Thursday, June 03, 2004

:: This article was wrote and sent to us by one of our fine American readers who seem to have a broad experience in political and economic fields. He pointed out an interesting idea about using oil revenues to enhance the democratic changes in Iraq and the feeling of Iraqis that they're part of this country, as many Iraqis have lost this feeling over decades and lost trust in a better future and in any government's promises.

A Silver Bullet: Empowering the Iraqi People

As complex and agonizing as the situation in post-war Iraq is, there is a way forward.
In fact, there is a “silver bullet” – a policy action that would go far to win the confidence of Iraq’s people who hold the key to lasting peace. It is a policy declaration that would cost nothing. Yet it would, at a stroke, offer immediate, tangible benefits and hope for a better future to the Iraqi people. It might also offer a model for reform in oil-rich nations all over the world.

Together with the new Iraqi authorities, we should announce – soon -- that the new government will "personalize" the nation's oil revenues by establishing an Iraqi national investment trust – call it The Iraqi People's Trust -- that will receive a major share -- say, 50% -- of all future Iraqi oil earnings. The balance of future oil revenues would go directly to central government and regional governments on a per capita basis to be negotiated later.

The models for the People’s Trust would be the Singapore Provident Fund and the existing Alaska Permanent Fund through which all citizens of Alaska receive an annual check, representing their share of that state's oil revenue. The effect -- immediately -- would be to establish irrefutably that the U.S. is NOT waging this war to somehow steal Iraqi oil, but rather intends to redirect this resource to the benefit of the Iraqi people themselves directly. One person at a time.

Each Iraqi -- man, woman or child -- would be eligible for a personal investment account in
the trust once they register as citizens of New Iraq. This is actually a fairly straightforward
administrative issue to handle -- given modern computing capacity, storage, record-keeping and biometric ID systems. The effort to register citizens for their Trust Fund benefits could go hand in hand with election registration.

Funds in the People’s Trust could be invested in New Iraq government bonds – further leveraging central government financial power – or in domestic equities, venture capital investments in Iraq or international equity markets. But legal ownership will be vested in each individual Iraqi, not the tribe, clan, or regional power-broker – but each individual Iraqi. Any Iraqi over age 21 would be allowed to withdraw funds or borrow against their balances at any time, for any reason at all.

The creation of such a fund would give all Iraqis a clear sense of the profound policy difference between liberators and corrupt thieves like the Ba'ath regime who exploited, stole and misused oil revenues in ways that infuriate ordinary Iraqis -- and endangered the world. It would give the new state administration of free Iraq an immediate, directly appealing way to register citizens -- and voters -- and to reward their loyalty. And it would, of course, answer the charge that this war is being fought, somehow, to take over Iraq’s oil for the benefit of outsiders.

By ensuring that all adult Iraqis have access to a locally significant source of money – the fund would spur entrepreneurship, revitalize the national economy, distribute real resources to the most remote and poorest regions of the country and create a very strong interest among all ethnic and confessional groups and tribes in ensuring their nation's future stability.

We're not talking small money here. Once its oil facilities are repaired and production is
ramped up, New Iraq can look forward to pumping as much as 5 million barrels a day -- $73 billion a year at today’s price of $40 a barrel. Even at far lower prices, 50% of Iraq’s oil exports would amount to roughly $1,000 a year per person per year...and undrawn funds would accumulate for young people to even more significant sums -- until they came of age...

The adoption of such a policy, properly structured and publicized, would
have the kind of impact -- in Iraq and on world opinion -- that Lincoln's emancipation
proclamation did on the domestic politics and international diplomacy of the American Civil War – redefining that struggle from a struggle over regional power to a moral struggle over slavery. Promising a share of their own resources to Iraqis could be the same kind of profoundly moral -- and revolutionary -- stroke.

What is amazing – and deeply disappointing – is that while senior Bush administration figures, including the President himself, Secretary of State Powell and Ambassador Paul Bremer have broadly endorsed the idea of ensuring that oil revenues benefit Iraqis, they have done little to flesh it out – or implement it. Yet it is difficult to conceive a policy action that could better clarify what it means to "liberate" Iraq and empower its people.

Oil is the dominant resource in Iraq, accounting for the vast majority of the nation’s economy.. The use – and misuse -- of oil revenue from it has been a central element of Iraqi politics for generations. And as has been the case in many nations, centralized government control over oil and all of its revenues in Iraq has been both the financial base for tyranny and a spur to horrendous corruption, rent-seeking, and capital flight for ill-gotten gains. That means reform in the distribution of oil revenue is central to winning the peace, indeed oil revenues are to Iraq what land reform was to post-war Japan.

The “curse” of windfall wealth is not unique to Iraq. Sudden oil wealth has done similar damage to societies from Angola to Nigeria, to Venezuela to the Persian Gulf. Observers of such distorted petro-kleptocracies sometimes refer to oil as "the Devil's Excrement." Yet we can – and should – act now to reverse this “curse”. By delivering real benefits from their own resources not just to a political elite – but directly to the Iraqi people – we could foster the rise over time of a broad-based, democratic middle class. We could transform oil from being the financial base of tyranny to being the economic base for democracy. We could give the Iraqi people back their own future.

This is a policy choice that would not only help win this war, but secure a lasting peace, grounded in clearly understandable justice, a peace that would redeem, in some measure, the tragic sacrifices that Americans and Iraqis have both endured. Let us do this – now.

I agree with the author that the Iraqis-in general-need a great deal of reassurance that their country's resources will not go to someone else's pocket, as this is how it has been for a very long time.

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