No one challenged the bomber as he approached his target. Iraqi sentries waved him through the gate, into a high-security compound that protects some of the most vital government offices in Baghdad. His uniform and badge identified him as a member of the Wolf Brigade, the elite police unit he had joined three months before. His shirt looked strangely baggy--"billowy," an investigator would say later. It covered a vest packed with explosives. The bomber walked unhindered through the gate and past the Interior Ministry. He passed through another checkpoint at the entrance to Wolf Brigade headquarters, 15 minutes by foot from the compound's gate. In the courtyard, members of the brigade were assembling for their 8:30 a.m. roll call. The young recruit had been AWOL for weeks, but no one asked him where he had been. Then he detonated himself. The only identifiable trace that remained of the bomber was his severed head and feet, according to Iraq's Interior minister, Bayan Jabr.

The explosion on June 11 killed three brigade members, wounded roughly a dozen others and worsened an already deep sense of gloom among U.S. military advisers in Iraq. The Wolf Brigade is supposed to be the cream of Iraq's counterinsurgency forces. The attack showed once again how vulnerable those forces remain. Since the newly elected Shiite-led administration under Prime Minister Ibrahim Jaafari took office on April 28, nearly 1,100 people, mostly Iraqis, have lost their lives in suicide bombings, shootings, abductions and beheadings. The problem goes far beyond the seemingly limitless pool of suicide bombers. In the long run, the insurgents' most powerful weapon may be one that is practically silent: a vast network of infiltrators, spies and recruiters.

According to intelligence officials in Baghdad, whose clearances bar them from speaking publicly, Iraq's security services have hundreds of "ghost soldiers"--members who vanish, sometimes for months on end, but continue to draw their pay. The fear is that they are working for the insurgency while keeping up their ties in uniform. Early on, when training procedures were still being defined, U.S. forces tried to institute a program to screen Iraqi recruits. According to officials who worked on the program but were not cleared to talk publicly about it, the process began with a preliminary interview with the enlistee. If he passed, vetting agents went on to do a background check on the individual as well as on key family members. But with pressure on to find an exit strategy for Iraq--and to build significant Iraqi forces fast--a lot of doubtful characters seem to have slipped through the cracks. Gaps in the process were quickly exploited in a strategic campaign of infiltration by the insurgency.

Over dinner last week in a fashionable Baghdad neighborhood, Iraqi officials were shaking their heads over news that 176 Iraqi police officers were found to have terrorist connections in the past two weeks. " [Some of] their fingerprints were found on bomb debris examined by specialists," said one official, requesting anonymity because he wasn't cleared to talk to media. "The Americans [have been] taking fingerprints from bomb cars and matching them with police records." But Iraq's Security minister, Abdul Karim al-Inizi, says the ones who got caught are only a fraction of the total number of infiltrators. "A number way bigger than that is still active and still in service," al-Inizi told NEWSWEEK. He's especially concerned about moles from Saddam Hussein's elite intelligence corps, the Mukhabarat. "They penetrated easily because [the former Iraqi] government brought them back without asking enough questions." Inizi criticizes the Americans, too, for failing to cultivate reliable Iraqi sources and ignoring repeated warnings about the loyalty of the Iraqis they had recruited. "Yes, they needed to have sources with the former regime," Inizi says. "But they needed other sources of information as well."

The Baghdad government now has its own web of agents and informants. "We are sending our spies inside the terrorist groups before attacking them," says the Wolf Brigade's commander, Maj. Gen. Mohammed Qureishi. "We have our regular ways to get the information from our sources about the terrorist locations." Qureishi is the creator of Iraq's most popular TV show, the reality series "Terrorists in the Hands of Justice," which features captured insurgents delivering public confessions. Human-rights groups have voiced concern over how those confessions are obtained.

