A Peace Prize for Iraq: An Economist's Solution to War

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Dean Baker
Truthout, December 12, 2006

The events of the last week should have dashed any hopes that the Iraq Study Group's (ISG) plan would lead to a quick US withdrawal from Iraq and an end to the violence. President Bush has made it clear that he will not accept the ISG plan for a phased withdrawal of troops. Even if he did accept the ISG plan, it is not clear how much longer US troops would remain in Iraq, nor that the plan would lead to an end to the civil war.

Some new thinking is clearly in order. John Schmitt, my colleague at the Center for Economic and Policy Research, has risen to the occasion. He has developed an economist's solution for the war in Iraq - a $200 billion peace prize.

The basic logic of the plan is very simple. At the moment, the various religious/ethnic groups in Iraq are fighting for control over Iraq and/or their particular territory in the belief that they have to protect their share of oil revenue and the other assets of the country. In other words, they have to fight to protect what they have, or to control what they think they should have.

The peace prize reverses this logic. It uses the money that we would have otherwise spent on the occupation to give the Iraqis money for not fighting. The prize would be given to the people of Iraq (sent as checks to each individual) if certain targets are met for reducing violence. If the targets are not met, no one gets any money.

For example, the prize could have a target that Iraq has fewer than 10,000 deaths due to political violence over the next year (as certified by an independent commission) in order for the first installment of $40 billion to be paid. The target could be lowered to 6,000 for the next year, with successive years having progressively lower targets for politically-motivated killings. In each case, if the country misses the target, no money gets paid.

A prize of this magnitude would potentially mean serious money for the people of Iraq. It would be sufficient to provide almost $1,500 for every man, women, and child in the country, or $6,000 for a family of four. This is a huge sum for people in Iraq, where per capita GDP is less than $1,800 a year. The equivalent sum for the United States would be $150,000 a year for a family of four. This would be enough money to get most people's attention.

If families in Iraq knew that they stood to get such large windfalls by keeping the peace, they might place considerable pressure on the militias, insurgents and jihadists to stop the killing. If the prizes were actually paid out, it would provide a huge boost to the Iraqi economy and could provide a basis for sustained economic development.

Of course, there is no guarantee that even the prospect of a large sum of money would be sufficient to end the current cycle of violence. Hundreds of thousands of Iraqis have seen their loved ones murdered, with many of the killings committed in especially brutal ways. These people may not be willing to just let bygones be bygones.

But the fact is, no one else has a better idea. Clearly, the Bush-Rumsfeld "stay the course" plan is a dead end, which will only lead to more death and chaos. The ISG's graceful departure still would imply that US troops would be involved in Iraq for several more years, and certainly provides no guarantee that the eventual outcome is peace in Iraq.

The peace prize proposal has the advantage that it would allow the United States to withdraw its troops as quickly as logistical arrangements can be made. The money that would otherwise go to support the occupation would instead be available to the Iraqis, if and only if they managed to keep the peace. At the least, this ends the US occupation. It also provides more hope for a peaceful outcome than anything else on the table.


Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer (www.conservativenannystate.org).