U.S. Military Wall Off Baghdad's Sadr City

BAGHDAD, May 12, 2008 — -- "At the end of the wall … is the end of the earth"

A sergeant's warning that we should not walk past the last 5-foot section of the 12-foot T-wall that is being put in place in Sadr City. The U.S. military has nearly three-quarters of the 2-mile wall completed.

Right now, this is the front line in the Iraq War.

As we watched the chunks of concrete being placed … a sharp crack. It was a U.S. Navy sniper firing on threats on the other side of the wall. Already, Shiite fighters are trying to blast holes in the wall.

A captain showed us a piece of what was molten copper that had slammed through the concrete and hit his armored truck causing just cosmetic damage. That copper is the top of an EFP, an explosively formed penetrator. These are the deadly armor piercing bombs that the United States says are being exported to Iraq by Iran.

The good news: The truce announced Sunday between the Iraqi government and Moqtada al Sadr's Mahdi Army militia seems to have cut the violence, at least for now.

And there have been improvements in the area that has been walled off. The combat station where ABC News correspondent and cameraman Ryan Owens and Bartley Price saw nearly continuous sniper fire a few weeks ago seemed relatively safe.

Surrounding buildings have been hit by American-guided bombs to deny Shiite snipers refuge.

We walked through the Jamila market. This is the wholesale market where trucks arrive packed with goods. The retail side of this massive market has been severely damaged in the fighting here since late March.

The lieutenant colonel in charge of the area asked shopkeepers whether life has improved and offered "micro-credits" to business owners. This is right out of the counterinsurgency manual. Secure the neighborhood, then improve services.

From the Iraqi side a sense of tension. Residents don't know what is to come next. They are waiting to hear what Sadr says.

How did we get to this point? In late March Iraqi Prime Minister Nouri al Maliki launched the Iraqi security forces against "special groups and criminals" in Basra. Most people call them Sadr's Mahdi Army. Sadr retaliated not only in Basra but here in Baghdad.