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Baghdadee بغدادي

Iraq a rental state or a economic powerhouse?

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I hope it is ok for me, a non Iraqi posting on this interesting board. I have been following the situation in Iraq to the best of my ability, and I used to be rather optimistic. Actually I still am, Iraq and the Iraqi people have a tremendous potential. I am just conserned that, even though democracy is beeing rightfully founded, that it does not have enough foundation to stand on, one of wich is the bad state of the Iraqi economy. Although I know that there are a lot of entrepreunal Iraqis who run their private bussinesses, but it seems most of the factories and in fact most of the work force has been employed by the government, wich comes to little surprise having the main source of the wealth in the hands of the government, the oil. Most oil countries become so called rental states, that is as the revenue source is pretty independant of the population the government tends to become corrupt and undemocratic, most countries where oil is the main source of revenues are undemocratic, or on the road to tyranny like Venesuela.


The only real oil country I know of that is not undemocratic (though the same party has had power over most of last century) is Norway, and I beliewe that is mostly due to they tend to be very cheap, that is even though they have billions in revenues they don´t use it, but store it under their pillows, so to speak, that is most of it goes into big publicly owned pension accounts wich use it to invest and pay old people pension. The government is thus not free to use the oil revenues for wathewer purpose they see fit, and have to draw much of their revenues from peoples taxes, wich are I beliewe rather uncommon in many oil countries.


Saddam used the oil revenues to make his power more, mostly by buying his own people and divide and qonquer, putting people against each other, giving money hither and thither, to his own tribe to buy loalty, and to sunny muslim to buy their loalty and so on and so on. The worst thing that can happen is that there will be a new ruling class that will start pumbing money into their own communities to buy their loyalties. This happens in every country, elected officials or not, but is particularly dangerous in oil rich countries, wich seem to go toward dictatorship in the fight for the oil money.


So my conclusion is that special precautions have to be done to limit the politicians power over the oil revenues, of wich I would like to get Iraqi´s and others views on and criticism and opinions if could work, why not if not, and how to make them work. First a Government Petroleum Fund into wich all the oil ravenus must go will have to be founded, wich will have open and thorough accounting system that all Iraqis (and others) can look into openly, maybe through the internet. From this fund then all money the government needs for running the things it has been limited to do, and that limit must be so that the government is only responsible directly for running few things like the police, armed forces and judicial branch. Most other things must be privatized. I know that this will be difficult in a country where the wealth is as unevenly distributed as Iraq and people are used to having the government providing for their all daily needs, even food so the transition will be difficult and will have to be done little by little. So one of the main function of the Fund will be to help the poor people of Iraq to get back on its feet.


One of the things I noticed in last elections was how many of the parties described themselfs in one way or another as socialistic, that is they wanted the government to provide for the citizens, presumable with the oil ravenus, all promised they to keep everybody happy and prosporous, that is they were going to give everybody what they need, or think they need through big government projects, one of wich, like I saw in the agenda of some of the parties was to continue the oil for food project, thus keep the people still as beneficiars, essentially beggars, from the good politicians that are giving them the oil ravenus. We can obviosly see how dangerous that will be, having so much power in the hands of the politicians, that even the main food source is subject of their control.


Here in my country, Iceland, there is constant struggle between the right and left, weather we should be helping everyone the same like the left wants, or like we on the right side of the political spectrum want, focus our limited money into helping the poor, mainly so they can get back to their feet so they will not have to get help any more. We do this mostly by say someone looses his health and ability to work, he gets a certein amount of money in help, but if he can work a little, for every extra crown (our currency, krónur) he works himselfs in, the help is reduced by some ratio, usually half crown for every crown he works himself in, beyond a special amount. Thus there are more money left to help those that can not work anything, and as the money is not cut completely off when they start working again they can start working as much as their health allows them.


Similarly you could keep helping those that need food aid, but the help should be less and less in ratio to how much that particular family earns, that is for every dinar they earn beyond some minimum amount, the food aid should be decreased for like one/tenth of a dinars worth or something like that initially, but little by little that ratio should be made higher, so the program can be little by little fased out for most Iraqis. But most importantly it should be privatized. I guess that every family gets a voucher (is the system not still in effect, although the government has taken it over?) stating how much of wheat and milk powder and all the other things that are given through this program they are entitled to, wich they have to take to the distribution centers to collect the food. Those vouchers should be given out by the petroleum fund under strict distribution rules like I mentioned earlier, so the money for them newer goes directly through the government, as the fund will have an independant administration and pre made rules about how the money shall be spent.


