BIRMINGHAM, England – Virtually everyone assumes that Saddam Hussein is so brutal that replacing him will give Iraqis a better leader. Perhaps it is time to think again.

As the current argument goes, American forces – aside from fulfilling the many and tangled aims of U.S. policy in Iraq – will not be invading Iraq, but liberating it. Removing Saddam solves the problem. The assumption is that Saddam is a unique phenomenon, a streak of bad luck that has befallen Iraq. This fails to recognize several factors in Iraq’s history, geography and economy that have predisposed Iraq to be ruled by someone like him.

Worryingly, scholars of modern Iraq tend to emphasize the continuity of Saddam’s rule with those of his predecessors. Charles Tripp’s “A History of Iraq” begins by observing: “Since its establishment by the British in the 1920s, the country has witnessed the rise and fall of successive authoritarian regimes, competing ruthlessly for power and resources. This struggle culminated in the dictatorship of Saddam Hussein.”

The implications of Tripp’s summation underscore the point that if Saddam’s removal changes Iraq’s leaders, but leaves unchanged the structural factors that have encouraged past Iraqi dictatorship, we risk inflicting another war on an Iraqi population that has already suffered greatly only to find themselves with a younger dictator who needs to prove himself afresh.

Some of the factors that tend to shape Iraq’s political life involve demography and geography: Iraq’s minority Sunnis live centrally, sharing religious views with the northern Kurds and ethnicity with the majority Shiites. Short of redrawing Iraq’s boundaries or a campaign of ethnic cleansing, these factors will persist.

One element that could be changed more easily is Iraq’s economic structure. Iraq has the world’s second largest proven oil supply. When governments nationalize oil industries they become financially independent of tax revenues, and by not demanding taxes from the people, they have reduced pressures to grant democratic rights.

This is borne out when we rank countries by the ratio of non-tax to tax income in their governments’ revenues. The top 10 countries (where data are available) are Kuwait, the United Arab Emirates, Bhutan, Oman, Iran, Bahrain, Botswana, Singapore, Bolivia and China. (Iraq, Saudi Arabia, Qatar and Libya would rank highly if data were available for them.) The top six listed have nationalized their oil companies. All six are autocracies; the other four are a mixed bag.

Power’s corruption is neither new, nor limited to oil. English parliaments opposed the possession of crown lands by Henry VII and Henry VIII. American revolutionaries did not call for “representation,” but merely for “no taxation without representation.”

In Iraq’s case, it may be significant that its oil industry was nationalized under Saddam Hussein. Thus, in economic terms, Saddam’s Iraq is predisposed to his sort of dictatorial rule. Unless oil’s role in Iraq’s political economy changes, future Iraqi leaders may find themselves in a similarly tempting and corrupting environment.

At present, signs are not encouraging. Iraqi opposition groups based in Washington seem to be calculating how they will use Iraq’s oil wealth when they come to power. Leaks in the Bush administration’s plans suggest that it leans toward protecting Iraq’s oil for Iraqis, not giving control or ownership of it to Iraqis – a policy likely to remind the people of their years under British rule. This will likely cause resentment among Iraqis, especially if their oil wealth is used to pay for an American military campaign and presence.

Last September, the Heritage Foundation in Washington presented a proposal to reform Iraq’s oil industry, saying that purely on the basis of economic considerations, Iraq’s oil industry should be privatized, and Iraq should leave OPEC. This may unintentionally address the political problem of centralized economic power in Iraq, but the economics of such a plan are shaky. If it merely privatizes monopolies, privatization does not improve efficiency, as Russia discovered to its cost. Efficiency requires competition, and Iraq’s departure from OPEC would encourage this.

But advising Iraq to undermine OPEC makes as much sense as advising Bill Gates to voluntarily break up Microsoft: it may benefit buyers, but it destroys the market power that enriches the sellers.

For Iraqis, a more promising approach might be to privatize its oil industry by issuing equal shares to each Iraqi, but keep it a monopoly, and stay in OPEC. This would reduce the harmful effects of centralized economic power while keeping the oil wealth at home.

Colin Rowat is an economist at the University of Birmingham, England.


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