The arguments being made for or against increasing the U.S. troops in Iraq have left out the essential details of what exactly they are supposed to do, what the new strategy consists of. Strangely, even the U.S. administration has been silent on its new strategy.

The U.S. chiefs have finally stumbled into the right strategy for establishing security in Iraq. The new plan includes creating gated communities in Baghdad. This is how the market has been establishing local security world wide. In South Africa, where violent crime has risen to an extreme height, people with the means to do so have responded by creating walled neighborhoods. There is one entrance, with a guarded gate. Visitors are required to provide identification.

In South African cities, wealthy and middle-class neighborhoods are protected by a high wall, topped with electrified fencing. A second layer of security is provided by the household, with bars on the windows, strong locks on the doors, and alarms connected to private security companies which provide armed response. One cannot obtain insurance unless one has such protective devices.

Governments world-wide have failed to provide what is supposed to be the prime reason for the state, protection from violence. Markets world-wide have responded to the demand for security with gated communities. Conventional economic theory says that security is a public good which markets will underprovide, which makes it necessary for government to provide with taxes. But the reality is the opposite: the prevalence of violent crime is evidence of government failure, while markets can and do fill the gap.

The new strategic plan for Baghdad is for the residents of neighborhoods to work with the Iraqi and U.S. military to create secure gated communities. The first step is to clear the neighborhood of violent rebels and terrorists. The plan can only work if everybody who lives in the neighborhood seeks security and wants to be at peace with their neighbors.

The concept of creating islands of security is nothing new. The U.S. military tried to do this in Vietnam with “strategic hamlets,” but the plan failed because they were not able to eliminate the Viet Cong members within the villages. If a neighborhood in Baghdad contains militia who seek to kill their neighbors, then this location would not be eligible to become a gated community.

The second step is to secure the perimeter of the neighborhood. At first, the area will require troops to guard the paths into the place. For permanent security, the residents and troops need to build a wall around the community, with one guarded entrance gate. Building a wall would provide a splendid opportunity for employment.

Third, the residents should be armed and trained to become a defensive militia. Every person in the gated community would need to have an identity card. The neighborhood should be small enough so that the people can get to know one another. There has to be continuous surveillance of the streets, which also provides employment. Eventually, the residents would take over their own security. They would have cell phones so that they could call for help if there is an invasion.

Once the neighborhood is secure, schools and businesses would be established in the community. In South Africa, I visited a gated community in which it was previously unsafe for children to be outside, but now, with gated security, children could play without fear. So too in Baghdad, schools should be set up within the community so that children may safely be educated. Grocery stores, restaurants, gasoline stations, and other small businesses would be established to serve the neighborhood so that for daily goods, one would not need to go outside the gate. The U.S. military should also provide a generator for the neighborhood so that it can supply its own electricity, so it can be as self-sufficient as possible.

With a population of six million, even with a troop surge, only parts of Baghdad can become secure with gated communities. So this would be a gradual process, where islands of security are established one by one, starting with those neighborhoods most amenable to the plan. As more neighborhoods become secure, there would be an exponential increase in commerce.

It is widely acknowledged that the solution to the violence in Iraq has to be political as well as military. As I have argued previously, the best political solution is to base political power in villages and city neighborhoods. The gated communities need to have their own empowered local governance. For that, the community needs its own public revenue. The plan proposes an equitable distribution of the oil profits. The money should go directly to the residents. The gated community would then collect ground rent from every plot of land within the neighborhood, just as private gated communities are financed from the assessments on the real estate owned by the members.

Like in South Africa, the residents of gated communities in Baghdad need to have additional security at the household level, each house and place of business having alarms, a secure entrance, and barred windows. Each family would have a telephone and be able to call for help. Each family should also be armed and trained to defend itself. But visitors to the community would be disarmed.

Clearing the neighborhood of terrorists and violent rebels would require cooperation between the U.S. and Iraqi military and governments. This is a weak link in the plan, because if U.S. troops capture a terrorist and the Iraqi government then claims he is not a danger and lets him go, and he then commits violence within the neighborhood, the plan will fail. Unfortunately, some Iraqi officials and officers are allied with violent militia, so the security plan would need to let U.S. forces make the decision on whether to detain or expel suspected violent rebels and terrorists. U.S. forces have to take the lead at first and operate in both Sunni and Shiite neighborhoods, so that both groups feel that this plan is in their interest.

Americans opposed to the increase in troops and who advocate withdrawal from Iraq may not know that the plan is to create secure enclaves in Baghdad. Past failure does not imply future failure if there is a new plan that has worked elsewhere. The public debate on Iraq should now focus on the alternatives of withdrawal versus establishing gated communities. In my judgment, the social and political costs of withdrawal at present could be catastrophic, much greater than the costs of creating gated communities. It seems to me that there is now a sensible plan, finally, that can work if done right, and a chance to salvage the mess created by past incompetence and misjudgment.