First the food distribution centers must be closed, and all the government employees fired that work in them, or better yeat, they are to be privatized, sold to those that want to run them. Every one that has a shop will then be allowed to sell those products instead of such food aid vouchers, wich they can then use to buy more food from the distribution centers, or the government in some way, or turned in for hard cash, thus privatizing one step in the food program, distribution. Next step will have to be to allow the shops to buy those food items independantly, not through the government or the petroleum trust fund, wich will little by little draw itself out of buying directly for the money.


Similarly the government should not pay directly for schools, health care, running companys or anything else for that matter. People could get a loan from the fund, with small rates to pay for schools, and maybe a voucher directly for those that served in the armed forces to increase the incentive to serve. Those vouchers and loans will only be possible to use to buy education, by paying the schools, and they will have to be used by the schools to pay for everything, teachers wages, renovation of the school property and all that, and thus there will be a competition in education (a good school could have their rates higher than the voucher, so people would have to pay additionally from their own pocket) and thus the school would become independant from the government, although still, at least in the beginning, those that are owned by the government, publicly owned and maybe ruled by the a school board elected by the parents of those that are in that particular school for the younger kids, maybe by the students themselfs in others.


Similarly the Fund could pay for health insurance or into semi-private accounts for every Iraqi (maybe less for those that are earning more money than others) whose function it is to pay for health service directly, thus providing competition in the healt industry. Thus doctors and hospital staff would not be on the government payrole anymore, having to compete in providing the best service in the cheapest manner, although, due to the economic situation in Iraq, the money comes initially from the government, but in this way the officials have no way of dictating how it is spent, thus reducing the possibility of corruption. And in same way the Fund could pay, against maybe small payment from the individual into pension accounts that will be invested until they retire and into accounts from wich people will have to draw their money if they suddenly loose their source of income, thus giving incentives to work, and marry and found families and propably other things.


But one of the most fundamental thing so Iraqis can fullfill their potential and ancient role as the economic giant of their region (remember Babylon and its riches) is to recognise private property and reducing red tape and beurocratic barriers to buying land or getting your property recognised before the law, and to go into bussiness. The famous economist Hernando de Soto has started the Institute for Liberty and Democracy wich focuses on the lack of formal private property rights in most of the non-western world, resulting in powerty, corruption and crimes. His research on the situation in Egypt should be intriguing for Iraqis. I look forward to hear your thoughts about my ideas, hopefully you can excuse my bad english, best wishes,



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Thank you very muvh for your interst and follow up with Iraq and it's new born brave nation.. I would like to briefly translate your letter.. It is so intersting to have Iraqi people share friends their great experiences.. Below is a brief translations to the main lines of your great letter..


ادناه ترجمه للافكار الرئيسيه التي وردت في رساله ليفور من النروج الدي يطرح فيها امام العراقيين افكاراه وتصوراته من خلال تجربه بلاده النروج في كيفيه اداره ثروات بلاده النفطيه طالبا التعليق عليها..

يمكن للاخوه التعليق بالعربيه


انا من النروج و احب ان اشارك قراء هدا الموقع الممتع كشخص غير عراقي . انا متفائل بما يجري في العراق واتابع تطورات اوضاعه حسب امكانياتي البسيطه واعتقد ان العراق والعراقيون يمكتلكون طاقه كامنه عظيمه جدا

لدي مخاوف من ان الديمقراطيه لايمكنها الازدهار من دون اسس متينه واولها الاقتصاد العراقي المنهار

صحيح ان هناك طبقه كبيره من رجال الاعمال والكفائات ولكن اغلب المعامل والموضفيين تابعيين للدوله مما يجعل الطبقه الحاكمه والحكومه مالكه لرقاب الاقتصاد وخصوصا النفط

وفاسده في كل البلاد النفطيه التي تتحكم فيها الحكومه بالنط تصبح الدوله غير دمقراطيه واغلب الدول النفطيه بالعالم غير ديمقراطيه او سائره باتجاه الدكتاتوريه مثل فنزويلا ,

الدوله النفطيه الوحيده الديمقراطيه هي النروج ودلك براي لانها لا تنفق من ايراداتها النفطيه بل تدخرها للاجيال القادمه واعانه المتقاعدين وتعتمد على الضرائب



لدا اعتقد انه من الافضل تحويل اشتمار النفط الى شركه عامه يمتلكها كل ايناء الشعب ويستطيعون الاطلاع على مردودها وارباحها بشكل شفاف يمكن الاطلاع عليه مثلا بالانترنت

صدام كان يعتمد على النفط لادلال شعبه والسيطره عليهم وهدا ليس غريبا على من يخلفه حتى لو كان ديمقراطيا

لاحضت ان الكثير من القوائم الانتخابيه جعلت من الاعتماد على النفط وسيله لاقامه المشاريع الكبيره مثل ادامه مشروع النفط مقابل الغداء الدي يحول الشعب الى جموع عاطلين


بدلا من دلك يجب توجيه العائدات لبناء البنيه التحتيه لمشاريع الانماء الصحي والضمان الاجتماعي والتعليمي

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Thank you very muvh for your interst and follow up with Iraq and it's new born brave nation.. I would like to briefly translate your letter.. It is so intersting to have Iraqi people share friends their great experiences.. Below is a brief translations to the main lines of your great letter..

