Baghdad, Iraq (CNN) There is a different feel to the atmosphere in Baghdad these days, as if the chokehold that has gripped the Iraqi capital for the better part of the last decade and a half has started to ease.

On the main road cutting through the Karada district, the sidewalks are crowded with vendors hawking designer knock-offs and sticky sweets. Restaurants lining the boulevard grill masgouf, a butterflied carp considered to be Iraq's national dish, over open flames. People sit at outdoor cafés, sipping tea and smoking shisha.

Two and a half years ago, ISIS plowed a truck packed with explosives into a busy shopping area down the road during Ramadan, killing hundreds of people.

Now, young men sporting skinny jeans, funky jackets and what we're told is the new "spikey" hairstyle hang around in groups. It's a look that once would have gotten them killed, back in the years of Iraq's sectarian bloodletting when Baghdad was a patchwork of brutal militias.

Most of the checkpoints that once clogged traffic for hours in the city have been removed, more roads are open, and the power cuts aren't as bad as they used to be.

At Baghdad's famed book fair, dozens of publishing houses from across the region have gathered to display their works, from poetry to history and terror literature. The event was named this year after the late novelist Alaa Mashzoub; known for speaking out against sectarianism, he was shot dead outside his house in early February.

During his opening remarks at the fair, Iraqi President Barham Salih spoke about the challenge of terrorism, the importance of freedom of speech , and Iraq's historic stature within the Middle East as an intellectual center, though the country is far from that glorious era.

"As we approach politics, its most serious challenge, the terrorist challenge, I want to point out that Iraqi political life is at a stage of transformation in which victory over terrorism and violence must be strengthened by further reforms and actions that would make it a decisive victory," Salih said.

Iraqis visit the International Book Fair in Baghdad on February 7.

For Hisham al-Hashimi, an Iraqi expert on ISIS, therein lies the problem. Despite the rhetoric from some Iraqi leaders, this is a country where political failures and the rise of terrorism and violence are inextricably intertwined.

"Iraq has not learned the lesson from ISIS," Hashimi, who has tracked the terror group from back in its early days as al Qaeda in Iraq, told CNN. "Especially when it comes to co-existing and civil security, accepting others and apologizing to others, the same reasons that made ISIS a state are still there and growing."

ISIS trains a new 'strike force'

There is a marked disconnect -- one the country has tragically suffered before -- between the changing Iraq described by Baghdad's politicians and military leaders and the reality on the ground for those living in areas once under ISIS rule.

While US-backed forces are on the verge of retaking ISIS's final stronghold in neighboring Syria, Iraq declared victory against ISIS just over a year ago, claiming the group had been reduced to a handful of lawless troops. Now, the militants are waging a fresh guerrilla campaign from their base in far-flung territories of northern Iraq -- launching targeted assassinations, looting villages, planting roadside bombs and training a new "strike force," an Iraqi intelligence source told CNN.

In the vast desert badlands near the Hamrin mountain range, residents remain at the mercy of ISIS "gangs" who rule the night. They know the region well, having embedded themselves here back when they were known as the Islamic State of Iraq, and as al Qaeda in Iraq before that. It is in these lands, which stretch all the way to the Syrian border, that Abu Bakr al-Baghdadi and his terror group once went to ground to bide their time, before emerging more powerful, lethal, and merciless than before.

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Minutes after our military escort veers onto a dirt track outside of Mosul, the soldiers stop to check for bombs.

The village of al-Thaya, barely more than a cluster of homes, is one of the most recent victims of ISIS' brutal new campaign. Three days before we arrived, six people were slaughtered there.

Yousuf Hawwas, 72, was still in shock. His older brother, his ailing wife, three of the couple's sons and one daughter-in-law were executed. The killers pried open the metal container where the family hid their money, stole the cash and two guns before trying to make off with a pickup truck, which got stuck in the mud.

"My emotions ... I don't know," Hawwas said, his eyes welling up with tears.

He took us to one of the homes where two of his family members were killed. The walls were still splattered with blood, bits of bone and brain were still on the floor.

Hawwas' daughter says that every few months, a village in the area is attacked in a similar way. They knew eventually it would be their turn.

On the foothills of the Hamrin Mountains, Iraqi security forces are increasing the number of checkpoints and military outposts along roads.

