The last thing Iraqi and U.S. officials wanted during an official handover ceremony was a deadly terrorist attack. The surprise transfer of power a few days ahead of schedule in a fairly private ceremony averted a potential disaster.

Some Iraq analysts like Michael Rubin of the American Enterprise Institute in Washington say the pre-emptive transfer of power may send mixed signals. "On one hand, it's a wise decision from the point of view of security. On the other hand, it does transmit to some of the militants that we're running scared," he said.

There is little doubt the insurgency will continue. Militants trying to derail Iraq's transition are targeting anyone connected to it.

Even as the handover took place, militants were threatening to kill an American soldier, three Turkish nationals and a Pakistani citizen they are holding hostage. Fighting continues in several areas of the country.

Security has been a chief concern for the U.S.-led coalition and for Iraqi leaders taking charge of the interim government.

The enormity of the task is not lost on Iraqi interim Prime Minister Iyad Allawi. "We feel we are capable and in control of the situation and the security situation," he said.

David Mack of the Washington-based Middle East Institute says the early transfer of sovereignty bolsters the interim leadership's credibility. "I think it's a recognition in London and Washington that the new group of Iraqi leaders has been saying the right things, taking the right initial steps. It's very early in the game but why not give them a vote of confidence," he said.

That vote of confidence is much needed for Iraqi leaders who are aware the military and police forces are not yet ready to enforce law and order.

Interim Prime Minister Allawi talks about the need for emergency measures that could include curfews and other restrictions. He also talks about rehiring former commanders of Saddam Hussein's army.

Middle East analyst David Mack says it is a risky but necessary move. "You had a huge pool of talent being wasted and worse than that, people being turned against the newly-emerging order in Iraq because they were deprived of the ability to carry out any honorable employment to support themselves and their families and enable them to serve the nation," he said.

Mr. Mack also suspects the timing of the early transfer during the NATO summit in Istanbul was not a coincidence. "This was an opportunity to put Iraqis in the best possible light at the time they were requesting from NATO special assistance, particularly in the area of training," he said

NATO assistance, he says, will be easier to get now that the U.S.-led occupation is over. Several NATO members had opposed the U.S. war in Iraq and refused to provide military help.

But Iraq's security also depends heavily on the continued presence of more than 150,000 foreign troops.

The bulk of the foreign troops in Iraq are American. U.S. officials have talked a lot about lowering their profile during the transition period. But their continued presence still gives Iraqis the impression the occupation continues.

"Sovereignty is symbolic at this point. U.S. participation on the security side and the U.N. role on governance is essential to going forward," Middle East analyst David Phillips of the Council on Foreign Relations.

Mr. Phillips says it is important for the interim leadership now to put an Iraqi face on security. "If Iraqis are manning checkpoints and proactively working from police stations around the country to create better security, it's going to send a message to Iraqis that the insurgency is against their own and that Iraq's interests lie in strengthening interim government and moving more fully toward sovereignty through additional government arrangements," he said.