," said Abdul-Aziz Zuhair, mayor of Mosul, explaining how recent peaceful provincial elections didn't tell the whole story of this Iraqi city.

As if on cue, an explosion rattled the windows of his fortified office. A grenade made from a tin can and ball bearings had hit a U.S. armored car patrol just a mile away.

"Iraq will be full of surprises," said Zuhair, barely skipping a beat.

Mosul, the country's second-largest city, is Iraq's last major stronghold for al-Qaeda, the global terror network that joined domestic insurgents to fight U.S. troops and the government after the 2003 U.S.-led invasion that toppled Saddam Hussein. While the threat has receded in the capital, Baghdad, and in west-central Iraq, Mosul is where America's biggest adversaries have sunk their deepest roots.

Persistent hostilities in Mosul are testing President Barack Obama's hopes of pacifying Iraq by June. American troops are scheduled to withdraw from city streets by then, or if not, by the end of 2011, when they are set to leave the whole country at the latest. Mosul needs to be stabilized because it is a base from which rebels can disperse south to Baghdad and to still- restive areas.

The city's volatility was on full display during a visit between Feb. 1 and Feb. 10. Not a day went by without an attack on U.S. troops or their allies. Weapons included homemade grenades, exploding scrap metal hidden under trash heaps and a car bomb. On Feb. 19, a suicide bomber detonated his vehicle near a U.S. patrol and killed four soldiers, the biggest single-day loss of American life in Iraq since last May.

Untested Iraqis

U.S. commanders caution that with the Americans gone and Iraqi forces not fully tested on their own, Mosul risks becoming the nucleus of resurgent trouble and even civil war.

"We don't want Mosul to become a safe haven for terrorists, as it has been in the past," said Lieutenant Colonel Benjamin Matthews, 41, with the 3rd Heavy Brigade Combat Team of the 1st Cavalry Division operating in northeast Mosul. "It's like tip- toeing through a minefield."

Three interconnected groups are wreaking havoc in Mosul, he said: al-Qaeda, which has attracted foreign recruits who enter through Syria, just 80 miles (130 kilometers) to the northwest; Sunni Muslims disaffected by their loss of power after Hussein was deposed; and bombers-for-hire used by al-Qaeda who also specialize in shaking down merchants for money.

Sunnis and Kurds

Mosul, which sits along a winding section of the Tigris River, is a majority Sunni Arab city with a minority Kurdish population. It fell without a shot after the ouster of Hussein, although Kurdish and Arab marauders looted government buildings and the central bank vaults before U.S. forces entered the city.

It has quieted in the past six months in the wake of heavy U.S. assaults backed by Kurdish forces ferried in from far northern Iraq. The Jan. 31 provincial elections, in which Sunnis took 48 percent of the vote for the 41-member Nineveh Province Council, may help reduce Sunni antipathy and undermine the group's connections with al-Qaeda, U.S. officials say. Kurds were running the city only because Sunnis boycotted 2005 elections.

"Elections are key to reversing instability by ending the reign of a local government perceived to be alien," said Colonel Gary Volesky, 47, commander of the 3rd Heavy Combat Team. "I am hopeful that with a new government, things will calm down further."

Baath Recruits

The city of 1.8 million was once a major recruiting ground for Hussein's army officer corps and security services and a stronghold of his ruling Baath party.

After Hussein's fall, 20,000 U.S. and allied soldiers controlled Mosul and surrounding Nineveh Province and the town was largely peaceful. Starting in January 2004, though, reductions in the U.S. contingent led to a rise in violence, including a January 2008 suicide car bomb in Mosul's western Zanjili district that killed 60 people.

During the past year, U.S. units, reinforced to 10,000, and Kurdish forces launched twin campaigns to tame Mosul. They were named Operation City of Two Springs I and II, in a tribute to Mosul's reputation for temperate weather. Bombings fell to a low of two a day at times from 60 or 70. In October, Iraqi forces numbering 35,000, almost a third of the entire army's strength, replaced Kurdish troops and fanned out to camps across Mosul.

Sand piles and cement barriers block city side streets and American and Iraqi troops run frequent patrols. Although they number 28,000, Iraqi police are staying inside their stations rather than walking beats. They are needed to keep watch street- by-street to deter insurgents, Volesky said.

"Eventually, it will be important for a police presence to cover Mosul," he said. Insurgent hotbeds endure, especially in Volesky's area of operations around Mosul University and in a district called Saddam in the far northeast.

Mayor Zuhair, who heads a U.S.-organized municipal council, is pessimistic, especially if the insurgents and al-Qaeda aren't crushed by June. He says Sunnis remain resistant to Iraq's new order and al-Qaeda is still a strong presence.

"I expect sleeper cells to reactivate," he said. "We could simply go back to zero."

By Daniel Williams