A senior military official who wasn't authorized to speak to the media said he believed one of the attackers, whose three sons are ISIS members and still at large, was familiar with the village and the family, which is how they knew where the money was hidden.

Hawwas said the assailants were wearing military uniforms. It's a tactic that ISIS has used many times before; the US Department of Defense reported a similar incident last year in a village north of Baghdad.

As we left the village in humvees with Iraqi security forces, one of the drivers was overcome with anger over Hawwas' mention of the military uniforms: "they are all liars, those sons of bitches should all be executed."

It was a raw moment that underscores the deep sectarian resentments this country still needs to overcome if it is ever to have a chance at peace.

A mysterious guest

Iraq's recent history is tormented and complex. Its largely Shia population was persecuted and butchered for decades under Saddam Hussein's Sunni regime. The fall of the dictator saw the rise of a Sunni insurgency (including the precursors to ISIS) on one side, and Shia militias on the other.

When the US military withdrew in 2011, the Shia-led government of former prime minister Nuri al-Maliki ratcheted up a vicious campaign targeting the Sunni population.

ISIS capitalized on the Sunni population's grievances. A sense of alienation and oppression by Baghdad, coupled with the Iraqi security forces fleeing their positions, are among the main reasons that ISIS was able to seize the largely Sunni city of Mosul with lightning speed in 2014.

Standing at the edge of the rubble cascading out of the ruins of the historic Great Mosque of al-Nuri in Mosul's Old City, Mahmoud Dawoud, an elderly imam, still recalls the Friday in July 2014 when a mysterious guest arrived to deliver a sermon.

The gate of the al-Nuri Mosque still stands despite heavy attacks during the battle for Mosul.

Dawoud remembers losing cell phone reception two hours before prayer time, and wondering whether a tower had gone down. Shortly after that, masked men swarmed the streets and rooftops, a convoy of some 200 cars with tinted windows thundered up to the mosque's entrance, and a man dressed in black robes and a black turban appeared.

"I wondered who was coming, we didn't know who was coming," he recalled. "Then they said Baghdadi is coming. We were like, who is Baghdadi?"

The imam said he hung at the back of the crowd as Abu Bakr al-Baghdadi announced the establishment of ISIS' caliphate, declared himself its leader, and ordered all Muslims to obey him.

"'I am a Muslim and I know my religion. I know that he isn't here to protect Islam,'" Dawoud remembered thinking to himself at the time. "We were amazed when he declared the caliphate -- the Ottoman caliphate ended 100 years ago, and now it's back?"

"People were all pledging allegiance and shouting God is great. They were grabbing his shoulder, kissing him, as if that's going to get them to heaven."

Dawoud knew in that moment that Mosul would be destroyed.

As we talk, others in the neighborhood emerge from the Old City's winding streets. Most of its resident have not returned as their homes are in ruins. For those who are here, the talk of what happened gets tossed around in casual conversation, the emotions and the suffering buried along with the dead, whether in cemeteries or still under the rubble.

"Yeah, my father and son were killed. We had to bury them in temporary graves," Azzam Ahdullah said in a deadpan voice.

His daughter Ahlam, 8, comes running across the courtyard. She misses her younger brother desperately. When they were trapped inside during the days of ISIS, she would dress him up like a doll.

Ahlam smiles, almost matter-of-factly, as if even at her young age she knows she needs to be strong, that life has not been and likely will not be kind to her.

After the battle, the fallout

The Old City and its western districts, which were pummeled by US-led coalition airstrikes, are still in ruins. Some rebuilding is being undertaken by those who can afford it, but it's hardly widespread. What little reconstruction you can see is in eastern Mosul, where there is a certain feeling of "life coming back."

But the shiny new storefronts selling Chinese-made clothing and the markets filled with fresh fruits and vegetables are not the product of government funding.

In what is widely perceived here as a deliberate slight, the government has sent only 1% of the federal budget to Nineveh province, where Mosul is located, despite being allocated 11%, according to Nawfal Hamadi al-Sultan, the governor of the province.

The view of the destroyed old city of Mosul on February 19.

Sultan blames his country's still bitter politics, saying there are sides that don't want to see Mosul rebuilt. The UN estimates that Mosul is now home to around 8 million tons of rubble and rubbish, which could take up to 10 years to clear.

