Wednesday, March 20, 2013

Nation Building in Iraq 10 years on

Pop quiz: What is the name of the oil minister of Iraq? Right: Abdul Karim Luaibi.
Pop quiz: What is the name of the oil minister of the United States? Right again, it’s Steven Chu.
On the tenth aniversary of Operation Iraqi Freedom, folks on the Left and on the Right are musing on the mission’s successes and failures. The verdict is mixed, with the idea of nation-building in an Arab-Muslim nation of warring tribal factions receiving a fair helping of skepticism.
The hazards of excessive optimism regarding transforming nations in the Arab/Muslim world have been well-documented by Nonie Darwish and others. Unleashing popular democracy in cultures steeped in Islamic Sharia law and tribal blood feuds is not a path to western-style constitutional civil societies with effective bills of rights resembling our own. Our (or the Bush administration’s, if you prefer) emphasis on voting and blue-inked thumbs may seem quaintly naïve in this light.
But there’s another problem, which if it had been recognized, might at least have offered some hope of mitigating the worst effects of the unstable tendencies. And that is this: if America is going to go around building nations, it ought not to build socialist klepto-petro nations.
Arab/Muslim Iraq is not the only country with the curse of oil wealth. Russia, Nigeria and Venezuela have corrupt regimes run by obscenely wealthy oil barons pretending to embody and defend the national interest while keeping their people poor and oppressed. Of those three, only Nigeria is marginally Islamic, with a 50% muslim population. The corruption of oil wealth is not a problem unique to Arab or Islamic nations; it is endemic to socialism, which is what nationalized natural-resource enterprises are all about.
Recognizing that, if we are going into a resource-rich nation to rebuild it, then as important as democracy and voting rights are private property rights and economic freedom.
What if the Bush administration had pushed the following agenda: Grant every Iraqi citizen over the age of 18, men and women, Sunni and Shia, Kurd and Armenian, Christian and Jew, a thousand equal shares of common stock in a privatized, formerly-national oil company. Initially ownership of these shares would entitle the holder to periodic dividend payments from the enterprise. Over a reasonable transition period, say five years, the shareholders would have the full rights and responsibilities of common owners to buy, sell, vote and trade their shares just as is done on the NASDAQ or NYSE. And the enterprise itself would have full rights to act as for-profit enterprises do, contracting with domestic and foreign (i.e. ExxonMobil) companies, including selling shares of itself on the international financial markets.
Not only would the enterprise be more efficient and better run under free-market discipline, paradoxically, devolving power and ownership of resources from the state to individuals would have the effect of promoting national cohesion and the cooperation of groups and families that otherwise tend to remain in perpetual warfare with each other. With personal skin in the game, when the pipelines got sabotaged, there would be more incentive for cooperative citizen participation to defend the rule of law and private property.
To my knowledge the Bush administration never made such a proposal. If they did, it certainly didn’t make any headlines or spark any national debates about the virtues or vices of capitalism as a solution to problems faced by nations under (re-)construction. I can’t remember the catcalls and snide derision coming from MSNBC and CNN, so it must not have happened. That fact is an ironic reminder of how far the USA has come from its image as the icon of capitalism in the world; no one even thought of proposing it.
One Iraqi oil minister did in fact propose a similar plan in 2009 if not sooner, and published his proposal in The Wall Street Journal. So maybe they get it over there even if we don’t anymore. As it is, ExxonMobil is engaged in Iraq today, operating oil fields and participating in Iraqi deals with Indonesia. Looks like a form of business as usual. Is that bad?
The USA doesn’t have a national oil company with a minister (yet), although we do have a Department of Energy with a Secretary. Maybe we would do a better job of nation-building abroad if we didn’t have that department; we don’t seem to be worse off than other oil-rich nations for not having a national oil company.
But wouldn’t it be presumptuous at best and fascist hubris at worst to presume that we can dictate such outrages as private ownership of capital stock by women in a culture where gender equality is an abomination? Well, sometimes you need a strongman like Saddam Hussein to hold a lid over the sewer. I nominate Milton Friedman.

More on Iraq in Retrospect: The history the war's critics choose to ignore 10 years later. Read the full article at The Wall Street Journal