Solving the principal - agent problem in Iraq: economic incentives create a new model for security
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Authors
Cole, Verlan R.
Hollingsworth, L. Scott
Cramer, Jayson L.
Subjects
Oil revenue distribution
Iraq stabilization and reconstruction
Alaska Permanent Fund Dividend
privatization
Iraq stabilization and reconstruction
Alaska Permanent Fund Dividend
privatization
Advisors
Melese, Francois
Laverson, Alan J.
Date of Issue
2007-12
Date
December 2007
Publisher
Monterey, California. Naval Postgraduate School
Language
Abstract
This paper offers a path for Iraqis to provide for their own security by ensuring each Iraqi citizen has a stake in Iraq's oil wealth. The hypothesis is that private, individual oil ownership provides dual incentives. First, each Iraqi citizen would have an interest in contributing to the security of Iraq's oil infrastructure and in monitoring the quality of investments, since they and their family would directly benefit. Second, if each Iraqi had the ability to convert some of their stake in Iraq's nonrenewable oil resources into renewable financial capital, then they would make entrepreneurial investments that could help diversify Iraq's economy and contribute to economic development. This report evaluates several alternatives that might be offered for consideration by Iraqi policy makers to distribute Iraq's oil wealth directly to the Iraqi people. The Alaska Permanent Fund dividend offers one potential model for Iraq. Other models explored in this study include the experience of Chad and various privatizations that took place in Eastern Europe. The advantages and disadvantages of alternative oil distribution schemes are explored in an effort to offer new insights and opportunities to policy makers. Several criteria were developed to evaluate the proposed alternatives. These criteria were an outgrowth of three main questions asked of each alternative: First, how efficiently would the model distribute oil ownership to the Iraqi people? Second, how effective is it likely to be in encouraging individuals to support increased security and stability? And finally, how effective is it likely to be in contributing to future economic development?
Type
Thesis
Description
MBA Professional Report
Series/Report No
Department
Organization
Naval Postgraduate School (U.S.)
Identifiers
NPS Report Number
Sponsors
Funder
Format
xvi, 115 p. ; 28 cm.
Citation
Distribution Statement
Approved for public release; distribution is unlimited.
Rights
This publication is a work of the U.S. Government as defined
in Title 17, United States Code, Section 101. As such, it is in the
public domain, and under the provisions of Title 17, United States
Code, Section 105, is not copyrighted in the U.S.