With further respect to joint economic institutions and their effect on mutual restraint and security, there are a number of opportunities for growth. There exist no unifying economic institutions in Iraq, although the Organization of Petroleum Exporting Countries (OPEC) and the Gulf Cooperation Council (GCC) have attempted to fill some unifying role focused primarily on social and economic cooperation—product-oriented trade blocs. However, OPEC and GCC have not contributed to internal stability within its member states. The Victory in Iraq document continually identifies national institutions as a critical component of stability and the model suggests that these institutions are necessary to complete the transformation to postwar order. These types of national institutions lower the returns to power that often follow periods of instability. The establishment of a NAFTA-type arrangement between the United States, Iraq, and other regional players that the United States hopes to engage directly could provide a stimulus for further institutionalization. Foreign policy decision-making by the United States must envision the long-term economic growth potential in Iraq if the United States intends to lead the way forward in the Middle East. Economic leadership is no longer optional; it is required.

On Security

Shifting focus to security, it must be noted that there is no regional model for shared security. That Middle Eastern nations are concerned about security is certainly no surprise. The CIA reports that expenditures on military growth in Middle Eastern nations has increased dramatically in the past few years, particularly as a percentage of gross domestic product (GDP), but none of those funds are being channeled into a common security apparatus. In sharp contrast, the gross combined military expenditures for the NATO members are in excess of US$850 billion and offer a markedly different level of stability between its member states. Significant financial commitments to NATO help to induce shared values in the institution and a desire for institutional endurance. Conflicts like the Iran-Iraq war and the Iraqi invasion of Kuwait might be avoided if a regional body for mutual security is institutionalized in the Middle East and significant investment of member nations – like that of NATO – may offer a stabilizing effect throughout the region. Additionally, a NATO-type organization—with the United States in a significant leadership role—that builds mutual accountability for shared security concerns in the region would not only create a more stable Middle East but also may produce a tranquilizing effect on nations like Russia and China. Direct relationships between US national security institutions and Iraqi institutions appear very appropriate and would directly address the administration’s goal to “build Iraqi Security Forces and the capacity of local institutions to deliver services, advance the rule of law, and nurture civil society."

Expanding Liberal Democracies

Finally, transformation in Iraq cannot be complete without a strategic push for democratic institutionalization. Liberal democratic governments are rare in the Middle East. Israel and Egypt are the only democratic-style governments within the Greater Middle East and none of the Gulf Coast states are democracies. To reach the level of stability implied in the institutional model, democratic reform must be continually pursued as a top priority for the long-term. The expansion of free-market economic trade between the United States, Iraq, and its regional neighbors is one particular area of untapped potential. Michael Mandelbaum recently published the following ideas in Foreign Affairs, “If popular sovereignty is relatively easy to establish, the other component of democracy, liberty, is far more difficult to secure. This accounts for…the continuing difficulties in establishing it in the twenty-first [century]. Putting the principle of liberty into practice requires institutions….Operating such institutions requires skills, some of them highly specialized. And the relevant institutions must be firmly anchored in values: people must believe in the importance of protecting these zones of social and civic life from state interference....The key to establishing a working democracy, and in particular the institutions of liberty, has been the free-market economy."

The continued emphasis on formulating institutions that stimulate democratic values such as liberty, personal ownership, and mutual restraint is a critical component of a stable Middle East as well a necessary tool in the continuing war on terror. US leadership in Iraq must be clearly focused on supporting the institutional model's modicum of high returns to institutions. Ikenberry suggests, “When political orders are organized in ways that constrain the ability of one actor or group to dominate or to wield power arbitrarily or indiscriminately, other actors and groups are more likely to abide by rules and outcomes that the political order generates at the moment." Krauthammer has framed this concept well in stating, “Established civilized, decent, nonbelligerent, pro-Western polities in…Iraq and ultimately [its] key neighbors would, like the flipping of Germany and Japan in the 1940s, change the strategic balance…."

Clearly, the institutional model provides tremendous insight and resource for continued strategic formulation and resolution to postwar Iraq. If the institutional model is applied effectively among the United States, Iraq, and regional partners, long-term peace and stability are much more likely to be achieved. Global and regional power restraint, shared commitment to binding institutions in economics and security, and shared values of democracy and liberty are necessary components of a winning strategy in Iraq and the Middle East.