Sharing the Wealth
April 9, 2003
How the United States handles Iraq's oil after the war is crucial. For guidance, America might look to its experiences in Alaska in the 1970s, says Steven C. Clemons, of the New America Foundation.
In the 1970s, during the construction of the Trans-Alaska Pipeline, the state realized that the new oil leases would produce an enormous windfall. Its citizens set up the Alaska Permanent Fund to manage this income, directing that the revenue be invested, the principal remain untouched and the gains be used for state infrastructure investments.
A part of the proceeds was distributed as dividends to every Alaskan.
- By July 2002, the fund had grown to more than $23.5 billion.
- Dividend payments to Alaskan families averaged about $8,000 per year.
The same should also be done with Iraq's most lucrative resource -- oil.
- Iraq's annual oil revenue comes to approximately $20 billion.
- A postwar government could invest $12 billion a year in infrastructure to rebuild the nation.
- The other $8 billion could anchor an Iraq Permanent Fund, to be invested in a diverse set of international equities.
The resulting income would go directly to Iraq's six million households. These payments would make a huge difference to families in a country whose per capita gross domestic product rests at about $2,500.
Source: Steven C. Clemons, "Sharing, Alaska-Style," New York Times, April 8, 2003.
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