Iraq Oil Money Invested in assets, returning an annual equal Iraq Dividend to all children and adults in Iraq

Ahmad Chalabi's proposal to distribute revenue from Iraqís oil equally to all Iraqis is outlined briefly in this August 17, 2005, Wall Street Journal editorial.In my view, such a proposal (which is not in conflict with any of the articles of the draft constitution), is the most enlightened approach to managing Iraqís oil wealth. The key concept in Chalabiís proposal is that Iraq's natural wealth is managed by the central government, but not owned by it. Revenue from the oil is distributed directly and equally to all Iraqi citizens. Government is funded through taxation and not directly from Iraqís oil wealth.

At least the last-minute brinksmanship doesn't appear to be about religion, despite repeated alarms in the U.S. about the rise of a Shiite "theocracy." Most of the Iraqi framers seem to agree with constitutional language asserting that Islam will be "a" -- not "the" -- principle source of legislation. This is not so different from the vague appeals to divine providence found in some of America's founding documents, and certainly is no reason to fear Iranian-style clerical dominance. On both family law and women's rights, as well, compromises appear to be within reach.

The best suggestion we've heard for cutting this Gordian knot comes from the much-maligned Ahmed Chalabi, who is now Iraqís deputy prime minister with special responsibilities for oil and infrastructure and has emerged as a major constitutional broker. He has bucked some of his Shiite and Kurdish allies by insisting that ultimate control of Iraqís natural wealth must remain in the hands of the central government, while also suggesting constitutional language that the wealth be owned by all Iraqis in "equal measure." In other words, the oil would be managed by the central government in the interests of all Iraqis wherever they live, but not owned by it.

That free Iraqis are taking another week to write their new constitution is no great cause for alarm. There were a few glitches 200 years ago in Philadelphia too. The reason to worry is that the talks are stymied on the issue of federalism, which is crucial if Iraq's ethnic factions are going to coexist in a single country for the long run.

The really tough disputes are over federalism and its corollary of sharing oil revenues. "Get those right and everything else falls into place," one Iraqi insider tells our Robert Pollock, who is reporting from Baghdad. By federalism we mean a political system modeled more or less on the United States of America, in which power is shared between a central government and the provinces. The name "United States of Iraq" was actually proposed inside the Iraqi meetings, and no wonder given the terrible experience that Kurdish and Shiite Iraqis had under Saddam Hussein.

The Kurds have enjoyed de facto self rule in the north under the protection of a U.S. no-fly zone since the mid-1990s, and they aren't about to give up their hard-won autonomy now. Many Shiites also find the idea of a weaker government in Baghdad attractive, given how they were victimized by Sunni-dominated Iraqi governments going back to the 1920s.

The dilemma is that most of Iraq's oil wealth is found in areas claimed by Shiites and Kurds. And some leading Iraqi ethnic politicians have been asserting a right to keep all the oil revenue in their regions. Kurdish chieftain Massoud Barzani wants to control the northern city of Kirkuk, while Shiite politician Abdul Aziz al-Hakim is pushing for nearly complete control of the oil fields in the south.

Thus strong regional governments, if allowed too much control over oil, risk leaving an Iraq with a rump Sunni province, and could create the perception of a legitimate grievance where none now exists for the Sunni-dominated insurgency. Sunni delegates have threatened to walk out of the charter talks over the issue.

The best suggestion we've heard for cutting this Gordian knot comes from the much-maligned Ahmed Chalabi, who is now Iraq's deputy prime minister with special responsibilities for oil and infrastructure and has emerged as a major constitutional broker. He has bucked some of his Shiite and Kurdish allies by insisting that ultimate control of Iraq's natural wealth must remain in the hands of the central government, while also suggesting constitutional language that the wealth be owned by all Iraqis in "equal measure." In other words, the oil would be managed by the central government in the interests of all Iraqis wherever they live, but not owned by it.

Mr. Chalabi hopes that the "equal measure" concept will pave the way in practice for the creation of an oil trust, under which Iraqis would from birth have accounts established in their name. Iraqis would receive their full and equal share of oil revenue and the government would have to vote to tax it away. Mr. Chalabi sees this as a way of breaking the "oil curse" that has turned so many oil-rich nations into corrupt tyrannies.

It's entirely possible that this oil-revenue compromise still wouldn't be enough to win over many Sunnis. Some of those negotiating over the charter are ex-Baathists who hope to regain the reins of power in Baghdad. Others may not sign anything that devolves power, lest they make themselves even larger insurgency targets than they already are. More important than which individual Sunnis sign the constitution, however, is whether it can win enough support from Sunni provinces in an October referendum. Many average Sunnis may welcome a federalist charter in the privacy of the voting booth as a way to protect themselves from being dominated by the Shiite majority.

A federalist system of power sharing is the only possible solution if Iraq is going to hold together as a single nation. The job of the U.S. here isn't to choose sides but to promote an Iraqi compromise. The Chalabi oil-sharing proposal has a better chance of doing so than anything we've heard in a long time out of the State Department.