The Occupation of Iraq: Winning the War, Losing the Peace

• Introduction
• Remarks
• Questions and Answers

Introduction JOANNE MYERS: Good morning. I'm Joanne Myers, Director of Public Affairs Programs, and on behalf of the Carnegie Council I'd like to thank you all for joining us this morning.

It is a great honor to have with us Ali Allawi, the former Minister of Finance, Defense, and Trade of Iraq. I hope you all have a copy of his bio and that you have taken a moment to read it. The subject of the discussion this morning is his book, The Occupation of Iraq: Winning the War, Losing the Peace.

Hubris, as defined by the ancient Greeks, denoted arrogance as well as pride and was often associated with a lack of humility. When combined with an absence of knowledge, interest in, or exploration of the past, you have the ingredients for what virtually everyone now agrees was a recipe which drove United States' efforts to implant democracy in Iraq without any understanding of the country, its people, or its history.

Ours has been a costly mistake. With the invasion and subsequent occupation of Iraq, the Bush Administration made a huge foreign policy investment. It has been four years now since the fall of Saddam Hussein and the price paid for this debacle has been enormous. It has been a constant sacrifice that is deeply felt by American troops and Iraqi people each and every passing day.

While many books have been written about this tragedy, the story as told by our guest this morning offers a unique insider's perspective about the aspirations of Iraq's political parties, interest groups, and global forces that have now converged to create a situation which is tearing Iraq apart and will haunt us all for decades to come.

Although U.S. pundits, scholars, journalists, and policymakers have offered countless analyses to explain the sectarian violence, until now no authoritative Iraqi perspective on the war has been part of the discussion. Ali Allawi's account is sobering. With uncommon clarity, he reveals how often the Iraqis were ignored in the chaotic rebuilding of their country and explains the complex dynamics behind Iraq's descent into violent sectarianism, as only someone who has himself an essential understanding and familiarity of all the players in the region can.

As one of Iraq's most respected Shia politicians of the post-Saddam era and as one of the principal participants in the unfolding post-liberation saga, he was able to witness events firsthand. As a result, his study of the crisis in Iraq is one of the most perceptive analyses that I have recently read about the extent of the disaster and how it might best be resolved.

While the liberation of Iraq may have been noble, the aftermath has proven dangerous and complex. The unintended consequences have reverberated well beyond the country's borders. History, as we know, cannot be written in advance. We can only hope that the situation, as bleak as discouraging as it now appears, is not in fact hopeless.

Please join me in welcoming our very distinguished guest—we are so delighted to have him here with us this morning—Ali Allawi.

RemarksALI ALLAWI: Thank you very much for this kind introduction. Good morning, ladies and gentlemen.

Breakfast meetings are quite unknown in the Arab world because usually we start ticking at around midday, so excuse me if I am not completely with it.

The book that I wrote was not a result of a conscious attempt to write a book when I first went to Baghdad. When I first went to Baghdad, the intention was to serve and to try to create a new political structure, a new political order, in the country, one in which the legacy of the past, the terrible legacy of Iraq's modern history, and some of the unresolved conflicts of the Islamic and Arab world we hoped were going to be recast in this new order. Unfortunately, this was to some extent an incomplete, if not a naïve, perspective of the depth of the crisis that emerged in Iraq as a result of the invasion and occupation.

I did keep a diary, and the diary was the key resource that I used in the process of trying to put down my thoughts through the various tumultuous events that we experienced in the first few weeks, months, and then years. And it was really one of the most important documents as far as I was concerned. It allowed me to look back in retrospect and to look at the ebbs and flows, the peaks and valleys, of this unusual, if not extraordinary, event in modern history. Without being presumptuous, I knew that I was participating in the making of history, not only the history of Iraq but also the history of the Middle East.

The overthrow of the Baathist regime, the invasion and occupation, in my mind is one of the most cataclysmic events in modern Arab history, maybe equivalent in terms of its effects and scope to the formation of the state of Israel and before that the fall of the Ottoman Empire. It did not appear that way, but if you add up all the issues, if you add up all the extraordinary events, you would see that what happened was not only an invasion and occupation; it was in fact an upending of a deep power structure that had been in place in Iraq for a number of years and had been one of the anchor stones of the post-World War I nation-state system in the Middle East.

