Arbil, the capital of northern Iraq's autonomus Kurdish region, enjoys a calm in stark contrast to blood-drenched Baghdad, where people have to rush home even before the sun sets to avoid the nightly curfew or a bomb attack.

Even as Ankara continues to warn of a military incursion into Iraqi Kurdish region to flush out Kurdish rebels, Iraqi Kurds continue to live their lives as if the threat did not exist.

Dozens of restaurants are open, shopping centres are thriving with people and cinema houses are full of movie goers.

"We meet each other almost every day. Turkish threats do not stop us from living. Life must go on. These threats are not new," said Azad Ahmed, 42, as he sips tea with his friends at the restaurant on Al-Iskan street.

"In Kurdistan you can stay out until dawn and travel with your family everywhere... visit relatives or have dinner outside without being afraid of killed or kidnapped. This place is not Baghdad."

Outside the restaurant, people stroll on pavements and traffic police direct vehicles as roadside cafes play Kurdish songs, while youngsters engage themselves in Domino.

Every now and then Westerners are seen walking into cafes wearing jeans and t-shirts but without bullet-proof vests, protection that is a must in Baghdad where they face threats of kidnapping or assassination.

"This is Kurdistan. There is no place for terrorists," says Ahmed, as the city's giant neon lights glitter in the background and huge banners invite people to visit the shopping malls.

Iraqi Kurds say they are not afraid of war anymore, having faced struggle for decades.

"Our history is full of crisis, tough times and wars," says Omed Haval, 33, a government employee as he parks his car outside a pizza shop.

"We have passed through hard times. We were forced to leave our homes and go to the mountains. But now we are not afraid and would not leave our homes if the Turks come."

Iraqi Kurds faced a series of military assaults in the 80s from executed dictator Saddam Hussein's troops. Experts say nearly 182,000 Kurds were killed in these campaigns, especially towards the end of the Iraq-Iran war.

Haval, however, hoped the Turkish threat would recede.

"I hope the Turks will not commit such stupidity," Haval said. "I hope our friends, the Americans, will intervene and find a peaceful solution to this problem and prevent the Turkish incursion."

Washington is concerned that a Turkish military operation inside northern Iraq would destabilise the only peaceful region in the war-ravaged country.

The three Iraqi Kurdish provinces of Arbil, Dohuk and Sulaimaniyah with their five-million citizens are witnessing an economic prosperity that is absent in the other chaotic Iraqi provinces.

The president of Kurdistan province, Massud Barzani, told Al-Arabiya television on Friday that any Turkish incursion was aimed at hampering development in these provinces.

"Frankly, targeting the PKK is just a pretext, the goal is hindering or stopping the development and growth in Kurdistan," he said.