Proposal For 'Iraqi People's Freedom Trust' - A Public Fund From Oil

excellent article

...There is, in fact, a war-winning weapon close to hand that the Allawi government could use – with support from allies and from both Democrats and Republicans. This weapon could, at a stroke, put flesh on the bones of formal democracy, change the dynamic of the insurgency, begin to win the confidence of the Iraqi people and create a powerful, growing force for stability, national unity and economic development. The weapon, of course, is oil -- and the huge flows of cash it generates.

The way to deploy it is straightforward. Iraq’s new government should simply announce that as of a date certain, it will establish a new national investment fund – call it The Iraqi People's Freedom Trust – which will be credited with a major share of all future Iraqi oil earnings. A popular real world model might be the Alaska Permanent Fund, which grants a share of that state’s oil revenues to every citizen. Revenues directed to Iraq’s Freedom Trust could be invested in Iraqi government bonds, keeping a small cash reserve to provide for cash withdrawals from the Trust by individual Iraqis.

All 27 million Iraqis – men, women and children – would be eligible for an equal, personal account in the Freedom Trust simply by proving Iraqi birth and pledging their allegiance to the government. With assistance from coalition allies, registration for ownership shares in the trust could go hand in hand with registering citizens for the upcoming national elections. Any adult citizen of Iraq would then be free, at any time, to ask for a calculation of their account’s value and withdraw up to their full balance – no questions asked.
...
Offering all Iraqis an equal, permanent – and possibly rising – future income stream would rapidly move resources out to remote regions and jump-start broad-based entrepreneurship and local development more efficiently than any centralized aid scheme. Instead of having to wait for political officials and aid workers to design, approve and deliver on projects, poor and rural Iraqis who have never seen a dime’s worth of their nation’s oil wealth would have a strong incentive to come to town, register for accounts in the Trust and claim a share of their own nation’s wealth.

Word of the first cash redemptions from the Trust would spread like wildfire, build its credibility and create a strong, growing interest among all ethnic and confessional groups and tribes in ensuring their nation's future stability.

Not a bad idea. I do have some worries, however, that many people will still be too cautious to give government their money, and make instant withdrawls. Additionally, I fear the possibility of a market crash in which everyone tries to withdrawl their money, when much of it may be invested in businesses or unavailable for a short period of time (banks or government offices could simply run out of cash, because they rarely keep all assets nearby). If Iraq somehow managed to pay for all the withdrawls quickly, there would be a huge inflation problem. Plus, it would be a giant bank account that a corrupt leader could pillage.
But, I think some dividends from the fund would help encourage people to keep money in it. Also, a way for government to slightly modify interest rates would help the government to control inflation and encourage or discourage personal savings (depending on what would help the market more in the long term).