Iraq needs money to rebuild infrastructure, security, etc. But
a. can not afford to borrow that much
b. as an Islamic nation, the borrowing may be problematic on religious grounds
So, why not sell non-voting equity? Make the payoff some function of future GDP (or even include some lower payoff if violence is high). Then sell these claims and allow them to trade in secondary markets around the world.
- It gives Iraq the financing it needs.
- Avoids debt.
- Allows those who want to pay to pay (indeed it could be seen as partially a charitable thing to do--similar to buying "war bonds" during WW II), and
- spreads the financing across multiple nations and thus may create better incentives (since shareholders might not want to do anything to hurt their investment. (A side note, we might not want to allow short-selling ;) ).
I vaguely remember something similar being tried in France in the 1700s?. Google to the rescue: here is a paper on it. While it did not work, I see no reason why it can't work.