The second battalion of a new Iraqi army (search) graduated Tuesday at a ceremony with traditional songs and dances, and a U.S. commander and Iraqi politicians said they soon will choose a civilian defense minister to lead the soldiers in securing a democratic nation.

Iraqi police, meanwhile, fired on former soldiers of Saddam Hussein's disbanded army, killing one and wounding three, to halt a violent protest in the southern city of Basra (search).

Demanding payment of monthly stipends promised by the U.S.-led coalition authority, hundreds of the ex-soldiers tried to storm the Central Bank and lobbed stones at it, and then at police who tried to keep them back with batons before shooting into the crowd.

Protesters said they had not received their allowances since September.

On Tuesday night, coalition officials said the ex-soldiers would be paid Wednesday — but only if there was no violence: "Any further disorder could cause payments to be delayed," a statement said. "We appeal to anyone collecting their payment to remain calm and to be patient."

Ambassador L. Paul Bremer (search), chief U.S. administrator in Iraq, formally dissolved Saddam's 400,000-strong army in May, provoking protests until the coalition promised to pay monthly stipends of $50 to $150 to rank-and-file soldiers. In one demonstration that turned violent in June, U.S. soldiers killed two former soldiers.

Also Tuesday, the French Foreign Ministry said in Paris said two French citizens employed by a private U.S. company were shot to death on a road Monday night and a third was injured near the city of Fallujah, west of Baghdad. They were the first deaths of French citizens in Iraq since the U.S.-led war.

Tuesday's ceremony was for 705 graduates that form the second battalion, the core of a 40,000-member army officials hope to field by September.

The first battalion got off to a bumpy start when about 200 of 650 soldiers deserted in December complaining their salaries, which start at $60 a month, were too low. Two weeks ago, Bremer's administration announced a new "hazardous duty pay" more than doubling the salaries of some soldiers and police.

Soldiers paid a fraction of that amount under Saddam complained the new salaries could not keep up with inflation that has spiraled since the U.S.-led invasion in March and the loss of subsidies and other privileges granted under the Saddam regime.

Some Iraqi troops have received threats from suspected insurgents who have carried out deadly attacks on Iraqis working with the U.S.-led coalition.

Still the soldiers were upbeat.

"We were very confused about this at first," said Capt. Nasr Abdel Jalil, a graduate who had stayed with Saddam's army until the fall of Baghdad on April 9. When recruitment for the new army began in July, he said, "We volunteered because we had to work, and not with much enthusiasm. It was the only job I knew."

He was won over by the two months of training to prepare the Second or Honor Battalion for low-intensity conflict that will include patrols, reconnaissance, security for convoys and cordon and search operations conducted alongside coalition troops, which are expected to remain in Iraq for some years.

"When we got to training, we were shocked!" he said. "This is the military the way we love it."

Abdel Jalil, a newlywed in his 20s, is from the Shiite majority among Iraq's 24 million people that long was oppressed by Saddam's Sunni minority, which also dominated the ranks of the army.

New to the military was another Shiite, Capt. Hassan Abdel Amir Aziz, who said seven of his relatives had been killed under Saddam.

"My family didn't want me to be a member in this army, this is a risky job. ... But I told them it is our duty. We should be here now. If we need the freedom, we will make it. Nobody will give us that freedom," Aziz said in English.

U.S. officials say the number of recruits has increased since Saddam's Dec. 13 capture.

"We are now into the accelerated period of providing Iraqi security forces, and these soldiers look very proud, very dedicated," said the highest-ranking U.S. officer in Iraq, Lt. Gen. Ricardo Sanchez. "I have high expectations that in fact they would help us bring security and stability back to the country."

A member of the U.S.-handpicked interim Governing Council, Muwaffak al-Rubaie, said the council is making headway in selecting "a small nucleus that can form the civil leadership of the new Iraqi army."

Ex-soldiers would not be excluded since "these are our sons and the sons of the new Iraq, and for sure the new army will include these members."

The U.S. Army's Maj. Gen. Paul Eaton, an infantry officer in charge of rebuilding the Iraqi security force, said the U.S. military is looking at retired Iraqi generals who had bad relations with Saddam for the defense ministry. "It is something that we are very careful about," he said.

It was "critical to find the right people" but he was "convinced that there is good leadership available in this country."