* Iraq government offers cash incentives to returnees
* Estimated 1.5 million displaced in sectarian war
* Government wants to end problem, but fear still a factor
By Khalid al-Ansary
BAGHDAD, June 2 (Reuters) - Jasim Jubayer al-Ugaili recalls with obvious pain the night he and his family fled their home in western Iraq, carrying the threatening letter that drove them away: "Either leave within 72 hours or die."
An estimated 1.5 million Iraqis left their homes during the brutal sectarian slaughter that saw tens of thousands killed in 2006-07. The government wants to end the displacement by the end of this year, either by permanently resettling displaced Iraqis in new homes or returning them to their old ones.
For many of those who fled, the decision is simple.
"I won't return to my old place," said Ugaili, 60. "If I return, I will be killed."
The United Nations refugee agency, UNHCR, has said the sectarian conflict pitting feuding Shi'ite and Sunni Muslims against each other produced the worst humanitarian crisis in the Middle East since 1948. In that year, some 700,000 people, half the Arab population of Palestine, fled or were forced to flee their homes after Israel was created.
Of the 1.5 million people displaced inside Iraq, 500,000 are squatting in camps or public buildings, according to UNHCR. In Baghdad, 200,000 people live in 120 camps.
The Iraqi government says 250,000 families, with an average of six people per family, fled their homes in 2006 after the bombing of the golden-domed Askari shrine in Samarra, an incident viewed as a milestone in a growing sectarian conflict that nearly tipped Iraq into all-out civil war.
Ugaili, a Shi'ite, lived in the Shi'ite enclave of Haswa in a predominantly Sunni district on Baghdad's western outskirts.
He said he sold his home for a quarter of its value and moved to a tract of open land in Baghdad's northern Shi'ite district of Chukook. There he built a small home of clay brick, roofed with reed mats and plastic sheets and opened a shop selling nylon rugs, plastic homeware and children's clothing.
"For whom shall we return? Shall we walk to death by ourselves?" asks Ugaili's 18-year-old son, Mohammed.
CASH INCENTIVES
The government is hoping some of the 3,000 families squatting in Ugaili's new neighbourhood will return home and is offering ${esc.dollar}3,500 cash to each family to help them move.
At a government office for the displaced in eastern Baghdad, 44,000 families have registered, about 80 percent of whom had moved out of other neighbourhoods in the Iraqi capital.
The office manager Safa Hamza said he expects 5,000 of those families to return home within two months.
"This is an increase of 400 percent compared to last year," Hamza said. "Some areas have become stable."
Qais Maryoosh, a 35-year-old construction worker, fled the restive province of Diyala when al Qaeda militants killed his brother. He settled in Baghdad's eastern Obaidi district.
Diyala is a volatile mix of Sunnis and Shi'ites where al Qaeda still launches attacks routinely. But Maryoosh and his eight family members plan to return home soon, he said, as he stood in line at the displacement office to complete paperwork.
"The situation there (Diyala) is now safe," he said.
Asghar al-Moussawi, Iraq's Deputy Migration and Displacement Minister, said more than 52,000 internally displaced families have already returned home, most of them from Baghdad, and many more were expected to move soon, as security improved.
"We expect a big number (of displaced families) to return to their areas after June, during the school vacation," Moussawi told Reuters.
"EXTRAORDINARY SITUATION"
"This is an extraordinary situation and must end," he said.
While families in Baghdad are returning home, there has been fewer returns in northern province of Nineveh, still considered an al Qaeda hotspot. Some 11,000 families of Christians and the Shabak ethnic and religious minority that fled central Mosul have not returned home.
Some Iraqis who fled abroad are also coming back because of trouble in the Middle East. Around 300 families returned recently from Syria, Yemen, Libya and Egypt, Moussawi said.
"Security is good and our indicators are rising. The returns to homes from outside and inside Iraq are rising," Moussawi said. "I expect big numbers to return in the coming months."
Iraq has some of the world's largest oil reserves and signed a series of deals with oil majors to develop its dilapidated oilfields, giving hope to some Iraqis that their war-battered nation is on a path to rebuilding after decades of war and international economic sanctions.
Some are encouraged by the incentives offered. The government and international non-governmental organisations are offering returnees ${esc.dollar}1,200 to ${esc.dollar}1,600 to help them find jobs.
But such incentives are no comfort to Kareem Mohammed al-Rikabi, 48, a Shi'ite carpenter who lived in the Haswa neighbourhood for 18 years and does not intend to go back.
"I am sure if I return, my destiny will be the same as those who tried and were killed," he said. (Writing by Khalid al-Ansary; Editing by Jim Loney and Jon Hemming)
Our Standards: The Thomson Reuters Trust Principles.