Thank you, and sorry for the lenght of it, I hope in spite of my bad english you have been able to translate the main meaning of it to the beutiful language of Arabic.


Salim, is the oil for food program still in effect in Iraq?


One things a conservative society like Iraq can do is giving families the option of instead of sending their youngest kids to school for the money they get from the fund, they can use it to buy educational material and service maybe through the internet and thus essentially paying one of the parents, most often the woman (women?), if she fullfills some minimal education standards, has an internet connection in her home and something like that, for providing her kids, under certein age with the education they need.


This system could also help distribute revenues between the many levels of government. The 18 provinces of Iraq, and all the numerous city and town counsils around the country can not have their revenues directly from the oil, and it would be dangerous if they would get their revenues directly from the government, as the distribution would be unfair and unbalanced, based upon the political supporf the politicians get in each area. Instead they will have to have a small tax on each households income, weather their direct income or if they want the income they get from the petroleum Fund (wich as I stated earlier will be mostly evenly distributed based upon pre made rules), wich they would use to pay for their communal affairs, roads maybe and such. Thus Iraqis can see on their paycheck and tax sheet how well their politicians are doing, that is if they do not get good enough roads instead of how high the tax rate is, they can consider electing new officials. Pleace tell me if this is possible or even feasible for Iraq.


I wonder, what do Iraqis want from their new government? Not who does the job, but how it is done and on what principles? Libertarian, conservativ, kapitalistic, individualistic aproach to building the new Iraq, or socialistic, collectivistic aproach or a mix of all those and other political ideas? What is mainstream in the political spectrum in Iraq? Should the state provide most services, or should individuals provide them? What services should be provided by the market and what by the state? In what direction should the new Iraqi democracy go in political terms?

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A similar idea about how to deal with oil revenue was mentioned last week through one of the most popular , though controversial, leader in Iraq, Dr. Chalabi



Dark horse. While most of the campaign rhetoric was slim when it came to political platforms, Shiite politicians are looking ahead to what they plan to do once they manage to form a government. Chalabi, who was once a favorite of the Pentagon but has since fallen out of favor in Washington, remains a dark-horse candidate for prime minister. Last week, he laid out what he says is the political agenda of his allies in list 169. First, he says the government should assume complete control over the security forces when it comes to training, recruitment, and deployments. "This is very important," he emphasizes. The next step should be to root out Saddam loyalists in the security forces, get a full handle on Iraq's finances (which have been controlled in part by U.S. diplomats), and rein in the activities of U.S. security contractors who blaze through Baghdad in armored SUV s with their guns bristling. Perhaps the most interesting proposal is his idea to give every Iraqi a share in the country's oil profits, modeled on the revenue sharing in Alaska. Those shares would be taxed, providing the government with revenue. "This is our FDR thing," says Francis Brooke, a close Chalabi adviser. "This is where we think we can build a permanent majority."



As for oil for food program, yes it is..


I don't think calling Iraq as covservative society in the sense that you discribed imight be non accurate.. Iraqis might be religious but way far from being convservative. Male and female students are walking miles every morning to reach schools on time, in country where there is about 30% unemployment..

Being religios has nothing to be conservative.. You might ask how.. To answer this question have a look to the American people.

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This is yeah, a similar and in fact better idea than mine, using a model I did not know of, Alaska, wich is by far simpler than my thoughts. I am not sure though how far this will go, if he wants to privatatize those services provided by the government, including the food for oil money, but it seems at least that the government will not get their revenues directly from the oil, but indirectly through the taxes of the people and that is essentially the stabilizing factor needed.


The thing is with countries like Iraq, Venezuela and other countries whose governments have their main revenue sources independant from their population they become corrupt. So what is possible to do to make them more like ,,normal" countries, whose government is accountable to their people, who see how much their spending is hurting their own revenues is to reform the property system first and foremost and try to distribute the money to the citizens first before it goes to the government.