So not only was America's expedition into Iraq one that had extraordinary implications in terms of international relations and international affairs, because I don't think one can look back in the last fifty-odd years after World War II and see such an extraordinary event—I mean Suez really pales in significance to what happened here. Suez was a few weeks' affair and the Anglo-French/Israeli invasion was quickly sent packing.

Similarly, Vietnam, which was another expedition that the United States undertook, was really in support, if one looks at it legalistically, of a sovereign or semi-sovereign government. So it really does not bear comparison.

Neither do I think the expedition to countries like Grenada and various other South American countries in the postwar era compare to this, because not only was this much larger in scale and scope and involved far more resources, far more ambitions, but it was designed in parenthesis to make over the Middle East in a way that would appear to engender international stability and secure America's own interests.

This catalog, as it were, and the Iraqi opposition—and I talk about the opposition because they are the main interlocutors, or they were the main interlocutors, with the United States in this project from the Iraqi point of view, and they are the ones who were catapulted to unexpected power as a result of the invasion. If one is to be fair, it would have been improbable, if not impossible, for this collection of various groups that were in exile in the 1990s to aspire to power under their own steam. Certain parts of the Iraq opposition firmament, like the Kurds, obviously had deep roots inside the country, but the rest, either singly or collectively, would not have been able to overthrow the dictatorship.

The consequences of the U.S. invasion, I think, because of the powerful impact it had locally, domestically inside Iraq and regionally, is very much akin to revolutionary effects. It is no less different, I think, than what happened in terms of the French revolution, or even the Iranian revolution, in terms of the consequences internally and regionally.

What are the consequences of this war that we are facing now, that we are trying now to come to terms with? Each country in the region in its own particular way, looking at its own national security, looking at its own interests, sees in Iraq either a boon for its own domestic stability and power or a threat, and the degree of threat varies from tangential to mortal. I say that really without much reservation.

In certain countries, the changes in Iraq do generate a sense of existential threat. An example here is that if the Kurdish drive to a great degree of autonomy in Iraq leads to some kind of confederal arrangement, if this is not contained in a way that Turkey finds acceptable or tolerable, then it will be seen as a mortal threat to it.

If the Shia ascendancy in Iraq leads to empowerment of a sectarian elite, empowerment of a sectarian group, and increases the religious or theocratic power of the clerical groups and a determinedly Shia perspective, that is going to affect Saudi Arabia undoubtedly, and it is going to affect the whole string of countries up and down the Gulf, wherever there are Shia minorities or majorities, as the case is in Bahrain, or pluralities, as they are in Lebanon.

What happens in Iraq is also going to affect vitally the interests of countries such as Jordan. Now, one asks, "What has Jordan got to do with Iraq?" Well, Jordan's economy in the 1980s and 1990s was very much dependent on its trade with Iraq. The investment flows and the economies and the business groups involved in sanction busting, involved in cross-border trade and so on, were an important element of the Jordanian economy. If Iraq changes its trade patterns, its economic patterns, in, let's say, a northwest/southeast axis, more towards Turkey, Iran, and the Gulf countries and on to the subcontinent, that is going to affect vitally the economic well-being of Jordan, not to mention the burgeoning refugee crisis that is now camouflaged as two million Iraqis on tourist visas in Syria and in Jordan.

So the issues that arise out of the invasion of Iraq are not the ones that were narrowly determined by the U.S. administration when it decided to go to war. The war, we all know, was given its justification in terms of weapons of mass destruction and, again in parenthesis, the issue of the war on terror. But in reality the war also had other proponents. Other groups saw in it the opportunity to remake or refashion Iraq as a kind of liberal, secular, modernizing society that could be an anchor stone of an overall civilizational makeover of the Middle East—a rather foolish project if one looks seriously at it.

So all of these factors I think created, without looking at the domestic Iraqi conditions, revolutionary, or potentially revolutionary, or radical outcomes.

In terms of Iraq itself, the consequences are even more incredible, and it is incredible how little attention was paid to them. I am thinking now obviously of the rise or the empowerment of the Shia and the relative disempowerment of the Sunni Arab community.

