KIRKUK, Iraq - Midway through the U.S. commanding general's proclamation of peace and brotherhood here yesterday, gunfire erupted outside the heavily fortified government compound where he was addressing town leaders.

"Get back! Get back!" U.S. soldiers shouted at hundreds of Iraqi civilians, mostly Kurds, gathered between coils of concertina wire to plead for jobs or help getting back homes and land taken away during Saddam Hussein's rule.

In a frantic attempt to escape the gunfire behind them, the crowd had pushed forward, prompting U.S. sentries to fire machine-gun salvos in warning. The panicked throng then rushed off, snagging skin, clothes and clutched documents on the barbed wire protecting the U.S. troops who are still the only authority in this oil-rich city the size of Denver.

Minutes later and a few blocks away, running street battles broke out between knife-wielding Kurdish youths and Arabs who witnesses said were behind the City Hall shooting incident. By midafternoon, shops were shuttered and streets that had been teeming with commerce in the morning were empty except for broken glass and boulders.

It was clearly the wrong day to declare victory in the coalition's fight here against the enemies of law and order.

But Maj. Gen. Ray Odierno, commander of U.S. troops in northeastern Iraq, carried on with his address to the civic leaders, insisting that the disturbances were the work of a criminal few and that the resuscitation of Kirkuk would go on undaunted.

Conditions in Iraq's most important oil city have indeed improved in the mere five weeks since U.S. troops of the 173rd Airborne Brigade arrived April 10. Water, power, banks, schools and a fledgling police force are up and running. Most of the civil service that made up as much as 70 percent of Iraq's work force has gone unpaid for three months or longer. In Kirkuk, however, U.S. troops have started paying salaries to teachers, health care workers and police officers with money seized from the government.

But the panic incited outside the government building and its spillover across the Khasa River was an ominous reminder of the work yet to be done to secure the peace even though the war is over.

It was also a pointed reminder that the Pentagon-run Office for Reconstruction and Humanitarian Assistance has yet to put its oar into the postwar rebuilding effort here, leaving the 2,500 U.S. troops of the 173rd Airborne to shoulder peacekeeping and restoration of public service.

Col. William Mayville of the 173rd Airborne swiftly deployed his troops to restore essential services and has single-handedly put together an ethnically balanced 500-member police force that is slowly earning the respect of the 1.2 million people of Kirkuk and its surroundings, said Ali N. Salhi, chairman of the Free Officers and Civilian Movement. But he estimated that there are 250,000 guns in the city and urged Mayville's troops, recently augmented by Odierno's 4th Infantry Division, to conduct house-to-house searches to disarm the public.

Sweeping the city for weapons is possible now that military reinforcements have arrived, said Mayville.

But the continuing presence of Hussein supporters and the prevalence of weapons leave the troops and Kirkuk's population vulnerable to provocations.

But Mayville and Odierno sought to convince the assembled civic leaders that Kirkuk is relatively safe and ready for the next step on the road to democracy and freedom: an interim government to take over the public administration reins from the armed forces. The officers have invited about 300 politicians and professionals to gather in a week and to choose a 24-member City Council, a mayor, a deputy mayor and three assistants.

C.J. Williams is a reporter for the Los Angeles Times, a Tribune Publishing newspaper.