War Economies in a Regional Context: Overcoming the ... · PDF fileWar Economies in a Regional...

War Economies in a Regional Context:Overcoming the Challenges of

Transformation

International Peace Academy

IPA Policy Report

Kaysie Studdard

MARCH 2004 ■ NEW YORK

Acknowledgements

The author wishes to thank Karen Ballentine, Heiko Nitzschke, and Clara Lee for their comments on an earlierdraft.

Table of Contents

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Introduction: Understanding Regional Conflict Complexes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Military Networks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Economic Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Political Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Social Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Creating Sustainable Peacebuilding Strategies:Lessons and Policy Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Building State Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Neutralizing Warlords and Mafiosi: An Unattainable Goal?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Delinking Conflict and Trade: Improving Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Dismantling Displacement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Creating More Effective Regulation: A Regional Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Regional Settlement for Durable Peace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Regional Development and Regional Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Contributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

About the EACW Program

WAR ECONOMIES IN A REGIONAL CONTEXT: OVERCOMING THE CHALLENGES OF TRANSFORMATION

Contents

Executive SummaryThis policy report distills key findings from researchcommissioned by the International Peace Academy’sprogram on Economic Agendas in Civil Wars (EACW)on the regional dimensions of war economies and thechallenges they pose for peacemaking andpeacebuilding.1 Drawing from analytical research aswell as case studies of Afghanistan in Central Asia,Sierra Leone in West Africa, and Bosnia andHerzegovina in Southeast Europe, a number of keyissues concerning the political economy of regionalwar economies and lessons for more effectivepeacebuilding were identified:

• The notion that internal conflicts have economic“spill over” or “spill into” effects on neighboringstates needs to be extended and deepened.Policymakers should work to develop a morecomprehensive understanding of the interstateimpacts of civil conflict that gives greater weightto systemic cross-border networks and less topotentially ‘one-off’ transborder phenomena.

• Peace processes suffer from a state-centric bias. Itis not enough to encourage the participation ofkey neighboring states in peace negotiations.R a t h e r, mediators and other representatives of theinternational community must endeavor toincorporate non-state local and regional actors,particularly participants in regional formal andinformal economies, into the peacebuildingprocess. This entails taking account of theinterests and agendas of such actors at the wartermination stage, as well as ensuring theirinclusion in subsequent aid, training, andrebuilding initiatives.

• Regional conflict complexes pose particularchallenges to the management of conflict and topost-conflict peacebuilding. Ignoring the regionaldimensions of a conflict may simply create aballoon effect, whereby corruption, instability,and conflict is displaced from one country to

another neighboring country. In developingstrategies to cope with regional conflictc o m p l e xes, policymakers should note that theinterplay of military, political, economic, andsocial networks fosters a self-reinforcing conflictdynamic that requires a multifaceted and compre-hensive approach.

• Contrary to many common perceptions, certaininformal regional economic activities that arepresently ignored or criminalized may actually bebrought into the service of peacebuilding andreconstruction. Policymakers should, at the outset,distinguish between those activities and actorswhich pose an immutable threat to peacebuildingaims and those which may actually contribute tosocial and economic stability. The latter mayinclude shadow networks capable of beingincorporated into the formal economy, naturalresource industries supported by foreign invest-ment, and also small-scale informal economicactivities and trade networks, particularly wherethese are traditional and not wholly infiltrated bycombatants.

• War economies are extremely flexible andresilient and may continue to operate after theofficial end of violent conflict. Spoilers marginal-ized by the peace process will continue to exploitweaknesses in the informal sector throughregional networks and the support of dispossessedpopulations to expand their power and challengethe authority of the post-conflict order. Theseactors require a complex policy approach, the aimof which should be to alter the social function ofthese actors with an eye to ultimately reinte-grating the resources at their control, whetherderived from natural resource exploitation or thetrade in illicit goods. Strategies may include co-opting spoilers with a view to reintegrating theminto the formal economy, criminalizing warlordsand seeking to bring them to justice, fashioningnational and regional policies of Keynesianeconomic development, or settling on a default


Executive Summary 1

1 Neil Cooper and Michael Pugh, with Jonathan Goodhand, War Economies in a Regional Context: The Challenges of Transformation(Boulder: Lynne Rienner Publishers, 2004).


policy of benign neglect where the other strate-gies may not be implemented. This set of policyoptions may be augmented by general efforts atimproving regulatory effectiveness throughregion-wide economic development programs toaddress transnational shadow networks, thecreation of regional regulation that identifiesspecific conflict commodities plaguing a region,and improving sanctions regimes, with a focus onrobust monitoring and implementation, a firmerUN Security Council commitment to reportsanctions violations, and the imposition ofsecondary sanctions.