Now, you say that the politics of Iraq were never cast in sectarian terms. On the surface this is true, but this is part of the problem also, because the surface calm that existed, that covered the deep structures, what was called the "deep state," was determinedly sectarian from the days in which the Iraqi state was established. But it was in the early days and right through the 1950s and 1960s a certain kind of sectarianism in which the Shia elite by and large acquiesced. But the bargain was that the Sunni Arab minority who achieved the commanding heights of power in the country allowed enough space for ambitious Shias to enter into that sphere. But they would not—and that was, I think, very clear—tamper with the institutions and props of Shia identity in Iraq. By that I mean the mercantile groups who were largely Shia, the clerical establishment which was the heart of Shia Islam, and all the cultural and educational institutions attached to it.

So throughout the 1930s, 1940s, and 1950s, the successors to the Sunni Arab Ottoman officer class, which actually dominated Iraq after the 1920s, were clever enough or were flexible enough to accommodate ambitious Shias, but it was understood that you stay away from things like the military, you stay away from things like the security forces, and that the state in its overall identity vis-à-vis other countries was a determinedly Arab state with a kind of allegiance to orthodox Islam or Sunni Islam. There were grumblings here and there, but it really did not affect the overall balance and throughout the 1950s and the last days of the monarchy, the situation began to ameliorate even further.

Of course, all this was put paid when the Baath came to power in 1968, because in their foolish drive to modernize—or apparently modernize—the country, they decided to destroy the props of Shia identity and other people's identities in this centralizing nationalist project that they had, and they declared war on various segments of the population under this false category of modernizing and secularizing the country.

So the first to go were the Shia Islamists. The Islamic movement had begun to burgeon in Iraq in the 1950s, mainly as a response to the increasing radicalization of youth into the communist movements and into the nationalist movements, but mainly the communist movements. And they [the Baath] began to attack business communities—large-scale expropriations, expulsions took place—and they executed a number of Shia religious figures, culminating the execution of one of the great intellectual figures of Shia Islam, Ayatollah Muhammad Baqir al-Sadr.

They also declared war on the Kurds. Between 1974 and 1975, the Kurdish movement had launched a near-successful insurrection in the north. But, again through international machinations negotiated through the offices of Henry Kissinger, the Iranian support for the Kurdish movement was withdrawn and the whole thing collapsed, leading to large-scale expulsions and a refugee crisis.

There was another twist when Saddam himself took over absolute power in 1979 and that coincided with the mortal threat that he saw from the Iranian revolution, which ended up in the Iran-Iraq war. Again, the Iraqi body politic, or social politic, was grievously disturbed by that. That was accompanied by large-scale expulsions of people on the spurious grounds that they had Persian identity or they were somehow undocumented and stateless. Something like half-a-million people were expelled from Iraq, mainly to remove what was seen to be a potential fifth column.

So the opposition abroad, which was really a smattering of individuals, grew in the 1980s, and grew in a way that its ups and downs coincided with the various movements on the battlefront. But it was foolish, because the entire world was supporting Saddam, not least the United States and the Western Alliance, including, we now know, the extent of financial support given to him by the Gulf States, something like $40 or $50 million.

But then there was another twist to it. In 1988 I remember we were voices in the wilderness. When the Iran-Iraq war ended, nobody wanted to hear about the so-called opposition. But we got a second wind after the invasion of Kuwait, and we were then eagerly sought after by various people in the state departments and the various chancelleries here and in Western Europe and wherever, to try to see how they could use these political figures in the process of containing and isolating the regime. This motley crew grew over time into some kind of formal opposition which was poised to come into the country after the fall of the regime.

So the political class that emerged to work alongside the United States in my mind is equally culpable in the deterioration and the conditions in the country after the invasion and occupation, and was really one that played a large part in pushing its personal narrow agendas against a national vision for the country.

Well, where do we stand now and where do you go from here? I mean I don't want to rehash the mistakes done by the CPA [Coalition Provisonal Authority] and the whole litany of inexplicable, incoherent, and inappropriate programs and politics. This has been covered, I think, quite a lot, and a lot of it is in the book here. Neither do I want to talk about the military flaws, the inability and unwillingness to acknowledge the existence of an insurgency, and the unwillingness to tackle it as its early stage.

Inside Iraq what happened was that the empowerment of the Shia was a necessary, as it were, concomitant to the invasion and led to an equally powerful effect, which is the rejection of that empowerment by a significant portion of the population.

