(This story was reported by a visiting journalist whose name has been withheld for security reasons)
* Alcohol banned and women forbidden to wear trousers
* Mayadin fell to rebel forces in November
* Islamist militants control oil and grain
* Residents views mixed on Islamist groups
MAYADIN, Syria, Jan 30 (Reuters) - In a small town in Syria's east, Islamist militants have taken unclothed mannequins they see as sexually enticing out of the shops.
Members of the al-Nusra Front, al Qaeda's Syria affiliate, have also prevented women from wearing trousers, preferring that they adopt the shapeless head-to-toe black veil.
The town of 54,000 on the Euphrates river offers a snapshot of what life could be like if Islamist rebels take control of significant areas of Syria as President Bashar al-Assad loses further ground.
Of all the hundreds of rebel units, al-Nusra is considered the most effective. Its fighters, who seek out death in battle as a form of martyrdom, have achieved victories in attacks on several military bases across the country.
They still represent a small fraction of the armed anti-Assad groups fighting in Syria but are growing in size and influence.
Their militants, bolstered by veteran Iraqis who battled U.S. forces, fought alongside rebel units from the Free Syrian Army, an umbrella group of rebels ranging from those who say they are fighting for democracy to hardline Islamists, to take Mayadin.
Government forces left the town in November and half its inhabitants fled during the fighting.
Now al-Nusra, the Free Syrian Army, local militia and tribal groups have carved the town into fiefdoms. Residents say there are around 8,000 armed men in total.
Insurgents with long Sunni-Muslim-style beards patrol the streets enforcing a strict interpretation of Islam. Alcohol is removed from shops. Daily religious teaching is provided for Mayadin's children, who get free loaves of bread if they attend.
One young boy who attends these classes told Reuters that pupils are taught about praying, the role of women, the place of polygamy in marriage and jihad against "Assad's Alawite regime."
A TURN TO SECTARIANISM
Syria's civil war grew out of a popular revolt against the four-decade dynastic rule of the Assads. Street protests, inspired by other Middle Eastern revolts, took hold in March 2011 and spread across the police state fast.
But Assad's forces cracked down hard, shooting on demonstrators and arresting thousands. An armed revolt was born and 60,000 have since been killed.
Nearly two years later the revolt has turned sectarian, with majority Sunnis fighting Assad's army, of which the top generals are mostly Alawite, an offshoot of Shi'ite Islam. Assad, himself an Alawite, has framed the revolt as a foreign-backed terrorist conspiracy and blames the West and Sunni Gulf states.
Moderate rebel groups find themselves increasingly overshadowed by extremist units and peaceful opposition activists say they now have little say in the war.
Al-Nusra fighters present a threat to those who want democracy in Syria. Instead, they envision a caliphate and a return to the lifestyle of the 7th century. Shops are forcibly closed at prayer times and people are rounded up in the streets five times daily to go to mosques.
Liberal residents try to continue life as normal but are feeling the day-to-day effects of strict Islamist rule. Many stocked up on Arak, a grape-based liquor, when they heard that al-Nusra fighters were closing down the shops. A bottle of Arak can now be bought in Mayadin for five times Damascus' prices but the transaction must be done in secret.
Al-Nusra have been shrewd. They took control of the nearby al-Ward oil and gas field and also went straight for the grain silos. They control the resources, which gives them power.
In the streets of Mayadin, oil can be bought at marked up prices and al-Nusra will even trade with the enemy if it means extra cash.
Residents of Mayadin said that al-Nusra has been transporting crude oil in large tankers to Deir al-Zor, 28 miles (45km) to the north, where the government still has a presence.
They say that the local authorities in Deir al-Zor are so stretched that even they will buy oil off the group Damascus says are terrorists.
Assad has lost huge areas of land, especially in the north and the east. Rebels have pushed into most major cities but the army has dig in and a military stalemate has ensued.
But the government has been punishing Mayadin for the rebel presence. Civilians stay away from al-Nusra and other rebel brigades as they are targets for aerial strikes and long range artillery from government positions to the north.
Damascus still controls the electricity supply and cuts it off regularly, residents say.
There is little bread and water, no telephone or Internet services and schools have closed. People eat weeds from the Euphrates and some will make the journey to Deir al-Zor to buy food, risking arrest or death as they cross enemy lines.
Order has broken down in Mayadin and residents say looting and theft are rampant. The streets empty after dark.
Still, residents say al-Nusra are gaining support in Syria's east. Militants have set up checkpoints at the entrances to the city where they try to recruit men and teenage boys.
"I will follow anyone who is fighting the regime," said 19-year-old Mohammed, a law student who grew up in Mayadin. He agrees that al-Nusra fighters present a distorted moral framework, but says they have managed to battle back against Assad's forces - his number one aim.
Members of al-Nusra refused to be interviewed by a female reporter but rebel fighters working with them talk of a strict hierarchy and coordination.
Hussein, a 28-year-old fighter from the Osama Ibn Ziad brigade of the Free Syrian Army, sees a strategic benefit from al-Nusra, who are well armed and include foreigner fighters who can advise on guerrilla warfare.
"The guys from al-Nusra are good people. We have to fight this regime and they are very well organised with strong fighters," he said.
But Abu Mahmoud, a 55-year-old labourer and father, says he fears his kids will be drawn into the group.
"We don't go out unless it is absolutely necessary. I sent my young children to a relative in Hasaka because I don't want them to be armed," he said, referring to the northern city near the border with Turkey.
Others hope that the tribal system of the arid desert east will prevent an Islamist takeover. "I don't think al-Nusra will be able to do what they want. We have our traditions and tribes won't let them," said Imad, 22, a student of engineering.
A LOST CITY
But many residents have organised demonstrations against rebel groups, include al-Nusra, whom they see as thieves. Across the country, rebels have taken over schools and hospitals to use as bases and take medical supplies and equipment for their war.
"The government abandoned us and there is nothing here; no life and no services. The bad situation will make all our young men join al-Nusra," said Yamen, a 20-year-old maths student. "They want to fight the regime and see al-Nusra as the last solution for Syria."
Many feel helpless.
"We lost our city and our children and now we will lose our future," said Fadia, a 22-year-old housewife. "There is nothing here. I hate all sides; the regime, the opposition, the Free Syrian Army and al-Nusra, because none of them care about civilians." (Addtional reporting by Oliver Holmes and Sara Elizabeth Williams in Beirut; Writing by Oliver Holmes; Editing by Giles Elgood)