Trading on Iraqi Constitutional Change


Intrade, the Ireland based electronic exchange for politics, current events, financial indicators, weather and other unique contracts, just opened a market on the new Iraqi constitution.

A press release from Intrade notes:

traders are betting the constitution will pass when it comes to a vote on October 15th. began trading contracts tied to the ratification of the Iraq Constitution with a rush of volume, mostly on the upside. Traders on correctly predicted the outcome of the US general election in 2004, Tony Blair's re-election and Cardinal Ratszinger's appointment to the papacy are also betting on ratification.

"The probability of a YES Vote is now about 55%, with all the rhetoric on rejecting this referendum and the history of correctly predicting political election results, I wouldn't take the other side of this trade", said Mike Knesevitch, Director of Communications at Intrade.

In other trading on the "War on Terror," the price for a contract betting that Osama bin Laden will be captured by the end of this year has fallen from $30 in May to only $12 now.

NEXT: Regulators! Mount Up!

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  1. As I’ve noted before, it’s a low bar. The document only needs 34% of Sunnis in one Sunni province to pass.

  2. No, according to the Times of London

    “The constitution will fall if two-thirds of the electorate in three or more provinces reject it, even if a clear overall majority favours the text. The Sunni population is large enough in four of these provinces to represent a credible threat to the constitution.”

  3. That’s the same thing I just said, mostly.

    The Sunnis control 3 provinces (the fourth isn’t really that credible). The referendum only needs 34% in any one of the three to pass.

  4. Of course, I’m assuming it passes in all the other non-Sunni-dominated provinces. But that seems a foregone conclusion, at least at the moment.

  5. TallDave: So where’s your money then? 🙂

  6. I’m actually hoping it fails. I think it would be better if new elections were held.

    Iraq has changed immmensely in the last year. I think secularists would do much better, and of course including Sunnis would give the constitution more legitimacy.

  7. That’s an odd mix of grim and compelling analysis, TallDave.

  8. The Sunnis fucking suck. It’s time someone said it.

  9. Well, it’s an odd situation, I guess.

    For instance, a Sunni defeat of the referendum is widely regarded as a defeat for Iraqi democracy. But think about that: we’re talking about a defeat at the ballot box. That is Iraqi democracy. And what better way to prove to Sunnis the democratic process can work for them?

  10. “For instance, a Sunni defeat of the referendum is widely regarded as a defeat for Iraqi democracy.”

    There isn’t going to be any more democracy in Iraq than there already is. Voting for the referendum is a vote to split up the country along the lines they’ve negotiated, not to form a unified democracy. The only people who think that this referendum, this constitution, is going to form a unified, democratic state are the people who support the Bush Administration. …the Bush Administration itself, surely, knows the truth.

    There isn’t going to be a democracy–at least not in the sense that we use the term–not in the Shiite dominated portion of what Iraq used to be. Sadr’s candidates aren’t going to bow their heads and join the loyal opposition if they lose an election. The Sadr Brigade isn’t going to disarm and disband in favor of some state police force.

    Sistani isn’t going to take orders from a new government. The leaders of Kurdistan aren’t going to take orders from a Shiite dominated central government either. They’ve gotten together and agreed on how to split oil revenue, how to secede and, hopefully, how to split territory.

    The existence of this bet suggests the depth of the American disconnect on this. People think that if the referendum is approved, it means that there’s going to be a unified democracy in Iraq–it doesn’t. The constitution is the terms of dissolution, nothing more.

  11. Ken-you said something similar on another thread, and I was curious then, too. Why do you say that the constitution is “terms of dissolution”?

  12. Ken Shultz: Interesting – giving high amounts of regional/provincial autonomy is the country’s “terms of dissolution, nothing more”. Funnily enough, the federal government is given more power s than the American constitution gives their federal government initially.

    So many years, why hasn’t the United States dissolved?

    Besides, it would be interesting to see how the Kurds maintain a single region; afterall, in much of their decade and a half history of autonomy, it was divided in two… If they can’t maintain a single region, how are they going to seceed?

  13. TallDave: Not only do I agree, but I think that it might be better for Iraqi democracy if the Constitution is defeated. That way, new elections will be held–and this time the Sunnis won’t make the mistake of boycotting them. If on the other hand the Constitution barely passes because of solid support form Shi’ites and Kurds (in only one of the four Sunni-majority provinces do the Sunnis have the necessary two-thirds majority to defeat it by themselves–and by law it needs to be defeated by 2/3 in three provinces to fail) the Sunnis might conclude that under democratic politics they are a permanent and isolated minority, and many more of them might support the insurgency than now do.

  14. Ken-

    I’m curious: Do you think they’ll still remain technically part of some Iraqi Confederation with a token but powerless central government?

    Although such a Confederation would be largely symbolic, something that’s just short of outright Kurdish independence would be enough to forestall a Turkish (and probably Iranian) intervention after the US leaves. And in a Confederation the Kurds and Shia Arabs could, when convenient, treat the “Sunni problem” as either an internal matter or a border issue: An internal matter when the international community starts poking its nose into humanitarian complaints, and a border issue when they want to say “We’re at war here!” when they want to take the gloves off.

