Foreign Affairs

Swiss Canton Model Is Perfect for a Federated Iraq

On Human Events Online this March, John Thomson reiterated the compelling case for a decentralized Iraq ["America in Iraq: These Colors Must Not Run"], which we had originally proposed in articles published in February and June 2004. We therefore welcome the recent publication by Sen. Joseph Biden (D.-Del.) and Leslie Gelb in the New York Times of their article, "Unity Through Autonomy in Iraq." Our only question to them and others is "Gentlemen, what took you so long?"

There remains as yet little indication the Bush Administration is considering any significant alteration to its long sounded call for a centralized government. However, even the most stubborn, ill-experienced observer must agree that long-term prospects for such a formulation are slight indeed. In any event, we are delighted that after more than two years’ gestation, the idea is getting attention and being discussed more broadly.

There are clearly challenges aplenty in the fulfillment of any governance formula for Iraq. The Arab world’s authoritarian tradition extends to Baghdad, requiring resolution and clear codification in law. Fortunately, at the leadership level, good judgment increasingly seems to prevail. Agreement on a prime minister and cabinet, after months of politicking, means politicians on all sides are becoming realistic, causing us to infer they have a clear understanding of the virtual impossibility of creating an effective, strong central government.

Shi’a and Kurd leaders overwhelmingly favor a decentralized government, with the Sunnis nominally opposed, fearing they will be dealt out of Iraq’s oil wealth.

What is required is equitable distribution of oil ownership with its attendant financial benefits, a challenge that provides an outstanding free-market opportunity, as discussed below. Arguments that the Kurds would slide from semi-autonomy to full independence and the Sunni sector would become a haven for terrorism are specious, so long as the United States maintains its promise to backup the fledgling government and its military forces. A Shi’a community controlled by Iran is equally improbable, owing to centuries of distrust between Arab and Persian Shi’ites.

The following is what we have been recommending for the past two years, respecting both governance and petroleum.

Governance. A cantonal system similar to the Swiss model is the most viable option for the restive, fearful Iraqi communities — Shi’a, Kurd, Sunni, Christian and Turkmen. In countless talks with a broad range of Iraqi leaders, it appears eminently possible to maintain an Iraqi national fabric while allowing for semi-autonomous governance in different sectors of the country. Such a formula has peacefully embraced very different communities, the very challenge facing Iraq, in one nation for 800 years: Switzerland.

A system of five cantonal districts can be envisioned. Three would be Kurd, Sunni and Shi’a dominated, based respectively in the northern, central and southern areas of the country. Two other cantons would have special administrative status: the one, based in Baghdad (a melting pot of Shi’a, Kurds, Sunnis, Turkmen and Christians, among others), would be recognized by all Iraqis as the country’s capital canton; the other, embracing oil-rich Kirkuk plus Diali-Khanaqin, would also have special status owing to the area’s equally diverse ethnicity.

The Kurdish canton should contain three main districts — Erbil, Dahuk and Suleimaniya. Concentrated in the North, the Kurds are a dynamic, non-Arab minority comprising some 20% of Iraq’s population. They have been remarkably capable of governing themselves effectively for a decade, and should retain their status.

The Kurdish leadership has solemnly undertaken not to seek independence from Iraq, a development which would greatly upset neighboring Turkey, Iran and Syria, each with large and restive Kurdish communities eager for independence as part of a renewed Kurdistan. Indeed, Having the Kurds remain semi-autonomous is the surest way to keep them from seeking complete independence.

The Sunni minority, similar in size to the Kurds, is reviled by the Shi’a because of decades of oppression by Saddam Hussein’s regime, and a Shi’a-dominated strong central government worries them, particularly following credible reports during the past year of Interior Ministry support for attacks on Sunni communities. The Sunni should have their own semi-autonomous canton in their heartland, the notorious "Sunni triangle" north and west of Baghdad. Once the Sunnis are secure in their safety–plus a fair share of Iraq’s petroleum wealth — they will cooperate fully in the eradication of the foreign Islamist terrorists, as well as the Sunni guerrillas, for one simple reason: They will have gained virtually all of what they want.

