A NEW MODEL OF NATION-BUILDING FOR CITIZENS OF IRAQ

Executive Summary
(Center for Economic and Social Justice)

? The Abraham Federation is a major innovation in democratic nation-building, offering an inclusive, comprehensive plan of economic development called ?Capital Homesteading.?  In contrast with capitalist and socialist models of development being rejected by Third World countries, it starts from a radically new perspective based on universalized citizen access to viable capital ownership and structured democratization of economic power as the basis for political democracy.

? The Abraham Federation strategy was first developed in 1978 to create a new democratic nation state for the Holy Land.  Freedom of religion and conscience would be secured by a government that systematically diffuses economic power into the hands of every citizen.  This strategy proposed starting with lands now controlled by the Israeli military on the West Bank and Gaza Strip, and offering citizenship to Palestinians and to all Muslims, Jews, Christians and others wishing to settle on this land. Today it also offers a viable and politically unifying framework for rebuilding post-Saddam Hussein Iraq.

? The new model addresses a ?fatal omission? in conventional approaches to nation-building that result in a growing exclusionary gap between the rich and poor, concentration of power and ownership within a small elite, corruption and abuses of power at all levels, and instability within society.

? The leading edge of this strategic framework is an economic component that attacks directly the root causes of terrorism and the basis of its support among the populace.  It will answer the demands for justice and an end to poverty and oppression of all Iraqi citizens.  It will create a unique nation of owners.

? It systematically promotes the growing economic sovereignty (i.e., empowerment) of each citizen ? as a worker, as a consumer and as a capital owner.  Economic governance and accountability would be diffused through the structured spreading of productive capital assets throughout society.  This would enhance the economic well-being and self-determination of the people, and reduce the likelihood of corruption and abuses of power associated with any form of monopoly power.

? It sets up the legal and constitutional framework for moving quickly to a high-growth, free market system.  It is based on the 4 pillars of a just market economy: (1) expanded capital ownership, (2) limited economic power of the state, (3) restoration of free trade and open markets for determining just prices, just wages and just profits, and (4) restoration of private property in all means of production.

? Because of its emphasis on infrastructural re-engineering, particularly with respect to central banking and capital credit, this framework would radically reduce the cost of reconstruction of Iraq, allowing for low-cost internal means of financing the reconstruction.  This would reduce the cost to the U.S. taxpayer, the UN and those countries supporting the effort in Iraq.

? It would help Iraq become economically self-sufficient as soon as possible, providing the basis for a stable, independent, and democratic government that would serve as a model for other nations in the Middle East and around the world.

Phases for Applying the Abraham Federation Model in Iraq

PHASE I: Denationalize the oil fields of Iraq, as a catalyst for building a new ?Just Third Way? economy. Convert the Iraqi National Oil Company into a professionally managed limited liability corporation. Issue initial shares at no cost to every oil worker and Iraqi citizen and guarantee them first-class shareholder rights to the profits and voting control of the company.  Encourage preferential oil production leases to competitive operating companies that are broadly owned.  To lay the foundations for Iraq?s future economy, launch projects to be owned by Iraqi citizens, using advanced U.S. technologies that produce power and water from sea water and waste. Future government revenues would then come from increased citizen incomes, reducing non-accountable political control by a military or political elite, or by foreign oil interests.

Set up individual share accounts (like IRAs) within local banks for each worker and every citizen of Iraq, including those now in exile who return to Iraq.  Free, full-dividend payout shares would be distributed equally to these individual accounts, representing the current assets of the denationalized Iraq National Oil Company. These initial shares would be non-transferable for 10 to 20 years, except for inheritance upon death.  The tax-sheltered equity accumulation accounts would be given the power to borrow interest-free, non-recourse productive credit on behalf of the shareholders for future share issuances to meet the expansion and modernization needs of the former state-owned oil company, as well as new enterprises, with the debt secured and repaid by the projected dividends on the newly issued shares.

One cautionary note: Experience with employee stock ownership plans has shown that it is not sufficient merely to give people ownership and expect any significant change in their behavior and value systems.  It is essential that management systems be introduced during the planning and implementation phases of Capital Homesteading to offer a new servant leadership philosophy and structures and processes for diffusing economic power and ownership. One such system called ?Justice-Based Management? systematically builds internal ownership cultures necessary to educate all members and maintain the continued deconcentration of power and accountability of managers to the worker- and citizen-shareholders.

PHASE 2:  Help the Iraqis to establish a written constitution that reflects all the rights contained in the UN Declaration of Human Rights, strengthening Article 17 (acknowledging every person?s right to own property individually or in association with others). The new Iraqi constitution would include the provision that as a fundamental right of citizenship every citizen is guaranteed access to the social means (i.e., money and interest-free productive credit) of access for acquiring and possessing income-producing property.  All tax, credit, property, corporation, insurance, inheritance and related laws should, if necessary, be reconstituted to conform to the constitution and to establish institutions supporting economic democracy and universalization of the right to private property and protection of the rights of property.

PHASE 3:  Restructure the discount power of the central bank in Iraq to create interest-free money for facilitating private-sector growth without inflation, linked to providing more widespread access to capital credit and allocated through local banks and institutions.

PHASE 4:  Have the U.S. introduce a resolution into the UN General Assembly to treat Iraq as a ?global free trade zone? whose imports and exports would be exempt from all trade barriers and tariffs of other countries.  In this way the international community could provide a major catalyst for ?Peace Through Justice? in Iraq and throughout the Middle East.
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For more information, visit www.cesj.org or www.globaljusticemovement.org, or e-mail .(JavaScript must be enabled to view this email address) ?Extending the Abraham Federation Model: A Just Third Way for Bringing Democracy to the Iraqi People? is available at http://www.cesj.org/homestead/strategies/regional-global/abrahamfederation-nk.html  A detailed report on Capital Homesteading, entitled ?Capital Homesteading for Every Citizen,? is available at http://www.cesj.org/homestead/donnersocialsecurity.pdf