U.S. opens new Iraq embassy

BAGHDAD (Reuters) - The United States dedicated its new embassy building in Baghdad on Monday, a step meant to symbolize its transition from occupying power to an ally of a sovereign Iraqi government.

In recent weeks U.S. diplomats have gradually moved into the $592 million newly built compound, the world's largest U.S. embassy, leaving behind a sprawling palace they had inhabited since toppling Iraqi leader Saddam Hussein in 2003.

U.S. officials had ruled Iraq directly from the palace for a year after taking Baghdad, and their continued presence there was seen by many Iraqis as a symbol of occupation.

The opening of the new embassy is in line with a change of power that was effected on New Year's Day, when U.S. forces in Iraq officially came under an Iraqi mandate.

U.S. Deputy Secretary of State John Negroponte and Iraqi President Jalal Talabani attended the opening ceremony.

In a courtyard between two buildings in the new compound, the Iraqi national anthem was played, then U.S. Marines raised an American flag to the tune of the Star Spangled Banner.

"It is from here men and women, civilian and military, will help build the new Iraq," said Negroponte, who was U.S. envoy to Iraq in 2004-05 and is now the number two U.S. diplomat.

ERA OF EQUALS

Talabani thanked the United States for helping create a democratic Iraq "which will serve as a model for other peoples of the eastern world." He explicitly praised U.S. President George W. Bush for the "courageous and historic" decision to topple dictator Saddam.

U.S. ambassador Ryan Crocker said the embassy's opening marked a new era for ties between the countries as "equals."

But some Iraqis, like Basim al-Hindi, 46, a security guard working in downtown Baghdad, saw more sinister motives behind the new coral-colored compound.

"They just want to retain their control in the heart of the Green Zone," he said. "The sovereignty is all America's."

U.S. forces on New Year's Day handed over responsibility to Iraqi troops for the Green Zone, a fortified compound in the heart of Baghdad off limits to most Iraqis. The new embassy, like the palace that housed it before, is located in the zone.

Embassy officials defended the vast scale and cost of a compound that dwarfs the U.S. presence in much larger countries. The embassy has 1,200 employees, including diplomats, troops and staff from 14 federal agencies.

"Its scale reflects the importance of the U.S.-Iraq bilateral relationship," said U.S. embassy spokeswoman Susan Ziadeh. "It reflects a more normal situation. This is a broadening of the relationship."

The U.S. force in Iraq, now more than 140,000 strong, had operated until the end of last year under a U.N. Security Council resolution, but now falls under a mandate granted by the Iraqi government in a pact agreed by Washington and Baghdad.

That pact -- viewed by both countries as a milestone in restoring Iraqi sovereignty -- requires U.S. troops to leave in three years, revokes their power to hold Iraqis without charge and subjects contractors and some off-duty troops to Iraqi law.

(Additional reporting by Tim Cocks and Peter Graff; Writing by Tim Cocks, editing by Mark Trevelyan)