• Security should not be seen as existing only at thelevel of the global or the national. In fact, in apost-conflict situation, marginalized populationsliving along borderlands often rely on illicitnetworks and other shadow activities for survival.In the absence of formal coping mechanisms, theseborderland regions may be seized by those who

resist peace. Unless policymakers supplementcapital-centered reconstruction policies with amore comprehensive national approach thataddresses borderland insecurity, continued insecu-rity could threaten peace.

• The set of economic policies relied upon by thedonor community and international financialinstitutions (IFI’s) do not treat war transformationas distinct from economic crises unaccompanied byviolence. To secure a lasting peace, it is necessaryto understand that policies aimed at privatization,foreign direct investment, and deregulated marke t smay have debilitating effects on peacebuilding. Thespecific needs of war-torn societies include theestablishment of a functioning state with thecapacity to control its finances, social programsand institutional decision-making, policies whichacknowledge the role that shadow economies play,and greater support for regional approaches tosecurity and development.

2 Executive Summary


Introduction: UnderstandingRegional Conflict Complexes

Research on contemporary civil war points to thesalience of economic factors in exacerbating andperpetuating conflict. While their role in the onset ofconflict is typically indirect, they can influence thec h a r a c t e r, duration, and adaptation of war inconsequential ways.2 In the post-Cold War environ-ment, decline in superpower support has fashioned theself-financing nature of today’s civil wars, withvarious actors turning to the predatory exploitation oflucrative natural resources, such as diamonds, timber,oil, and narcotics, or to the capture of illicit tradenetworks and informal economies, to support militaryobjectives. While policymakers and academic literaturerecognize the importance of economic agendas duringcivil war, considerably less attention has been given tothe regional dimensions of intra-state conflicts. Wherethe spread of conflict has transgressed from one stateto another, analysis has tended to point to the “spillover” or “spill into” phenomenon of conflict, with aone-off outpouring or inpouring of conflict-promotingactors and activities (such as cross-border raids,refugee flows, and the inflow of arms) wreaking havocon a neighboring state and threatening a region’sstability. While the “cross border contagion” of conflictimported from one state to another drastically affects aneighboring state economically, and while conflict inone state greatly increases the chance of civil war in aneighboring state, the one-off nature inherent in the“spillover phenomenon” does not adequately explainthe proliferation of regional instability.3 There is

increasing recognition that the “spill over” conceptfails to appreciate the long-standing cross-borderdimensions of internal conflict. 4

Instead, the “spread” of conflict from one state to aneighboring state can be seen as part of a systematicregional conflict complex, characterized by BarnettRubin as “transnational conflicts that form mutuallyreinforcing linkages with each other throughout aregion, making for more protracted and obduratec o n f l i c t s . ”5 The outbreak of internal conflict in onecountry can spur regional movements and contesta-tions for territory, resources, and power, sometimesresulting in the destabilization of neighboring states.A l t e r n a t i v e l y, long-standing regional rivalries centeredon power and economic control of valuable naturalresources can create grievances and politicaltransborder disputes, leading to conflict in a region. Thespread of violence from Liberia to Sierra Leone and Côted’Ivoire in West Africa is a case in point, where theperpetuation of violence and instability has beenspurred by a variety of transborder dynamics, includingthe trade in arms and the exploitation of diamonds andt i m b e r. Ad d i t i o n a l l y, in Afghanistan, it is impossible toseparate the decades of internal conflict from theregional instability that has plagued Central Asia.