In normal countries, where the economy is based upon many pillars, and private entrepreunalship, the government must get its revenues from the people. F.e. is the situaton in Afganistan and Iraq very different, as Afganistan does not have many natural resources, so they must get their revenues from trade, agriculture and other kinds of productivity inside the country, and foreign help in the beginning propably. In fact if there is not a permanent solution to what to do with the oil money Afganistan is more likely to become a democracy than Iraq, unless they become a rental state (a state with independent revenues) through foreign help like Egypt. The danger there was newer too much centralization, quite the opposite, to much chaos, there needs to be found a balance.


I like those ideas particularly as they will decrease the power of the central government in Bagdad, and they can increase the power of various levels of government in new Iraq, of the 18 districts and various cities and towns, who will all get revenues by taxing these and other income of the citizens, like in a ,,normal" country. Thus the potential for many different kinds of systems to arise within Iraq is great, maybe in some areas there will be high taxation and programs like the food program, public health and public schools (it depends though upon how much power each level will get over these issues, the more power at lower level the better in my opinion) and others still be run by the local government. In other areas the people will vote for more right winged aproach, having lower taxes and having to pay for schools, food, health care and such themselves. Thus this system can be something all the various powers within Iraq can agree on, instead of allways fighting for the top position to be able to distribute the oil wealth to their own people.


What I saw in my ideas before I knew about those is the possibility of creating a right wing (libertarian, conservative) society, but as there is no guarantee that the top position is held by someone with such idealogy, this system is better as it will encourage people trying many different systems, wich will like in rest of the world in ,,normal" countries in my opinion and according to my political beliews will result eventually in a right wing aproach to most issues. The only limit on that aproach is that the oil sector will it seems not be privatized, and although idealogically I beliewe in privatization of all aspects of political and daily life but I can understand that the oil will not be privatized, specially as there will not be a political will for doing so. Then such a system is the next best thing and will result in Iraqis beeing prepared for the time when the oil will run out.


So the downside is maybe that there will be still socialistic aproach to solving societies problem in many parts of Iraq, may be the whole of it, but the potential of doing it in libertarian and conservative (in euro-american meaning) way will still be there with such a system. Other kinds of downside, related to this is maybe such increased flow of money to Iraqis will discourage them to work and find themselfs education and participate in the armed forces and thus protecting their society. In way to many of the arab countries the natives are just used to sitting with their legs up in the air and having imported work force doing all the manual jobs and all though I know that Iraqis are far from beeing lazy, such system will maybe encourage lazyness like many of the socialistic ,,help" programs here in the west.


My idea was more about helping people back to their feet but encouraging them to work and invest in education and their own health and future by encouraging steady growth in population instead of like our systems are discouraging growth, both economic and population, by all kind of social engineering that, although you do not call your self conservative in arab standards, you would thing way to liberal I beliewe. Things like subsidised daycere (kindergartens) and other such system that are pushing families to send both of the parents out to work and thus decreasing the birth rate so it is now in my country 1.9 per woman, less than the 2.1 that is neccasery for the population to replace itself, the situation is by far worse in other parts of Europe. The ultimate resource is in my opinion the human resource so there is no such thing as overpopulation, at least in most parts of the world.

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  • 2 months later...
Guest Guest

I like politicians that reduce their power, and if Achmed Chalabi, as the new oil minister (although temporarily), will be able to reduce the control of the government, and his ministry essentially over the oil revenues, he will be doing the Iraqi nation a great long time favor. Here is an part of an article taken from here:


"There is a direct proportional relationship between bad government and oil revenue," said Ahmad Chalabi, the current chairman of the Governing Council, leader of the Iraqi National Congress, [and fugitive who fled Jordan rather than face trial]. "If the government performs well or badly it doesn't matter, because the oil revenue continues to flow. The government will use the oil revenue to cover up mistakes."


Mr. Chalabi pointed to a precedent: a trust fund that existed in Iraq during the 1950's, when part of the oil revenue went not to the government's budget but to a development fund whose disbursements were directed by Iraqi and foreign overseers.


"The fund worked very well," he said. "Iraq's economy in the 1950's and 1960's was relatively good."


Back then, Mr. Chalabi said, oil revenue was a relative pittance, adding up to less than $10 billion in the four decades preceding the Baath Party's rise to power in the late 1960's. But then came the resource curse. During a single decade, the 1980's, Iraq's oil revenue amounted to more than $100 billion.


"What happened to it?" Mr. Chalabi asked. "Iraq was a much better country in every aspect before it got that money."


The article itself is interesting, and I wonder, and want to ask you, Iraqis, do you beliewe he will reduce his power, and thus essentially make the oil ministry less important to fight about? Do you beliewe the ideas put forward in the article could be good for Iraq? Or do you think it should be more important to use the money to build schools and hospitals and such, as opponents said?


