Off a dusty street flanked by piles of rubble and bombed—out car skeletons, the Saleh family is rebuilding their home with American aid money they got because three family members were accidentally killed in crossfire between U.S. forces and insurgents.

In another neighbourhood of the battleground city of Ramadi, a new boat motor and fishing nets are tucked into a corner of the Zeyadan family’s courtyard, bought with money from the same U.S. aid fund.

The aid for these families and hundreds of others like them came from a special fund earmarked by Congress for innocent civilians killed in U.S. military operations in Iraq. But recently, members of Congress asked the U.S. Agency for International Development in Baghdad, which manages the fund, to explore having Iraq take over financing and management of the project.

Though no timeframe was given for the transition, the request is one small example of how the U.S. is looking to cut more than just military ties with Iraq as it withdraws its remaining troops over the next 17 months. Already some victims are worried they will never see the compensation if Iraqi authorities, seen as corrupt and inefficient, run the process.

Christopher Crowley, USAID director in Iraq, said the push for Iraqis to take over the U.S. victims aid programme is part of a general trend for all American assistance programs here. The U.S. is “seeking a larger contribution from the (Iraqi) government to these programmes so they will become more sustainable as time goes on,” he said.

But the move is rankling some Iraqis. Foreign Minister Hoshyar Zebari, has criticised the U.S. for rushing to cut ties to Iraq, saying- “Their message to us is- ‘Solve your problems quickly so that we can withdraw quickly.’”

Mr. Crowley said many in the U.S. believe Iraq has the means to pay its own way to rebuild after the war, with the world’s third largest proven reserves of crude oil, though so far infrastructure woes mean Iraq is far from producing as much as it could.

“Presumably, when Iraq is reaching its full potential with regard to its oil resources, it’s not going to need this kind of assistance,” he said.

Asked why the Iraqi government should pay compensation for deaths during American operations, he said the victims “are Iraqi citizens. We would like to see an expansion of the definition of victims beyond those injured and wounded in U.S. military action” to include all the innocent war victims."

The Iraqi government already has its own programme to give money to families of the about 100,000 civilians killed since the 2003 U.S. invasion. But the programme is patchy and underfunded, run by each province. In Baghdad province, for example, some payments were made in 2007 and 2008 but none since 2009 as no budget was appropriated, according to a spokeswoman, Shatha al—Obeidi.

No payments have been made by the Iraqi government since 2004 in Anbar province, once the bloodiest front in the fight against the insurgency, where the government estimates up to 50,000 Iraqis have been killed.

In Ramadi, the Sunni Muslim province’s capital located about 70 miles (115 kilometers) west of Baghdad, the idea of putting Iraqis in charge of aid to victims worries both victims and the aid workers trying to help them.

“They are not going to reach the right people, the most needy people,” said Eman Kadhum, the Anbar programme manager for CHF International, the organization that distributes the USAID money in the province. “Poor people are going to remain, as always, the victims. No one will help them.”

If Iraqi authorities and aid groups take over the aid process, “most of them will just take the money,” she warned, noting that Iraq was ranked as the fifth—most corrupt country in the world by the watchdog group Transparency International.

At the height of the war in mid—2006, violence was out of control in this city of 400,000 with daily bombings, attacks and gunfights. Whole neighbourhoods were too dangerous for police. Insurgents attacked U.S. troops nearly every time they ventured out, and some roads were so bomb—laden American forces would not use them.

Mohammed Hesham, 36, recounts how his sister’s husband, Walid Ali, was killed in 2006. Ali was on his way home in an area where insurgents were active. He was crossing the street when he was shot by an American sniper on a rooftop. He lay bleeding in the street until dawn because there was too much fighting to evacuate him.

“Sometimes, they shot everything that moved. It didn’t matter if you were carrying a weapon or not,” Hesham said.

Ali, who worked in a glass factory, left behind a wife and three kids with no means to support themselves. Last month, with $8,000 in U.S. aid, they opened a small stationery and gift shop in Ramadi and stocked the shelves with mobile phone accessories, photo albums, batteries, clocks and toys.

Mr. Hesham, like other victims, said he sought help from the Iraqi government for his sister and her children, but never got it. And he does not have faith in Iraqi authorities to manage aid for victims.

“No one is going to reach the victims, and if they do they will give them something very small,” he said.

The money for the Hesham family and others like them came from the Marla Ruzicka Iraqi War Victims Fund. The fund was named after a young American aid worker who was the first to persuade Congress to assist civilian war victims in both Iraq and Afghanistan before she was killed herself in a 2005 suicide bombing in Baghdad.

The Marla fund aims to help the poorest families who have lost their main breadwinner and to give them a home or an income—generating project such as a small store. The families must document the deaths extensively to get aid, including providing police reports. In some cases, the money comes with an apology from the U.S. military.

The fund has helped more than 5,360 people across Iraq so far, according to USAID.

The programme, funded through USAID, has received about $50 million since 2005. But the money is decreasing- USAID has asked Congress for $5 million a year for the coming two years for the fund, half what it got annually from 2006—2008. It’s part of a general downward trend in American humanitarian aid for Iraq, which peaked at about $1 billion in 2006 and is expected to run about $250—300 million annually from 2010—2012.

Separately from the Marla fund, the U.S. military says it has also distributed about $115 million directly to victims. That funding will dry up completely after the U.S. forces withdraw at the end of 2011.

For families like Hakima Zeyadan’s, the U.S. aid has been the only glimmer of hope in years of misery.

Her husband, a fisherman, was killed inadvertently in crossfire four years ago on his way home from Baghdad to Ramadi when a U.S. convoy nearby opened fire after being attacked by insurgents. Now she lives in a house with more than 20 family members and can’t afford the $300 a month rent.

With $12,000 from the Marla fund, the family bought a fishing boat, nets and a tent to pitch along the banks of the Euphrates where her son Khaled, 34, will fish and hopefully take over his father’s role as the breadwinner.

Selema Saleh is rebuilding her home, damaged in fighting, and adding two rooms with $28,000 in U.S. funds. Her two sons and her husband’s brother were killed in 2007 in a crossfire between American forces and insurgents. The 54—year—old was forced to move her family of six, including her seven—year—old grandson and the widow of one of her sons, to one room in her brother’s house.

“I lost everything,” she recalled. Only the U.S. came to her aid, Saleh said, pouring out her gratitude as she stood amid the construction work on her newly expanded home.

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