A variety of regional linkages, including populationmovements, smuggling routes, transnational identitygroups, criminal rings, and political connections areoften systematic features of a conflict. These linkagesfit into the regional conflict complex through fourtypes of networks: military, economic, political andsocial. Such networks often overlap and shift as the

Introduction: Understanding Regional Conflict Complexes 3

2 For further reading on the political economy of armed conflict, see Paul Collier and Anke Hoeffler, Greed and Grievance, PolicyResearch Working Group Paper no. 2355 (Washington, DC: The World Bank); Mats Berdal and David M. Malone, eds., Greed andGrievance: Economic Agendas in Civil Wars (Boulder: Lynne Rienner Publishers, 2000); Karen Ballentine and Jake Sherman, eds., ThePolitical Economy of Armed Conflict: Beyond Greed and Grievance (Boulder: Lynne Rienner Publishers, 2003). 3 See, for example, James C. Murdoch and Todd Sandler, “Economic Growth, Civil Wars and Spatial Spillovers,” Journal of ConflictResolution 46, no.1 (2002).4 Michael E. Brown, “The Causes and Regional Dimensions of Internal Conflict,” in Michael E. Brown, ed., The InternationalDimensions of Internal Conflict (The MIT Press, 1996).5 Barnett Rubin distinguishes these regional linkages as being part of a regional conflict formation. Cooper and Pugh, with Goodhand,draw heavily from Rubin’s concept of regional conflict formations to expand on their analysis of regional conflict complexes, yetborrow the term from Wallensteen and Sollenberg. See Barnett Rubin, Andrea Armstrong, and Gloria R. Ntegeye, eds., RegionalConflict Formation in the Great Lakes Region of Africa: Structure, Dynamics and Challenges for Policy (New York: Center onInternational Cooperation, 2001); Peter Wallensteen and Margarata Sollenberg, “Armed Conflict and Regional Conflict Complexes,1989-1997,” Journal of Peace Research 35, no.5 (September 1998), pp. 621-634.


4 Introduction: Understanding Regional Conflict Complexes

nature of conflict mutates and the participants’incentive structures develop throughout the course of aconflict. Regional conflict complexes encompass awide range of actors tied together through a fluid webof alliances and enmity: rebel groups, official stateactors, and the civilian population. An exploration ofthese four networks may serve to illustrate theirdiffering impacts on civil conflict and the potentialchallenges they pose to peacebuilding.

Military Networks

The most self-evident military element of regionalconflict complexes is the invasion of states by rebelgroups that receive financial support, logistical aid,actual troops, or a base of operations fromneighboring governments. These cross-border prox yinvasions undertaken by “bad neighbors” may have avariety of motivations, including national securityconcerns, the desire to ‘tie up’ regional rivals in civilconflicts, economic motivations directed at theacquisition of natural resources or trade andsmuggling routes, retaliation, and the goal ofinstalling allies in the government of target states. InWest Africa, for example, the government of CharlesTaylor provided mercenaries, financial aid, arms, andbases to rebel groups directed at Sierra Leone in thehope of gaining control over regional economicnetworks and diamond mines, prompting thewithdrawal of Sierra Leonean troops from the TheEconomic Community of West African States( E C OWAS) Monitoring Group (ECOMOG) action inLiberia and installing his ally Foday Sankoh in power.This tactic by Charles Taylor spread to include otherstates in the regional conflict complex, resulting in theeventual involvement of Burkina Faso, Guinea, Côted’Ivoire, and Nigeria, as well as Sierra Leone itself.

Another military network that plays a major role in thetransmission and prolongation of conflict is theregionalized nature of the trade in arms. Civil wars areoften fraught with arms produced from areas outside aregion, and in particular by industrialized nations whodominate the global arms supply. Once arms make theirway into a region marked by conflict, however, theybecome an element of regional smuggling and tradenetworks characterized by flexibility and resilience.

The imposition of arms embargoes on governments orrebel groups often results in a reorientation of armsnetworks to fill the resulting demand for weaponry. Inthis situation, regional networks serve the purpose ofcreating alternative routes for weapons circulation,concealing the destination of the weapons, andshielding the supplier. Regional illicit networks, such asthe smuggling and drug rings that developed inKosovo, rewarded insurgent participation with thearms required to wage war against the Serbian author-ities. Kosovar Albanians, unable to acquire arms licitlyon the state-oriented global market, turned to long-standing networks built around the transport of heroinand the smuggling of consumer goods to develop therevenue and criminal connections they used to funnelsmall arms to the region.

