“The Case for Partitioning Iraq”

Carroll Andrew Morse makes a strong political argument for partitioning Iraq (via InstaPundit). The United States, by insisting on keeping Iraq together, has made Iraqi progress hostage to wreckers and terrorists who must be killed or coopted before a stable nation can be created. Morse says that we could make more headway by subdividing Iraq into self-governing sectors, so that the non-disfunctional regions and people are not held back by the thug minority. I agree, and think that we have made a big mistake by not considering such a course of action.

Reuven Brenner, in a December 2003 column, addresses the same problems as Morse does, dealing with the politics in historical context and also taking more account of economics. He frames the issue as a failure of the Wilsonian paradigm that we still use (and that wasn’t successful the first time around):

Wilson’s administration miscalculated. The policy prevented neither German nor communist aggression. Adherence to the abstract principle of “self-determination” also showed that the creation of small nations did not solve the problem of other smaller ones, which now found themselves within new borders. They were just called “minorities”, so as to deflect their claim to nationhood and self-determination. Language, too, can be an effective weapon.

Brenner suggests a federal solution that is similar to Morse’s. One issue that Brenner deals with explicitly, which Morse does not address, is oil. A unified Iraq likely means a central government controlling all of the revenue, which thus both encourages and facilitates centralization of power — as Saddam Hussein well knew. Brenner suggests that oil revenue be split proportionately among the various Iraqi ethnic groups.

With revenues from oil being widely dispersed, the chances of much funds going for rebuilding centralized military and police powers are diminished. “Power” has been dispersed and brought closer to the people. Whether or not such dispersion of financial clout will lead to developing – bottom up – a “canton”-like federal arrangement as in Switzerland, or lead to a breakup of Iraq along ethnic lines – time would tell. Both solutions seem more stable than what the world now faces.

If the tribes do not see eventual advantages of staying together, so be it. The separation of Slovakia from the Czech Republic did not end in any great disaster. If the ethnic groups now populating Iraq can’t get along, and will end up fighting, the resulting instability can be more easily contained, since none of the groups would have as much financial (oil-generated) clout as Saddam Hussein had. The best scenario would obviously be if these tribes – now having stakes in stability because of shared oil revenues administered by impartial outsiders (some Swiss, maybe?) – slowly find ways of making deals, and trade and live together. But even if one is prepared for the worst-case scenario – of the three major tribes not finding a modus vivendi and breaking up within the anyway artificial borders of what now defines Iraq – the harm is minimized.

“Ideas have long lives,” as Brenner puts it. Part of our problem is that our policy makers still rely by default on a sort of stagnant Wilsonianism as their model for dealing with multi-ethnic societies. Iraq, perhaps more than any other post-war crisis, demonstrates the limits of that approach. Brenner and Morse use different routes to arrive at similar policy responses to the crisis, and those responses make a lot of sense.

7 thoughts on ““The Case for Partitioning Iraq””

  1. A true statement: “A unified Iraq likely means a central government controlling all of the revenue, which thus both encourages and facilitates centralization of power…”

    A proposed solution: “oil revenue be split proportionately among the various Iraqi ethnic groups.”

    This is obviously a step in the right direction, but doesn’t go far enough. It just moves the battle for power to control oil revenues further down the food chain. Let’s go all the way and establish an Iraqi National Oil Trust with the oil revenues being paid into individual accounts for every Iraqi.

    That way, every Iraqi has an interest in a peaceful and united Iraq in order to enjoy their payments from the oil fund. If the oil belongs to the people, let them have the profits.

  2. A nice idea in theory, but rather far fetched in practice. In order for the various groups to agree to this, the administration of oil money would have to reach a level of transparency unheard of anywhere in the world, let alone the Middle East. Never mind the fact that this part of the country has more refineries and pipelines than others, and therefore higher costs…Which would presumably be picked up by the central oil administration but then who decides where future pipelines and infrastructure goes etc. The practical details seem overwhelming, given the current state of social, political and economic decay.

    Finally, I’m not sure I get the whole bit about Iraqis fighting each other. And there is no thug minority located in one single part of the country. It was true for a while but it no longer is. If anything, they seem to be fighting each other less. They are fighting us a heck of a lot more than they are fighting one another. Had we separated Iraq – arbitrarily, without popular consent ? yeah right – who is to say we would not be fighting the Sunnis in their bit and the Shia in theirs ? And if they are fighting one another, who gets to police their borders ?

    I guess I don’t get it. Although I do agree with the general principle, I can’t quite map it to this particular reality.

  3. I don’t understand why the Iraqi oil industry can’t simply be privatized. And I don’t mean sold off to the highest bidder. Get a map of the known oil reserves. Create four independent corporations. Apportion out the reserves equally across the four corporations via a map. Whatever other facilities lie within the map boundaries (refineries, etc.) become assets of that corporation. Give each Iraqi a share in each corporation. These shares cannot be sold or exchanged for a period of 10 years. During those 10 years, each new Iraqi citizen (born or naturalized) is also entitled to a single share. No other shares would be distributed. Guarantee that at least 50% of the profits are redistributed as dividends. Setup a legal system to enforce these property rights.

    Then walk away.

