Critics, however, say that direct cash transfers to the Iraqi people would increase inflation and spur consumption; it would also limit government spending on infrastructure, education and health services.
On the pro-dividend side is the Sadrist movement, which has a very strong Shiite Muslim following. MP Abdel Hussein Resan, a member of the Sadrist movement and of Parliament’s economic committee, said his party favoured an oil dividend because so many Iraqi families lived in a precarious financial situation. Resan pointed out that the average income of many Iraqis had dropped in recent years due to rising unemployment and as higher inflation had eroded their purchasing power.
“Oil income is the first option we should be thinking about,” he said.
In an editorial for influential US website Huffington Post late last year, oil industry analyst Johnny West put it like this: “Why not give petro-dollars back to the citizens? Directly, in cash?”
West argues that if this happened, “poverty could be abolished inside two years, and that, just as important, it would unleash such interest and attention from the public that governance in the oil industry would never be the same again.”
In another study paper, West concluded that, “a dividend, starting at $220 per capita in October 2012 and rising with expanded production, could also cement the affiliation of all citizens to Iraqi territorial integrity, act as a powerful disincentive to secession in oil-producing regions, and create popular pressure among all sections of the population to discourage acts by the ongoing insurgency which disrupt economic reconstruction”.
Basically the idea is that, apart from helping decrease poverty, a direct oil dividend would mean that every Iraqi had a personal stake in keeping the national oil industry going. And that would help combat what’s known as the “resource curse”, the tendency of state-controlled commodity wealth – such as the income from oil, which is Iraq’s main earner - to engender corruption, graft and wasteful government spending.
There is some evidence to support the supporters of an oil dividend for Iraq. Much of it comes from the US state of Alaska, where a comparatively smaller version of such a scheme has been in action since the 1970s. In the past Alaskans have received between US$1,000 and US$2,000 per year from the fund.
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