    (Come to think of it, the hawks refer to terrorism suspects as criminals when they want to argue that certain treaties don’t apply. But when somebody starts talking about due process and judicial processes, suddenly “we’re at war here!”)

    Also, the Kurds and Shia might find it useful to control the vestigial central government in a coalition, and when necessary use that central government to confer some legitimacy on whatever policies they deem necessary to deal with the Sunni Problem.

    And, although I doubt that this is their primary concern, a few leaders might be looking farther ahead and thinking that it would be nice to have an arrangement to ease trade between the 3 regions.

    Anyway, I have no doubt that within a few years there will be 3 essentially independent states in what is now Iraq. The only question is whether they’ll maintain the legal pretense of a single country.

  15. (Article (114):

    1st — This constitution, when implemented, shall endorse the region of Kurdistan and its existing power as a federal region.

    2nd — This constitution shall endorse the new regions that will be established according to the provisions of the constitution.

    Article (115): The Council of Representatives shall pass a law that fixes the executive procedures relating to establishing regions by simple majority in a period that does not exceed six months from the date of the first session.

    Article (116): Every province or more has the right to establish a region based on a request for a referendum to be submitted in one of the following ways:

    1st — A request from one-third of the members in each of the provincial councils in the provinces that wish to establish a region.

    2nd — A request from one-tenth of the voters in each of the provinces that wish to establish a region.

    Article (117):

    The region writes a constitution for itself, defines the structure of the region’s powers and its authorities as well as the mechanism of using these powers in a way that does not run contrary to the constitution.)

    Article (118):

    1st — The governments of regions have the right to practice legislative, executive and judicial powers according to this constitution, except in what is listed as exclusive powers of the federal authorities.

    2nd — The regional authority has the right to amend the implementation of the federal law in the region in the case of a contradiction between the federal and regional laws in matters that do not pertain to the exclusive powers of the federal authorities.

    3rd — A fair share of the revenues collected federally is designated to regions, in a way that suffices their duties and (responsibilities), taking into consideration the (region’s) resources, needs and (the percentage of the population in it.)

    4th — Offices for regions and provinces are to be established in embassies and diplomatic missions to follow up on cultural, social and local development affairs.

    5th — The regional government shall be in charge of all that’s required for administering the region, especially establishing and regulating internal security forces for the region such as police, security and guards for the region.

    —-Text of the Draft Iraqi Constitution

  16. “I’m curious: Do you think they’ll still remain technically part of some Iraqi Confederation with a token but powerless central government?”

    I suspect we’ll see something like the Articles of Confederation–except instead of 13 players, there will only be two. …Two, who represent some 80% of the population and only have to cooperate on a few things.

    …I think the Sunnis may be right about this constitution. I think they’re gonna get left out in the cold. …and if the real power is in the regional governments, out in the cold means a place in the federal government.

  17. Ken-

    So, your prediction is 2 regions rather than 3?

    Do you see the Shias including the Sunnis in their region, where the Sunnis will be a distinct minority subject to Shia rule? Or do you see the Shias forming a Shia-only region, and leaving the Sunnis subject to the federal government rather than enjoying their own regional self-rule?

  18. The Sunnis fucking suck. It’s time someone said it.

    I’d say the Shi’ites suck more. But then I’m not a fan of theocracy.

    Strangely enough, I actually find myself agreeing with TallDave. Passing this constitution would just be slapping a band-aid on a nicked artery. Worse, it would cover over disputes both within and between the various factions, allowing issues which could possibly be resolved at this point a chance to fester and grow to a point where civil war would be inevitable. I don’t hold out much hope even if new elections are held, but a fighting chance is better than no chance at all.

  19. It’s been evident for a while now that on a collective basis, the Kurds, though not entirely noble in their behavior, are the only major ethnic/religious grouping in Iraq worthy of much sympathy. Too bad that they want as little to do with the rest of the country as possible.

    Is it me, or is this whole constitutional charade starting to feel a bit like Versailles?

  20. Ironic you should say that Eric, since the whole matter began at Versailles when the Brits took Iraq as spoils. Now, we’re fighting to protect the Brits and their decisions. Nothing ever ends, I guess.

  21. Good posts, Ken – they must be, since I agree with almost everything in them. 🙂

    Funnily enough, the federal government is given more power s than the American constitution gives their federal government initially.

    Big deal – everyone in Iraq knows that the “Federal Government” is loaded with Shia and Kurd supporters, plus it has almost no coercive powers to speak of – it can’t even protect its own soldiers and policemen from being killed at will by insurgents. As Ken’s citations from the draft constitution make clear, all the real power lies in the regions.

    So many years, why hasn’t the United States dissolved?

    It almost did, remember? Cost us 4 years of war and 620,000 dead to preserve it, and frankly, we had more reasons to stay united than the Iraqis do.

    Besides, it would be interesting to see how the Kurds maintain a single region; afterall, in much of their decade and a half history of autonomy, it was divided in two… If they can’t maintain a single region, how are they going to seceed?

