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SANGIN, AFGHANISTAN - This town, nestling in a valley in northern Helmand, has long had a fearsome reputation.

The 3 Rifles Battlegroup which operates here lost a soldier on Thursday, taking to 21 the number of men who have been killed since it deployed last autumn.

People talk about a "smuggler's culture" here of drug trafficking, and deadly tribal rivalries.

Meanwhile the planting of Improvised Explosive Devices (IEDs) has grown into an industry of such scale that Sangin district is rumoured to account for half of all such bombs encountered by British troops in Helmand Province.

Yet despite the sorry story of struggle and loss, there is much talk these days of progress. The bazaar now has 600 traders, which is three times the number of shops that were open one year ago.

Phil Weatherill, the Stabilisation Advisor from the Foreign Office serving here, estimates that the area of the town that he can safely move around in has expanded 10-fold in the past nine months.

We walked about town on Friday morning, looking at a school and health clinic that have been operating recently.

The existence of this bubble of relative security is dependent on a ring of outposts manned by British and Afghan troops surrounding the town.

It is on the edges of this security belt, particularly to the north and east, that almost daily firefights take place with the insurgents.

The signs of progress being reported fit neatly with the "metrics" of success preferred for the past year by Nato's commander General Stanley McChrystal.

Out have gone Taliban body counts, to be replaced by tallies of shops open, children attending school, and IEDs pinpointed by tips from locals.

By these measures, there is definitely a distinct change going on here. The questions that interest me are why is it happening, and why are coalition casualties still running at similar rate to last summer?

I'm not going to attempt answers yet, because my stay here is not yet finished, and the state of this violent place will be the subject of a Newsnight report in due course.

One thing is clear to me though - and that is how hard it is to find the right levers to influence people in a district like this.

The bazaar may be doing much better, but it is still segregated into virtual no-go areas for different tribes.

A local policeman tells me that these tribal conflicts have been violent for the past 20 years - since the Soviet Army withdrew in fact.

There are other factors complicating Nato's job too - like the existence of a substantial opium industry in this valley.

Add to this a fierce insurgency against both Nato and its Afghan government partner, and you have an inkling why it is so hard to make the kind of rapid progress that, for example, the Iraq surge brought in Baghdad during 2007.

Still, quite a few Afghans agree that life has changed for the better. How far this improvement can be consolidated will be a key question now that the Operation Moshtarak offensive in central Helmand is winding down and troops become available for operations in other places, including Sangin.

SANGIN, HELMAND PROVINCE - The relationship between the British soldier and the Afghan has enthralled writers from Kipling to Conan Doyle or Churchill.

Back in the 19th and early 20th Century, the security of the Raj required frequent campaigns in Afghanistan and those provinces where the same people are settled in modern day Pakistan, the tribal areas of the North West Frontier.

The Afghan mindset has been dominated for centuries by Islam, family, and often tribe.

The British on the other hand have left behind the complex of British imperial overlord pretty much entirely.

Back when Winston Churchill served with the Malakand Field Force here was a system of carrot (in the form of subsidies) and stick. Entire villages would be razed in reprisal for the murder of a British officer.

These days the British who are trying to develop the Afghan forces and state are restricted more to carrots. Many think hand outs alone are a bad idea.

"Don't give them anything", says one officer nearing the end of a six month tour in this hotbed of insurgency, "it won't curry favour and they will simply come back for more".

Instead he favours a policy of tough love.

This is not about communal reprisals of course, but about the ways to avoid dependency in order to get Afghans - from platoon commander to local official - to take responsibility for their own future and that of the community.

Otherwise interactions with Afghans simply become an attempt to fend off scroungers - from the village kids who ask constantly for pens to the local bigwigs who ask Nato to build mosques rather than schools.

When the soldiers here find a self starter they seize upon him with intense pride.

"He's a complete gleamer", says one staff sergeant, shaking his head with admiration about the spirit of one Afghan army junior officer.

Another military advisor recounts the story of a superb Afghan sergeant major he discovered recently who responded cheerfully to the Briton's compliment announcing "I'm leaving the army in three weeks to work in security for a bank in Kabul".

The difficulty of promoting talent emerges as a constant theme here. Too many capable Afghan soldiers or administrators find themselves sidelined because of tribal, ethnic, or political favouritism.

Even when the Afghan state does advance its talented people, they often spot better opportunities elsewhere. A translator working for Nato forces or an aid agency can earn ten times as much as an army officer.

On one thing pretty much all of those involved in training or advising the Afghans agree, it is their natural ability as soldiers.

"They are madly brave in contacts", remarks one officer, "they would do things we would consider crazy - and usually get away with it".

It is here that perceptions seem closest to those who soldiered among the Afghans a century ago. It is not simply courage, but the Afghan's fine eye for ground, knowing how they might approach an enemy unseen, as well as their ability to hit targets at long range that emerge as common themes with soldiers I've spoken to in the past week.

When it does go wrong, and Afghans pay with their lives, their comrades often shrug it off with dry fatalism.