Qureishi is believed to have been the intended target of the suicide bombing at Wolf Brigade headquarters, but he was not in the courtyard when the bomb went off. In the wake of the attack, the Defense Ministry created the "Lessons Learned Center"--the first office of its kind in Iraq--to find and fix the problems that made the attack possible.

New insurgents seem to spring up faster than the allied forces can cut them down. The Coalition has announced the killing of some 15,000 insurgents over the past year. Nevertheless, official briefers have recently estimated that between 12,000 and 20,000 insurgents remain active. According to a U.S. Special Ops source, who required anonymity because of the sensitivity of his work, the insurgents include an estimated 1,000 foreign jihadists, 500 homegrown Iraqi jihadists, between 15,000 and 30,000 former regime elements and as many as 400,000 auxiliaries and support personnel. Those figures don't count gangster organizations operating "in at least 12 of the 18 provinces." All told, the insurgency is believed to include upwards of 40 reasonably distinct groups that sometimes join forces for particular operations.

Counterinsurgency experts are alarmed by how fast the other side's tactics can evolve. A particularly worrisome case is the ongoing arms race over improvised explosive devices. The first IEDs were triggered by wires and batteries; insurgents waited on the roadside and detonated the primitive devices when Americans drove past. After a while, U.S. troops got good at spotting and killing the triggermen when bombs went off. That led the insurgents to replace their wires with radio signals. The Pentagon, at frantic speed and high cost, equipped its forces with jammers to block those signals, accomplishing the task this spring. The insurgents adapted swiftly by sending a continuous radio signal to the IED; when the signal stops or is jammed, the bomb explodes. The solution? Track the signal and make sure it continues. Problem: the signal is encrypted. Now the Americans are grappling with the task of cracking the encryption on the fly and mimicking it--so far, without success. Still, IED casualties have dropped, since U.S. troops can break the signal and trigger the device before a convoy passes. That's the good news. The bad news is what the new triggering system says about the insurgents' technical abilities.

Even so, the Americans are managing to celebrate a victory or two. Last Tuesday, in the embattled city of Mosul, U.S. and Iraqi forces captured Mohammed Khalaf Shakar, also known as Abu Talha. The Iraqi insurgent leader was said to be a top lieutenant of Al Qaeda's commander in Iraq, Abu Musab al-Zarqawi. "This is a major defeat for Al Qaeda's terrorist organization in Iraq," said allied forces spokesman Brig. Gen. Donald Alston. "Al-Zarqawi's leader in Mosul is out of business." The insurgent was captured at an associate's home in a quiet Mosul neighborhood. He had vowed to kill himself rather than fall into U.S. hands. "Instead, Abu Talha surrendered without a fight," Alston said. Another military spokesman, Cmdr. Dave Wray, credited the capture to a helpful telephone tip, along with information obtained from Khalaf associates captured earlier.

No one in U.S. intelligence seems ready to say the fight is hopeless. But no one is sounding very optimistic, either. The CIA produced a study this May on a topic so sensitive that even the title is classified. The paper discussed the environment in which jihadists trained at Al Qaeda's camps in Taliban-run Afghanistan, contrasting that against the environment in which Iraq's insurgents are mastering the techniques of urban warfare. For starters, not all new recruits in Afghanistan necessarily hated America before undergoing Al Qaeda indoctrination. In Iraq, on the other hand, hostility toward America is practically the only thing that all insurgents agree on--foreign infiltrators and native recruits alike. And jihadists in Iraq are getting direct, on-the-job training in a real-life insurgency, with hands-on experience in bombing, sniping and all the skills of urban warfare, unlike the essentially artificial training that was given at Al Qaeda's rural Afghan camps. One of the paper's main points is that America's Iraqi troubles will not end with the insurgency. In effect, Iraq is producing a new corps of master terrorists with an incandescent hatred for the United States--the "class of '05 problem," as it's called in the shorthand of CIA analysts. This war is proving to be longer and nastier than almost anyone expected. One day, its results may be felt closer to home.