November 13, 2004

THE IDEA Of SETTING UP AN OIL TRUST to deliver oil revenues directly to the Iraqi people originally appeared here in March of 2003, was picked up by Michael Barone and some others, and then didn't seem to go anywhere. But now it's reappearing:

Ba’athist dead-enders are, in essence, fighting to regain the power to steal fellow Iraqis’ wealth — and kill anyone who objects. Their terrorist allies would also be hurt by the creation of the Freedom Trust. The commonsense justice of giving Iraqis a personal stake in their own oil wealth would undercut terrorists’ appeal to Iraqi youth. These “militants” would suddenly find themselves defined as fighting to steal young Iraqis’ future, while Iraq’s Army and National Guards would be fighting to defend that future. .

It is deeply disappointing that the Bush Administration, which is advancing the virtues of an “ownership society” in America has not advanced any creative ideas for using Iraq’s oil to benefit its people directly. Nor has the Allawi government laid out any path away from the regional tradition of state-centered oil paternalism and public clientelism. Yet it is difficult to conceive a policy action that could better clarify what it means to “liberate” Iraq, empower its people, and create real common ground for a national rebirth. Reform in the distribution of oil revenue is as critical to “winning the peace” in Iraq as land reform was to fostering democracy in post-war Japan.

By sharing some of Iraq’s vast oil wealth with its people, a new Iraqi government could foster the rise of a broad-based, democratic middle class. It could turn black gold into liquid freedom, the fuel for democracy and the engine of development. The Freedom Trust would give the Iraqi people, and their new police and Army, a future to believe in — and fight for. This single move would do more than any other initiative to help secure a lasting peace, grounded in justice. And such a peace may be the only outcome that could, in some small measure, redeem the sacrifices that Americans and Iraqis are now enduring.

While some people have raised reasonable-sounding objections to this approach, so far I haven't seen anything that should be a deal-killer, and the failure to go forward with this idea has probably been the Administration's biggest mistake in Iraq. After the transfer of sovereignty, of course, this is for the Iraqi government to do. But it seems like an idea that it ought to consider, and that we ought to encourage it to consider.

UPDATE: Reader Roy Mumaw notices that StrategyPage has picked this idea up.

And read this article from Slate on how Norway handles things.