    They already have seceeded, in all but name, and are busily expelling non-Kurds from Kirkuk and other strategic areas in Kurdistan. Believe me, any differences between the two major Kurdish groups are vastly overshadowed by the utter lack of common interests they share with either Sunni or Sh’ia Arabs.

  22. I don’t have a crystal ball, but given the regionalism and the fact that oil production is concentrated in the North and the South, I don’t see any political reason for the Sunni insurgents to ease up on the attacks. …the attacks on Shiites, that is. It’s all they’ve got to bargain with.

    Eventually, the Shiite leadership will retaliate. Once they do, well, that’s what we’re talking about when we talk about a civil war, isn’t it? I don’t think Sunni insurgents can win that war, but I’m not sure they can lose it either. The Shiite leadership could enlist the help of both the Kurds and the Iranians and Fallujah the rest of the Sunni Triangle–would that kill the insurgency? …Maybe, but probably not.

    So, how does the insurgency end? The way they all do–when it becomes more expensive than valuable for the insurgency’s leadership to fight. Before the Shiite leadership decides to retaliate in a big way, perhaps they’ll consider cutting Sunni leaders some kind of a deal. I certainly hope they do.

    …but, honestly, I can’t picture Sistani or Sadr forces compromising with Sunni leaders on questions of security, foreign policy or oil revenue on a permanent basis. …and when I hear the Bush Administration say that’s what’s going to happen, I find it insulting to my intelligence. …and when I see that Kurdistan’s exit–for want of a better term–is a foregone conclusion written into the very text of the constitution… …and that the Shiites insisted on giving themselves the same out at the expense of Sunni support for the document…

    I expect the Shiite leadership to form a region of their own as soon as they possibly can, and I expect them to defend themselves when they’re attacked. If in that defense, they occupy Sunni territory… …It’s hard to imagine Sunnis having any kind of real government of their own under those circumstances, isn’t it? I imagine that scenario as looking something like the Gaza Strip and the West Bank prior to the Palestinian Authority. That would be a disaster for everyone.

    …So I guess that makes two and a half states?

    I sure hope the Shia leadership gets the Sunnis on board, but, right now, it doesn’t look good.

  23. Raise your star and crescent high
    Let your burqa pat your shoulders
    Life could be so sweet
    On the Sunni Side of the street.

    Seriously, there are cases of countries surviving a long time with divisions this bad. Canada Switzerland, and Belgium. Austria-Hungary managed to last quite a while, too. There are plenty of examples of divided countries which have succeeded as well as more who have failed.

    If Iraq split into three countries, each would be a minor player in the Middle East. If they stay together, they can be a major player. I’m not optimistic, after Czechoslovakia split up for a lot less reason, but I wouldn’t give up on the possibility of an acceptable compromise.

  24. Ken,

    Thanks for the link.

    Sounds like a disaster waiting to happen, look at all the central economic planning they want to do. That’s probably not why the Sunnis don’t agree with it, but it’s telling that you don’t hear anything from the Bush administration about how Marxist the whole thing sounds.

  25. Ken, you’re way way off. Their will be a national legislature, and Iraq will be quite democratic under the new constitution.

    You clearly haven’t been folloing the news. Sistani isn’t going to take orders from the new gov’t? Sistani, the guy who agitated for elections, whose whole philosphy demands a secular gov’t, who said his name can’t be used for electioneering by any party, and who opposes federalism saying Shiites “should embrace their Sunni brothers”? That Sistani?

    I agree al-Sadr is a problem, but his following is not that great and his military potential is nearly nil.

  26. Sorry Ken, you’re way off. The constitution creates a federal democracy. There will be a national legislature, and perhaps some regional legislatures. We have those too. There will be free elections, free press, freedom to protest… all the hallmarks of democracy. And if the Shia women don’t like sharia… guess what, they can vote for people who are against it!

    Sistani isn’t going to take orders from a new government.

    That assertion makes me think you haven’t been following the news. Sistani, the guy who demanded elections, whose whole philosophy says clerics should stay out of gov’t, who demanded all political perties stop using his name, who this week said he opposes federalism and that Shia should “stick by their Sunni brothers”? That Sistani?

    It’s amusing how hysterical people here are about “theocracy.” The chances of Iraq looking even remotely like a theocracy are practically zero. It’s amazing to me that anyone takes it seriously. Even the head Shia clerics don’t want a theocracy. In fact, as far I can tell, no one in Iraq is seriously suggesting rule by unelected clerics.

    The ?Iraqi theocracy? meme seems to be the 2005 edition of the 2004 ?elections will never happen? meme advanced by Chomsky and others.

  27. Oops double post. Sorry, the first one didn’t show up for a while.

  28. Meanwhile, lots more good news from Iraq (with dozens of links) perhaps summed up best by Maj. Joe Leahy:

    “We all know it’s a dangerous place. But the thing that I want people to understand is that they only see those one or two instances in the country that are negative. You don’t really hear about the 100 things that have gone good,”
    says Maj Leahy. “One thing we’ve got to understand is that it’s not going to happen tomorrow, but we are doing something that’s getting better everyday.”

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