Even here, Saddam is good for a laugh

The storyline is of hapless ordinary citizens having to pay endless bribes to a kleptocracy, while courtesans use high official connections to enjoy the good life. The inhabitants of this crumbling society are finally wiped away in a nuclear attack.

No Need to Tell Me, I've Seen It for Myself is the hottest show in town, and – given that the town is Baghdad – it's a surprisingly bold satire. Against a backdrop of suffering caused by United Nations sanctions, fatalism over a coming war and the state muzzling of political dissent, the Iraqi capital has seen an unprecedented spread of the arts, and the use of it, albeit carefully, to question the system.

The theatregoers who pack into the hot and stuffy Nasr playhouse, with its peeling walls and plumes of acrid cigarette smoke, appear to range across classes, including government officials, and include a significant number of women.

The stars are two actors well-known from Iraqi television, Abdel Rahman el-Murshedi and Mais Qamar. At one level the production is a piece of slapstick with lots of gags about mothers-in-law, landladies, tarts, drunks and farting, with a dwarf as a jester. But there are also digs at the endemic incompetence and corruption affecting life under Saddam Hussein's regime.

The audience roll around laughing and clapping at the wordplay, including digs at the hierarchy of the ruling Ba'ath Party and fat-cat businessmen. There are loud cheers and deafening wolf whistles at the entrance of a peroxide blonde in a clinging black dress, with a plunging neckline and a scarlet feather boa.

A drunk reading her palm says: "I see something that goes off for six hours and comes on for three ..." The theatregoers, who endure Baghdad's chronic power cuts, know what he is talking about, but the woman affects not to understand. "Ah," says the drunk with a wink, "you just phone your friends and the lights come on." Cue for uproarious laughter.

The "friends", of course, are her lovers in officialdom. This is a double joke, as the actress is apparently known to be on intimate terms with more than one senior figure.

There are knowing nods from the audience amid the laughter as an old man delivers a comic monologue about Iraq's stultifying red tape, and the struggle to get through dozens of official forms. As he speaks, he makes the well-known gesture with his thumb and forefinger for baksheesh.

It is not just the regime which is criticised. There is bitterness towards the West, blamed for imposing 12 years of cruel sanctions which have left the ordinary people of Iraq impoverished while the ruling elite is virtually untouched. The ending, in a nuclear winter, is a metaphor for the destruction Iraqis believe the US intends to visit upon them in its greed to grab the country's oil.

These sketches may not exactly seem cutting-edge political analysis by Western standards, but they reflect a society in which most people are uneasy about discussing with outsiders anything about those who rule them. "It is a funny play, but it also shows the problems we face," says Mohsin Ali el-Bashir, a 33-year-old engineer, as he leaves the theatre. "It is trying to show how some people in authority misuse their position. We all suffer."

His 29-year-old friend, Talal Mohammed is quick to add: "But it is not direct criticism of the government, that is not possible." Which is why, perhaps, the production has been allowed to continue without the regime clamping down – along with the huge popularity of the show, and a desire not to antagonise the populace too much in the face of the looming external threat.

But it is not just the theatre which has been exploring new spheres. Before the Gulf War, there were just two or three art galleries in Baghdad. Now, despite severe difficulties, there are close to 30. "The artists often don't have proper paper, pens, colours. They suffer, and still they create, and it's good," said Francis Dubois, the resident representative of the UN Development Programme.

Many of the paintings depict suffering, the long years of war, death and decay. But there are also images of hope, of liberation and freedom. "We are banking on the Mukhabharat [the secret service] not being into abstract and expressionist art," laughed one rising artist. "Otherwise a lot of us will be in trouble."