ARBIL, (Southern Kurdistan), Oct 18 (AFP)  The two main Kurdish parties sharing control of northern Iraq have decided to increase the use of the dollar in the enclave to counter a shortage of Iraqi dinars and threatened legal and other measures against traders hoarding the Iraqi currency.

Informed sources in the area said Friday the Kurdistan Democratic Party (KDP) and Patriotic Union of Kurdistan (PUK) were also expected to pay civil servants' salaries in dollars in another attempt to resolve the cash crisis.

Traders from the area and neighboring countries have been hoarding foreign-printed dinar notes on the assumption the locally printed bills, which show the face of Iraqi President Saddam Hussein, will be taken off the market if the United States goes ahead with threats to attack Baghdad and oust the regime, money-changers told AFP earlier this month.

In contrast, traders expect the value of the foreign-printed notes to soar after a US strike.

The value of locally printed dinar notes also has tumbled sharply in the Kurdish enclave, which has been off limits to the Baghdad government since the end of the 1991 Gulf War, in anticipation of US action.

Old foreign-printed dinar notes are the main currency in the region, but locally printed bills, which are of poor quality and easy to counterfeit, are also circulated in the enclave.

Before UN sanctions were imposed on Iraq when it invaded Kuwait in 1990, Iraq's currency was printed in Britain.

But in 1993, Baghdad took the British-made notes out of circulation after they assumed greater value on the market than locally printed money.

The old notes are now worth about 11 to the dollar in the Kurdish enclave, while the new notes have dipped to 2,000-plus to the greenback.

After a meeting in KDP-held Arbil devoted to the liquidity crisis on Thursday, officials from the KDP and PUK administrations slammed the "irresponsible" hoarding of dinar notes and threatened to take legal and other unspecified measures against hoarders who did not put the currency back on the market by end November.

They also urged the estimated 3.6 million residents of the enclave to try to use the dollar in their transactions and savings and decided to form a committee to price goods in the US currency in a bid to encourage its use along with the dinar.