Transformation of war economies

A regional approach

Since the mid-1990s, academics and policy-makers have increasingly focused on the way that economic factors have influenced the inception and perpetuation of civil conflicts. The most obvious example is the way the trade in diamonds has fuelled conflict in African countries. However, in the new political economy literature (with the exception of Barnett Rubin) the regional dimensions of local conflicts have generally been poorly articulated.


Regional conflict formations

It may therefore be useful to consider what Barnett Rubin(1) has termed a ‘regional conflict formation’ – transnational conflicts that form mutually reinforcing linkages with each other throughout a region, often making for more protracted and obdurate conflicts. A case in point is the interlocking conflict in West Africa where war has moved from Liberia to Sierra Leone, and then back into Liberia and on to Côte d’Ivoire, all the while fuelled by the same inter-connecting dynamics of poverty, resource predation, mercenaries and arms proliferation.

Regional conflict formations are characterized by four types of network: economic, military, political, and social. All these have varied characteristics but some examples should suffice to illustrate some of the ways in which these different dimensions influence civil conflict, and in particular, its economic dimensions.

Economic networks. Extensive regional trading networks are drawn upon to facilitate the export of resources from a conflict area and the import of arms into it. For instance, both Rwanda and Uganda have established regional trading networks to support their resource predation in the conflict in the DRC. Following their involvement in the conflict in the DRC diamond exports from both Rwanda and Uganda(2) increased massively (by 150% and 500% respectively). The regional nature of such networks gives them a greater ability for flexible adaptation in the face of external attempts to prevent such trade. For example, when the Taliban banned drug production in Afghanistan, it increased in Northern Alliance areas. Similarly, military action against the drug trade in Colombia displaced drug cultivation to Ecuador and Peru, risking exporting the conflict too. Further, borderland areas in the peripheries of states can become sites of conflict rather than cooperation when adjacent territories undergo rapid, but differential, impoverishment, as a consequence of structural adjustment programmes, for example.

Military networks. Localised conflicts are typically supplied with arms that originate from outside the region. However, regional arms networks are also important particularly when direct supplies from producers to belligerents is problematic, e. g. in case of an arms embargo. In such cases, indirect supply through neighbours has obvious advantages – it offers deniability to the supplier. Moreover, small arms and light weapons may well be circulated around the region moving from conflict to conflict as one ends and another begins. Similar dynamics are also at work with respect to regionally-based mercenaries. A peace can release former combatants available for hire – particularly when peace is accompanied by a flawed demobilization and reintegration processes. This has occurred most notably in West Africa, where ex-RUF combatants from Sierra Leone have been hired to fight in conflicts in Liberia and Guinea.

Political networks. Formal military alliances between governments and political leaders in neighbouring states can both reflect and reinforce regional economic links that aid the prosecution of conflict and/or adaptive resistance to frameworks of peace settlements. For instance, the political alliance between the late DRC leader, Laurent Kabila, and Zimbabwean President Robert Mugabe during the civil war in the DRC was underpinned through a variety of “legal” and “illicit” commercial deals. Similarly UNITA in Angola reinforced regional alliances with the payment of diamonds to leaders in Togo and Burkina Faso as well as to Mobuto in what was then Zaire.

Social networks. The social networks that underpin regional conflicts are defined by occupational, familial, and diaspora affiliations that transcend national borders. For instance, in both South-east Europe and Central Asia, lorry drivers were key participants in conflict trade. A hub for drug and people trafficking in Plovdiv, Bulgaria, was found in 1999 to be controlled by an Albanian godfather from Kosovo, whose trucking network extended from Italy to Albania and throughout former Yugoslavia. Regional diasporas can also perform important functions in regional conflicts – the provision of sanctuary, the physical movement of goods, and the maintenance of shadow economies in neighbouring countries. This is particularly true where borderlands are economically marginalized and poorly monitored by weak central state authorities.


Peacebuilding and strategies of transformation

Regionalised shadow economies bequeath a mixed legacy for peacebuilding. On the one hand they are arenas for entrepreneurial elites to exploit the comparative advantages that arise from the mix of corruption, weak governance and porous borders that characterise war economies. On the other hand, they also serve broad welfare needs. For instance, they can enable people to survive in dire economic circumstances, or provide short-cuts through bureaucracy. This duality of predatory and warlord/mafia activity that also provides functional benefits, together with the adaptability of shadow networks that survive into peace, represents a particular challenge for peacebuilders. However, various approaches might be adopted that address the regional political economy of conflict more effectively.(3)

Neutralizing warlords and mafiosi. There is no simple solution to the issue of mafia and warlord networks. Some might be coopted into the political economy of transformation by incentives to invest in state authorized enterprise. Others suspected of war crimes may need to be brought to justice. The adoption by states of Keynesian welfare provision might be a way of undermining the functional role of such networks in situations of dire poverty. All of these strategies are problematic. For instance, cooption may involve legitimation and compromise with war criminals. As demonstrated by the case of Foday Sankoh in Sierra Leone this does not always work. Judgements about appropriate strategies will depend largely on the political context, and a judicious mix of approaches may be necessary.

Improving sanctions. Sanctions on weapons or conflict goods (such as diamonds or coltan) are unlikely to prevent illicit trade in the absence of broader frameworks of economic and social support. Shadow trading networks are remarkably able to adapt the new geographies of regulation created by sanctions. Furthermore, the current application of sanctions tends not to target actors engaged in conflict per se, but rather those with insufficient diplomatic, economic or strategic weight to effectively oppose restrictions. Even where sanctions are introduced, the arrangements for implementation and monitoring are generally inadequate.

