The soldiers at the west Baghdad checkpoint know who to look for. “It’s a black four-wheel drive,” said Captain Ahmed Mousawi of the Iraqi army, describing the Shia militia men who routinely test their resolve. “They come every day and, if we let them in, it is a problem for the Sunnis.”

The captain is a Shia member of Iraq’s national army. He is guarding a Sunni neighbourhood in what eight years ago was the heart of insurgent territory.

From 2008, when violence ebbed for a while, until early this year, when it returned with a vengeance, Ghazaliyah had been held up as a symbol of how things were getting better in Iraq, a place where people from both sects could again move freely, and maybe even overcome the wretched, recent past.

Not anymore. Ghazaliyah, like much of Baghdad, is a cantonment, where communities are again splintering along sectarian lines, families are hunkering down and reconciliation – the buzzword of the past five years – is openly scorned.

Not far away, behind blast walls, Iyad Allawi, the man tasked with bringing Iraqis back together, readily acknowledges that his job description is fraught. “This is the last chance for this country to survive as a single entity,” said the newly named vice president for reconciliation, who admitted to the Guardian that he had reluctantly been sworn in. “I believe reconciliation has a role now. I am trying to convince people to take part in it. Nobody can feel as though they’re outside the net anymore.”

In the Ghazaliyah living room where Ahmed Jabouri and his brother Haithem have sat and smoked through the worst of the past decade, they say the renewed uncertainty is, for the first time, making them want to leave the country for good.

“How can people live together again,” said Ahmed. “I had stayed because there was hope. Even in the darkest days, there always seemed like there would be something better, some day. Now the horizon is black. It’s not easy being Sunni in Baghdad anymore. Every checkpoint (where the brothers’ identifiably Sunni name is checked on their ID cards) means delays, or even detention.

“Asa’ib Ahl al-Haq are looking for us,” he said of the much-feared militia unit that lurks near the main checkpoint leading into his neighbourhood. “It’s only because the officer is strong that they don’t cause havoc here. But they have taken away some Sunnis. We don’t know what happened to them.”

Nearby, in another former flashpoint area, Hai al-Jamea, which before the war was a co-existent hub of Sunnis and Shias, an elderly Shia resident described his ordeal at the hands of kidnappers whom he believes were Asa’ib.

“They stopped me under the bridge,” he said. They put cotton wool on my eyes and a blindfold and they forced me down on the back seat of my own car. We drove around the city for 60km and were waved through every checkpoint.

“They wanted to know my sect. When they believed I was Shia, they released me and gave me my car back. If I was a Sunni, I was finished.”

About 20 miles to the west, where the Islamic State (Isis) insurgency laps at Baghdad’s doorstep, entry to the capital is forbidden to all but a few. The road to Anbar province is blocked by soldiers and militia men west of Abu Ghraib, meaning Fallujah and Ramadi, most of which were overrun by Isis last December are, for now, severed from the rest of the country.

Here and on Baghdad’s southern outskirts, which share Anbar’s predominantly Sunni demographics, community leaders openly say they believe that Iraq within its current borders is no longer viable.

“We fought al-Qaida before,” said Mustafa al-Samarie, a teacher from the town of Latifiya, south of the city. “When the awakening started, we paid a huge price and we have been killed by the terrorists ever since. Now we are being called terrorists by the Shia government that abandoned us and the fight [we fought] for them.”

“How can there be trust when there is no justice,” said Ahmed Abu Risha, the Anbar tribal leader who led the awakening movement in 2007, which at the time was credited with saving Iraq from splitting along sectarian lines. “We have been asked to help them win this fight, but on their terms,” he said of the new Iraqi government.

“There is a long way to go in this country before people can ever start to reconcile with each other. There is no real power sharing. There is no inclusiveness.”

Iyad Allawi said re-empowering Sunnis, and giving the Kurds of the north a stake in the country, was essential if Iraq was to remain a nation state within its current borders.

“There has to be parallel schemes, to abolish or freeze some of the (discriminatory) laws, especially de-Ba’athification and article 4 of the counter terrorism laws (both of which had previously been applied disproportionately to Sunnis). “There has to be measures of trust among the people. Some deserve compensation.”

Allawi says he supports talking directly with former Ba’athist leaders who are playing prominent roles in the insurgency alongside Isis. Some former senior members of Iraq’s military are credited with giving the insurgency a steel and military rigour that it would have lacked if left solely to the jihadis.

“We have to talk on a bilateral basis with those who are making the problems,” he said. “Because they have been severely disenfranchised.

“With the Kurds, either we consider them part and parcel of Iraq, or as an enemy. I look at them as brothers, I don’t see them as outcasts.”

Allawi said he planned to organise a conference backed by the United Nations to reinvigorate reconciliation in Iraq and reintegrate the country within the region. “We have work to do with everyone,” he said. “Neither Iran, or any country, can feel secure while the rest of the region is boiling. Isis has been manufactured by the political realities here and elsewhere. We have to do something fast.”

To many in Baghdad, co-existence has been shredded. At a money change office in the east of the city, the Guardian watched as the owner refused to give a Sunni woman $400 that had been sent from her family in Dubai. After she left, despondent, he said: “She can go and pick it up from Fallujah.”