In Zubayr the Baath party is still a threat

Alim Tahrir – not his real name – stands in the sand-drenched military compound that borders the southern Iraqi town of Zubayr. A teacher by profession, with softly spoken and near-impeccable English, Tahrir is explaining his all too valid predicament to a British Army official.

Over the past two weeks, Mr Tahrir has been acting as an interpreter for the British armed forces. In the aftermath of securing Zubayr, Tahrir has been gathering intelligence on local Baath party officials; liaising with local doctors and medics; and explaining the humanitarian needs of Zubayr's people.

"I cannot work here now," he said, sadly. On Thursday night, he arrived home to find his family had received a death threat from Baath party officials. "I must go somewhere else, like Safwan. I will take my family and work with the British there. It is safer."

A nascent economy, provoked by war, is establishing itself in southern Iraq. Mr Tahrir is one of dozens of local Iraqis now using their skills as truck drivers, engineers, labourers and interpreters to help British armed forces in southern Iraq to kickstart a long-stagnant local economy.

For his aptitude at interpreting, Mr Tahrir charges the going rate: $4 (£2.55) a month. In an area in which the annual salary averages around $24 a year, he admits he has landed on his feet. "Before the Kuwait invasion, I was a professional," he said. "I had a very high standard of living. My family could afford to eat very well. I had a car. Now: nothing."

Nearly all Iraqis remember the day in May 1991, when Robert M Gates, George Bush Snr's deputy national security adviser, announced that all sanctions would remain in place, and that "Iraqis will pay the price" until they removed the Glorious Leader.

The announcement destroyed an already fragile national resolve. And the Iraqi economy immediately fell into an abyss. As an example, before the days of sanctions, Iraqi doctors had considered obesity a national dilemma. Now, rubbish collectors in Baghdad were reporting a significant drop in food scraps thrown out by Iraqi families. Even melon skins were being saved and devoured.

Nowhere was the effect more apparent than on the Iraqi middle classes. Prior to the invasion of Kuwait, most Iraqis like Mr Tahrir had been able to afford to eat chicken at least once a day. Now a ravaged hen costs around $37.

The price of food rocketed by 2,000 per cent, and moneylenders recall exchanging dollar bills for plastic bags of devalued dinars.

Behind Zubayr General Hospital, Jalil Raul is clambering into his water truck. Before the invasion of Kuwait, Mr Raul, an oil engineer, was earning about $30,000 a year. Now he drives a truck transporting water for less than one thousandth of his previous salary.

Mr Raul sells clean drinking water at the rate of 250 dinars for 30 litres. He recalls when, in 1991, one dinar fetched $3.20. Four years later, Mr Raul was exchanging each dollar for 2,550 dinars.

"This is the most money I have earned in some time," he said. "I remember when the sanctions came: things were very difficult. I wanted to leave my job, but they would not allow me. I was trying to work with the UN as an interpreter or as a driver. But my government would not let me leave my job."

The middle classes – or what is left of them – are eager to re-establish a financial base. The teething problems, however, are paramount: as increasing droves of teachers, doctors, engineers and lawyers attempt to find work as truck drivers and interpreters, a brain drain is inevitable.

"We need to be very careful in how we employ local Iraqis," says Colonel Peter Jones, who commands the 23 Pioneer Regiment in charge of the distribution of humanitarian aid in southern Iraq. "It is important that we try to stick to the wages Iraqis were used to under the oil-for-food programme. It was a programme that, to some extent, held society together. Anything more than that and we end up creating a brain drain and a black market economy that we have no control over."

This was a pooled report from Burhan Wazir of 'The Observer'