Ensuring a Lasting Peace

The day after is fast approaching. The day after Iraqis are liberated from the despotic rule of Saddam Hussein, the U.S. will occupy an entire nation for the first time since it took over Germany and Japan after World War II. It is an historic opportunity to introduce a democratic, civil, market-based society into the heart of the Middle East. America should neither flinch from this task nor underestimate the difficulty and cost of this important endeavor. Not only should the White House make explicit to all Americans the heavy burden they are about to bear, it should try to share that burden with others. In building the peace in postwar Iraq, the U.S. should rebuild the ties within the Western alliance that were shattered in the runup to war. Here is what should be done:

-- Make it multinational. A magnanimous gesture inviting Europe to play a major role in providing security, feeding the uprooted, rebuilding infrastructure, and reviving the oil fields in Iraq would help restore America's image in world public opinion. It would also undercut any regional criticism that the U.S. invaded Iraq as an imperialist power. But if France, Germany, and Russia wish to play a role in postwar Iraq, they must show a willingness to work with America in a constructive manner. For France and Germany especially, this may be their last chance for years to come to reestablish close ties with the U.S.

-- Make it multilateral. The U.S. should integrate the U.N., the World Bank, and other multilateral organizations into its nation-building plans. The U.N.'s oil-for-food program already feeds millions of Iraqis and provides a ready-made structure for using Iraqi oil revenues to house and feed the country's people. Using the U.N. in this way would, again, undermine the view that the U.S. is acting as a colonial power in the Middle East.

-- Make it Iraqi. In 1979, before Saddam took power, Iraq was on a par with Spain and Hong Kong in terms of gross domestic product per capita. It had a well-educated, professional elite. Despite two decades of Saddam's rule, much of this class remains just below the Baathist thugs loyal to Saddam and should be used to help run the government institutions during the occupation. This is especially true in the energy sphere, where capable Iraqi oil experts can run the industry. Iraq, of course, must continue to have full national ownership of its natural resources, even as it bids out contracts for reconstruction and development of its oil fields.

-- Make it clear. The cost of the war and the occupation is likely to reach into the hundreds of billions of dollars. Lawrence B. Lindsey, President Bush's former economic advisor, estimated that the war alone might come to $200 billion. Rebuilding Iraq must inevitably amount to several times that figure. Counting on Iraqi oil revenues to pay for the war and occupation may be naive, especially if the oil fields are torched by Saddam. Even if the fields are saved, it may take 18 months to three years to return Iraq to its pre-1990 production level of 3.5 million barrels. Certainly Saudi Arabia and Kuwait should be approached to pay part of the bill. But the Bush Administration should be honest with Americans about what rebuilding Iraq will cost them. And it should begin to adjust its tax and fiscal policies accordingly. The U.S. needs to get a reasonable estimate of the bill for introducing democracy and freedom in Iraq before it runs up massive budget deficits for many years to come.

    Before it's here, it's on the Bloomberg Terminal.