The Bush administration urged an appeals court Wednesday to overturn a judge's order awarding nearly $1 billion in Iraqi money to 17 Americans taken prisoner by Saddam Hussein's government during the 1991 Persian Gulf War (search).

Attorneys for the POWs, who were tortured and starved, countered that the award - to be paid from Iraqi government assets (search) frozen in this country - in no way threatens the rebuilding of Iraq, taking issue with the central argument of the administration.

Justice Department attorney Gregory Katsas said that foreign policy interests are at stake, and that the POWs' claims should be handled through diplomatic channels rather than the courts.

The administration maintains that countless people suffered at the hands of Saddam and plenty will be seeking compensation from the new government, jeopardizing its fragile existence. Once the Iraqi government gets on more solid footing, the administration believes reparations could be negotiated.

Stewart Baker, attorney for the POWs, told a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit (search) that his clients simply want the judgment in their favor upheld to affirm their suffering and allow them to collect at a later time.

"French oil companies are going to walk in and say 'I have a contract signed by Saddam Hussein and I want to be paid,' and they're going to have a claim that is recognized under international law," Baker said outside court. "We think this is a debt incurred by Saddam Hussein that deserves much more priority than some French oil contract."

Ret. Col. David Eberly, who was held by the Iraqis for more than 40 days, said the government's effort to void the ruling is disappointing.

"Today, the argument boils down to the fact that the government simply wants to say 'thank you very much for your service and now go home and live forever the horrors and the memories of your captivity and the torture that went on.'" he said. "I think that's unjust."

Eberly was shot down over northwest Iraq on Jan. 19, 1991, and captured by Iraqi soldiers who beat him daily and fed him just bread and broth.

The POWs filed suit against Iraq in April 2002 under a 1996 law that allows victims to pursue blocked assets if they've won damage awards against foreign governments that sponsor terrorism.

U.S. District Judge Richard W. Roberts sided with the POWs last summer and ordered payment of $653 million in compensatory damages and $306 million in punitive damages.

But the Justice Department stepped in and said the POWs could not have access to any of the $1.7 billion of Iraqi assets frozen in 1990. It argued that President Bush formally seized those assets after the invasion of Iraq last year and that the money would be used for rebuilding the country. Judge Roberts reluctantly agreed that the government had the right to block those funds from being used.