Iraq approves $400 mln payment to U.S. "human shields"

BAGHDAD (Reuters) - Iraq's parliament on Saturday agreed a $400 million deal to compensate Americans who accused Saddam Hussein's regime of using them as human shields during the 1990-91 Gulf War, lawmakers said.

MPs passed a law authorising the payment to settle all claims by Americans, some of whom said they were tortured by Saddam's supporters.

Iraq hopes the deal will help protect its funds abroad, particularly money in the United Nations Development Fund for Iraq (DFI).

The law still needs to be signed off by Iraqi President Jalal Talabani.

"Today, the majority of parliament voted in favour of the law to settle claims with the United States," Hamid al-Mutlaq, a lawmaker with the Iraqiya bloc, said.

Scores of Americans were captured by Iraq in 1990 and used as human shields to deter allied air strikes.

In court cases filed in the United States, the former prisoners alleged they suffered death threats, mock executions, starvation, sleep deprivation and had medical care withheld.

The Iraqi government signed a compensation agreement with the United States over the claims last September, which helped pave the way for the lifting of U.N. sanctions imposed during the rule of Saddam, toppled by the 2003 U.S.-led invasion.

After the 1991 war, the U.N. Security Council ordered Iraq to compensate countries that suffered as a result of its Kuwait occupation. Baghdad now sets aside 5 percent of its oil revenues for reparations payments, most of which go to Kuwait.

The U.N. Compensation Commission (UNCC), set up by the Security Council to evaluate damages claims related to the Gulf War, said on Thursday it had paid out a further $880 million for Kuwaiti corporate and governmental claims against Iraq.

It brings to $32.2 billion the total paid out to date by the Geneva-based body to individuals, companies and countries worldwide. A further $20.1 billion worth of claims already approved remains outstanding, to be paid from Iraqi oil proceeds, it said.

Bahaa al-Araji, a lawmaker belonging to anti-U.S. cleric Moqtada al-Sadr's bloc, said the faction did not vote in favour of the law.

(Editing by Serena Chaudhry and Andrew Heavens)