If schools and hospitals would be privatized, then of course if the money would be given to the people, there would be built schools and hospitals, that is one thing I want to point out.

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Thank Guest for this reference..


As Iraqi, I personally don't think Dr. Chalbee could force any of his ideas, though might be good. The new Iraq today is not like any other Arab country were an influencial leader, as Chalabee today, might be able to .


The importance of such take over by Chalabee would be important to materialize his experiences with the Iraqi oil industry, so when it comes to discussing such critical issue as the one that Dr. Chalbee is proposing to deal with, as one option, he might be in better face. Before this, most of his proposals might lack real life touches..


I personally fully support such proposals of people having direct access, same I feel with most Iraqis, yet because oil is currently the only resource that the country is relying on, we need to be very careful and need any proposal to be discussed not by people only but by experts also, and Dr. is filling a critical gap to be considered as a real life expert as he is in the academic sense..


There are so many social, political dimentions to such move.. We need also to test the reaction by those Arab oil country leaders who consider the oil revenew as their personal property .. I am sure that they would consider such move as a direct threat to their robbery!!




شكرا للضيف الدي اشار الى هدا الموضوع بعد تولي الدكتور الجلبي


انا لااعتقد ان الجلبي بامكانه فرض مثل هدا المقترح بجعل عوائد النفط تصل مباشره الى المواطنيين

فالعراق الديمقراطي اليوم يختلف عن باقي الدول العربيه التي يمكن للرجال النافدين فيها فرض ارائهم


ما يهم هو ان هده الفرص بتوليه الوزاره هو لترصين خبرته العمليه بالصناعه النفطيه العراقيه مما سيغني مشروعه الدي يدعوا الى جعل صناعه النفط بشكل شركه مساهمه موزعه اسهمها بنسبه سهم لكل فرد , لايجوز بيعه او تداوله, بمنح لكل وليد عراقي ويسحب من كل متوفي

ويتم توزيع العائد على الاسهم بعد استقطاع مصاريف العمل وحصه مناسبه للحكومه مقابل توفيرها الاسناد اللازم

وهي طريقه متبعه في ولايه الاسكا التي اشترطت دلك مقابل انضمامها للولايات المتحده الامريكيه


وبالرغم من انني من المؤيديين لمثل هدا المقترح والدي اعتقد ان الكثير من العراقيين هم كدلك, الا انني ارغب في منح مثل هدا الموضوع الخطير وقتا كافيا للدراسه ليس فقط من قبل الشعب وانما من المختصين و سيكون الدكتور الجلبي احدهم بعد اضافه الخبره العمليه الى خبرته الاكاديميه

ان النفط هو مصدر الدخل الرئيسي في العراق و يحتاج الامر الى عنايه خاصه


ان مثل هدا المشروع له ابعاد سياسيه واجتماعيه كبيره جدا.. و لاننسى رد فعل الحكام العرب في الدول النفطيه اللدين يعتقدون ان عائداته هي املاك شخصيه لهم

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And thank you Salim once again for what you are doing, I guess you have translated the article, am I correct? Actually it was me who posted this, I just forgot to log my self in.


But tell me, do you think such ideas would have better succes of beeing implemented if there was a strong leader in Iraq, or was I misunderstanding you? I wonder, would it not be enough of a discussion among the nation if he implemented those "reforms" and would then see how popular they would be in the next elections, that is where he can see weather he and his party will be popular for what it has done or not.


Is the oil the only resource? It does not seem to be much money they are getting from it these days, so I suspect most of their money now comes from international aid, most notably from the US, am I not right? That could of course also be dangerous, the Egyptian government is not accountable to their people because they get all that money from the US, wich the government then uses to buy their power. If the oil revenues were put into individual accounts for each and every Iraqi (living in the country) to be used at will (or have some limits on what they can spend of it) they would see incentive in helping the oil to flow.


Thus, little by little, when the oil revenues will go up, and the aid will go down, Iraqis will get more and more money to buy themselves daily services, like health care, schooling for the children (and others), life, disability and pension incurences and so on. In the same time, the government could little by little reduce what they pay directly for those services, f.e. by making the hospitals and schools financially independant, and then little by little reducing what they pay for each and every individual directly, and in turn, what each and every Iraqi, with their increased individual oil revenues, paying more and more and eventually they would pay all (or most) things directly. Then the government could sell the hospitals and the schools to their employees and others, who would then compete in providing Iraqis the best service and the cheapest prizes.


Yaeh, that would be a slap in the face for the other oil rich countrie´s governments, showing their peoples that they don´t have to accept the governments robbery.

