Residents of Baquba, an hour from Baghdad, are on the frontline of a sectarian showdown that is fast becoming another civil war

An hour from Baghdad where the battle lines are drawn, residents of Baquba say they're caught between two terrifying options. Just to the north are Isis, the Sunni militant group bent on destroying Iraq and the Shias who govern it. To the south are Shia militias who have responded with vehemence and are transforming the frontlines into a sectarian showdown that pays no heed to the state.

"We have Da'ash on one side," said Abu Mustafa, a Baquba resident, using the colloquial word for Isis. "And we have Asa'ib ahl al-Haq on the other. I don't know who to be more scared of."

Asa'ib ahl al-Haq is the most powerful Shia militia in Iraq, and perhaps the most potent in the land. A direct proxy of the Iranian general Qassem Suleimani, who has extraordinary influence across Iran's sphere of influence, Asa'ib is untouchable in Baghdad and feared around the country.

Asa'ib, like Isis, has made Baquba and the area that surrounds it one of the most important flashpoints in Iraq. Whoever controls this lethal city will secure an approach to the capital an hour south, and a foothold in the east within striking distance of the Iranian border.

"The police are the most powerful people in this city," said Abu Mustafa. "But only because they are all militias anyway."

In 18 days of what is fast becoming another civil war, the Iraqi government has insisted that its forces are leading a fightback against Isis, which now occupies around one third of the country. Western officials in Baghdad estimate 10-15,000 Isis members are in the country. Clashes between Isis and military units continued in Tikrit , where the Iraqi army gained ground over the weekend.

Iraqi army volunteers parade in Baquba on 20 June. Photograph: Reuters

By Sunday, fighting was still raging in parts of the central city, not far from Awja, Saddam Hussein's home village. However, late in the day, Iraqi forces withdrew 12 miles south of Tikrit, clouding government claims that they controlled the city.

Isis members had been in contact with local tribal leaders coordinating the fightback in Tikrit, claiming they would soon withdraw to the northern area of Baiji. Government planes pounded Tikrit, as Russia delivered the first of 12 Sukhoi fighter jets bought by Iraq for $500m (£293m). The jets are ground fighters and will be flown by Iraqi pilots, state media said.

The US has so far not acceded to Iraq's request that its air force return to Iraq to help fight Isis, which has seized most of the weapons from the Iraqi army's main depots in the north and is sending reinforcements from Syria.

Late last night Isis issued a statement declaring a "caliphate" in the region it had taken, and called on factions worldwide to pledge their allegiance – a move that some analysts saw as a direct challenge to Gulf Arab rulers, and to al-Qaida, which disowned Isis in February.

Washington is believed to be hoping for progress on Tuesday on electing a parliamentary speaker, a process that might pave the way for a quick election of a president and a prime minister.

US officials have repeatedly signalled to Baghdad that a political solution would make military support easier. However, some western officials believe the political torpor could drag on for six months.

Iraqi forces are present wherever clashes are happening, but so too are the Shia militias, their presence stirring ghosts of a time, seven years ago, when a militia-led bloodletting almost meant the end of Iraq. Residents of Baquba, and of battle zones nearby, such as Samara, say the militias are again starting to wield inordinate power. In some cases, they say, security forces are deferring to them.

In Samara, Abu Abdullah, a Sunni resident, said: "We are on the faultline, we cannot go north or south. Whichever way we go we hit a militia. Da'ash is nearby but we can't communicate with them. Some of them are foreign, they have long beards and we don't want to go near them.

"Asa'ib are closer to Baghdad. And they're also defending the shrines. They're dressed in military clothes, but we know who they are from their beards."

All the approaches to Baghdad are defended by a mix of state security forces and Shia militiamen, most of whom have had several perfunctory days of training before being dispatched to the frontline.

While the city's immediate defences have not yet been threatened, Baquba and Samara in the north and Ibrahim bin Ali, west of Baghdad, have all been flashpoints. And in each of them, Shias fighting under the names of Asa'ib, or of the rebranded Jaish al-Mahdi, have been prominent. In Baghdad's southern suburb of Dora, several Sunnis have been killed in recent weeks after being seized on the streets. One man, who retrieved his nephew's body earlier this week after he was kidnapped by the side of the road on 18 June, said Asa'ib had been responsible for killing him. "They are operating right under the nose of the government and no one will stand up to them. Only Asa'ib can do that. It is clear who did this."

While the militias' rapid rise to prominence worries many Baghdad residents from both sects, officials insist that the state retains primacy.

A lecturer in political science at Baghdad University, Dr Ihsan al-Shimari, said: "Generally speaking, [the militias'] role is supportive to the security institution. Though they are backing them up with everything they can. Asa'ib are there, they are operating, but they are not trying to relegate the state to a secondary position.

"If they take primacy, this indicates a huge malfunction in the structure of the security institutions. This would weaken the government that they are trying to protect."