Iraqi forces encircle Grand Mosque in Mosul’s Old City

Black ISIL flag still hangs from minaret of the mosque where ISIL leader declared group's "caliphate" nearly three years ago.

Turmoil from the the conflict with ISIS and volatility of oil prices has negatively impacted Iraq's economy the IMF says. Youssef Boudlal / Reuters

Troops are meeting fierce resistance as militants retreat into the Old City, where street fighting is expected in the narrow alleyways and around the mosque where ISIL declared its caliphate nearly three years ago. The black ISIL flag still hangs from the mosque’s minaret.

A helicopter fired rockets into the area and heavy gunfire and mortar blasts echoed as troops made forays into nearby districts.

“Federal police and rapid response forces completely control the Al Basha mosque, Al Adala street and Bab Al Saray market inside the Old City,” a spokesman said. “Forces are trying to isolate the Old City area from all sides and then start an offensive from all sides.”

Five months into the campaign to liberate Mosul, ISIL’s last major stronghold in the country, Iraqi forces backed by US-led coalition air strikes have retaken the eastern half of the city and about half of the western side across the Tigris river.

They are now trying to lay siege to the Old City and cut off a street leading out to prevent ISIL dispatching the armoured suicide car and lorry bombs that have been targeting army positions inside the city.

On Wednesday, a suicide bomber in an armoured digger lorry penetrated Iraqi forces lines, smashing through vehicles and barricades before detonating a blast that destroyed vehicles including Iraqi US-made Abrams tanks.

An attack on Thursday was stopped when the vehicle was hit by a rocket in the Bab Tob old market area before it could approach federal police and other units.

US officials estimate that around 2,000 fighters remain inside the city. The risk is that the militants will return to the kind of guerrilla warfare and bombings they have used in the past against the capital and other cities.

Just north of Baghdad, a Sunni militia leader was killed along with two members of his family and two guards on Friday when gunmen, including suicide attackers, broke into his house, police and army sources said.

Lateef Al Jari, local leader of the Sunni brigade in the small Sunni town of Mishahda, was killed in the attack, which security sources blamed on ISIL.

As many as 600,000 civilians are caught with the militants inside Mosul.

* Reuters