Despite these flaws various reforms can improve the operation of the current sanctions system. There is a need for a Brahimi-condition. The Brahimi report(4) on UN peacekeeping argued that missions should not be authorised by the Security Council until the UN had received sufficient funding and troop commitments from states. A similar condition should be met prior to the UN (and other bodies) introducing sanctions and as a condition of their continued maintenance. Sanctions on conflict goods should be conditional upon a feasibility study covering the likely effect of sanctions as well as the measures needed. The Stockholm Process(5) on ‘smart sanctions’ has also recommended that the mandates of UN missions include a requirement to report sanctions violations. The feasibility study should also be tasked with considering the economic impact of sanctions on neighbouring states. Where the economic impact is substantial, a precondition for sanctions should be the provision of compensation. Thus, rigorous application will be encouraged. Sanctions should also include a requirement for regular assessments of implementation. Finally, consideration could be given to either imposing secondary sanctions or a substantial financial penalty in cases of complicity in violations of sanctions by other actors.

Avoiding displacement. Currently the mental map of external peacebuilders stops at a state’s borders. Yet informal economic networks exploit differentials in tax rates, currency convertibility, customs duties, and policing across borders. Disciplinary regulation whether through the market or the law often has the effect of shifting shadow economic activities into neighbouring territories. By tackling controls at the regional, as well as the global and national levels, a holistic approach to regulation is possible, and evasion and adaptation through relocation becomes more difficult for the entrepreneurs of shadow trade.

More stringent regulation at regional level. The current focus on national and global regulation of the trade in arms, mercenaries and conflict goods neglects the opportunity to deepen the conflict goods control regime. Regional organizations and initiatives could do this on the basis of closer economic relations within regions. Regions that suffer from specific problems (such as mercenaries) may be willing to introduce more stringent control initiatives than exist at the global level. Current agendas for controlling the trade in conflict goods, such as conflict diamonds, tend to be tokenistic, voluntary and nominal. Moreover, existing regulation is also asymmetrical, concentrating on the curbing of war economies locally, while overlooking their symbiotic relationship with global aid, trade, and investment. There is thus a need for a deeper, broader and more stringent approach to the trade in conflict goods.

Institution-building. States that lack the capacity to engage in economic intervention need assistance, primarily in institution-building and meeting the recurring costs until revenue systems are adequate. The neoliberal concept of the minimal state needs to be reviewed because it has not had the predicted effect effect on economic growth (in Bosnia e. g.), but allows borderlands and shadow economies to resist central authority. Social networks that flourish in ‘shadow economies’ are unlikely to be broken without the provision of ‘pump priming’ growth and employment creation to substitute for mafia welfare. This will entail state intervention, economic protection of the poor and high-level economic planning. That this is technically and politically feasible in post-war contexts has been demonstrated e. g. by reconstruction after the Second World War.

Regional Settlements for Durable Peace. Peace agreements tend to be reached separately and successively despite the existence of regional conflict complexes. Given the multiple political, economic, military and social dynamics that underpin such complexes, and given the tendency of both shadow networks and conflict itself to simply migrate to neighbouring states in response to international action, it may be more appropriate to seek regional rather than national settlements for durable peace. Although difficult to achieve because of the multiplicity of actors, holistic efforts could achieve more effective transformations. Such settlements would clearly include aspects of the recommendations noted above and allow local actors to develop initiatives that are responsive to particular conditions in each region. For example, the specific challenges of transformation in borderlands may require the development of innovative approaches that take into account local economic, cultural, and political factors.

Regional Development. There is a need for policy commitments to the development of region-wide trade and infrastructure cooperation, to create better alternatives to regional shadow networks that undermine peace and development. Without a regional approach to economic exchange, the unruliness of borderlands is likely to continue and national control solutions likely to be fruitless.

Regional Protection. Existing region-wide initiatives are usually based on assumptions about macroeconomic stability and opening up markets for foreign investment. For the majority of the population in fragile post-conflict economies, this is like rubbing salt into war wounds. Regionalism should be considered as a mechanism to protect these economies from current policies that have the effect of reducing purchasing power, increasing unemployment, and limiting production – at least until they show signs of sustainability. Regional frameworks, such as the South-east Europe Stability Pact and the Economic Community of West African States, could pursue economic integration on the basis of protection behind common customs policies. They would invert Western strategies (that aim to stop refugees and illicit goods coming to the West) by adopting strategies to stop neoliberal economics further debilitating post-conflict economies.


Conclusion

This is not to claim that regionalism would be a panacea. There are limits, perhaps also disadvantages, to regional initiatives. For example, regionally dominant states, such as Nigeria in West Africa, may develop hegemonic ambitions that skew regional development to their own advantage. However, regional-level initiatives offer an opportunity for local actors to construct alternative representations of the political economy of conflict and to develop novel regulatory mechanisms to address such issues. In this sense they have an unrealized potential to develop far more radical and more transformational approaches to the economics of violence.

1) Barnett R. Rubin: Regional Approaches to Conflict Management in Africa. Talk to meeting for the UN Security Council. 8. 8. 2001. www.cic.nyu.edu/conflict
2) UN Report … on the Illegal Exploitation of Natural Resources … of the D. R. Congo. S/2001/357, 2001, p. 21, 25
3) Michael Pugh, Neil Cooper: War Economies in a Regional Context. Boulder, Lynne Rienner Publishers, 2003 (forthcoming)
4) Report of the Panel on the UN Peace Operations. UN Doc. A/55/305-S/2000/809, August 21, 2000
5) Peter Wallensteen et al. (eds.): Making Targeted Sanctions Effective. Uppsala University, 2003, p. 28, see: www.smartsanctions.se