Acton Commentary

Success in Iraq: Guaranteed Property Rights as a Precondition for Democracy


The obligation to respect and protect private property is integral to many faith traditions. In Hebrew and Christian scriptures, the ten commandments prescribe: "Thou shalt not steal" and "Thou shalt not covet." Pope Leo XIII ushered in the modern era of Catholic social teaching with an assertion of "the natural character of the right to private property" ( Rerum Novarum , 1891). He argued against socialism as it was known then, but also pointed out that the faithful must account for the use of their possessions. The Qur'an and the traditions of the Prophet Muhammad, similarly, declare property rights to be sacred. The Prophet said: "Your life and your property are as sacred to you as this day is sacred. No Muslim may take from another Muslim anything except by his consent."

To succeed in the formation of a genuinely democratic society, those in charge of Iraq’s reconstruction must heed the truths expressed by these religious teachings. Iraqis must assure that titled property rights for the poor are instituted in national law, and enforced. Today, bullies, politicians and tyrannical rulers can plunder Iraq’s small holders who have no proof of ownership. Unless small-holder property rights are protected, they will remain outside the power structure, even if they are given the vote in elections. By writing a constitution guaranteeing titled and protected private property rights for all Iraqi people, Iraqi lawmakers will strike a chord that resonates with Kurdish, Sunni, and Shi'a communities, as well as with Iraqis of other faiths.

The United States is circulating a draft resolution among U.N. Security Council members which calls for the Iraqi Governing Council to come up with a timetable by Dec. 15 for a constitution and elections. But who speaks up for a constitution that will protect economic liberty and property rights under rule of law rather than a welfare-style "full-service state"? Protecting private property of men and women, a duty of the state, ignites initiative and work-based prosperity.

To establish a legal system that will protect titled property rights, there must be extensive discussions with clerics, tribal chiefs and Iraq's bread earners who are the ultimate judges of the country's moral truths, traditions and practices. By agreeing to guarantee titled property rights in the constitution, secular and clerical leaders will acknowledge long-held religious and societal practices of Iraqi ancestors. Indeed, among the earliest maps in the Library of Congress is one showing hundreds of property plots that belonged to people in the Tigris and Euphrates Valley centuries ago.

Neither the United States nor any other outsider can proceed with economic reform in Iraq until a proper constitutional framework is established. Banks cannot function properly until property rights are guaranteed in a constitution, starting with real property (land and structures) and an independent judiciary system. Without sine qua non property rights in place, U.S. support for modernizing capital markets, foreign investment, privatization, tax regimes, microenterprise or skills to allow most Iraqis to trade globally will produce gravely disappointing results.

Confidence in secure property rights, coupled with relaxation of regulation, could encourage both Iraqi nationals and Iraqi expatriates to invest in high-priority telecommunications, electricity supply, water services, and transport facilities, and thus relieve U.S. taxpayers of part of this burden.

Iraqis today face a sizable and arduous challenge to revive Islam’s ancient secret of property rights as fundamental to individual well-being. The task entails raising national awareness, analyzing individual citizens’ situations countrywide, creating institutions that encourage entrepreneurs to create new businesses, implementing information systems to track and adjust the formalization system, and creating law to speed the capitalization process. The Peruvian economist Hernando De Soto spells out the necessary steps in considerable detail on the Web site of the Institute for Liberty and Democracy . The ILD works with heads of state to implement institutional reforms that give the poor access to formal property rights for their real estate holdings and businesses along with the tools to release the capital locked up in those assets.

But if the powers now rebuilding Iraq reject this path, only the Iraqi elite — those who control property now — will prosper fully. These insiders will write the so-called rule of law and thus become its primary beneficiaries. The 70 percent of Iraqis who remain in the underground economy and deal only in cash will miss out on accessing the capital that can fuel untold business growth and wealth for all citizens.

Americans, for their part, must focus on limited government and economic freedom as the key post-war objectives in Iraq. By doing so, they will signal that governance must be framed first to secure life, liberty and private property as preconditions for both prosperity and political pluralism. When Iraqis commit to this course, they can expect to achieve enduring peace and ubiquitous prosperity. That will be the legacy of adhering to the property-rights wisdom taught by the world’s ancient religions.