down arms and enter the political process, while the U.S. declared that the Mahdi Army had been militarily defeated when Brigadier General Mark Hertling, a top U.S. commander in charge of Najaf, Iraq, stated, "The Moqtada militia is militarily defeated. We have killed scores of them over the last few weeks, and that is in Najaf alone. [...] The militia have been defeated, or have left..." However, Sadr remained in control of parts of Najaf and Sadr City, while the U.S. continued to patrol in the south outside those areas. Transfer of sovereignty (June–July 2004) On June 28, 2004, the occupation was formally ended by the coalition, which transferred power to a new Iraqi government led by Prime Minister Iyad Allawi. With the situation in the south seemingly settled and the transfer of power, many hoped that the steam would be taken out of the ongoing Sunni insurgency. Although many Iraqis were optimistic about the government, militants saw it as little more than an American puppet and continued the fight unabated. On July 18, guerrillas offered a $285,000 reward for Allawi's assassination. The Battle for Najaf, the Truce Agreement, and aftermath (August–September 2004) Soon, however, the peace in the south would once again be broken. The U.S. Marines, having taken control from the U.S. Army of the area around Najaf, began to adopt a more aggressive posture with the Mahdi Army and began patrolling zones previously considered off-limits. Soon, the Mahdi Army declared that the truce had been broken and militiamen launched an assault on a police station. U.S. forces responded, and in the first week of August, a prolonged conflict broke out in Najaf (one of the holiest cities in Shi'ite Islam) over control of the Imam Ali shrine, often thought of as the holiest Shi'ite Muslim shrine in Iraq. Heavy combat ensued in the Old City of Najaf around the shrine and in the Wadi al-Salam (Valley of Peace) cemetery, one of the largest cemeteries in the world. The terrain of the cemetery, densely packed with above-ground mausoleums and caves, favored the urban guerrilla warfare conducted by Sadr's militia. It was described by U.S. soldiers as "jungle warfare without the jungle." Nevertheless, U.S. forces continued a steady advance and inflicted heavy casualties on Sadr's forces, lightly wounding Sadr himself. Eventually, after three weeks of fighting, Sadr's forces, which originally had at least 2,000 militiamen spread out throughout the