  4. MP, could it be that simple ? How do you divide it in four ? Who gets what ? When you divide things in two, it’s hard enough to ensure both parties are satisfied, but four ? And who does the dividing ? According to what criteria ? Who keeps track of the shares ?

    “Set up a legal system to enforce these property rights”. Well, there you go. Now you’ve put your finger on the problem.

    Also, giving a new share to newborn Iraqis, while fair, is more of a problem than you think. Given Middle East demographics, this represents significant shareholder dilution for those Iraqis who are already born and alive. They sure as heck won’t retire on it.

    Last but not least, how does this relate to this post or the current reality in Iraq ? Is the fighting in Fallujah, Najaf or Ramadi about oil ownership ? Is that the only problem the occupying power has to deal with ?

    The Iraqis should make this decision. And right now, the conditions for them to make it without undue pressure and coercion, and with the right information, do not even exist.

  5. A sub-topic of the original post was what to do with the oil revenue when it is controlled by a centralized state. This implies that the natural resources are to be controlled by the government, whether Iraq is to be kept in its current nation state configuration, or subdivided in some manner. Although the political nature of Iraq is not necessarily a derivative of the economic nature, I do believe that establishing a strong economy will solve far more political issues than simply focusing on the political structure. By focusing on the politics, it becomes a matter trying to have the “correct” parties win the power grab, while continuing to ignore the plight of Joe Iraqi. Focusing on building a strong, liberal, economy will properly incentivise the citizens to take control and clean up the mess.

    The resource of greatest economic value in Iraq is clearly the oil. Of course, I’m sure there are many other things of economic value compose an Iraqi GDP, but oil is dominant. A dominant theme in the Iraqi anti-U.S. propaganda is “You want our oil, so get out!”. Well, we want to buy it, but we don’t intend on simply taking it. And we also don’t intend on simply handing it over to some unstable power structure where yet another dictator could eventually grab control. If you believe that “He who has the oil, makes the rules”, and that certainly appears true in all of the Middle East, then let’s focus on the oil and let the politics sort themself out.

    If the oil is not to be controlled by the state, which I think is the worst possible outcome regardless of how the political boundaries are eventually drawn, then who is to control it? Foreign corporations claim to have titles to some of those resources, but all of those titles were rendered meaningless with the eviction of Saddam. Besides, the Iraqi people are unlikely to tolerate foreign ownership of their natural resources, regardless of whether the foreign owner is the U.S, Russia, or France. The Iraqis believe they have exclusive rights to the oil, yet a state run oil monopoly is just a recipe for further oppression. So why not have it run by an independent corporation?

    Well, a single corporation won’t do. With no competition, it would likely become a puppet of the government. And it wouldn’t generate any market efficiencies. If one believes that the natural result of oil competition would be a “Standard Oil” type monopoly, that is not justification for starting with a monopoly.

    So we need multiple independent corporations. I’d say more than two but less then ten. I like four, but for no particular reason over five or six. It’s just easier to conceptualize.

    Once the four corporations are created, there becomes a matter of granting resource rights to each corporation. I’d say simply split it evenly. Let them all start from the same base point. Focus on splitting the known reserves and don’t worry about the small stuff like refineries. There is no need to worry because there is no need to be perfectly even. The purpose of an “even split” is to manufacture a marketplace with four (or whatever) equally balanced players. This gives each corporation a better chance of building a strong foundation and not simply being swept aside by a more dominant player, at least from day one. Note that the creation and allocation of resources to these corporations has absolutely nothing to do with current ethnic or political relationships. It is simply the creation of four independent economic units.

    Now, it doesn’t matter that they are exactly even because each Iraqi citizen would get a single share of EACH corporation. No individual then gets any more than any other individual. The idea of continuing this grant to all newborn/naturalized Iraqis for 10 years following is simply to grant the newest generation a stake in the country. I’m not sure what the economic significance of this type of dilution would be, but I think it would be offset by the social significance.

    A basic restriction would be that no one could sell during the initial 10 years. This would be primarily to allow the Iraqi population time to grasp the significance of what they own, and not simply cash out quickly. Once the share value is better established in the marketplace, and 10 years is allowed in order to build 4 corporations from nothing to something, it is much more likely that your average Iraqi would want to retain those assests. Although the shares could not be sold, they could certainly be left as inheritance.

    And for the citizens to be able to truly understand the value of the shares, the corporations would HAVE to pay a dividend on the shares, of let’s say a minimum of 50% of the profits. Maybe even 100%, after “capital investments”. Whatever, as long as significant funds from oil operations are flowing directly into the pockets of Joe Iraqi.

    Would this be complicated to setup? Probably, but a hell of a lot cheaper than the 100B we’ve pissed away already. Once the economy is put directly in the hands of the people, they would stop the terrorism on their own. And we could walk away.

    Thanks for giving me a forum to air this out.

  6. Actually, the idea that every ethnic minority deserves its own state is characteristic Wilsonianism, not the reverse.

  7. In practice, Wilsonianism did not mean independence for all ethnic minorities. In the cases of Iraq and other ME states that were created after the first world war, the political unification of multiple ethnic groups eventually contributed to problems. Perhaps I should have used a different term than “Wilsonianism,” but I think that the argument for considering partition is still strong.

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