(Updates with Brown visit to Iraq)

By Peter Graff

BAGHDAD, Dec 9 (Reuters) - Prime Minister Gordon Brown has all but called an end to Britain's Iraq war, but as Britain's largest overseas campaign in more than 50 years comes to a close there is little sense of victory.

In less than two weeks British troops will hand over security responsibility for Basra, the last province they control in southern Iraq, to Iraqi troops.

Nearly five years after then-Prime Minister Tony Blair sent 46,000 British troops to help the United States topple Saddam Hussein, Britain is keeping in place a force of just several thousand, confined to a single air base near Basra city. London says its troops have done their job well.

"The reason why security is so much better here, the reason why things have improved, is because of you, because of what you've achieved," Brown told some of the remaining troops during a brief visit on Sunday evening to their last main base.

But in a sign of just how precarious Britain's presence has become, journalists travelling with him were not even permitted to report the visit until he was safely out of the country.

Critics say Basra is now a place where Shi'ite militiamen administer justice and spray paint walls with threats to kill women who go out without veils. Interpreters who worked for the British have been kidnapped, tortured and killed.

Some experts have concluded Britain lost its war.

"It is quite clear that the British have been defeated, that they are essentially marginalised in an enclave," U.S. analyst Anthony Cordesman of the International Institute for Strategic Studies said in August. That judgment may be too harsh.

"The Blair government built this up into a valiant effort that would change the Middle East and become a beacon for the region, but that was never really an attainable objective given the resources they applied to it," Tim Ripley, who writes for Janes defence publications, told Reuters over the weekend.

"They were playing for a draw. That's a more realistic assessment I'd say. Nil-nil. In extra time. Not pretty."

BUSTLING CITY

On the positive side of the ledger, Basra is a bustling city where restaurants are open late, streets are busy and trade is booming -- for residents, a marked contrast with the grim, walled-off neighbourhoods of Baghdad.

More than 1.5 million barrels of oil flow out of Basra every day, providing the bulk of the central government's revenue.

But the people who exercise much of the power on Basra's streets are no friends of Britain or the United States. That could mean trouble for the U.S.-allied government in Baghdad.

"The objective was to put people in charge of it who were our friends. A hundred and umpteen British troops and billions of pounds later, what do we have to show for it?" Ripley said.

Perhaps the worst stage of Britain's deployment in Iraq was the last. In nearly five years 134 British soldiers were killed by enemy action in Iraq -- more than 30 of them in just four months from April to July this year, after Blair announced plans to pull out of Basra.

Shi'ite militias greeted Blair's announcement with months of intensified bomb attacks and virtually non-stop mortar barrages.

British generals, having announced that tank officer Prince Harry would go to Iraq, called off his deployment at the last minute in May. Iraq was no longer safe for the man third in line to the throne.

"From May to July the brigade we had in Basra was standing toe-to-toe with the militias in the city of Basra and fighting some of the most intense tactical battles that we have had to fight in the four years since we have been here," the British commander, Major-General Graham Binns, recalled last month.

In September, Britain withdrew from a former palace of Saddam Hussein in central Basra to an airbase outside the city, ending a four-and-a-half year presence on Basra's streets.

Since then, violence has dropped: predictably, there is little violence against the British because they are no longer in town; less predictably, Binns said, violence between rival militias has not risen -- in contrast with other provinces.

This is partly because of the dominance in Basra of the Mehdi Army militia of Shi'ite cleric Moqtada al-Sadr, a sworn enemy of Britain and the United States, Binns said.

"We were expecting a spike. Every other province that we have handed over to (Iraqi control) there has been a spike in intra-Shi'ite violence. We haven't seen it in Basra. That is because I think the Sadrist militia are all powerful."

Basra's governorate is held by a smaller rival Shi'ite party, and top commanders of the police and army are loyal to the government in Baghdad, dominated by other Shi'ite parties.

Militants showed their muscle in October, seizing a police station. Police defused the standoff without bloodshed and without calling on British support.

Today, Sadr's followers are halfway through a 6-month ceasefire that the cleric called in August. They and the security forces have avoided a showdown.

So for now: call it a draw. (Additional reporting by Adrian Croft in Basra)

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