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The men identified themselves as Ali Hussein Jassem Mohammad al-Zubaidi and Ahmad Alwan Hussein al-Mahmadawi, both residents of Sadr City, a teeming Shiite slum in Baghdad.
They said they worked at a US base in Ramadi, a bastion of Sunni Muslim insurgents west of the Iraqi capital.
Mr Zubaidi said he thought he would be working for a Lebanese company named Safwan, but found himself working at the US base. Both he and Mr Mahmadawi, who said he was a "tanker driver", called on those who worked with US forces to desist or face death.
After making their "confessions" in front of a banner carrying the name of Zarqawi's al-Qaeda Group of Jihad in the Land of Two Rivers, the video showed each man having his head cut off.
[The severed heads were held aloft by the men's slaughterers and put on their backs to shouts of Allahu Akbar, or God is greatest.
The grisly footage of the beheading, in which about four men appeared to be involved, was followed by a chilling written warning from the group that "anyone who helps the occupying enemy in any way" would meet the same fate.