US prepares to pay Iraqis

Previous mass handouts have caused chaos

The US-controlled administration in Iraq has promised to start paying more than a million Iraqi employees by next week.

Most Iraqis are desperately short of money after what has for most been at least two months without pay, and interim handouts of $20 to some employees and $40 to some pensioners have not gone far.

Now, though, the US Office of Reconstruction and Humanitarian Affairs (ORHA) - the arm of the Pentagon responsible for running Iraq - has told the Reuters news agency that it has 130bn dinars (about $100m, or £60m) ready to pay back salaries under a new wage scale.

The scale sharply cuts security forces' salaries while boosting those of teachers and doctors, ORHA said.

The payments will amount to 100,000-500,000 dinars apiece for 1.1-1.2 million civil servants in the southern and central parts of Iraq, Paymaster General Muhanna Jassim told Reuters.

Sanctions

According to Mr Jassim, the US is taking action now regardless of whether the United Nations Security Council approves US plans to lift - or at least suspend - sanctions.

ALREADY LIFTED

The US has ditched some of its own sanctions, including:

allowing US residents to send up to $500 a month to Iraq

allowing humanitarian aid supplies to be sent to Iraq

authorising any activity paid for by the US government, including reconstruction moves by contractors

permitting privately funded humanitarian activities by US-based organisations.

The plans before the UNSC have been amended to take non-US sensibilities into account, but could still run into Russian or French opposition because of the severely limited role it allots to the UN.

Until sanctions are removed, Iraq does not have a government that can legally sign contracts, so reconstruction and the resumption of trade even under the oil-for-food programme has thus far been delayed, the US says.

Some of the US's own sanctions have already been lifted, meaning that US residents can send money to family or friends in Iraq legally for the first time in more than a decade.

But the US says that without rapid action on UN sanctions, supplies of money will soon run out and food and other essential stocks will dwindle still further, triggering runaway inflation.