One British lieutenant I was speaking to this morning argues, "it's a shame we can't follow their example".

But the emotion which is triggered by each of the losses in this place is evidence of a changed society.

And while many Victorian soldiers might be amazed by the 'courageous restraint' shown by soldiers serving here today, and the way public support at home has been shaken rather than enlivened by British casualties, the characters of the Afghans who live here would be completely familiar to them.

The joint Nato-Afghan offensive called Operation Moshtarak has pushed troops into many areas previously under Afghan control.

The results are encouraging - but so they should be, as Nato now has 10 times as many troops in Helmand as the Russians did.

When the Soviet army pulled its brigade, the 22nd Spetsnaz Brigade, out of that province in 1988, I accompanied them as a young newspaper reporter.

They numbered fewer than 2,500 troops.

Although a similar number of Afghan army men remained in the province once they had gone, it is important to note how few the Russians had there.

The Soviet approach to Helmand revolved around a grand deal made with the principal mujahideen commander - you leave us alone in the main provincial centres (Lashkar Gah and Gireshk) and we will leave you alone in more remote districts.

It was this bargain which produced relative quiet for the 22nd Brigade and, at the same time, saw the province turned into opium central.

Nato's operation embraces totally different ideas - it is a vast expenditure of resources designed to crush opposition in areas where the Taliban have found sanctuary, propelling newly formed Afghan security forces in at the same time, and extending the control of the country's callow government.

It was never likely that the Taliban would not contest Operation Moshtarak in a major way.

When 36 Sea Stallion helicopters land around your farm (as happened in Marjah), each of them carrying 30 or more US marines, even the most ardent guerrilla fighter knows it is time to strike the pose of a peaceful farmer.

Some people assume that these fighters will pop up, laying IEDs and taking pot shots as soon as the forces which surged into their area thin out a little.

This is quite possible, or likely even.

But there is also a possibility that, if the Afghan security follow-up is as extensive as we have been led to believe, there could be some permanent "re-adjustments" in the Marjah and (British-controlled) Nad Ali districts.

Things may reach a point where a significant number of local people who had been fighting Nato or government forces decide it is not worth it - for a while anyway.

Early reports indicate that this is what may have happened in another Helmand district, Now Zad, following a major operation there in December, which I witnessed first hand.

Recently there have been suggestions that many refugees have come back to Now Zad and that the level of attacks or IEDs laid against US marines has declined since their clearance operation.

With something like 25,000 Nato and 8,000 Afghan security forces operating across the province the ratio soldiers to locals has now reached a level considered optimum by many theorists of counter insurgency (1:25 or 30).

In short, if this does not work, the generals will have run out of excuses.

The US surge will buy a window of opportunity in Helmand and elsewhere.

The Obama administration want to be cutting troop numbers on 2011-12 by which time the Afghans will have to hold the ring.

It is a totally different approach to the one tried by the Soviet army - and it might even work.

Journalists love writing those "I told you so" pieces. Newspapers will often "rag out" their original piece to demonstrate their foresight.

Here, I too will admit to having linked back to some earlier pearls of wisdom.

We're less likely to remind people of unsuccessful pieces, but on this occasion I'm going to.

Back on 22nd October last year I wrote a blog about hopes running high for a nuclear breakthrough with Iran.

The story, was based on sources in the International Atomic Energy Authority and the US State Department talking up the chances of Iran accepting a deal.

The idea was that Russia and France would reprocess their enriched uranium into things with civil uses, like medical isotopes, rather than military ones.

Chatting today to Ali Ansari, an Iran expert at the Royal Institute for International Affairs, he pointed out that the US State Department was insisting the offer stood a good chance of success because it, along with the rest of the Obama administration was desperate for a sign that the president's police of engagement was yielding results.

Three months on it has become clear quite how remote the hope of this nuclear offer being accepted were.

Its opponents in Tehran soon shot it down.

The violent aftershocks of June's Iranian presidential elections meanwhile have further poisoned the atmosphere.

Iran has continued with public show trials of democracy activists. These have included claims about US, UK, Zionist and even Βι¶ΉΤΌΕΔ plots against Iran.

Last week's Afghan conference in London might have given a chance for a resumption of diplomacy, but the Iranian foreign minister did not turn up and the US instead used the margins of the meeting to campaign for new sanctions against Iran.

So the Obama administration's engagement policy has yielded little by way of concessions from President Ahmadinejad and now seems to be mutating into something different, as the US State Department sherpas begin the long painful climb towards a new sanctions regime.

If the policy can be said to have achieved one thing it is that Barack Hussein Obama still does not look like a good fit for the Great Satan cap that Iranian ideologues reserve for the occupant of the White House.

The absence of Bush-style sabre rattling creates a political vacuum that anti-Western Iranians try to fill by linking their pro-democracy countrymen to alleged Western plots.

Where US policy is heading from here is not yet clear.

And given what I wrote back in October, I shall be quite careful before claiming I have spotted the new direction of travel.