Taking a leaf out of ICANN's book
This shambles seems to repeat itself all around the world; ICANN are even worse when it comes to board accountability, and here in Oz we're about to be hit with the same ccTLD direct registration money grab for .au.
As soon as the artificial scarcity of domain names was created, its administration should have been handed to disinterested professionals, such as trademark or business name registrars in each country. The USA's ending up with the non ccTLDs should have been corrected once the Internet went global.
I wonder how much of the fear created around formal government adminstration of the DNS (e.g. via the ITU) is actually legitimate and how much is FUD. Governments can still isolate or seize IT systems in their respective countries, regardless of domains.