It also cemented the drift of the Kurds away from the state of Iraq. The Kurds were never loyal, frankly, to the state of Iraq. They were loyal to their own territory, which happened to be inside Iraq.

The Shias used to be loyal to both the country and the state, but after the 1991 uprising and the terrible repression used to put it down—something like 300,000 people were killed in 1991—I think the Shias themselves became alienated from the traditional Iraqi state, although they kept their loyalty to the country.

So the Kurds' drive toward some form of autonomy may be leading to confederal arrangements inside Iraq, may be leading subsequently to the beginnings of a Kurdish state. They always talk about being the only large nation that does not have a state. How that is going to come about—if it comes about, who knows?

Then you have another, I think, very important consequence of the war, which many people are trying to avoid facing. That is Iran has been empowered, or its power has increased. And I don't think you can really reduce that fact, unless you are prepared to deny that the Shias in Iraq are going to somehow or another turn against or become a bulwark against Iran, which is really patent nonsense. There is no secular, liberal middle class of any consequence in Iraq. If there was one, it was destroyed by hyperinflation in the 1990s, by immigration and exile, and by the terrible sufferings of the Iraqi population under sanctions in the 1990s.

So the entire project of building, as it were, a democratic secular order in Iraq, which may have underpinned the American plan, as it were, was based on a false premise. A large number of Iraqi liberal politicians who were in exile also believed that the society of country clubs that they were used to in the more affluent parts of Baghdad, with intellectual discourse, with well-educated people who held important positions, that this was Iraq.

Iraq had really changed beyond recognition, as far as I was concerned, in many ways. I left a country with a population of ten million people; I came back to a country of 25 million people, maybe 30 million. The entire balance between urban and rural societies had changed. The cities exploded in size. Baghdad had a population of a million people sometime in 1965-1968; now it has a population of maybe 6 million, of which half live in one giant, entirely Shia, grim neighborhood called Sadr City, which was a relatively minor neighborhood in the 1960s.

We are moving, I think, into a situation where we have to recognize that the consequences of this war are immense and that the current policy of denying that these consequences are real and that they do not really affect the neighboring countries in a significant, if not existential, way has to be abandoned.

The military solution, even if it succeeds, even if the surge succeeds, is likely only to be contained within the boundaries of Baghdad and will keep the main issues still festering.

There is now a determined effort on the part of the Shia Islamist parties to control the main props of power inside the Iraqi government. Now, I am saying that as a fact, without being for or against it. The surge in many ways strengthens that trend. It strengthens the trend towards a sectarian division or crystallizing a sectarian end to the Iraq crisis.

Normally you might say, "Well, so what? I mean this country does not seem to be cohesive, is not united by language, is not united by race, it doesn't seem to be united by culture, it is not united by ethnicity, it is not even united by a community of interest. So why should this nation exist in its present form?"

Well, there are two answers to that. One is that sometimes Nature abhors a vacuum and you have to have a state there. I think it is incredibly naïve to believe that Iraq will break into three states, for the simple reason that it will not be acknowledged internationally.

I think also it is naïve to expect that an Iraqi identity and consciousness can be just wished or willed into the equation, because sectarian divisions have gone very, very far, and the Kurds, whether we like it or not, are not only alienated from the state, they are also busy preparing their own state or statelet.

I think there has to be a major rethink in not only American policy but also thinking in terms of what needs to be done by Iraqi politicians and statesmen and leaders, because if we do not refashion the politics of Iraq in the context of the changes in the patterns of power inside the country and their effect on their neighbors, then I don't think we will get a stable end-state.

That I believe can only be done by the only party, frankly, that has the resources and means to do that. This project would have sunk any other country except the United States—not because of the brilliance of its political or policy leadership, but just because it has a huge amount of resources that nobody else has. I mean, after all is said and done, the United States will probably have spent nearly a trillion dollars in this exercise. Even if they take all of Iraq's oil for the next 50 years free of charge, it would not pay what the taxpayers have paid. So I think the United States has to be involved in this U-turn, as it were.

