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U.S. Bombs Baghdad Neighborhood

Two car bombs killed seven Iraqi national guardsmen and a rocket barrage hit a police academy Monday as insurgents kept up their offensive to subdue Iraq's beleaguered security forces. U.S. jets pounded suspected militant positions in a Baghdad slum.

Two U.S. soldiers with the 1st Infantry Division (search) were killed in separate incidents Monday near Balad, north of the capital. The first died in a car crash and the second was killed when a patrol came under fire as it returned from the crash, the military said. More than 1,040 U.S. military members have died since the start of U.S. operations in Iraq in March 2003.

The American attack took place before dawn in the Sadr City (search) neighborhood, where residents said explosions lit up the night sky for hours, leaving a trail of mangled vehicles, damaged buildings and shards of glass. At least two children wrapped in bloodstained bandages could be seen lying in hospital beds and one man suffered burns from head to toe.

Dr. Qassem Saddam of the Imam Ali hospital said the strikes killed at least five people and wounded 46 -- including 15 women and nine children. The U.S. military said the claim of such high casualties was "suspect."

"Early indications are that injuries to a large group of people as a result of this engagement did not occur," the military said in a statement. However, the military said it was opening an internal investigation to determine what happened.

Lt. Col. Jim Hutton, a U.S. Army spokesman, said insurgents also fired three mortar rounds at a nearby Army base, but the shells fell short and exploded in a civilian neighborhood. It was not clear if any of the casualties in Sadr City were from the insurgents' shells.

U.S. warplanes struck again late Monday, residents said. Loud explosions echoed through the neighborhood, but there was no immediate word on casualties.

The military has launched a sweeping crackdown against Shiite fighters loyal to renegade cleric Muqtada al-Sadr (search) in the sprawling slum -- named after the cleric's late father -- in an effort to dismantle his militia before elections slated for January.

Those elections are central to a U.S. exit strategy from Iraq, as is the development of a strong Iraqi National Guard (search). The United States is trying to build a security force capable of taking over security operations in many towns and cities, thus allowing the Pentagon to reduce the number of American troops.

The first car bomb Monday struck a seven-vehicle national guard patrol in the northeastern city of Mosul, killing at least four guardsmen and wounding three others, police said. Gunmen followed up the blast with a burst of automatic weapons fire before fleeing.

An attacker later detonated an explosives-packed vehicle at a national guard checkpoint near the Sunni insurgent stronghold of Fallujah, killing at least three guardsmen and wounding several other people, police said.

U.S. warplanes were spotted over Fallujah later Monday. Residents said they fired at least three rockets at northern parts of the city, but U.S. Marine officers said only illumination rounds were fired. There were no immediate reports of casualties.

Iraqi interim Prime Minister Ayad Allawi warned that a "decisive military solution" could soon befall the rebel stronghold of Fallujah if a political one is not found.

"I think we waited more than enough for Fallujah," the Iraqi leader said in an interview aired Monday on the Arab television network Al-Arabiya. He indicated Iraqi security forces would be used in any operation against the city.

In east Baghdad, insurgents also fired several mortar rounds that hit a police academy on Palestine Street, Interior Ministry spokesman Col. Najah Shakre said. There were no reports of injuries.

With civil servants and security personnel dying every day in attacks, Allawi's Cabinet announced it had adopted a draft resolution to compensate families of those "killed by terrorist acts" -- an apparent effort to encourage government employees to keep working.

If ratified by the national assembly, families of victims will receive a monthly income equal to the last salary of the dead person, the Cabinet said. It was not clear how long the payments would last.

Also Monday, the Iranian Embassy announced that Fereidoun Jahani, the Iranian consul in Karbala, had been freed after 57 days in captivity. The diplomat was seized while traveling between Baghdad and Karbala, said Abbas Attar, director of the Iranian ambassador's office in Baghdad.

In a video made public Aug. 7, militants calling themselves the "Islamic Army in Iraq" accused Iran of meddling in Iraq's affairs. Iran, a predominantly Shiite Muslim country with close ties to Iraq's majority Shiite population, is suspected of using money to influence Iraqi politics.

Jahani's release came as the brother of a British hostage abducted Sept. 16 along with two Americans called on Prime Minister Tony Blair to resign over his policies in Iraq. The two Americans have been beheaded by suspected followers of terror mastermind Abu Musab al-Zarqawi.

The hostages are among more than 140 foreigners who have been kidnapped in Iraq -- some by anti-U.S. insurgents and others by criminals seeking ransom. At least 26 have been killed.

Later Monday, Egypt's Middle East News Agency reported said an Egyptian engineer working with a telecommunications company who was kidnapped in Iraq last week was freed. There was no immediate government confirmation of the report.

The U.S. military, meanwhile, announced a second set of murder charges in as many weeks against members of the same Army battalion deployed in Baghdad.

The statement identified the latest two American soldiers to be charged as Staff Sgt. Johnny Horne Jr. and Staff Sgt. Cardenas Alban, both from Company C, 1st Battalion, 41st Infantry Regiment from Fort Riley, Kan.

The military declined to provide details about the case, saying an investigation is ongoing. Last week, the military filed separate charges against two other soldiers from the same unit for the death of three Iraqis. The 1st Battalion, 41st Infantry is involved in efforts to bring stability to Baghdad.