By Tim Cocks

BAGHDAD, Feb 12 (Reuters) - Four million Iraqis are struggling to feed themselves and 40 percent of the country's 27 million people have no safe water, despite oil wealth and a booming economy, the U.N. said on Tuesday.

With annual economic growth of around 7 percent, according to U.N. estimates, and a national budget of $48 billion, buoyed by oil exports of 1.6 million barrels per day, Iraq has the ingredients to be prosperous.

But insurgency and sectarian attacks have displaced more than two million people and left nearly twice as many hungry.

"Four million Iraqis cannot guarantee they're going to have food on their table tomorrow," the United Nations humanitarian coordinator for Iraq, David Shearer, told Reuters at the launch of a $265 million appeal to donor governments for 2008.

The United Nations says the number of displaced people has roughly doubled since 2006 to nearly 2.5 million. High unemployment has left many others unable to feed themselves.

Violence is down 60 percent across Iraq since last June, thanks to a surge of 30,000 extra U.S. troops, a decision by Sunni tribal leaders to turn against al Qaeda and a ceasefire by Moqtada al-Sadr's Shi'ite Mehdi army.

Shearer said 36,000 displaced people had gone home in this period, a tiny fraction of the total who fled the violence. "We seeing a plateauing of the displacement," Shearer said, adding Iraq was still too dangerous for foreign aid workers to move around or for the U.N. to have a large-scale presence.

In August 2003, insurgents blew up the U.N. headquarters in Baghdad, killing envoy Sergio Vieira de Mello and triggering a pullout of most U.N. staff that has yet to be reversed.

Shearer said the latest appeal should be seen as a stop-gap until the government has fully set up its own networks, not a bid to enlarge the long-term presence of aid agencies in Iraq.

Underscoring the paradox of an aid appeal in a nation as wealthy as Iraq, the government said it would for the first time give $40 million from its own coffers.

Elements of the appeal include food ($97 million), shelter ($37 million), health ($32 million), human rights ($26 million), water and sanitation ($21 million) and education ($18 million).

(Editing by Mark Trevelyan)

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