In his book Partitioning for Peace, Ivan Eland argues that division offers the best chance for peace in Iraq. He outlines lessons that can be learned from historical examples of partition.
However, he makes little of precisely how oil revenue is to be shared amongst the different peoples. Rather than divide the land and the oil by proxy, it would be much better to centrally process the oil and divide the revenue.
If the land is divided, there may be uncertainty surrounding the profitability of oil reserves. For example, the Sunni portion of Iraq may end up having more oil than currently confirmed. Or certain reserves may prove costlier and less profitable to exploit than expected.
Rather than allow the possible volatility of oil revenue between region create tensions in the future, centrally dividing the revenue of the oil creates certainty. If agreement can be reached on the issue of land and oil by proxy, it should actually prove simpler to divide just the revenue.
But the major practical benefit comes from ethnic tension. As it currently stands, Iraq suffers from a lack of checks and balances on political power. If oil revenue is divided by a federal government composed of Sunnis, Shi’ites and Kurds, they will maintain a check on each other.
In resource-rich developing countries such as Iraq, corruption can often break the political process. Politicians who use their power to benefit cronies are often more likely to get elected than honest candidates. The major opportunity to do this comes from embezzling money spent on public works.
Under the plan suggested here, politicians will have a major incentive to reach an agreement over contracts to exploit the oil, while mutual distrust will ensure that no corruption takes place. These politicians are unlikely to co-operate, even if that means they won’t be able to embezzle money themselves.
So money is no longer lost due to a lack of competitive bidding processes for public funds, ensuring that the Iraqi people get as much revenue as possible.
Once revenue is received into the regional governments, it’s at least slightly more difficult for politicians to steal it, given that they will then have a major incentive to spend the money in their own region responsibly. The only people to receive the benefits then are voters on whom they are reliant for support.
Democracy in Iraq is broken, and will continue to be as long as ethnicity dominates politics and certain regions are not adequately represented. Partition may well provide the solution to these problems, but only if agreement can be reached over oil resources – and the best route is through the division of revenue collected by a federal government.
© The Free Marketeer 2009