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لاحضت ان الكثير من القوائم الانتخابيه جعلت من الاعتماد على النفط وسيله لاقامه المشاريع الكبيره مثل ادامه مشروع النفط مقابل الغداء الدي يحول الشعب الى جموع عاطلين



الفكرة حيدة كما انه يمكن الاستفادة من عائدات النفط هذه لاحياء ثروتنا الزراعية فنحن بحاجة الى تخصيص جزء من عائدات النفط لاستخدان تقنية زراعية جديدة ، لشراء اجهزة حديثة لرفع المياه الى المناطق الزراعية، لشراء معدات زراعية لتشجيع العاطلين عن العمل والفلاحين الذين تركوا أراضيهمم للعودة من جديد.

دول كبرى ليس عندها نفط واحيت زراعتها فكيف بنا نحن ؟

وكيف لا نعتمد على زراعتنا التي قتلها صدام ونحن نملك هذين النهرين العظيمين دجلة والفرات.

فلو بدأنا الان لاصبحنا في خلال عشر سنوات من ادول الزراعية المهمة، فالعراق باستقطاعته الاعتماد على الثروة الزراعية اعتمادا كبيرا ومعظم الدول الكبرى اعتمدت على النهوض باراضيها الزراعية والتركيز عليها بشكل جدي .

وهذا ما حدث للولايات المتحدة في عهد جورج والشنطن فبنتيجة احياء الزراعة نهضت الصناعة ايضا.

كما حدث في اسبانيا في عهد فرانكو التي فرض عليها حصار لسنوات عدة ولكن ذلك لم يؤثر على شعبها كثيرا بسبب الاعتماد الكبير على الزراعة فلم يمت احد من الجوع مثلما حصل في دول اخرى. وكل تقدم تشهده اسبانيا الان يعود اساسه الى مبدأ العتماد على النفس التي اعتمدتها اسبانيا ولا ترال حتى الان من الدول الفريدة في كونها دولة زراعية وصناعية في ان واحد

The idea is very good . Also we can use the petrol resource to revive our agriculture heritage. We need to discard a part of our petrol resource for our agriculture , to use new methods , new tools and instruments, to animate the unemployed and farmers who left their lands to return back. Many countries do not have petrol but they could revive their lands, so we must work hard specially we have two big rivers which help us, and if we start now our countrry will be very important in the future.

United States did the same , and Spain too in Franco s time . Now Spain is a model country because it is an important industrial and agricultural country at the same time.

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But tell me, do you think such ideas would have better succes of beeing implemented if there was a strong leader in Iraq, or was I misunderstanding you?



Indeed what I ment was that in a democratic country as the case with Iraq, a person might not be able to force the nation to follow his thoughts even if he is a strong leader. He need to convince people first..


As Omward stated, Iraq is a very rich country not with oil only. Lands and water , adding to this the huge tourist market possibilities.. During the last year, though very unsafe, there were millions of religious tourists that had visited Iraq.


I think the main issue with such proposal is the oil countries leaders who will try their best to stop it, specially by adding more accusations to Chalabee.. I think such proposal should not be made by one person but as party goals to the people , so in the next ellection , people would have their say on it.. The propaganda against it already started by the Arab dominating media though!

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  • 4 months later...

An "Ownership Society" on the Tigris

A modest constitutional proposal: Why not give the Iraqi people a stake in their national oil endowment?

by Lenny Glynn

09/06/2005 12:00:00 AM


NOW THAT THE IRAQI PEOPLE'S ELECTED REPRESENTATIVES are actually trying to draft a new constitution, there is a single, central provision that any party or politician interested in shaping the country's future should seriously consider. This provision would, at a stroke, create a powerful, long-term force for democracy, national unity, and economic development--and counter the forces pushing for national fragmentation.


It is, simply, to grant personal ownership of an equal share of future oil revenues to each and every individual Iraqi--Sunni, Shiite, Kurd, Christian, or secular--just as the State of Alaska shares surplus oil revenues earned through the Alaska Permanent Fund with its 600,000 citizens.


To that end, an Iraqi political party or leader could declare that it seeks to write into the country's constitution a new national investment fund--call it The Iraqi People's Freedom Trust--which would be credited with a substantial share--a quarter, a third, even half--of all future Iraqi oil earnings.


All 25 million-plus Iraqis--men, women and children--should to eligible to claim their own personal investment account in the Freedom Trust. All they would need do is prove Iraqi birth and pledge allegiance to the government. Adult citizens should be free, at any time, to ask for a calculation of their account's value and withdraw up to their full balance--no questions asked. The majority of assets, those held for minors (Iraq's median age is 19) would be held in trust, bearing interest, until the owners came of age.


