MOSUL, Iraq (Reuters) – Iraqi forces clashed with Islamic State militants holding out in Mosul’s Old City on Wednesday, more than 36 hours after Baghdad declared victory over the jihadists in what they had made the de facto Iraqi capital of their self-declared caliphate.

Prime Minister Haider al-Abadi’s victory announcement signaled the biggest defeat for the hardline Sunni group since its lightning sweep through northern Iraq three years ago. But pockets of Mosul remain insecure and the city has been heavily damaged by nearly nine months of grueling urban combat.

About 900,000 people fled the fighting, with more than a third sheltered in camps outside Iraq’s second largest city and the rest living with family and friends in other neighborhoods.

Civilian activity has quickly returned to much of Mosul and work to repair damaged homes and infrastructure is underway, but authorities have not prepared a post-battle plan for governance and security in the city, officials say.

Iraqi forces exchanged gunfire with the militants in their final Mosul redoubt just before midnight and into the morning hours, three residents living just across the Tigris River from the area told Reuters.

Army helicopters strafed the Old City and columns of smoke rose into the air, though it was unclear if these came from controlled explosions or from bombs set off by Islamic State, the residents said by phone.

“We still live in an atmosphere of war despite the victory announcement two days ago,” said Fahd Ghanim, 45. Another resident said the blasts shook the ground around half a kilometer away.

An Iraqi military official attributed the activity to “clearing operations”.

“There are Daesh (fighters) hiding in different places,” he said, using an acronym for Islamic State. “They disappear here and pop up there, then we target them.”

Media access to the area has been heavily restricted since Abadi claimed victory on Monday, hailing “the collapse of the terrorist state”.

Footage released by the Islamic State news agency Amaq entitled “Fighting till the last gasp” and allegedly filmed in Mosul’s Maydan district showed militants mixed in with civilians and unidentified corpses lying amid the rubble of an urban battlefield. Reuters could not authenticate the video.

ASYMMETRIC ATTACKS

The Iraqi official declined to estimate the number of militants or civilians remaining in the Old City, but the top U.S. general in Iraq said on Tuesday that as many as a couple of hundred IS insurgents could still be in Mosul.

“There are bypassed holdouts. We haven’t cleared every building in this city the size of Philadelphia. That’s going to have to be done, and there are also hidden IEDs (improvised explosive devices),” Lieutenant General Stephen Townsend told reporters. “There are still going to be losses from the Iraqi security forces as they continue to secure Mosul.”

The U.S.-led coalition said it had conducted three air strikes on IS in the Mosul area on Tuesday, targeting militants, machine-gun emplacements and rocket-propelled grenade systems.

South of the city, Iraqi security forces repelled an IS attack launched from western desert areas on the village of al-Jaran, a tribal fighter said.

Reinforcements also arrived to help government forces oustmilitants armed with machine guns and mortars from the village of Imam Gharbi, further to the south. IS had taken around 75 percent of the village since storming it last week.

These are the kind of asymmetric, guerrilla-style strikes Islamic State is expected to concentrate on now as U.S.-backed Iraqi forces regain control over cities the group captured during its shock 2014 offensive.

Another attack on a border guard convoy in western Anbar province, near the Syrian border, killed two soldiers and wounded four on Tuesday, military sources said.

Separately, 28 Sunni Muslim civilians were kidnapped in the Iskandariya district south of Baghdad this week and 20 of them were found dead later, a police officer told Reuters.

Suspects detained by the authorities said they belonged to the Shi’ite Muslim Asaib Ahl al-Haq militia. A Baghdad-based spokesman for the group, whose fighters are taking part in the Shi’ite-led government’s campaign against Islamic State, said he had no knowledge of the incident.

The government’s victory in Mosul may rekindle revenge attacks and fresh violence between Sunnis and Shi’ites, a sectarian divide that tipped Iraq into civil war after the U.S.-led invasion that toppled Saddam Hussein in 2003.

(Reporting by Stephen Kalin; editing by Michael Georgy and Mark Heinrich)

By Ghazwan Hassan

TIKRIT, Iraq (Reuters) – Islamic State has captured most of a village south of Mosul despite losing control of its stronghold in the city, an Iraqi army officer and residents said, deploying guerrilla-style tactics as its self-proclaimed caliphate crumbles.

Prime Minister Haider al-Abadi declared victory over Islamic State in Mosul on Monday, marking the biggest defeat for the hardline Sunni group since its lightning sweep through northern Iraq three years ago.

But the militants, armed with machine guns and mortars, have now seized more than 75 percent of Imam Gharbi, a village on the western bank of the Tigris river some 70 km (44 miles) south of Mosul, and reinforcements are expected, the Iraqi army officer said.

Islamic State launched its attack on Imam Gharbi last week, in the kind of strike it is expected to deploy now as U.S.-backed Iraqi forces regain control over cities the group captured during its shock 2014 offensive.

Mosul resident Hind Mahmoud said by telephone that she had heard exchanges of gunfire in the Old City and seen an Iraqi army helicopter firing on Islamic State militants on Tuesday.

