U.N. offers cash rather than goods, food or vouchers so people can spend it on what they need - food, medicine or rent

By Sebastien Malo

AKRE, Iraq, June 6 (Thomson Reuters Foundation) - As Mohammed Said Amin witnessed the intensifying battle between government forces and rebel groups for control of his hometown of Damascus, he and his wife made a plan to escape.

They left for Ras al-Ayn, a Syrian town bordering Turkey. But when it came under attack from the Nusra Front, the former bus driver felt he had no option but to take up arms against the al Qaeda-linked group.

"We fought them for weeks," Amin, 48, said in a tired voice. "Who would want to do that? But we had to protect our women, our homes, our land."

Two years on, Amin and his wife, Nadia, are refugees living in Iraq's Kurdish region - a haven for about 235,000 people uprooted by Syria's civil war and more than 1 million Iraqis who have fled violence in other parts of their country.

Once a prosperous oil-producing region, Iraq's Kurdistan has been hit by an economic crisis caused by a slump in oil prices with protests earlier this year against austerity measures.

The war against Islamic State and the influx of displaced people has only compounded the crisis. Jobs are few and far between, especially for the more recent arrivals.

Amin's new home is in a converted prison once used by Saddam Hussein to hold political dissidents during his iron-fisted rule spanning more than two decades.

Some 1,000 Syrian refugees are sheltering in the gloomy fortress-like building in the northern town of Akre. The frontline in fighting is some 30 miles (50 kms) away, beyond Akre's barren hills.

Although Amin has no job, he and his wife receive a $38 monthly lump sum from the U.N. World Food Programme (WFP) as part of a pilot project to offer assistance in cash rather than goods, food or vouchers.

INFLATION RISK

More than 14,000 households receive cash under the programme launched in Iraq this year.

Aid officials say the relative stability of Iraqi Kurdistan has made it possible to roll out a form of food assistance that has been touted as a more efficient way of delivering aid.

"Cash provides people with flexibility so they spend it on whatever they need - be it food or medicine or part of their rent," said WFP spokeswoman Abeer Etefa.

The European Commission's humanitarian department ECHO has provided most of the nearly $680,000 (600,000 euros) needed to run the programme, part of a $20 million pot of funding the agency has provided WPF in Iraq since 2015.

Nicholas Hutchings, a technical assistant with ECHO, said that while it was impossible to rule out the risk that recipients would spend cash on cigarettes and alcohol, rather than food and rent, there was little to suggest they do.

"Not just in this country but in others, evidence shows that people don't spend it on vice," he said.

Giving cash benefits the local economy and offers people the dignity of choice, but it must be done in a way that does not cause inflation, proponents of cash assistance say.

"Of course with large-scale numbers of people receiving assistance ... there is the risk of pushing the prices up," WFP's Etefa told the Thomson Reuters Foundation.

In conflict areas in Syria, where WFP is providing food to more than 4 million people, handing out cash indiscriminately would risk causing inflation, she said.

Previously, refugees like Amin would often have had to queue for bags of beans, flour, bulgur wheat and other staples.

Many families find the experience humiliating, and such operations are more expensive to run because of transport, storage and other costs, aid officials say.

Clutching his rumpled U.S. dollar bills, Amin sat and talked inside his dark living quarters - a former prison cell which the couple have tried to brighten up with red ribbons hung on the concrete walls.

Amin said cash was better than food vouchers which he could only use in specially designated shops, where goods are often pricier than in neighbouring stores.

"Now I can take the money and go buy wholesale from the supermarket," Amin said. "When it was the voucher, the prices were fixed and I would lose some of the value of the dollar."

MARSHALL PLAN

Despite the assistance they receive, the lump sum does not cover all the refugees' needs and most would prefer to work.

Recalling his life in Damascus, Amin lamented how the war had stifled his plans to open his own shop, with which he hoped to secure the financial future of his nine children who fled Syria ahead of him and are now in Turkey and Germany.

"I worked really hard," he said. "I wanted them to remember me afterwards by saying 'Our father has done his best to provide for us'."

But opportunities to work in Akre are close to none, leaving Amin and many others feeling frustrated and aimless.

The local authorities, who say they are feeling the strain of the refugee crisis, are also calling for more cash assistance for displaced Iraqis.

"It's not easy to have large numbers of displaced people coming to your city and upsetting the status quo," said Jane Pearce, WFP's country director in Iraq.

Like other aid officials, Pearce is concerned about the humanitarian consequences of a planned offensive by Iraqi forces, with help from a U.S.-led coalition, to retake Iraq's second biggest city of Mosul from Islamic State later this year.

"I'd like to see (something) like a Marshall plan for Iraq that could re-build and keep it stable," she said, referring to the massive relief the United States provided to rebuild Europe after World War Two.

The European Commission's Humanitarian Aid and Civil Protection department provided a travel grant for this trip.

(Reporting by Sebastien Malo, Editing by Katie Nguyen and Emma Batha. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's rights, trafficking, property rights and climate change. Visit http://news.trust.org)

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