The [U-Turn's] end-state is some kind of treaty that confirms within acceptable boundaries the changes in the patterns of power inside Iraq; recognizes, acknowledges, and accommodates within certain minimal standards of acceptability by various powers concerned, the changes that the Iraq war has had on them; some kind of congress—if this was the 19th century, we would have the Congress of Berlin or the Congress of Vienna or something like that. We need something like that. We have to think outside of the box, because if we don't, I think we will end up at best a sectarian state with a large chunk of the country in a state of, if not insurrection, deep rejection and parts of the country in an autonomous or confederal arrangement.

This may be a reasonable end-state for most Iraqis, but the neighborhood won't accept it. If we want to have some reasonable prospect for our people, then we have to acknowledge that you can't live alone in a rough neighborhood; you have to deal with your neighbors and try to take into account what their concerns are, as long as they recognize and accept and acknowledge what has happened inside the country, within limits.

Thank you.

JOANNE MYERS: I want to thank you very much. I think the size of the audience today confirms our concerns for what is happening in your country.

I would like to open the discussion up now.

Questions and AnswersQUESTION: Thank you, Mr. Minister, for an excellent set of remarks.

I would like to press you a little bit on the final part of your remarks, on where we are now and where we go. When I talk to people in the Pentagon in particular about the military aspects, they would agree with you that this cannot be solved militarily. When they talk about the ongoing efforts, their concept at least is that at the moment we are trying to offer the Iraqi government, such as it is, the opportunity to make very serious political choices and, frankly, build some institutions that can hopefully over time attract greater support by the population.

Can you talk about that a little bit? Do you see any effort at all ongoing right now for the government to address those serious problems of sharing of oil, reconciliation, de-Baathification, dealing with the militia groups; or are we really just sort of buying time for no real reason right now until we go to the next step, the next chapter, in Iraq? Thank you.

ALI ALLAWI: I would like to just make a short disclaimer. Although in the biography you have it says that I am a senior advisor to the prime minister, I am actually a sort of dormant advisor. What I am saying now and what I have said in the past is something that is entirely my own views and has nothing to do with the Iraqi government. So I will answer in that context.

The present Iraqi government is the result of a coalition-building exercise, but it is not true to call it a national unity government, in the sense that it has a common purpose and a common plan and a common set of objectives. It is basically a government dominated by the United Iraqi Alliance, or certain groups or factions within that, and that takes its ultimate sanction from the religious authorities in Najaf.

There is a plan to continue to, as I said, keep the commanding heights of the government and the state under the control of the majority party, which works against the idea of, quote/unquote, national reconciliation. Whenever the two issues have been put in conflict, the choice always goes back to accepting that they should push the limits of power of the majority group. It is not that they are negotiating in bad faith, but I think there is a different set of objectives involved here.

A case in point, for example: de-Baathification, which was seen by many people as de-Sunnification, was blamed for a great deal of the subsequent alienation of the Sunnis from the new order. The attempt to reform that and to restructure it in a less Draconian way—although I don't believe it is as Draconian as people claim—was just torpedoed recently by Ayatollah Sistani, which really proves the point I was trying to make, that there are different visions here as to what the end-state is likely to be. Unless we recognize that some of these visions are in conflict with each other and try to reconcile them, we will just end up basically spinning our wheels.

The oil law will fall or succeed inasmuch as it meets the desires of the Kurdistan regional government for control over new oilfields in its territory and for unfettered access to revenues. Now, you can say you can work around that a bit, but you can't really go away from that objective. That objective is not really a national objective; it is a regional objective. Other regions may share it, but that is another matter from saying that it is a national goal.

It is very hard to articulate, I think, a unified national vision if you have conflicting agendas within a certain government.

QUESTION: Thank you, Mr. Allawi, for a fascinating and instructive talk.

If I could just get you to go back to one of your earlier remarks, when you talked about the reactions in the broader region, or rather the immediate region, I wonder if you could parse that out a little more for us, the concerns of neighboring states. You alluded to Bahrain being a country with a Shia majority. Assuming that you see this as either a continuation of the present kind of governance in Iraq or chaos, one can understand the worries of the neighborhood.

