Iraq's education minister said on Sunday the school system needed billions of dollars in aid to overcome decades of neglect under Saddam Hussein, who preferred to pour money into the military.

Alladin Alwan said in an interview most of the $850 million education budget for 2004 would be spent on salaries and operating costs and would not meet capital investment needs to rehabilitate more than 10,500 schools.

?Unfortunately we do not have an investment component in our budget and for this reason we have to rely on donor funding to implement our reconstruction plans,? Alwan told Reuters. ?We are still working with very marginal aid.?

Education spending fell drastically before last year's US-led war to an average of about $47 dollars per student each year, mostly paid for through funds from the UN oil-for-food programme. That compared to about $3,000 spent 20 years ago, the Education Ministry said.

A US Congressional allocation of $88 million will be used to renovate 950 schools from April, Alwan said.

And detailed negotiations with the World Bank will begin next week on disbursing $100 million in emergency funds by June for the physical renovation of schools and printing textbooks.

Alwan said about 2,500 schools had been renovated since Saddam was ousted last April, but much more money was needed to build new schools and massively overhaul another 1,000.

Alwan said recent statistics showed more than 70 percent of secondary schools did not have sanitary facilities and in poor southern cities only 10 to 15 percent of schools had toilets.

?So far we have no source of funding for building new schools. We need to build hundreds of new schools. We need to demolish and rebuild a large number of schools,? Alwan said.

The US-led administration's senior adviser to the Education Ministry, Leslye Arsht, said renovation was done by the US military, non-governmental organisations, the US Agency for International Development (USAID) and contractors.

Alwan said the school curriculum could not be rid of the ideology of the former ruling Baath party overnight and the process needed a national dialogue, under way among senior educators since December.

?The process of revision that took place in August was a very, very quick one and if you look at the curriculum that we are now using there are major problems,? Alwan said.

?Anything that was directly related to the previous regime was removed but the rest of the curriculum contained a lot of problems,? he said, pointing out what he said were distortions in history, religion and civic education.

Following Saddam's fall, textbooks were purged of pictures and references to the former dictator.

Suleiman al-Khalidi