BAGHDAD -- Saddam Hussein will fight his last battle on a banknote, as the United States gets ready to pay Iraqi civil servants in dollars, not in the local dinar that carries his picture.

And this battle will take longer than the three-week military campaign that ousted the Iraqi leader from Baghdad on April 9, since billions of banknotes have to be replaced.

"For sure there will be a new dinar, this one has Saddam's picture and the quality of the paper is poor," said Humam Shamaa, who teaches in the faculty of management and economics at the University of Baghdad.

A new currency is also needed because Kurdish areas in northern Iraq use the so-called "Swiss dinar," Iraqi banknotes printed in Europe that do not carry the picture of Saddam, he argued.

The "Swiss dinar" was withdrawn from circulation in areas under Saddam's control in 1993, replaced by higher denomination banknotes printed locally and carrying the picture of Saddam, a move prompted by skyrocketing inflation.

Once a new post-Saddam government is formed, "it should not take more than two months to decide on a new dinar, if the will is there," said Shamaa. U.S. officials have reportedly put the timeframe at three to six months.

The Central Bank in Baghdad was looted and destroyed after the collapse of the regime but its operations could resume in another location as "the staff is ready to return if there is security," said Shamaa.

Until its replacement, "the old dinar will remain in circulation as no law had cancelled it," he added.

But this will start to change at the end of the month in the state administration.

The United States said Thursday employees of the Iraqi state would receive their salaries in dollars, taken from the estimated $1.7 billion in Iraqi funds confiscated from U.S. banks.

Washington is planning to pay up to 2.5 million civil servants $20 per head, a total of $50 million, according to the BBC.

At the current exchange rate of 3,300 dinars per greenback, $20 fetch 66,000 dinars, slightly above the average salary of 50,000 dinars During saddam's rule.

But Shamaa said the civil servants often supplemented their monthly pay with extra sources of revenue, mainly illegal, and therefore their April income is likely to be less than in February.

The economist played down the threat of dollarizing the economy.

Shamaa said the main inflationary threat comes not from dollarization, but from the higher wages likely to be offered by foreign companies taking part in the reconstruction and the rehabilitation of the vital oil sector. (AFP)