But can you help us understand what the serious extents of the threats are? Are you worried, for example, that there could be a demonstration effect for other Shia populations? Or is it simply that, say, a country like Jordan is concerned by the mere fact that there is a majority Shia regime in a neighboring country? Because we have always been told that Iran is Iran and Iraq is Iraq and the fact that they are both Shia doesn't necessarily mean that Tehran is pulling strings in Baghdad. So are these concerns exaggerated? What are they based on? If you could just expand on that a little bit, since you alluded to it at the beginning.

ALI ALLAWI: I was introduced as a Shia politician. I am actually a sort of politician who is a Shia, so it is a little bit of a different matter.

Really the question goes to the heart of the issue, which is how do Arab Shias view themselves and how are they viewed by their co-religionists? I am afraid that so far the different perceptions lead to different outcomes.

It is true that nearly all the Shias of Iraq are Arabs—and they are not just Arabized, they are Arab tribes—so the Arab component of it is extremely powerful. But you can't divorce that from the historical fact and the legacy that the props of identity ultimately relate to the class as it were, or the group, that has preserved and protected that identity, which is seen to be the senior religious authorities. So the senior religious authorities—it is impossible to think of Shiism, I think, in its present form, without relationship to the existence of a religious authority. If you take the religious authority out of that, Shiism would probably collapse. So there is that loyalty, that other loyalty.

These multiple loyalties or multiple layers of identity are something that is intrinsic to the Shia character. You move from one to the other, but that does not necessarily mean that you choose one over the other. You flip from one to the other, depending on the circumstances and conditions.

In many ways, for example, the Shias are extremely Arab in their thinking. Let's take the issue of the Arab-Israeli conflict. It is, I think, next to impossible—and one of the silly analyses of the then-neocons—to believe that the Shias of Iraq are going to move en masse into another category. That is not true. They think like and empathize with the Arab causes, no matter what they may be.

But when it comes to Iraq and when it comes to the response of others to their empowerment, they think differently. So it is not that the Shias of Iraq are disloyal. You cannot really be disloyal to a country in which you are a majority. It doesn't make sense. Even if they choose to be disloyal, they have a right to be disloyal.

So all of these comments that are thrown out by, for example, President Mubarak, that the Shias owe their loyalty to Iran, are really ridiculous. They don't owe their loyalty to anyone as such exclusively. They owe loyalty to the state if the state treats them as first-class citizens. They owe loyalty to the religion of Islam if that is threatened or if that finds itself in confrontation with other cultures and civilizations—I hope not. They see themselves as Shias, specifically Shias, if they are challenged as Shias. So it is a complex identity.

That has not yet been resolved also by the Sunnis. The Sunni Arab—I don't call it mindset, but the historical legacy of Sunniism—is basically to deny the existence of the minority strand and deny its legitimacy. They will accept it, they will acknowledge it, as at best a form of deviation, but at worst it is an anathema. This constant sense of being somehow at odds with the majoritarian perspective causes another twist in the relationship.

The last one has to do with Iran. Now, it is probably the misfortune of the Shia Arabs that Iran is a Shia state. I think we would probably be much happier if Iran had stayed Sunni, because basically the divisions then would not be couched in power terms and would not be couched in Iranian versus Arab or Persian versus Arab terms.

But you need to have a long period, I think, whereby the threats are seen to be to some extent imaginary before you reach a new degree of acceptance. I think, for example, of the Gulf countries, where economic progress has certainly changed a great deal of the attitude of the Shias there. They are far more moderate, they are far more accommodating to changes, they are far less confrontational. And frankly, I think, if they had to choose between states that are responsive to their needs as citizens and treat them with respect, they would obviously choose loyalty to their state rather than some mythical Shia international. But this doesn't really apply to the conditions in Iraq, because in Iraq they have different formulae.

QUESTION: Thank you very much, first, for your remarks.

I wonder if you could say more about what you think the United States' policy toward Iraq ought to be. You made this very general point about the trillion dollars and the United States has to stay involved. As you obviously know, everybody here knows, there is this huge debate between the Democrats in the Congress and the president about the duration of American military remaining in Iraq, so part of your answer maybe could be about that.

But I wonder if beyond that you could say something—if you were speaking to one of these candidates who is going to become president in two years from now, what's the general thrust of what you mean by the United States staying involved in Iraq, in the future of Iraq?

