Post War Iraq: Economic Reconstruction

Apr 16, 2003

Featuring:

Hernando de Soto
President
Institute for Liberty and Democracy

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With the apparent collapse of Saddam Hussein's regime, the global community faces many challenges in rebuilding the Iraqi economy. Although Iraq's plentiful oil reserves are a source of great wealth, its economy is relatively undiversified and has been shut off from global markets for over a decade. As a result, Iraq's economy will likely face severe short-term problems that could destabilize efforts to create a legitimate, democratic oriented government.

Before we can initiate political or economic reform, we need to understand the local culture, customs, and political institutions. What has been the day-to-day economic experience for Iraqi citizens? Is it easy to purchase and sell property, or does the black market and "informal economy" dominate? Is the local government effective at dispute resolution, or do people rely on trusted citizens or the organized crime? Do Iraqi's understand and accept western notions of "property"? Without a firm grounding of these fundamental issues, outside efforts to create a viable economic system would fail.

In order to help Congressional staff begin think through these issues, the Mercatus Center invited Hernando de Soto to discuss his efforts in reforming the legal and economic institutions throughout the middle-east and the third-world. Mr. de Soto is the president of the Institute for Liberty and Democracy in Lima, Peru. Time magazine recently named him one of the five leading Latin American innovators of the century. In the late 80's and the early 90's he initiated his country's economic and political reforms. His two books "The Other Path: The Economic Answer to Terrorism" and "The Mystery of Capital" have been best-sellers in Latin America as well as throughout the United States.