Political-military alliances within regional conflictcomplexes play a significant role in structuring andmaintaining arms supplies throughout the course of aconflict. States take care to ensure that their proxieshave the capability to continue the conflict; thus armstransfers may take place directly between states andrebel groups or, alternatively, may be facilitatedthrough the provision of contacts with arms dealersand the granting of concessions in the form ofresources or plunder. In the Afghan conflict,neighboring states ensured the continued provisionand maintenance of arms supplies in the wake of thewithdrawal of superpower support. Thus, Iranian armssupplies were directed to their allies in the NorthernAlliance through other regional actors such as Turkey,Uzbekistan, and Tajikistan, while Pakistan’s strategy of‘strategic depth’ manifested itself in support for theTaliban that took the form of shipments of ammunitionand fuel as well as direct combat assistance.

Alternatively, the dynamics of a conflict in one statemay create displacement effects that extend to armssupplies throughout the region. In this sense, ineffec-tive or incomplete disarmament, demobilization, andreintegration (DDR) programs, by failing to demobilizeand destroy supplies of weapons, can leave behind alegacy of inexpensive arms. Existing regional networkscan maximize the flaws of such DDR processes,resulting in the transport of large quantities of arms toneighboring states, which may in itself contribute to


Introduction: Understanding Regional Conflict Complexes 5

the eruption of conflict. State collapse and civilconflict can contribute to the regionalized nature ofarms networks, as the breakdown of central statecontrol fosters the outpouring of arms to surroundingstates. The disintegration of the authority of the centralgovernment in Albania in the 1990s, for example,permitted the looting of thousands of weapons thatcontributed to the political economy of revolt inKosovo.

The existence of mercenary networks also contributesto the formation and entrenchment of regional conflictc o m p l e xes. In this sense, underfunded or poorlydesigned peace implementation efforts in one statemay lead to regional instability, as combatants who arenot reintegrated into formal society are enticed to joinforces in mercenary activity in neighboring states inexchange for economic reward. For instance, in WestAfrica, ex-Revolutionary United Front (RUF) fightersfrom Sierra Leone have subsequently been used asmercenaries in neighboring Guinea and Liberia.

Economic Networks

There are a number of ways in which economicnetworks can add to regional conflict complexes.Regional trade routes may be a means by whichconflict goods can escape formal sanction, enablingneighboring states to derive revenue from one state’scivil conflict and the resulting establishment of traderestrictions. For example, the imposition of sanctionson Sierra Leone, and in particular, the system ofcontrol and certification designed to stem the trade inconflict diamonds, created a space for neighboringstates to exploit the regulatory regime by acting asmiddlemen and re-exporting diamonds under theirown names. This regional network was built upon along-standing and informal system of diamondproduction and exportation in West Africa thatoriginated in the colonial period and thrived during themilitary dictatorships that preceded the civil war.Taking advantage of the central role of Lebanesediamond traders, conflict actors developed a complexsupply chain extending from the alluvial diamondfields in rebel-held Sierra Leone through intermediatecontrol by Liberians and Lebanese before eventualprocessing in such states as the Gambia and Liberia,

which both boasted significant diamond exportsdespite a lack of domestic reserves. This regionaleconomic network enabled rebel groups to derivesignificant revenues from diamond production asSierra Leonean diamonds clandestinely entered globalmarkets such as Antwerp.

Additionally, attempts to regulate commodities andconflict goods can create a “balloon effect” in a region,whereby the focus on eradicating production in onestate without simultaneous regional measures results inthe displacement of resources and goods to asurrounding state. For example, the ban on poppyproduction in Afghanistan, absent a larger, region-wide initiative, resulted in an upsurge of poppycultivation in Burma and in Northern Alliancecontrolled Afghanistan.

Economic networks can also feed into regional conflictcomplexes even if a state possesses neither valuablenatural resources nor illicit commodities, through themanipulation of tax systems and the circumvention ofregulation. For instance, while Southeast Europe hasfew primary resources, conflict actors have been quitesuccessful at generating revenue by evading formal taxcollections through smuggling a variety of goods.Taking advantage of insecure borderlands and differ-ences in adjoining regulatory regimes, smugglers havedeveloped a large land-based system of illicit truckingthat supplies Western Europe with drugs, prostitutes,and other forms of contraband. By evading sales taxand serving as a conduit for money laundering,smugglers can generate very large sums of money.Cross-border smuggling is a pervasive social andcriminal problem in the Central Asian regional conflictcomplex also, with particularly large amounts ofsmuggling occurring in the Afghan-Pakistan borderregion. The more open trade regime of Afghanistan, asopposed to the more restrictive trade regime inPakistan, has created additional incentives for illicitsmuggling and tax evasion. The pervasiveness ofsmuggling is made more acute by corruption amongcustoms officials and police, a phenomenon that maybe exacerbated by low salaries and minimal investmentin these sectors of the government. The impact ofsmuggling and tax evasion is apparent not only in thestate where criminal activity occurs. Rather, such

networks have the effect of entrenching transbordercriminal operations and depriving neighboring statesof legitimate tax revenue. The finances generatedillicitly both weaken formal state capacity and transferfinances to rebel organizations that challenge stateauthority.

