Shuneh (Jordan), June 23: US officials here have outlined plans designed to allow to Iraq move to a market economy without harming its vulnerable population, using oil revenue to create a "social safety net." The US overseer of Iraq, Paul Bremer, said at a World Economic Forum (WEF) meeting on Jordan's shore of the Dead Sea that the war-torn nation needed to move to a market economy to generate wealth and jobs.
"Our strategic goal in the months ahead is to set in motion policies which will have the effect of reallocating people and resources from state enterprises to the more productive private firms," he said.
"A fundamental component of this process will be to force state enterprises to face hard budget constraints by reducing subsidies. Following these policies will help accomplish many of our goals for Iraq's macroeconomy: vigorous competition, fiscal discipline and low inflation and interest rates," the chief of US-led coalition's civilian administration said. But he acknowledged that dismantling the state economy could lead to "political and social strains unless they are accompanied by the establishment of a humane social safety net."
The US official proposed two schemes using oil revenue to reduce potential social tension, and give the Iraqis "an opportunity to participate fully" in the economy. He said, "Oil revenue could be deposited in a national 'trust fund' used to finance public pensions and other elements of a safety net.”
Another way is to distribute to the 24 million population "some profits from oil sales ... As 'dividends', along the lines of the system used by the (US) state of Alaska." Bureau Report