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1. Immediately end all the special contracts, and bring in the UN to facilitate the rebuilding effort. UN team should be primarily a disperser of funds to local enterprises, thus drawing on the vast amount of technical expertise that exists in Iraq and significantly lowering unemployment in the process. This would undoubtedly go a long way toward reducing violence in the region.
2. Abolish the Coalition Governing Authority and place governance under an international/UN mandate. Empower local citizens' councils in neighborhoods and small towns to take over as many services as possible, with the primary support being to "pick them up when they fall down", thus encouraging the Iraqis, on a local level, to take a personal investment in the running of their own daily affairs. These councils sprung up in the aftermath of the invasion in many areas of Iraq, but were largely ignored because the represented true self-governance rather than vestiges of a puppet state. They are a tremendous untapped resource.
3. VASTLY reduce the military presence in the region. Cease all plans for permanent military bases. Bring in a small, international peacekeeping force that specializes in constabulary duties (among US units, only MP's would really qualify for this). Command of this force would rest with the UN governing authority, and timetable for withdrawl should be relatively short, resting on the establishment of local policing units tied in with citizens' councils.
4. On the regional level, the UN should be employed to get leaders from different regions talking to each other. Concentrating on improvements being made and areas of converging interest should be emphasized to them, in an effort to establish some kind of coalition. MAKE them sit down and talk to each other, with direct investment being tied to refrains from violence. If the leaders of different sects are talking to each other, chances are they won't be killing one another. And if they find areas of converging interest, in which they all benefit from working together, chances are they will not kill each other in the future.
Anyway, that's the first four points of my plan. I realize the likelihood of such a plan (based on altruistic realism rather than self-interest) being implemented is virtually nil, but it doesn't hurt to hash these ideas out so that when we protest against an ongoing military occupation and are asked, "Well, what would YOU do?" -- we have a thought-out answer to give in reply.
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