ALI ALLAWI: Maybe I am being a bit idealistic or naïve—I don't know—but I don't think that the Iraq crisis and the issues relating to that aren't to be separate from the Arab-Israeli thing, that this can be handled on the basis of partisan politics here. I am looking at it from an Iraqi and an Arab and a Middle Eastern point of view.

To us, it is far better to have a bipartisan policy based upon some kind of desirable end-state that not only you agree on but also the other parties agree on. That end-state, I think, is what I was referring to.

Now, how do you get to that end-state and what are the components of that end-state, and whether this can be handled unilaterally by the United States' own relationships with specific countries and its own immense power inside Iraq, or whether you are going to walk away, leaving a few troops and bases in Kurdistan and declare victory, or whatever is the expression?

My own thinking is that there are now the possible ingredients for really a sort of Wilsonian leap, if you want to call it that, of separating the Iraq crisis from the Arab-Israeli issue. In many ways, it is a separate crisis. This leap would call for a kind of—the end-state in my mind would be a treaty arrangement which would guarantee the final political settlement in Iraq between the various groups and set limits to their ambitions, without denying the changes that have taken place, and in the process draw in all the regional countries as co-guarantors or as co-principals in this exercise.

You would then have a number of treaty-related commissions or agencies that would manage or would help to manage the process of enforcing this new balance of power, as it were, arrangement— inside the Middle East as a result of this war. I think then the withdrawal of American troops makes ample sense because it would leave behind—this sounds like a grand word—a kind of architecture of security both inside Iraq and in the region.

But people have to come to the table with their specific interests. We, as Iraqis, also need to know what the United States wants out of this country in the end. Do you want Iraq to be like a part of the military base archipelagos you have around the world? Do you want Iraq to be a liberal democracy? Do you want Iraq to be a platform to confront Iran? Do you want Iraq to be used as a goad to the other Arab countries? All of these factors have to also feature in.

QUESTION: Thank you for an enlightening discourse.

You started by talking about how the regimes in the region were afraid of the consequences of what is taking place in Iraq and you said it is an existential threat.

When you answered the earlier question—and I agree with you entirely and I don't agree with Hosni Mubarak, or for that matter the king of Jordan, that for the Shia of Iraq their loyalty is to Iran. I don't think so. I think they are Arabs.

But in your answer you said that the Gulf Shia, because of the economic status, are much more loyal to their state. Where is the threat? I know in the beginning after the invasion probably the existential threat to the regimes was not from the experiment in Iraq but from the possibility of invasions if the Americans succeeded in Iraq.

I just want to know where is exactly the threat? Is it the threat from the Americans or the threat from the experiments, because I think now they all concluded that there is no threat from the experiment in Iraq.

Thank you.

ALI ALLAWI: I think it is a very good point. But when I say "the Shias of the Gulf" I really mean Saudi Arabia. I don't mean Kuwait or even Bahrain, because in the final say Saudi Arabia is the biggest power in the area. As long as the Shia ascendancy in Iraq, if it takes that form, if it takes a consciously Shia form, if it changes the orientation of the Iraqi state, that I think would be seen as a serious threat.

Now, given the current mindset of people, if that mindset changes with time, and if they are prepared to accommodate it without necessarily undermining their own ideological foundations of this Wahhabi Islam as it were, and if they don't see that their 15 or 20 percent of their population which is in the eastern province as somehow infected by this, and therefore may make demands that are unacceptable, then yes, they should be able to accommodate them. But, unfortunately, that flexibility in thinking has not yet been seen.

I can tell you that Saudi Arabia has basically cold-shouldered the Iraqi government since April 9th. Of course, they had cold-shouldered Saddam. But they refused really to engage with this government at any serious level. Things are beginning to change now slightly, but it is a very reluctant engagement, and I think they much prefer to quarantine it and to have the minimum amount of relationships with it rather than engage with it. That is where I think the existential threat comes.

In Turkey is a different matter, and in Syria also it is a different matter.

QUESTION: Given your own background in finance and engineering, would you please comment on the role of oil in this whole story, the importance, for example, of the location of the oil deposits in the various regions, and the possibilities for Iraq to enhance its future end-state with the oil revenues?

But, in addition—and you have been at the World Bank—is the question of local entrepreneurship. You mentioned the demise of the middle class. But can you foresee a rebirth of the middle class and an opportunity for more people to enhance their own well-being so that they will be more loyal to the end-state?

