If There Was Ever a Case for Oil2Cash, It’s Post-Qaddafi Libya

The idea of cash transfers—or just giving money to the poor—is gaining ground quickly. The use of conditional cash transfers as a way to assist the poor have shown pretty impressive results in Mexico and Brazil, leading to lots of other copycat programs in dozens of countries. Iran, and now India, are replacing inefficient and costly subsidies of basic goods with cash payments.Our Oil2Cash initiative has been exploring whether cash transfers might be a good way to prevent the more harmful effects of the resource curse. We have been looking at several countries (Ghana and Iraq are here, and more country cases on the way). My colleague Arvind Subramanian argues now might be the time for this approach in the Middle East too. But of all the countries I have looked at, the case seems more obviously to apply in Libya. Here’s my Foreign Policy piece today on post-Libya Qaddafi that makes that case:

The cash-transfer model involves a leap of faith: the bet that people know better than bureaucrats how to use their money. This has made direct payments politically attractive to both the populist left and the libertarian right. What better way to push "power to the people" than to give them the money that was the source of elite dominance and corruption in the first place?