Stripped of Mosul, Islamic State’s dominion in Iraq will be reduced to mainly rural, desert areas west and south of the city.

Islamic State also faces pressure in its operational base in the Syrian city of Raqqa, where U.S.-backed Syrian Kurdish and Arab forces have seized territory on three sides of the city.

The campaign to retake Mosul from the militants was launched last October by a 100,000-strong alliance of Iraqi government units, Kurdish Peshmerga fighters and Shi’ite militias, with a U.S.-led coalition providing key air and ground support.

Abadi’s government in Iraq now faces a difficult task managing the sectarian tensions which enabled Islamic State to gain supporters in the country among fellow Sunnis, who say they were marginalized by the Shi’ite-led government.

The U.S.-led coalition warned that victory in Mosul did not mark the end of the group’s global threat.

“Now it is time for all Iraqis to unite to ensure ISIS (Islamic State) is defeated across the rest of Iraq and that the conditions that led to the rise of ISIS in Iraq are not allowed to return again,” Lieutenant General Stephen J. Townsend said in a statement.

(Writing by Michael Georgy; Editing by Gareth Jones)

By Stephen Kalin and Maher Chmaytelli

MOSUL/ERBIL, Iraq (Reuters) – Iraqi security forces expect to take full control of Mosul within hours as Islamic State’s defensive lines crumble in its former de facto capital in Iraq, military commanders said on Saturday.

Dozens of soldiers celebrated amid the rubble on the banks of the Tigris river without waiting for a formal victory declaration, some dancing to music blaring out from a truck and firing machineguns into the air, a Reuters correspondent said.

The mood was less festive, however, among some of the nearly one million Mosul residents displaced by months of combat, many of whom are living in camps outside the city with little respite from the blazing summer heat.

“If there is no rebuilding and people don’t return to their homes and regain their belongings, what is the meaning of liberation?” Mohammed Haji Ahmed, 43, a clothing trader, told Reuters in the Hassan Sham camp to the east of Mosul.

“We are seeing now the last meters (yards) and then final victory will be announced,” a television presenter said, citing the channel’s correspondents embedded with security forces fighting in Islamic State’s (IS) redoubt in the Old City of Mosul, by the Tigris. “It’s a matter of hours,” she said.

A U.S.-led international coalition is providing air and ground support to the eight-month campaign to wrest back Mosul, by far the largest city seized by Islamic State in 2014.

Almost exactly three years ago, the ultra-hardline group’s leader Abu Bakr al-Baghdadi declared from Mosul a “caliphate” over adjoining parts of Iraq and Syria.

ARTILLERY EXPLOSIONS, GUNFIRE

A military spokesman cited by the TV said the insurgents’ defense lines were collapsing. Iraqi commanders say the militants were fighting for every meter with snipers, grenades and suicide bombers, forcing security forces to fight house-to-house in the densely populated maze of narrow alleyways.

Dozens of insurgents were killed on Saturday and others tried to escape by swimming across Tigris, state TV said.

“The battle has reached the phase of chasing the insurgents in remaining blocks,” the Iraqi military media office said in a statement. “Some members of Daesh have surrendered,” it added, using an Arab acronym of Islamic State.

Artillery explosions and gunfire could still be heard during Saturday afternoon and a column of smoke billowed over the Old City riverside, the Reuters correspondent said.

The road where the soldiers celebrated was scarred with gaping holes from explosions and rubble from a flattened multi-storey shopping mall. Rubbish and ammunition boxes were strewn around and there was no sign of civilians.

Months of urban warfare has displaced 900,000 people, about half the city’s pre-war population, and killed thousands, according to aid organizations.

Prime Minister Haider al-Abadi declared the end of Islamic State’s “state of falsehood” a week ago, after security forces took Mosul’s medieval Grand al-Nuri mosque – although only after retreating militants blew it up.

Stripped of Mosul, Islamic State’s dominion in Iraq will be reduced to mainly rural, desert areas west and south of the city where tens of thousands of people live. The militants are expected to keep up attacks on selected targets across Iraq.

The United Nations predicts it will cost more than $1 billion to repair basic infrastructure in Mosul. In some of the worst affected areas, almost no buildings appear to have escaped damage and Mosul’s dense construction means the extent of the devastation might be underestimated, U.N. officials said.

The fall of Mosul also exposes ethnic and sectarian fractures between Arabs and Kurds over disputed territories or between Sunnis and the Shi’ite majority that have plagued Iraq for more than a decade..

During their impromptu victory celebrations, some of the Iraqi soldiers waved pictures of Hussein, the grand son of prophet Mohammed who is immensely revered by the Shi’ites.

Mosul is a majority Sunni city who has long complained of being marginalized by the Shi’ite-led governments installed after the 2003 U.S.-led invasion of Iraq.

Meanwhile, Iraq’s regional Kurdish leader said this week that the government in Baghdad had failed to prepare a post-battle political, security and governance plan.

(Additional reporting by Isabel Coles in Hassan Sham camp; Writing by Maher Chmaytelli; Editing by Helen Popper)