Property Rights: Twin Promises for Post-War Iraq

Andrew M. Langer, President The Institute for Liberty Seton Hall University February 11, 2008

Who I am…
What Is The Institute for Liberty? Background on Property Rights

and International Issues

About Andrew Langer and IFL…
 Started In Public Policy After College…
 Committed to Individual Rights and Free Markets

 Small Business Advocate
 IFL founded in 2005, focused on Tech Issues

 Now Focused on Small Business and the “petty

tyrannies” of government

The Property Rights Issue
 Worked on Property Rights Early In Career
 Property Rights underpin all other rights…  Currently under siege in the United States

Property Rights: the rights to hold, enjoy, and use private property free from unreasonable regulation, uncompensated confiscation, and unwarranted interference.

The Development Context
 Left out of the international affairs/international

development arena
 American foreign policy focused on “building

democracy” abroad  Aid tends to go willy-nilly to economic development projects  Neither have succeeded.  Property Rights are the missing planks.

 The International Property Rights Working Group

Building on the Work of 2 Scholars

Hernando De Soto

Dr. Richard Pipes

DeSoto: 2 Seminal Works (1)
 The Other Path
 Focused on Peruvian

problem with Marxist Terrorism!  Discovered problem founded in land and title issues for campesinos.  Solutions broke Sendero Luminoso’s back!

DeSoto: 2 Seminal Works (2)
The Mystery of Capital
 Comprehensive look at

property systems worldwide.  Looks at the relationship between protection of private property, and the ease of getting title to property.  Forms the basis of the work worldwide of The Institute for Liberty and Democracy

Pipes: Foreign Policy Architect
 Historical tracing of

property rights protection.  Charts boom and bust cycles of societies given their protection of property rights.  Demonstrates clear interplay between the two.

Preliminary Conclusion
Property Rights are an essential element in building civil societies. They create twin promises:
 Economic Prosperity

 Political Stability

Economic Prosperity
 One is able to make investments in one’s property,

with a reasonable certainty that one can reap the benefit of that investment.
 One can use that property as leverage (ie, capital) in

making investments in one’s future.

Political Stability
 By having some certainty that one’s personal economy

is protected, one then has a stake in the society.  By having some glimpse that opportunity is both available and possible, one has hope in that society’s future. Without hope and a vested interest, One has no incentive to support a nation’s direction. Chaos Ensues, along with economic ruin.

The Issue As Applied: Iraq
 Background: The International Property Rights

Working Group
 The Run-up to the Iraq War  The Specific Underlying Issues in Iraq
 What Happened with the Recommendations

 Formed in the Summer of 2002
 Comprised of property rights activists, academics,

former Development and Diplomatic professionals  Included DeSoto’s representative in DC  Consulted additional experts in order to create background.  Originally conceived to make recommendations generally to State, Defense, USAID

The Run-Up To War
 As War become clear, focus changed
 Focus now on Middle East and Post War Iraq

 Necessary to understand unique attributes to Islamic

societies  Necessary to make recommendations of post-war reconstruction. A more focused goal was actually more helpful.

Unique Attributes of Islamic Societies
 Long-standing tradition of private property rights

protection (cf, Pipes)  Capital investment different because of usury rules  Complicated land-ownership traditions (eg Morocco)  Nevertheless, real potential exists Because none were experts in Islamic market background, the IPRWG consulted with the Minaret of Freedom Institute, an Islamic think tank.

Initial Recommendations
Looking at Post-war Japan, A MacArthur-style post-war reconstruction would be recommended:
 Inculcate local traditions/institutions into the

property rights process.  Have provisional government lay framework for governance, let citizens fill in the blanks  Invest local religious and civic leaders in the process

Laying the Case: As Applied (1)
 The case for investment: without titled property rights,

foreign investment for reconstruction would be limited (the power company example)
 Why build if there was fear that the government might

nationalize within 3-5 years?
 Why invest if you don’t know who owns the house that

you’d want to stick a meter to… who are you going to bill?

Laying the Case: As Applied (2)
 The case for national security: without titled property

rights, Iraq would continue to be a chaotic system.
 The Twin Promises wouldn’t be realized.  More practically, there is a relationship between

knowing who owns property and keeping the peace. (cf. Gen. Petraeus’ post-surge deployment strategy)

Selling the Recommendations

IPRWG spent the Summer of 2003 making recommendations to the following agencies: Department of Defense Department of Commerce Department of the Treasury The White House
The State Department was Uninterested. (But then again, the recommendations were ignored)

 Yes. Like a lot of recommendations that were made,

these, too were ignored.
 Not Surprising, and Not entirely hubris.  Property rights not in the mainstream of ideas in the

international development/diplomacy community.

Conclusions and the Future
 Stability, prosperity and investment continue to be a

problem in Iraq  Not saying property rights are a panacea  They are a part of a series of things, perhaps one of the most important aspects of nation building  Valuable lessons in terms of future events We are seeing, and will continue to see, property rights as an issue both here and aborad.

THANK YOU! (202) 261-6592

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