WASHINGTON, 3 July 2003 — The United States said Tuesday it was working with Iraqis to create a new currency, develop a budget and reopen Baghdad airport for commercial traffic, but business advisors said security and stability were the priorities.

The Pentagon said six US soldiers were injured in two separate bombing attacks in the Baghdad area on Tuesday, further evidence of unrest as a two-day conference opened here on how to rebuild.

“It is not reconstruction from the military activity of the last few months as much as it is from the economic devastation of the last 25 years,” US Treasury Undersecretary John Taylor said at the opening of a privately sponsored, two-day Iraqi Reconstruction Conference.

Iraq’s annual gross domestic product had tumbled to $40 billion last year from $130 billion in 1979, he said.

Taylor, the top Treasury official for international affairs, cited signs of improvement he had seen on a recent trip to Baghdad.

“There is the continuing tragedy of people losing their lives, and that is something we are addressing as best we can, but I saw some significant signs of activity,” he told the conference hosted by investment promoter Equity International. Oil was now being pumped and shipped, and small shops could be seen selling imported goods such as refrigerators, he said.

The United States was using $1.7 billion of former leader Saddam Hussein’s assets, frozen and then transferred to the New York Federal Reserve Bank, to pay civil servants in Iraq, Taylor said.

So far, $400 million in cash had been driven by truck from the New York storage facility to Andrews Air Force Base, flown by warplane to Kuwait and moved to Iraq to pay more than two million people.

“We don’t imagine dollars being used as an official currency,” Taylor said, adding that the United States was working with Iraqis to create a single currency to replace the two now circulating: The so-called Saddam dinar and the Swiss dinar. “We are working with them to try to make that happen as soon as possible,” he said.

US Treasury Department officials in Baghdad also had unearthed the Iraqi budget for 2002, formerly a state secret, and were using it to project spending for 2003 and 2004, although no figures were yet available.

On the Iraq debt, estimated at anything from $60 billion to $130 billion, the United States had secured international agreement that no service payments should be expected until at least 2005, Taylor said.

And donors were now expected to come together in October to make aid pledges. The World Bank was already seeking to assess total costs of reconstruction in Iraq. “There is a very strong plan now to get the Baghdad International Airport open in the very short term,” Taylor added.

The State Department would set up rules and procedures for businesses to travel to Iraq “as soon as we can,” he said.

But risks remained. “There may be the ability to lay down some legal framework now and hope that much of that legal framework will be preserved, but you never can predict the future perfectly,” Taylor conceded.

Reconstruction challenges were considerable, said Ayaz Shaikh, a partner with the San Francisco-based law firm Pillsbury Winthrop, advising clients on business in Iraq. “Restoring basic services and filling the persistent security vacuum remain the immediate priorities,” he told the conference. Businesses required an Iraqi central authority that could credibly enter, guarantee and facilitate long-term commercial contracts, Shaikh said. “The coalition’s provisional authority fulfills this role today, but whether its long-term obligations are binding on a succeeding Iraqi regime remains uncertain,” he said.