Plan C for Iraq
With the Democratic Party taking the reigns of power in Congress, change is coming to the bungled war in Iraq
November 1, 2006
Fred Foldvary, Ph.D.

With the Democratic Party taking the reigns of power in Congress and the President seeking new strategies in conjunction with the review by James Baker's Iraq Study Group, change is coming to the bungled war in Iraq.

The two plans that have been most prominent are Plan A, stay the course, and Plan B, a quick exit. Plan A would continue the course of the U.S. military fighting the rebels and terrorists, whether with present or greater levels of troops. Plan B would withdraw all U.S. troops, perhaps deploying some to nearby bases such as in Kuwait and perhaps still controlling the Green Zone in Baghdad. There is also plan D to chop up Iraq into several countries, which is not going to happen, as Turkey will not allow an independent Kurdish state to exist, and there is no way to have separate religious states in Baghdad.

Plan C is the least worst option, even though it has so far not had much discussion. The elements of Plan C are:

All profits from oil production would be distributed directly to the people in equal shares.

Villages and city neighborhoods in which there is order would elect local councils, and all powers of governance would be transferred to these councils or to traditional tribal governance, except for foreign affairs. The locals governing bodies could choose to delegate some powers to the provincial and the central governments. The constitution of Iraq would be changed to authorize this decentralized structure.

U.S. and British troops would be replaced by a new international alliance. India, China, Russia, Indonesia, Egypt, and other countries would be invited to contribute and finance troops to maintain order in Iraq. The United Nations would authorize this new coalition, but it would not be under the administration of the U.N. The new coalition would enter at the invitation of the government of Iraq to protect rather than dominate the people of Iraq.

Since Iraq is potentially a major producer of oil, much of the power struggle there is an effort to control and benefit from that wealth. If the constitution of Iraq and the nations of the world recognize that the oil of Iraq properly belongs to all its residents in equal shares, and this is enforced, then much of the incentive for conflict will recede. The nations of the world have not sought to recognize equality in the oil wealth in Iraq because they fear that the same principle could then be applied to them also. Nevertheless, without the principle of equal benefits from the natural resources of Iraq, there can be no lasting peace.

The democratic structures set up by the U.S.-led coalition and the religious and ethnic parties in Iraq have not created social peace. Indeed, voting by party has generated more conflict, as religious parties have fought for supremacy rather than agree to compromise. Moreover, the rebels in Iraq regard the elections as a sham and the Iraqi government as a U.S. puppet. Decentralizing power will let the various interests have genuine control over their own areas while maintaining the overall unity of Iraq.

The United States is perceived by many Iraqis and Arabs elsewhere as seeking to dominate the Middle East. Malicious propaganda has led many Muslims to believe that the U.S. government is against Islam. The U.S. is seen by critics in the Middle East as seeking to control the oil, as opposing the interests of Palestinians, and as supporting oppressive regimes. Blunders, the outrageous conditions in prisons, and massive corruption in Iraq have also contributed to the image of America as the imperialist crusader. America's promotion of liberty and democracy abroad are therefore seen by these critics as hypocrisy. The truth is more paradoxical and ironic, as America does in reality promote and defend freedom and democracy even while supporting dictators who stifle freedom. But such contradictions are not appreciated by those who fall victim to simplistic propaganda.

The replacement of U.S. troops by troops from other countries which do not have the liabilities of the U.S. government would avoid the catastrophe of an escalating civil war and takeover of Iraq by supremacist terrorists. There would much less resistance to the presence of troops from India and Russia and other countries regarded as in Iraq friendly or at least neural. The governments of China, Russia, India, and other powers have an incentive to provide troops, since they too would be vulnerable to a terrorist Iraqi state well funded by oil revenues. Muslim troops would be seen as less alien. As another incentive, contributing troops would give the members of the new alliance influence in Iraq. In turn, the U.S. would lose much influence, but the idea of an Iraqi regime that loves America is a lost cause anyway.

It is tragically unfortunate that the alternatives for Iraq that have dominated the election have been plan A, "stay the course," and B, "cut and run." At this pivotal time, the new Congress and the Bush-Baker policy team should study and discuss equal benefits from oil, decentralized governance, and the replacement of U.S. forces with a new international military alliance. Plan C would avoid the disasters of both A and B.

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Fred Foldvary, Ph.D.

FRED E. FOLDVARY, Ph.D., (May 11, 1946 — June 5, 2021) was an economist who wrote weekly editorials for since 1997. Foldvary’s commentaries are well respected for their currency, sound logic, wit, and consistent devotion to human freedom. He received his B.A. in economics from the University of California at Berkeley, and his M.A. and Ph.D. in economics from George Mason University. He taught economics at Virginia Tech, John F. Kennedy University, Santa Clara University, and San Jose State University.

Foldvary is the author of The Soul of LibertyPublic Goods and Private Communities, and Dictionary of Free Market Economics. He edited and contributed to Beyond Neoclassical Economics and, with Dan Klein, The Half-Life of Policy Rationales. Foldvary’s areas of research included public finance, governance, ethical philosophy, and land economics.

Foldvary is notably known for going on record in the American Journal of Economics and Sociology in 1997 to predict the exact timing of the 2008 economic depression—eleven years before the event occurred. He was able to do so due to his extensive knowledge of the real-estate cycle.