FOR THE FIRST TIME in the history of Iraq--indeed, in the history of

oil nations generally--a new set of leaders would be offering every Iraqi citizen an ownership stake in the country's vast oil wealth. Iraq's 113 billion barrels of proven oil reserves and 3 trillion cubic meters of natural gas constitute a multi-trillion-dollar treasure. Yet this national patrimony, long-since nationalized--allegedly on behalf of the people--has been routinely abused and looted in the past.


The promise to create a Freedom Trust would distinguish its proponents as genuine reformers, seeking to break with the old pattern of statist, top-down control of Iraq's natural resources, economy, politics, and society. As in many oil-rich nations, state ownership of Iraq's oil has long formed the material base for tyranny--enabling whatever faction controls the government to do what Bertolt Brecht once joked about: effectively dismiss its own people.


By holding control over oil revenues that account for the vast majority of GDP--and for 95 percent of Iraq's foreign exchange earnings--Saddam Hussein's regime was empowered to dominate and manipulate civil society--doling out jobs, contracts, favors, and privileges, buying weapons, building palaces--while remaining wholly beyond popular accountability. In that negative sense, as in many other oil-rich nations, Iraq's black gold has been the key object--and corrupter--of Iraqi politics throughout the Saddam era up to and including the oil-for-food program administered by the United Nations.


BY CONTRAST, any system that declares a significant share of Iraq's oil revenues to be the personal property of the Iraqi people would create a powerful material base for democracy. There would be a strong, hard-coded incentive for public accountability and transparency in the production and use of the nation's natural wealth.


The precise institutional form that such a system might take is less important than the principle that Iraq's natural wealth should belong, by right, to its people. As Nobel Laureate Vernon Smith wrote two years ago in supporting the handover of all of Iraq's natural resources to popular ownership: "The details, if wrong, can later be repaired. The principle, once corrupted, can never be re-instated . . . the principle of individual ownership [must] be primary."


The actual adoption of such a plan would have both immediate and compounding benefits. For example, it would give all Iraqi women direct, personal claims on wealth--a real first. It would also jump-start spending, investment, and bottom-up economic development even in remote regions. And it would do so much faster than any centralized, bureaucratic aid scheme.


Poor and rural Iraqis, who have rarely seen a dime's worth of the wealth extorted by top-level Baathists, would have a strong incentive to register for accounts in the Freedom Trust and claim their fair share. Word of the first cash redemptions from the Trust would soon give all Iraqis--whatever their ethnicity, sect or tribe--an equal, bankable, and growing stake in the country's future stability--a "win-win" proposition, even for Sunnis--especially compared to the "zero-sum" or even "lose-lose" game of an unpredictable civil war.


We're not talking small money here. Even amid ongoing war and sabotage, Iraq today pumps over 2 million barrels of oil a day--roughly $96 million a day--nearly $43 billion worth a year at $60 a barrel levels. A


more stable Iraq could pump 5 million barrels a day or more--nearly $45 billion a year, even if prices were to fall to $25 a barrel. Even after accounting for the oil industry's costs and heavily-subsidized domestic consumption, crediting one quarter or more of future net revenues to a Freedom Trust would ensure every single Iraqi a growing wealth stream worth hundreds of dollars a year. That's serious money in a country whose per capita gross national product is calculated by the CIA at roughly $1,500. But it is hardly enough to risk creating a society of loafers anymore than the Alaska Permanent Fund has turned that state's population into indolent sheiks of the tundra.


One other possible objection--that crediting a large share of oil revenues to the people would cripple the central government's finances--falls apart on its face. In the first place, Iraq's governance problems have stemmed from a state that is too swollen on oil money to take account of its own people. But crediting new flows to a fund would not cripple Baghdad's finances, anyway. To the contrary, it would effectively leverage those flows by jump-starting the fledgling market for Iraqi government bonds.


Of $100 million that comes in, for example, granting $25 million to the fund might be instantly met with a $20 million purchase of government debt--leaving a $5 million cash reserve. The central government would have effective use of $95 million of the revenue--while the Freedom Trust holds $20 million in public debt and $5 million in cash. Since over half of all Iraqis are under 21--and so ineligible to withdraw their assets--only about $12.5 million could even potentially be asked for by the people--against the $5 million cash reserve. The Fund's cash reserve position, in short, would be multiple times that held against withdrawals by say, Citibank.


Such details, however, can be worked out by Iraqi wonks. They are far less important than the political, economic and psychological impact that this provision would have on the Iraqi people.


THE CONFLICT IN IRAQ is ripe for redefinition. Just as Lincoln's Emancipation Proclamation was a war-winning weapon--because it turned the Civil War from a sectional, "states rights" struggle to a morally clear crusade against slavery--the campaign to establish a Freedom Trust would redefine what's truly at stake in Iraq.


