In Baghdad, there were signs yesterday of progress in a city struggling to emerge from war and lawlessness. Iraqi police worked alongside US troops, and hundreds of demonstrators marched through the streets, demanding that the foreign troops withdraw.

But in a reminder that small-scale fighting still persists more than a week after the collapse of Saddam’s regime, US troops faced small-arms fire at a palace in Saddam’s hometown of Tikrit. No one was hurt or arrested.

US Central Command said that members of the newly revived Iraqi police force arrested Hikmat Mizban Ibrahim Al-Azzawi, who was Saddam’s finance chief and a deputy prime minister, in Baghdad on Friday and turned him over to US troops. He is among the 55 ex-Iraqi leaders on the US most-wanted list.

A Central Command spokesman, Marine Capt. Stewart Upton, said Al-Azzawi’s arrest showed that the new Iraqi police force is working well and “going after regime leaders.”

Upton suggested that Al-Azzawi should know where the regime kept its wealth hidden. “It’s money for the people of Iraq, and we seek to have that for the building of the future of Iraq,” he said.

Also Friday, Emad Husayn Abdullah Al-Ani — described as the mastermind of Iraq’s nerve agent program — turned himself in to the Americans. Al-Ani may be able to provide information on any chemical or biological weapons in Iraq, or evidence of links between Saddam’s regime and the Al-Qaeda terrorist group.

US officials say he was involved in Iraq’s development of the deadly nerve agent VX. He was also accused by US officials in 1998 of involvement with a chemical plant in Sudan linked to Al-Qaeda leader Osama Bin Laden.

The Central Command also said that Khala Khader Al-Salahat, a member of the Abu Nidal terrorist organization, had surrendered to Marines in Baghdad. Abu Nidal, who died in Baghdad last year under murky circumstances, led a terror campaign blamed for more than 275 deaths on several continents.

In northern Iraq, where Kurds run an autonomous region, scores of people forced to fight for Saddam were freed by their Kurdish captors and began their journey home after as long as three weeks in detention at a prison camp in a tranquil mountain valley.

Minibuses carried 94 Iraqis from the Ashkotwan Prison Camp as the remaining 640 prisoners, all captured around northern Iraq, cheered.

In Kut, hundreds of anti-American protesters chanted: “Go home, USA,” as a US Marine commander, Gen. Rich Natonski, met with tribal leaders seeking their support for the interim regional administration he runs.

The protesters support Said Abbas, an anti-American religious leader who earlier occupied city hall and claimed to control the eastern city, 70 km (45 miles) from the Iran border.

In the capital, the first convoy of food aid arrived after traveling from Jordan. The flour and other supplies, carried in 50 trucks organized by the United Nations, will be stored in warehouses until authorities arrange distribution.

The New York Times reported yesterday that Washington plans to ask the United Nations to lift sanctions against Iraq in phases, gradually turning over parts of the economy to a new Iraqi authority.

Quoting Bush administration officials, the Times said the step-by-step approach was the latest US tactic to counter assertions by France, Russia and other Security Council members that they would oppose lifting sanctions without a broader role for the United Nations than envisaged by Washington. Asked whether the Bush administration favored a phased end to international sanctions, one US official said he was not familiar with such a proposal.

“I don’t know if we’ve decided how we would go about it (getting sanctions lifted),” the official said. He added, “I just know the president wants to lift the sanctions.”