Political Networks

Linkages across borders amongst political and militarygroups may contribute to the regional conflictcomplex, as individuals utilize their political associatesto engage in a variety of both licit and illicit tradedeals. In this sense the repercussions of politicalnetworks are not separate from the other networksdiscussed in this report. Rather, political allianceschannel behavior in the military, economic, and socialspheres, structuring relationships in these areas in linewith political goals and aspirations. In Afghanistan, forexample, rival factions in the civil conflict werecovertly aided by political patrons in such neighboringcountries like Pakistan and Uzbekistan; such alliancesconnected the civil strife in Afghanistan with violencein Kashmir, Chechnya, Tajikistan, and Kyrgyzstan.Pakistan lent significant support to Afghan groups,particularly the Taliban, in an attempt to redressperceived security threats from its historic antagonist,India, while curbing Pashtun nationalism thought tothreaten Pakistan’s territorial integrity.

Transnational political relationships affect the formsand motivations of shadow economic activity in thecontext of regional conflict complexes. Leaders mayprovide political associates with valuable commoditiesor smuggled goods both as a reward for loyalty and toprovide their allies with the means to advancecommonly held goals or continue military campaigns.This form of association, in turn, gives rise to asubsidiary class of economic actors dedicated to facili-tating these political exchanges. Thus, in the WestAfrican context, Taylor relied on a coterie of assortedregional actors, from the Lebanese diamond traders toa Berkinabe ‘General’ named Ibrahim Bah, to assist himin exploiting the diamond fields of Sierra Leone andproviding his RUF allies with funds and militaryequipment.

Political linkages may persist beyond war termination,distorting peacetime economic relations andsubverting the authority of the post-conflict state. Inthe Balkans, for example, relations between theCroatian military and extreme Croat nationalists basedin the Mostar region of Bosnia and Herzegovina (BiH)persisted into the post-Dayton era, undermining thecontrol of the Sarajevo government and providing thefaction with incentives to continue their resistance ofcentral authority.

Social Networks

Transnational social networks include familial, kinship,occupational, and diaspora groups. Family networks inparticular play a vital role in providing social andeconomic welfare to impoverished societies throughthe disbursement of private loans and employmentopportunities. When the state is unable to guaranteebasic livelihoods and sustenance, informal shadownetworks comprised of familial and clan systems mayfill the vacuum, directing the organization andprovision of essential goods and services. InAfghanistan, for example, with the decline in thecentral state’s ability to carry out its essentialfunctions, individuals relied upon informal andtraditional family and clan networks for support.Occupational groups may have regional systems thatbecome connected to a conflict trade. In SoutheastEurope, for example, lorry drivers have been incorpo-rated into a larger criminal network of drug smugglingand human trafficking. As these trucks crossed througha number of “tax” zones, the revenue generated wentto local militia groups. In the absence of formaleconomic opportunities, these structures create liveli-hoods and further strengthen regional shadoweconomies and the unruliness of borderlands.

Regional diaspora groups have proven to be influentialboth politically as well as through their economicsupport for home populations. They can provide safetyfor individuals by harboring or sponsoring them.Additionally, regional diaspora groups may engage inthe physical transfer of goods. Diaspora groups canalso feed into a regional conflict complex by strength-ening shadow economic activity in surrounding states


6 Introduction: Understanding Regional Conflict Complexes

and within borderland areas, especially when theseremote areas are extremely poor and lack formaloversight. When peripheries are economically margin-alized and borderlands are somewhat free fromgovernmental monitoring, diasporas may take on thecharacteristics of a quasi-state, undermining centralauthority and control. The Pashtun community inCentral Asia, for example, has extended fromAfghanistan into the border regions of We s t e r nPakistan, where it has usurped a large degree of localcontrol.