Iraq's internal "insurgents" would be exposed, clearly, for what they are--a congeries of factions struggling to reestablish their power to loot Iraq's wealth. They form, bizarrely, what may be history's first "National Re-enslavement Front." "Oil for the People" could trump the appeal of Baathists and jihadis alike. Certainly it is a slogan--and a policy--that anyone can understand.


If there is one thing that matches the universal appeal of freedom, it's the universal appeal of money. A Freedom Trust would marry Iraqis' hunger to breathe free, so heroically displayed by their votes last January, with the income and wealth-building to enjoy their freedom. We might even see the flowering of a hope that is all too rare in the Middle East--an attractive, predictable future--as Iraqi parents see wealth building up in trust for their kids--something those children might also note.


Creating an "ownership society" along the Tigris could do more than fuel democracy in one country. It could set a worthy example for other oil-rich nations--from the Persian Gulf to Nigeria, Venezuela--in fact, to every nation where oil has become the property and plaything of the state elite. In Iraq itself, this single reform could help secure a lasting peace, grounded in commonsense, Rawlsian justice. After decades of tyranny and years of bloodshed, that is an outcome that would help, in some measure, to redeem the sacrifices that Iraqis, Americans and our coalition allies are now enduring.


Lenny Glynn, Boston-based financial writer, has been a staff editor at BusinessWeek, senior writer at Institutional Investor and European bureau chief for Global Finance Magazine.


Taken from the Weekly Standard

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  • 3 months later...

Congratulations Iraqis for your upcoming democratic elections. I am happy to hear that the country is not one electoral area like in the last elections, so people chose mostly along ethnic lines, but as 18 electoral areas based on the historical 18 municipalities of Iraq. That will propaply encourage more ideological and community based political powers, wich I beliewe are essential for any emerging democracy to keep being a democracy and not split between ethnic lines.


Pleace answer a few questions of mine:


Are there any parties with specially left or right winged political ideologies? Like socialism, communism (both left) or conservative or libertarian or classical liberalism policies (more right winged) on their agenda?


Is the political discussions about the candidates themselves, or their vision for Iraq and how to implement them? Are these visions according to political ideology? Do they talk on socialistic terms like the government should do this and that to help the people, or more capitalistic/freedom terms that the government should allow people to do this and that themselfs without the interference of the government?


Are the 18 municipalities of Iraq today the same, and with the same boundaries as before the war? Where they f.e. changed in the north to include Mosul city within the Kurdish areas?


And finally, how are the discussions about the future of Iraqi oil revenues? Do candidates and policy thinkers want the oil revenues to be controlled by the central government, by local governments or to be distributed, similarly as I have talked about here on other posts of mine on this thread, to the individuals themselfs?


Please answer at least some of my questions, from an interested Icelander who beliewes in the future of Iraq as the economic and democratic guiding light for the middle east.

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Guest moron99

Leifur, I think if anyone knew the answers to your questions then they could be considered a prophet. The constitution touches upon many of your questions but defers the details to the next parliment.


The next election is the Iraqi crossroads. From here they can go anywhere. Once the ballots are cast it will be very difficult to change direction. But for this week the future can be anything and everything. Personally, I am not worried. If some of my yankee neighbors carbombed, kidnapped, and assasinated my southern brothers then there would be a civil war in America. Yet the Iraqis have shown the tolerance not to do so. If men with guns threatened to shoot anyone who votes and the government was unable to catch them, then myself and my fellow americans would not take the risk of purpling our fingers. Iraq will be fine. They have been steeled by sufferring and tested with sectarian strife - and yet they always emerge with dignity, courage, and compassion. They have resisted the urge to lash out irrationally or seek the revenges of a French Reighn of Terror. They will be just fine. They have good people and a country that is rich with both water and oil. Iraq will rise from the ashes of Saddam and cast the light of freedom across the entire gulf.

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Is the political discussions about the candidates themselves, or their vision for Iraq and how to implement them? Are these visions according to political ideology? Do they talk on socialistic terms like the government should do this and that to help the people, or more capitalistic/freedom terms that the government should allow people to do this and that themselfs without the interference of the government?


Iraqi ellections is mix of all. Ingeneral there are some slate of one candidate that is based on personal chrisma of social or tribal leader. There are groups who are coalition of parties.

The main battel is , security, economy and social development.

Some put security as priority, others put on economy.. As for social aspect I don't see a lot of series debate as the constitution solved most critical ones.

The factionist competion within the Arab side is not so sharp. There are a lot of lebral secular parties. On Kurd side there is only one main slate.

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