Mosul is ruled by Al Qaeda

Reuters: 'Baghdad's ministers describe Iraq's crippling infrastructure problems as an opportunity to invest. Occasional explosions are dismissed as the last throes of isolated cells trying to show they are still relevant in a country where the overwhelming majority is committed to peace.

But during a visit of several days in Iraq's third largest city, security officials and residents of Mosul painted a picture far worse than commonly understood from Baghdad.

Far from being furtive and on the run, al Qaeda and its allies maintain a hold over economic and political life that shows little sign of loosening. Residents speak fearfully.

Um Qassim's family of nine are Shi'ites from the small Shabak minority, one of the many ethnic groups that share Iraq's most diverse city. They have had to abandon their home and move into two rooms across town.

"They have displaced all the Shabak from their houses to eastern Mosul. Whoever resists, they kill him or bomb his house," Um Qassim said.

As she began speaking to Reuters, her husband approached, clearly agitated: "Be careful, do not mention your real name," he said. "Keep in your mind that they can reach us anytime."

Shop owners say they are forced to pay protection money to the militants. Security officials say the fighters are raising millions of dollars per month here, which they use to fund bomb attacks across Iraq.

"They keep coming, every three months, to take $300 - $100 per month - always at the same time but not the same person," said a pharmacist, who spoke to Reuters only when his shop was empty and became silent whenever a customer entered.

"They are very organized and very polite. I cannot get rid of them. The pharmacist next door refused to pay. They planted a bomb inside his pharmacy and one of his workers lost his leg."