"A lot of reasons led to the fall of Nineveh [to ISIS], including differences between the government," Sultan told CNN. "The security forces, the arbitrary detentions, the outside influences, this made Nineveh a political theater."

He insisted that the crackdown had since ended, but many in Mosul disagree, although there is a certain level of cooperation between locals and security forces.

"Do you know what brought misery to this city? The army and the police were harassing women, the checkpoints, the wait would take hours. And the detentions," Dawoud, the imam, said.

Now he fears it could be even worse than before, much worse.

A vicious crackdown

In the wake of ISIS' defeat in Mosul, many Sunnis are accusing the Iraqi government of launching a vicious crackdown on them, marked by disappearances and arbitrary detentions.

It's a sentiment that is amplified in sprawling, destitute camps where internally displaced people live alongside the families of those who have been detained for their real or perceived links to ISIS. The prison-like feeling and the sense of despair and abandonment are just some of the factors potentially incubating the next incarnation of terror.

Sitting in one of the thousands of flimsy tarpaulin tents in a camp in Qayyarah, south of Mosul, Schams Hannoush, who is in her 70s, sobs uncontrollably. Three of her sons are missing; not knowing where they are is eating away at her.

Too overcome by emotion to speak, Hannoush's remaining son, Jihad, tells us their story.

Schams Hannoush cries as her family discusses the disappearance of three of her children.

The brothers, members of the police and army, were trapped in their village when ISIS came, Jihad says. He swears that none joined the group -- although they did repent to avoid execution.

He says one of his brothers was even acting as a spy for the Iraqi security forces, sneaking out at night to climb up a nearby hill to get a bar's worth of cell phone reception to pass on intelligence about ISIS movements in the area. He was later picked up by an Iraqi SWAT team.

The other two brothers, Jihad says, were taken by the Hashd Al-Shaabi, a predominantly Shia paramilitary force which has been accused of widespread humanitarian violations, including the extrajudicial execution and abduction of Sunnis.

"Our sons are gone, they are innocent," Hannoush said. "They were all army, they left their children, they left us, tired and in pain, we are Iraqis, how can this happen to us? What did we do?"

Iraq's prisons are well over capacity, a festering mess of the guilty and those caught in the government dragnet. In just one location in Baghdad, there are 940 people on death row awaiting execution.

"When these kids grows up ... they won't have that same education, intellect," Salah Hassan said. "It's going to reach a point where it's like a prison."

Human rights organizations have long criticized the Iraqi judicial system and tried to shed light on a culture of rampant torture, and flawed trials.

Abdul Satar Bayraqdar, a judge and spokesman for Iraq's higher court, rejected that criticism, and said confessions obtained under torture were removed from evidence in terror trials.

"Under the terrorism law," he said, "each person who participated in the crime, even if their participation was just logistical, is considered a direct actor and is considered a terrorist."

"When I sentence someone to death or life in prison, I am giving the victim their justice," he added. "But I am also giving a deterrence to society, to anyone thinking of joining these groups to think a thousand times before they do it. And that is also a message to those coming from abroad."

'This hatred stays within them'

At the camp, Hannoush's grandchildren from one of her detained sons keep asking where their father is. The other kids taunt them, shouting, "your daddy is ISIS, your daddy is ISIS." Their mother assures them it's a lie, but the younger ones barely remember their father.

The youth at the camp pose a challenge, according to Hassan.

This is what keeps Salah Hassan, the Qayyarah district director, awake at night: the children of ISIS and those whose fathers, brothers and uncles -- innocent or guilty - disappeared into Iraq's murky judicial system or were killed. If nothing changes, he says, the disaffected youth across Iraq will grow up to become the next wave of ISIS fighters.

It is a problem Baghdad can hardly afford to ignore. The resurgence of ISIS in Iraq is not guaranteed, but the window is closing for the government to change its approach, and by all indications it is failing. Simmering anger easily swells, sectarian politics threatens to drown out whatever hope currently exists, and there are fears that the status quo will only lead Iraq into the next cycle of terror.

"This hatred stays within them and they pose a danger for the future," Hassan said, "when all they hear from their mother is your father was killed by the government, disappeared by the government."