Creating Sustainable PeacebuildingStrategies: Lessons and PolicyImplications

Although research and policy have become moresensitive to the variety of ways that economic agendasmay impact war transformation, there is a lack ofunderstanding about the different functions of wareconomies and their implications of these for conflictsettlement and post-conflict reconstruction.6 A sdiscussed above, conflict economies are embedded in acomplex web of regional social, economic, political,and military networks that profoundly impact thebehavior of conflict actors. A similarly nuanced andcomplex understanding of the nature and structure ofwar economies must be developed. Often, analysistreats all economic activities associated with conflictsituations as elements of the combat economy, whichexploits natural resource wealth and illicit goods suchas drugs and small arms to sustain conflict and profitfrom war. In other words, economic activity is viewedpurely as a malignant agenda that must be rooted out.In Sierra Leone, for example, the connection betweenillicit trade in natural resources, particularly diamonds,and the criminal activities of rebel groups gave rise toan overly one-dimensional narrative that left out therole of government corruption and illicit exchangenetworks. Such a characterization of these economicrelationships overlooks important distinctions among

various economic actors. For instance, the shadoweconomy encompasses a much wider range of behavior,motivated in large part by economic opportunismfueled by conflict. These actors thrive on their abilityto operate outside the formal economy but do notnecessarily find themselves committed to thepursuance of war. Furthermore, they often play acritical role for those whose livelihoods have beendisrupted by conflict. In Afghanistan, landowners areoften considered elements of the shadow economy, asthey lease out their land for poppy cultivation andgenerate revenue from this and related transactions.Similarly, the smuggling of illicit goods via trucking inthe Balkans is a shadow economic activity thatbenefited from the collapse of state authority duringthe conflict but has continued to thrive in the post-Dayton era. The coping economy, on the other hand,consists of individuals who seek to maintain a basiclevel of economic sustenance in the absence of afunctioning state. In Afghanistan, for instance, manypeople are left with no other alternative but to turn tocoping economic mechanisms for their survival, partic-ularly growing poppies and dealing opium.

The main points of difference may have implicationsfor vital war transformation goals and strategiespertaining to reintegration, the neutralization ofpotential peace spoilers, the economic development oflicit economies, and the restoration of essential stateservices. However, this conceptualization of thepolitical economy of war based around three clear-cutcategories—combat, shadow, and coping—simplifies avery complex reality. In actuality, the economiesdescribed above are neither distinct nor whollyindependent of one another. Rather, these forms ofeconomic relationships easily coexist, and it may bevery difficult to determine where one form of economicrelationship ends and another begins. The seamlessintegration of combat, shadow, and coping economiesis exemplified by the supply chain that has beencreated around the cultivation of poppies inAfghanistan during the 1990s. As Goodhand notes,much of the poppy production was carried out by poor


Creating Sustainable Peacebuilding Strategies:Lessons and Policy Implications

7

6 Most literature relating to war economies is concerned with the inception or maintenance of conflict, rather than the effect thatwar economies may have on post-conflict transformation. Exceptions to this include Susan Woodward, “Economic Priorities for PeaceImplementation,” IPA Policy Paper Series on Peace Implementation, October 2002; and Heiko Nitzschke, “Transforming WarEconomies: Challenges for Peacemaking and Peacebuilding,” IPA Conference Report from Wilton Park, 27-29 October 2003.

farmers engaging in sharecropper agriculture as ameans of providing basic subsistence; these individualsare part of the coping economy. The landowners whoprovided the lease and the capital, in return for thelion’s share of the final agricultural product, make upthe shadow economy. The military commanders whodirected and taxed this trade, setting price levels andcapping production, are firmly planted in the combateconomy. Thus the production of a single commoditymay pass through each of the different forms ofconflict economy described above; the opium inquestion simultaneously provides basic subsistence,shadow profits, and capital for the waging of war.

In this light, there is a particular need to integrate thevarious economic dimensions of conflict in post-conflict strategies in those areas that have witnessedviolent competition over and trade in natural resourcewealth and illicit commodities. There is a generalmisconception that once a war has stopped theavaricious activities that occurred during wartime willalso cease to exist. However, networks of governmentcorruption and rebel-based illicit trade that havebecome an entrenched part of conflict rarely simplydissipate after the cessation of hostilities. On thecontrary, these shadow networks may gain strengthfrom delicate post-war conditions, where the statelacks the ability to govern its own resources and isunable to confront economic criminality. Furthermore,war-related economic activities may have filled animportant gap in providing economic and social liveli-hoods to members of the coping economy. When thestate is unable to fill these social, cultural, andeconomic roles, these patterns endure in and shapepost-conflict recovery.