The numerically dominant Shi’a strongly favor running their own affairs, provided there is agreement on the composition and residual responsibilities of a Baghdad national government.

Shi’a would control their own development and destiny in the south and central areas where they predominate, and also be a pivotal force in a national government based in the Baghdad capital canton plus the ethnically mixed Kirkuk and Diali-Khanaqin.

The remaining sizable community to be specially considered is the Turkmen, who have felt inadequately considered since Iraq’s liberation and are fearful for their rights. Most live in the two proposed mixed cantons, as does the much smaller Christian community. Clearly, every effort should be made to guarantee the rights of all minorities in the ultimate cantonal and national constitutions.

The national government should provide for Iraq’s foreign relations, internal and external defense and monetary requirements, plus oversee the development, management and equitable operation of the country’s massive petroleum reserves.

Petroleum. We have encountered no substantial or meaningful case favoring a nationalized, government-owned petroleum industry, just as we have heard no persuasive argument in Baghdad or Washington for a centralized Iraqi government. Indeed, there could be no stronger proof of Iraq’s newly attained free-market status than for its greatest natural resource not to be socialized.

Iraq’s petroleum wealth, an asset of inestimable potential perhaps even greater than that of Saudi Arabia, must be developed to the benefit of all the country’s citizens. Oil in the north cannot be solely for the benefit of Kurds, or oil in the south solely benefiting the Shi’a: petroleum is a resource which must benefit all Iraqis equally.

The nation’s enormous oil patch clearly requires committed oversight. Local management, reporting to a Board of Directors (half designated by a super majority of the national parliament and half by a similar majority of shareholders) would see to the industry’s effective and honest operation, utilizing international companies to prospect and develop the oilfields plus market production.

Actual ownership should be completely Iraqi, adopting a modified Norwegian model that provides direct participation in the financial benefits of its oil industry to the citizenry, to whom of course the resource belongs. A key difference from the Norwegian model, however, should be that the Iraqi petroleum industry is actually owned by the citizens, whereas the Norwegian industry is state-owned, with profits earmarked to a host of services benefiting all citizens.

The keys to a successful citizen-owned, locally managed and internationally developed petroleum sector are threefold:

1. An equal number of shares distributed to every citizen age 18 or older.

2. Shares held by the original recipient for a minimum of five years, except in the event of death, when they would be deeded to the designated next of kin. In any event, shares could be held only by Iraqi citizens.

3. All petroleum-related operations overseen by an independent Board of Directors.

A citizen-owned oil industry would send a resounding message to Iran, Kuwait, Saudi Arabia and every other oil-producing state in the region: Petroleum is a resource of each country’s citizens. In so doing, state-owned companies would no longer have the option, as currently, to creak with inefficiency and reek of corruption.

Implementation of a federated government and free-market petroleum industry owned by all Iraqis would lead to:

  • Development of trusted leadership cadres in the three major population groups;
  • Reduction in potentially disastrous inter-communal rivalries;
  • No need to deal with Tehran’s foul regime, simultaneously encouraging the already strong Iranian opposition;
  • Creation of a genuine beacon of free-market democracy in the Middle East.

This is decidedly not the time to cut and run. With renewed, enlightened commitment among Iraqi leaders plus recognition in Washington that progress must evolve in different ways at different times in different countries, we firmly believe the way forward is promising indeed.

America’s Iraqi experience since the end of its brilliant military campaign has been an object lesson in what not to do. However, it is not too late to reverse the downward spiral and to implement with clarity and conviction what can and should be done to bring peace and stability to the country and, thence, the region.

Our recommended approaches to governance as well as petroleum sector organization and ownership have the great benefit of being broadly accepted by all Iraqis. They would avoid much of the predictable disputes that the coalition’s current centralized approach for government and a nationalized petroleum sector have produced. Indeed, they would be as refreshing to good governance and nascent capitalism as the widely popular 15% flat tax for individuals and corporations that is already in place.

What remains is Republican concurrence with this thoroughly non-partisan solution to Iraq’s two most pressing issues, followed by the U.S. mission and its British partners providing guidance and encouragement to the country’s new cabinet in the fulfillment of these realistic goals.

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