Abobo, usually one of the most populated suburbs of Abidjan, has become a place of terror, bloodshed and desperation

The men wear roughly improvised balaclavas, some plain black, others patterned with skulls and crossbones. One is clad in a heavy-duty jacket that bears the circular logo of CND. They have fashioned a checkpoint out of battered car doors lined up across the road.

This is the gateway to the "autonomous republic of Abobo", usually one of the most populated suburbs of Ivory Coast's commercial capital, Abidjan. It has in effect declared independence from the disputed presidency of Laurent Gbagbo. Now a lawless place of terror, bloodshed and desperation, it typifies the slow-motion implosion of a country into a failed state.

No one is safe in Abobo. Women were slaughtered in a hail of machine-gun fire at a demonstration. Men have been beaten and burned alive because they were judged to belong to the wrong tribe or nationality. UN peacekeepers have been shot at and western journalists have been roughed up and threatened with lynching.

The Guardian's vehicle was stopped at the makeshift roadblock and its occupants ordered out. The masked guards, going by the name "invisible commandos", conducted a thorough search of the glove compartment and under the seats. A local observer said men with AK-47s were waiting out of sight in case the mood soured.

Normally busy with traffic, Abobo is emptying as thousands of residents flee the anarchy. Burned out hulks of cars and pickup trucks litter the scorchmarked roads. Vast piles of rubbish are expanding and threatening public health. Along the single storey rows of shops, almost all the shutters are down, making a mockery of the glamorous faces grinning from advertising billboards

"Life in Abobo is catastrophic," said resident David Kouassi, an IT technician. "You have people who cannot get to work so they are being fired. The electricity company is threatening to cut people off for not paying their bills. It's hard to find food or medicine. I will use one word to describe what will happen if people don't take care of this situation: chaos. Abobo will become a place where no one can live." Kouassi, 28, had a narrow escape when youths questioned him about his tribe: fortunately his was the "right" one. He said: "Sometimes if you don't go back home in time, you find youths have set up blockades with machetes and knives. They search you and steal everything they find like medicines and mobile phones."

He is trying to move away with his pregnant wife and father but has nowhere to go. "If we stay here we could be killed," he said. "Almost all the companies and shops have been ransacked and people have run out of money and are looking at ways to feed themselves. When they have exhausted the shops, they will go to homes and families could be killed."

The Abobo militias say they are defending the neighbourhood against Gbagbo's security forces and hired mercenaries following weeks of night raids and street battles with heavy weapons. They demand that Gbagbo gives way to his rival, Alassane Ouattara, who beat the incumbent president in a UN-certified election last November.

There are signs that other pro-Ouattara areas are trying to secede from government control, turning Abidjan into a chessboard of rival power bases. The most important politically is the sprawling Golf Hotel where, in sharp contrast to Abobo, there is sunshine and calm as Ouattara and his "cabinet" sit and watch and wait.

One resident describes it as "the safest place in Ivory Coast today".

Beside a lagoon and surrounded by great coils of barbed wire, UN peacekeepers from Bangladesh, Jordan, Togo and elsewhere try to sleep in humid white tents on a lawn near the hotel swimming pool. Inside the worn four-star hotel, where all 250 rooms are occupied, people lounge on plastic chairs in the cavernous reception hall with 1970s decor of murals and lurid green and purple walls. In a makeshift plywood studio, young men wearing headphones sit at computers editing content for a pro-Ouattara station that they hope will counter Gbagbo's state TV.

Among those who have been holed up here for nearly four months is Patrick Achi, Ouattara's economic infrastructure "minister" and government spokesman. He describes the hotel as a "prison" but said its guests were working day and night to weaken Gbagbo's grip.

"Power: it's all he cares about," Achi said. "Mr Gbagbo is the most charming person I've ever met in my life. I compare him with a snake that the kids put around their necks. He's around your neck and feels so soft and he starts to squeeze and you don't realise. By the time you realise, it's too late and he kills you."

Achi believes a popular uprising against Gbagbo could be imminent – though it is unclear how the UN's 12,000 peacekeepers would respond. "We think the time is ripe," he said. "Shooting those women [at a demonstration in Abobo last week] was really a turning point. No one in the army wants their name attached to a criminal act. If it came to it, Mr Gbagbo would have a handful of loyalists but that's all."

But Ouattara, now bound for Nigeria for talks with President Goodluck Jonathan, is playing a delicate waiting game. Achi continued: "People have been asking Mr Ouattara to make a call to go after Mr Gbagbo. One guy told him on the internet that we did not vote for you to go for the Nobel peace prize. They are saying people are already dead and we have to go after him.

"But you have to be sure everybody is ready, because if it misses it makes things more difficult. If you don't defeat him, it makes him stronger." The UN says nearly 400 people have died since the political crisis began; Outtara's camp puts the figure at 700 with a further 300 missing. This week's atrocities allegedly included the murder of a 12-year-old boy and kidnapping of his younger twin sisters, apparently because their father dissented against Gbagbo.

Around 80,000 refugees have poured into neighbouring Liberia and some 450,000 are internally displaced. The UN's children's agency, Unicef, has warned of a "humanitarian emergency", with rates of acute malnutrition trebling in some areas and schools closed for around 800,000 children. Hospitals are running out of staff and supplies. Drugs are no longer available for new cases of HIV-positive pregnant women who want to prevent their babies from being infected. The UN says 1.5 million people are at risk of deadly diseases and there are already outbreaks of yellow fever, measles and cholera, which has infected 516 and killed 12.

Banks are closed and essentials such as gas, petrol and money are about to run out, while staple food prices have soared by an estimated 80%. Hotels and restaurants in Abidjan, once "the Paris of Africa", are shutting as the city is gradually strangled from within. An entire economy is creaking and listing.

"There's already a pretty gruesome humanitarian disaster going on," said one western diplomat. "It will get worse when the electricity is cut off. The question is, when will the population radicalise? When will the army intervene?"

The official, who has prepared an evacuation plan, added: "Civil war is a real possibility. It will be very destructive, not just in terms of lives and homes but Ivory Coast as a nation. It could be a bloodbath here. That's a dreadful outcome."

Ivory Coast's election was one of the most open and most observed in African history. It was intended to be a model for the continent's widening democratic movement. Instead, with Gbagbo now seen by many as another benighted Mugabe or Gaddafi, the whole country is staring into the abyss of Abobo.