I’m on the same page as Glenn
I’ve been pushing that idea since 2003, of course, and it’s also been supported by the likes of Milton Friedman and Vernon Smith. I don’t understand why the Bush Administration hasn’t been more supportive.
who points out that Hillary Clinton has co-authored a WSJ op-ed supporting the Iraq Oil Trust. It is good to see Clinton come down on the right side of this issue - she explains the case for the Oil Trust fairly well. But she doesn’t make clear one of the most important benefits: that is empowering Iraqis to take control of their government. Making the government dependent upon taxes [rather than on controlling the oil revenues], places the levers of power in the hands of the citizens. Here’s Clinton’s benefits summary:
• The future of Iraq’s oil reserves remains at the heart of the political crisis in Iraq, as the regional and sectarian divides in Iraq play out over the division of resources and revenues. As the Iraq Study Group writes, “The politics of oil has the potential to further damage the country’s already fragile efforts to create a unified central government.” An Iraq Oil Trust would chart an equitable path forward for dividing oil revenues in a way that transcends the divide among Shiites, Kurds and Sunnis.
• As report after report indicates, one of the challenges to building Iraq’s oil revenues has been insurgent attacks against oil infrastructure. A distribution of revenues to all Iraqis would mean they would have a greater incentive to keep the oil flowing, help the economy grow, reject the insurgency, and commit to the future of their nation.
• While demonstrating that the U.S. is not in Iraq for oil, an Iraq Oil Trust would also inhibit corruption and the concentration of oil wealth in the hands of a privileged few.
• Finally, an Iraq Oil Trust would demonstrate the values at the heart of democratic governance: Individuals would have the rights and responsibilities of citizenship. Indeed, the study group reports, “Iraqis have not been convinced that they must take responsibility for their own future.” By trusting ordinary Iraqis, ordinary Iraqis would in turn gain greater trust in the national government while seeing something positive about the future at a time when positive signs have been few and far between.
An oil trust would have made sense as part of a swift return to Iraqi sovereignty sometime in late 2003 or early 2004. However, at this point it would be ill-advised. An oil trust in which the American government had influence would become a tool to buy off terrorist, anti-democratic cells and tribes.
At this point, the Iraqi government must be able to fight its civil war against terrorism on its own. It needs whatever cash is available to do that and win, while keeping its loyal citizens well cared for.
Hi Dan,
Sorry for the slow reply — we’ve been relocating to Hobart, Tasmania for the rest of the Pacific NW winter.
I agree the oil trust would have been more effective if done sooner. But I still think it is a powerful policy. What could be more effective at propagating a sense of ownership of the new government? And how could the ex-Baathist Sunni bad guys argue [to locals who are protecting them] that the Sunnis have to fight else they’ll get none of the oil $$? Today that is a powerful argument.
I appreciate your point about operating cash - but designing the transition cash flow solution has always been an issue. It is not different in 2007. My take is the big hurdle is the political will to truly put the people in charge [via taxation]. Given that, the cash flow design is “just” a Wharton problem.