The British Army was slashing its rates of pay for locally hired staff “due to circumstances beyond our control”, it announced.

The wages of skilled workers were to be cut to $22 (£13.80) a month, those of the unskilled to $10. Graduates and trained professionals, who had been working as translators and drivers for about £1.30 a day, found themselves being paid 50p or less. The effect was immediate: less than three weeks after liberating Iraq’s second-largest city, the British forces had a strike on their hands.

The pay was being cut to conform with standards imposed across Iraq by the United States. “This is cruelty,” Vahan Gregor, a civil engineer who used to have his own company, said. “The rate is not even enough to pay for the lift into work. A packet of decent cigarettes costs more than a day’s pay. A packet of nappies is one month! Is this fair? Even under Saddam, it was better than this.”

In a city of 1.3 million, a protest walkout by 200 interpreters over the weekend may seem to be a trivial matter — and it failed to change the pay rate — but it went to the heart of the problems facing the British military administration in Basra. Having driven out the Iraqi Army and the Baath party, having quelled the worst of the looting and partially restored supplies of water and electricity, the Desert Rats may have triumphed in war, but they are a long way from winning the peace.

“I’d say that, in terms of infrastructure, the city is now back to its prewar level,” Brigadier Graham Binns, commander of the 7th Armoured Brigade and Basra’s de facto ruler, said, “but that’s not enough. Now we need to show people the benefits of freedom.”

A pair of rotting camels flank the main road into Basra and the overwhelming atmosphere around the city is still one of destruction and decay, yet, compared with other cities in the south, there has been remarkable progress. A local police force is visible on the streets.

The markets, where a platoon of the Black Watch regiment patrols on foot, are the most vibrant in southern Iraq. Luminous oranges and plump tomatoes have replaced the shrivelled and fly-blown specimens on offer a fortnight ago. There are cakes and cups of syrup-flavoured ice.

In al-Magaiz market there are carpets, watches, perfume, make-up and kitchen appliances on sale. All of this is an improvement, but it still falls far short of the expectations of Basra’s residents, particularly those who have suffered the biggest material loss in the past month — the professional middle classes.

It is an open secret, for example, that many of the goods on sale in the market were looted during the first anarchic week after liberation. Invisible, but no less thriving, is the black market in guns.

Amid all this, the dispute about interpreters’ pay is symbolic of much deeper discontents and apprehensions.

“I am so disappointed with the British,” Ahmed Ali, a former geography teacher who has been working for the UK force, said. “If you make an agreement, you should keep to it — not reduce pay after one week. Mr Bush talked so much about freedom and how we would live in great conditions after the war. Well, that was all bullshit.”

Many locals believe that without substantial economic improvements, the progress made so far will prove fragile and reversible.

“Crime is coming down now,” Mr Vahan said, “but I’m afraid that it will soon go back up. If a man sees his children crying because they go hungry, what will he do? Easy. He will hit you over the head and steal your camera, and he will sell them that so that he has some money on which to live.

“And perhaps he will not worry too much about how hard he hits you, and whether you live or die.”

How troops put Bertie on his feet

BRIGADIER Graham Binns, commander of the 7th Armoured Brigade, stands in his Basra headquarters and introduces the most important member of his team. It is a 2ft drawing of a man named Bertie Basra.

Bertie represents the Army’s plan for the city. “We envisage Basra as a human body,” the Brigadier says. “We knew we had to remove the brain of the regime and replace it with something else, but keep the vital organs remaining.”

The feet contain the universities and schools and also the civilian population. Emanating from the chest is the blood — the power and water, whose fluctuating supply has come so close to giving Basra a fatal heart attack.

Brigadier Binns admits imperfections along the way. His troops, he says, were inadequately coached in the subtleties of Iraqi culture, and a lack of Arabic-speakers or any functioning mass media made it almost impossible to communicate with the people of the city.

But the biggest problem has been the necessity of compromise. Basra’s existing educational system, its police force and its legal system are still based partly on pre-war propaganda and principles. “Locally we couldn’t afford to wait for a new national curriculum, for example,” he says. “We wouldn’t have had any schools.

“It’s like football players. Many of them just wear different shirts. But we had to have contact with people who, in some people’s eyes, were tainted.”

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