When civil society is undeveloped, and when the state is too weak and poor to treat all citizens equally, democratisation may stir up rather than alleviate ethnic conflicts. Iraq had both of these disadvantages when it gained independence in 1932, and its political history since then has been characterised by increasing fragmentation and conflict along ethnic lines. There are institutional designs that may help in a democratic Iraq to prevent escalation of these conflicts: an electoral system that favours vote pooling across ethnic lines; federalism on a non-ethnic basis with a strong component of fiscal decentralisation; a strong regime of minority rights; and a judiciary apparatus capable of enforcing the rule of law. The UN is better suited than a US administration to provide outside support for the process of institutional transformation.