The economic and legal challenges facing postwar Iraq aren't new, and there is a body of knowledge developing on how to surmount them. A Peruvian economist and a former Soviet Politburo official have some advice for the reconstruction team.

Hernando de Soto is a Peruvian economist who makes the argument that successful market economies and liberal democracies depend on recordable and trackable property rights. Ramesh Ponnuru interviews De Soto on Who Should Own Iraq?

De Soto estimates that people in the third world and in ex-communist countries hold more than $9 trillion in what he calls "dead capital" — property that is owned informally, but not legally, and is thus incapable of forming the basis of robust economic development. . . . "It's not clear [in most poor countries] who owns what in terms of national records. . . . in Egypt it is not clear who owns 90 percent of all assets. In Mexico, 78 percent is not clear. Having a modern market economy is not possible. . . . There's no market without property rights. Second, no credit. Third, no investment. Fourth, no rule of law, no enforcement. And there's no supplying of electricity: Who's at the end of the wire, who do you bill? If it takes too long to figure out, it's very costly.

(It is instructive to read this together with the series of links I posted about Palestinian banker Omar Karsou, whose group "Democracy in Palestine" - composed of fellow businesspeople - is lobbying the US to depose Arafat, because they see clearly the link between peace, rule of law, and prosperity, and are refreshingly unideological where the bottom line is concerned.)

Roger L. Simon links to an article about Aleksandr Yakovlev, who has exhaustively documented the viscious human rights abuses of the Soviet system, and has some thoughts on how to go about cleaning house.

. . . In the case of the Soviet Union, he contends that the unwillingness to face history in its dreadful entirety has left his country as an invalid — the people still hobbled by prehensile fear, the system still paternalistic, if not exactly repressive. . . . The falsified glory of Soviet history makes heroes of the army and the intelligence services and helps them retain disproportionate influence.

Yakovlev contrasts this situation with tribunals created under international auspices in South Africa, Yugoslavia, Rwanda, Cambodia, Sierra Leone and East Timor, which exorcise the totalitarian ghosts that would otherwise haunt societies trying to remake themselves. (Simon's blog has a long discussion thread on whether getting the UN involved would help or hinder this process.)

Posted By Judith (Kesher Talk) at May 6, 2003 02:06 AM | TrackBack