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Somalia’s interim leaders this week claimed victory over insurgents after an offensive by their Ethiopian backers turned much of Mogadishu into a ghost town. However, they will struggle to salvage a durable peace from the rubble.

In the past few weeks the city has witnessed its worst fighting in 15 years as Ethiopian troops have fought tank and artillery battles with the government’s Islamist and clan-based opponents. Well over 1,000 civilians have been killed, and more than 300,000 have had to flee.

Previous predictions of the Islamists’ demise have been premature, but Ali Mohamed Gedi, the interim prime minister, said government forces and their Ethiopian allies had overrun a key opposition stronghold in the north of the capital on Thursday. “Most of the fighting in Mogadishu is now over,” he told a news conference.

Despite Mr Gedi’s assurances, the recent violence has left US strategy for stabilising the country in disarray. Washington has backed both the Ethiopians and the interim government in the hope they will deny suspected al-Qaeda militants a haven in Somalia, but their allies’ heavy-handed tactics have proved a growing source of embarrassment.

Jendayi Frazer, assistant secretary of state for African affairs, became the highest level US official to visit Somalia in more than a decade when she went to the government-held town of Baidoa this month, although her calls for a ceasefire appear to have had little effect.

Ms Frazer also urged the interim government to broaden its appeal, hoping it will evolve into the first central government since 1991. But street-to-street fighting is only likely to have hardened opposition to leaders already viewed by many Somalis as Ethiopian and American stooges.

The US had hoped the African Union would step in to fill the security vacuum as Ethiopian troops withdrew, but with only about 1,200 Ugandan peacekeepers in Mogadishu, that prong of US strategy looks compromised.

“The US has shot itself in the foot in Somalia,” said Mohamed Ali, a senior researcher at the Institute for Security Studies in Nairobi. “It’s not only made Somalia more unstable, but the whole Horn of Africa.”

Stoking fears the conflict could spread into Ethiopia, ethnic Somali rebels killed 74 people including nine Chinese workers in an unprecedented attack on an oil exploration facility near the Somali border on Tuesday.

Optimists argue that now Ethiopia appears to have achieved its main military objectives in Mogadishu, it may increase pressure on Abdullahi Yusuf, Somalia’s interim president, to reach out to opponents at a reconciliation conference due in the next few months.

“There is an opportunity now for serious negotiations,” said a western diplomat. “The international community needs to put strong and consistent pressure on Yusuf.”

However, recent defections have left the administration looking increasingly dominated by the Darod clan, regarded with suspicion by Mogadishu’s Hawiye majority. Hussein Aideed, deputy prime minister, recently defected to Eritrea and has accused Ethiopia of “genocide”. The fighting in Somalia has also provided a new arena for Ethiopia and Eritrea to play out a conflict dating back to their 1998-2000 war, and has undermined Kenya’s role as mediator.

Allegations that Kenyan security services participated in the secret “rendering” of Somalis to Ethiopian prisons for interrogation by CIA agents has cast Nairobi in the role of a US stooge in the eyes of many Somalis, and inflamed Muslim opinion at home.

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