I read this around 2006/2007. I had the book on loan from a friend that I since lost contact with. I would like to re-read the novel (and any sequels) so I hope this rings a bell for someone.
The setting is Istanbul/Constantinople and surrounding area in an alternative reality with a eastern medieval flavor (although there are some unusual twists, see below).
The City is a powerful city-state that has influence over a large area.
The City (I'm sure it has a different name in the story) is protected from the nomadic barbarian tribes (Mongol/Hun like) by a magical protective wall that keeps foreign magic and spirits out.
The lake (Bosporus/Sea of Marmara) next to the city is the source of powerful magic/spirits and some of the Gods live in/under the lake too.
There are a number of intertwined story-lines, but I can't remember much detail. One main character is a shaman/sorcerer of the nomadic tribes that is possessed by evil spirits that have designs on the City.
There is group of nobles from a nation in the north (identifiable as the Crimea) that are scheming to attack the City.
The City's army needs to go an a campaign to deal with attacks on the outlying farming villages along the shores of the lake. The novel follows (among others) one of the army commanders.
Some notable details I can remember:
The God of War is actually a Goddess, which is somewhat unusual.
The society in the City is completely equal opportunity for men and women. E.g. men work in childcare and many soldiers are women.
When characters are first introduced in the story it sometimes takes a few pages before you realize whether the character is a man or a woman.
Homosexuality is completely accepted and common place. E.g. The army commander I mentioned above is married to another man.
Book was a fairly thick paper-back (guessing 400-500 pages) with a striking cover in predominantly purple background with a female figure (I think the Goddess of War I mentioned) in dark purple and grey in the foreground. She holds 2 slender swords, one raised high in salute and the other pointing down. She has glowing eyes.
People in the City are not yet aware that the problems with the nomadic tribes and the attacks on the villages are all part of a bigger scheme. The novel ends without resolving many story-lines. I presume it is the first novel in a series.