The Coalition Will Continue To Help Iraqis Rebuild Their Infrastructure And Economy. Iraq's economy faces real challenges but the Coalition and Iraqi leaders have made significant progress in a number of areas. Iraq has a stable currency, an independent stock exchange, and an independent Central Bank. Iraqis have new investment laws welcoming foreign capital, tax and commercial laws encouraging private-sector growth, and a low-tariff trade regime opening the economy to the world. Unlike under Saddam Hussein, Iraq's new constitution guarantees protection of property rights.

Iraqi Leaders Are Also Making Tough Choices Necessary To Reform Their Economy. Iraq is easing gasoline subsidies, which made fuel prices artificially low, creating incentives for black-market corruption and crime. Changing these subsidies is a necessary step on the path to reform. Gasoline subsidies, along with other subsidies, consume over half of Iraq's annual operating budget - diverting critical resources from health, education, infrastructure, and security. Addressing these subsides will allow Iraqi leaders to better provide for their people and build a modern economy.

One Of The Biggest Challenges Is Restoring The Country's Oil And Electric Power Infrastructure. These sectors were devastated by decades of neglect - and since liberation, terrorists have targeted these areas for destruction. As a result, oil and power production are below pre-war levels. To help increase production, the Coalition is helping Iraqis better maintain their oil refineries, build oil supply and transportation capabilities, improve the capacity to generate power, and better protect their strategic infrastructure. Despite the challenges they face, seven in 10 Iraqis say their lives are going well, and nearly two-thirds expect things to improve - and their optimism is justified.

While I can claim no expertise in developmental economics, I do see several points worthy of note. First and foremost I would say that nothing here seems particulary spectacular or revolutionary. That is to say, on the whole these are the kinds of policies that you'd expect to see and which, most importantly, send strong and positive signals to more economically developed nations and international lending institutions. In fact, so ordinary and bland are these pronouncements that I wonder if this is a meant as a resassuring signal of some sort, that is to say, as a way of telling the outside world that though other aspects of the US's Iraq policies may be controversial or idealistic or revolutionary, the economic component of it is not.

Secondly, with regard to the specific sub-components, I find the choice of the word "infrastructure" an interesting one. A careful reading of the first paragraph reveals quite clearly that the kind of "infrastructure" that is being discussed is not the physical kind, i.e. roads, air- and seaports, telecommunications and power lines, etc. Rather, what they are talking about are the most fundamental institutions fo capitalism- "an independent stock exchange and Central bank, a currency that can be traded, investment laws to encourage foreign capital, low tariffs and an openness to foreign trade, and best of all, respect for property rights. These are the institutions without which no modern nation can hope to participate in the global marketplace, let alone bring its population out of decades of deep poverty and neglect.

The point about "Iraqi leaders...making tough choices" is also an important one. One thing for which totalitarian governments are often praised is that you can get things done very quickly when you care nothing for the needs, rights, and interests of your citizens. Things like environmental impact statements and court challenges to eminent domain seizures and consensus-building are non-existent in totalitarian regimes, as are the rights interest groups to lobby the lawmakers on behalf of groups adversely affected by the government's actions. Without such considerations, decision-making can be very streamlined because the leadership need onlly think about one thing- what is good for us. It need not think about the consequences of its decisions on a population who might vote it out of power.

So when I see that Iraqi leaders are having to make choices about what subsidies to cut and how to (re)allocate the additional resources, I feel encouraged. Effective management of any organization or political entity requiries that the leadership recognize its limitations, that it exhibit an attitude of stewarship rather than a pirate ship attitude toward the collective resources, and that it exercise judgement and compassion in deciding who needs help most and when. This will be a tough job that will be bound to hurt or alienate some while, perhaps, aiding a greater number. That this is recognized this early on is a credit to the policy makers.

Finally, it is in the last paragraph that I see the discussion of what I think of as "infrastructure", particularly the oil and electric infrastructure. As the major source of revenue for the Iraqi people, it is understandable why those who did not wish to see Iraq join the community of nations would target this sector. Without the cash to fund its enormous needs and to payback its debts- many of which should be forgiven- the pace of economic development and the legitimation of the aforemetntioned institutions will be sorely delayed.

Though the US is providing valuable assistance in outlining the major issues and problem areas, accomplishing all of the above will ulimately require the best of which the best minds in Iraq are capable. May God, by whatever name they know him, help them to do their part.

Linked by: Don Surber | Wizbang |