He looks at a teenage boy wearing a baseball hat and standing a few feet away from him. "Once I told them, 'I don't have any money and can't pay any more.' Next day my son was kidnapped and I had to pay them $500 to release him. This time I am going to kill anyone who touches my son."

What started as a campaign by religious extremists to impose sharia law in Baghdad and Iraq's other main cities, by attacking liquor shops, hairdressing parlours and music stores, has turned into a very lucrative mafia-style protection business.

Yaqub Moussa's shop is in Karrada, a prosperous neighbourhood of Baghdad, where Christians, Jews and Shiite Muslims have lived for centuries in an atmosphere of harmony. Fifty years ago the Jews were the first to feel religious tolerance dry up; most left for the new state of Israel in the 50s. Today, it is Christians who are feeling the pressure, which is forcing many of them to consider leaving too.

A few streets away from Moussa's establishment, in front of another liquor shop whose window frontage is completely covered by protective metal sheeting, stands a man with a badly tailored brown suit, a white shirt and a thin, neatly trimmed beard. Keeping his back to the shop, he scans the street.

Inside, another man, also in a badly tailored brown suit, but with a thicker beard and a big ring on his finger, stands in front of the counter questioning the son of the owner. "Where is your father?" he asks, in the tone of voice that used to be employed by Saddam's security police. "Call him, we have to talk to him."

"He is out, can I take a message?"

The frightened son is taken outside for a further talking-to, before the two men leave in a big white government SUV.

"They are from the security service of the Dawa party [one of the strongest Shiite religious parties]," the young man explains. "They come here every few weeks and we pay them. They are nice to us, they don't threaten to use force, but we know if we don't pay this place will be bombed the next day."

Christians in Iraq are divided into more than a dozen ethnicities and sects. Of the ethnic groups that exist within the country's borders today, the Chaldeans and the Syriacs are considered to be the oldest inhabitants. Joined by Assyrians, Armenians and Arab Christians they make up around 1.5% of the population, centred in Baghdad and the northern regions around Mosul, Dohuk and Kirkuk. Most of these groups are then divided between the Orthodox eastern church and the Roman Catholic church, but even the Presbyterian protestants have followers in Iraq.

Throughout Iraq's modern history, there has been little or no direct religious oppression of Christians, according to Father Bashar Wardeh, a priest in the Catholic Chaldean church in Baghdad and a teacher at the Babel Liturgical college. He argues that, unlike the Shiites and the Kurds, who opposed the ethnic-sectarian policies of the Ba'athist regime militarily and politically, the Christians never had political ambitions and so were tolerated by the regime.

Things started to change after the American led war of March 2003 that toppled the Ba'athist regime of Saddam Hussein. As chaos replaced dictatorship and oppression in Iraqi society, currents of religious fundamentalism - whether in the form of extreme Sunni Wahhabi militancy aimed at annihilating the "infidel", or attempts by Shiite clergy to impose a sharia ethical code - have been proving stronger than secularism. In this anarchic atmosphere, tribe, sect and ethnicity have become the natural shelters for people who feel that the state is unable to provide security for its citizens. As the Christians have no strong political or tribal weight, they have come to be perceived as the weakest element in the society.

"The Christian man will know who attacked him," says Father Wardeh, "but because there is no law to protect him and no tribe to go and take revenge for him, he will thank God for the loss and keep going."

In the office of one Christian political party - which agreed to an interview on condition of anonymity, fearing reprisals from Islamist extremists - more than a dozen young Christian men have been brought from their villages in the north to protect a party official. He sits in a dilapidated room in a former Ba'ath party office. "With the disappearance of the state, the tribal and ethnic elements became the major forces, which leads to government in which every post is awarded on a sectarian basis," he says. "The Christian citizen knows that the only way to participate in the process of rebuilding the country is to be adopted by this political party or that."

Many Christians find themselves obliged to affiliate with Islamic religious parties or tribes to get a degree of protection. After having a car crash, for instance, Sami Mansour, 57, a Christian taxi driver, sought the help of a local Shiite tribal council to solve the dispute. "When the other driver realised I was a Christian, he demanded not only that I should pay for the car repair but also that I should pay the tribal fine," he says. "I then went to a tribal council which agreed to talk on my behalf as one of their 'sons' and the other driver withdrew his claims."

Christians have seen their numbers falling dramatically in the past two years. In fact, they have been leaving Iraq in numbers since the mid-1990s. With the heavy impact of United Nations sanctions against the Ba'ath regime in power at that time, thousands of Iraqis began to flee. The Christians felt this pressure doubly: partly from the sanctions and partly from the resulting "Islamisation" of society. But a new wave of emigration has taken place in recent months, especially after a bombing campaign that began in August, targeting churches in Baghdad and Mosul.

In his house in a poor neighbourhood in eastern Baghdad, empty apart from couple of sofas and a plastic picnic table and chairs, Moris Illyas sits with his family to have their last Sunday meal in Iraq.

"There is no security here, a Muslim child can insult a Christian man and no one of us can say anything," Illyas says. He points to his 12-year-old daughter: "I stopped her from going to school. I used to take her to the school, wait outside for hours and then take her back. I can't stand that pressure any more."

Fear of verbal and physical intimidation caused his wife, Jaclin Shamir, to begin wearing hijab, covering her hair whenever she leaves the house to give her the look of a Muslim woman. "I have had to change my whole life. I now wear a scarf most of the time." Holding a golden crucifix in her hands, she says, "I hide this under my clothes now. It's like living in Rome in the early days of Christianity."

According to many priests, the numbers of churchgoers has fallen by more than half, and Sunday evening mass has had to be shifted to the afternoon because of security fears. Midnight Christmas masses were cancelled this year.