ALI ALLAWI: Regarding oil, obviously oil is in many ways the only economic activity of consequence in Iraq. I mean it accounts for 90 percent of government revenues and the government accounts for 75 percent of the GNP. So you can see that without oil, Iraq would be way down in terms of the income scale, probably one of the poorest countries in the world now. So in terms of domestic revenue generation and domestic resources, there really is nothing else right now except oil, apart from aid transfers which are now dwindling.

Iraq has huge amounts of oil deposits. Just by the known fields that we have, we can increase production over the next five years to somewhere around $3-$3.5-$4 million a day, and even up to $6 million. So it is sitting on a very, very large pool of oil.

But oil is, again, part of the problem, I think. The so-called oil dividend has against it the sort of Dutch disease, where you drive every other economic activity and you have an overvalued exchange rate, which makes it difficult to diversify the economy.

But it is a resource that everybody is fighting for. Everybody wants to gain control if it. But I don't think that oil was the driver of American policy in Iraq. It may be a contributing factor, but it was not the driver, because you really can control—by "control" I mean able to influence—the direction of oil exports and prices in ways that fit your national energy strategy. That's what I mean by control. That doesn't require that you physically and militarily occupy oilfields. This is done in a thousand and one ways—through diplomacy, through pressure, through markets. So I don't subscribe to the argument that oil is what drove all of this.

But now that the dust has settled a bit on the oil sector, there is a struggle for supremacy between various countries as to which companies and which groups are going to gain the main concessions. Oil is obviously a critical issue in terms of the regional revenue generation.

Now, I think Iraqis are very entrepreneurial people. There is no doubt about that. And I don't say that so casually, but it is true. Iraq before these various socialist experiments that we had was very much an open economy, one of the most open economies before, and it was an entrepot economy. Basra was a very important port, much more so than any of the Gulf ports now. It can act as a major transshipment center to goods coming from the Far East to southeast Europe and Russia. It can be what it has always been, a kind of trade and a passageway.

But the drive has been hampered by very, very bad economic policies, starting from the 1960s, and the era of sanctions really destroyed what was left of the non-oil Iraqi economy.

The agricultural sector is doing reasonably well, now that prices have been adjusted. I think with the right economic climate, the right set of policies, we would have a very, very quick rebirth of the entrepreneurial class, which within a short period of time would be able to compete at first with regional groups and then internationally. So I am extremely optimistic about the prospects for the Iraqi economy once stability is established.

QUESTION: The world and the United States seem to agree that the war in Iraq has been a disaster. The Carnegie Council is a voice of ethics. So, ethically should the United States have left Saddam alone and done nothing, or is it possible there was a way to have handled this without war?

ALI ALLAWI: Actually, I tried to answer that in the book. I think the rules of a just war could have been applied in Iraq. If you want to speak of ethics, you can talk about Thomas Aquinas, and there is the Islamic equivalent. It is, I think, incumbent upon the international community to interfere in the affairs of so-called sovereign states if there is a certain threshold of domestic violence and oppression and also regional violence.

But these were not the arguments used. The arguments were not used that we are overthrowing a dictatorship that is tyrannical, because I think it would not have been accepted by the international community. The arguments used were weapons of mass destruction and, as an add-on, the war on terror. It was only ex post facto that democracy and tyranny and so on were brought into it.

Mmy own belief is that if the United States had gone in specifically with an ethical agenda—that is, it catalogued the crimes of the regime and catalogued the dangers to the population of Iraq of this happening—I think it would have had a different outcome. But that wasn't the case. The case was entirely different.

It is also to do not only with the failure of the United States to articulate this, but also the failure of the Arab system, and broader, the Islamic system, or whatever systems we have, that govern how you deal with countries that go beyond a certain acceptable threshold.

Now, it is not something that you can calibrate—"when does an authoritarian regime become dictatorial and when does dictatorship become totalitarian?" But I think it's like trying to describe an elephant—you know it when you see it. I think in the case of the Saddam regime it was like that.

There are others who disagree. But I think the rules of a just war could have been applied in Iraq but weren't.

JOANNE MYERS: Mr. Allawi, I thank you so much for being here and sharing your thoughts with us . Thank you all for coming.