The cease-fire between Iran and Iraq is less than two weeks old, but the battered city of Basra already is showing signs of recovery. Over the weekend, men and boys in white galabia robes sat atop sandbags lining the Shatt-al-Arab waterway and cast lines baited with sesame paste into the murky green waters clogged with sunken freighters. Not far away, young swimmers did backflips into the canals that cut through the city toward the Shatt-al-Arab, which forms the southern border with Iran. A welder patched a gate at the Sheraton Hotel, heavily damaged by artillery shells. In the city's main square, sandbags fortified the walls of the Al-Hamdan Hotel and its lobby was covered with jagged shrapnel holes. But the staff said all the rooms were taken, booked by a teachers convention and Kuwaitis returning to examine the city where they once spent vacations. Such signs of recovery are noteworthy in a city only 15 miles from Iran's border, which came under relentless artillery and missiles fire. The attacks on Iraq's only port city during the eight-year war damaged virtually every building in central Basra, where the pounding was so intense at times that dozens of shells landed every minute. The city was nearly captured in February 1987 when Iranian fighters poured across the border and came within six miles of Basra. In the fierce fighting that followed, the Iranians were decimated and, according to U.S. defense analysts, suffered 25,000 casualties, including 15,000 dead. Hundreds of thousands fled the city of more than 1 million peope at the height of the shelling and missile attacks from December 1986 to February 1987. Basra Governor Anwar Sayid said recently that the shelling killed 1,000 civilians and wounded 2,000. The attacks stopped earlier this year when a series of Iraqi victories pushed the Iranian guns out of range. Iraqis soon began returning to the city, and the population is now back to about 1 million, Sayid said. Many have begun rebuilding homes, but reporters touring the city this weekend found a few areas still nearly deserted. Even the pristine Basra airport, reopened hours after the Aug. 20 cease-fire, resembles a massive mausoleum with its granite floors and marble walls. So far, only one flight a day arrives and departs. The shrapnel-scarred Shatt-al-Arab Hotel was reopened after eight years to serve as sector headquarter for United Nations truce observers. ``There have been no problems up to now,'' Danish Maj. Jaspar Boysen said as he sat in the 1930s-era lobby beneath a twirling ceiling fan. Other observers sank into the worn armchairs nearby, chatting and working at postcards to escape the heat in their poorly air-conditioned rooms. Sandbags and coils of barbed wire lined the Shatt-al-Arab waterway outside. By its banks, scores of rusting freighters trapped eight years ago by the war were anchored two abreast. The governor said it would probaby take two years to clear the Shatt of built-up silt and sunken hulks. The governor said many people are returning and rebuilding, carrying truckloads of belongings back to their damaged homes. Sayid said the government is financing home repairs, rebuilding schools and hospitals, working on a new water system and planning to renovate the electrical grid. ``I am sure that if you visit it after two months, you could never imagine the city experienced the war,'' he said.