This phenomenon is particularly significant in border-land regions where the influence of the state may bew e a kest. In these areas, entrenched informal networksmay provide the ideal conditions for the growth ofshadow economies and the development of spoilers.Such networks constitute semi-autonomous socialgroups with significant control over lucrativeresources and a stake in subverting the powers of thestate. To perpetuate their clout, these groups may seek

the collusion of governmental officials, particularlythose charged with combating illicit economica c t i v i t y. Although borderlands are important fornational security and territorial integrity, they arefrequently neglected by weak central governmentsand may become prey to rampant criminality and‘capture’ by shadow networks. This phenomenon iscompounded by the difficulties inherent in theadministration and policing of borderlands, whichmay be far from the state’s seat of power, occupied bypotentially hostile groups that may feel someallegiance to neighboring states, geographicallysprawling, and resistant to economic integration.Examples of borderlands that exemplify one or moreof these characteristics include the borders betweenLiberia and Sierra Leone, Afghanistan and Pa k i s t a n ,and Serbia and Albania.

U n f o r t u n a t e l y, efforts to transform post-conflictsocieties have typically ignored the regional dynamicsof war economies. To date, emphasis has been given tostate-centric policies of transformation. Developmentand reconstruction policies repeatedly underestimatethe interconnectedness of regional economic networks,which have a profound impact on the likelihood of asustainable peace. Furthermore, managing wareconomies tends to focus on control regimes.7 Cooperand Pugh, with Goodhand, elaborate on differentcontrol strategies that are currently being employed inresponse to conflict trade and war economies:governance initiatives, prophylactic controls, andcontrol-lite strategies. Governance initiatives use donorconditionality to promote peace and improve politicaland economic governance. These programs, whichfocus on economic growth through established neo-liberal formulas, have been criticized for fosteringcorruption and economic mismanagement whilefailing to address social welfare needs that are oftenthe root causes of conflict. Prophylactic control strate-gies aim at interdicting the exportation of destabilizingresources and commodities—drugs, asylum seekers, andsex workers, for example—from conflict zones todeveloped states, or “zones of peace.”8 This approachreflects the trend of liddism, whereby the advancednations of the world try to keep a lid on growing


8 Creating Sustainable Peacebuilding Strategies:Lessons and Policy Implications

7 Mark Duffield, Global Governance and the New Wars: The Merging of Development and Security (London: Zed Books, 2001). 8 M. Singer and A. Wildavsky, The Real World Order: Zones of Peace and Zones of Turmoil (Chatham, NJ: Chatham House, 1993).

insecurity without addressing root causes of dissentand without adequately taking into account the rolethat globalization may play in contributing to thenegative effects of poverty and war.9 Control-litestrategies acknowledge the role of the developed worldas both a market for and a participant in illicitnetworks. However, these are selectively targeted atrogue actors and the elaboration of minimal controlmechanisms. Furthermore, they neglect structuralelements, particularly the existence of a robust demandfor illicit goods and of global illicit trade networkscapable of transporting shadow goods and exchangingthem for arms and other resources, that can underlieboth armed conflict and the shadow economies uponwhich conflict can thrive.

The failure to take into account a regional analysis ofwar economies in post-conflict peacebuilding—including the challenges posed by porous borderregions, the vitality of economic shadow networks, andthe strong political, economic, social and militarytransnational linkages that comprise a regional conflictcomplex—may undermine the effective management ofconflict and peacebuilding. Moreover, the impositionof neoliberal models of economic reform, with theirinsistence on privatization, foreign direct investment,and deregulated markets and their neglect of statecapacity, are not designed for post-conflict settingsand may have deleterious effects for transformation.War torn societies confront the various pressures ofmultiple transitions affecting the social, political,economic, and governmental sectors. These include theshift from war to peace, from command to openeconomies, and from collapsed state authority tonascent governmental systems. Current IFI donorpolicies run counter to the needs and capacities ofweak states, in which the most urgent concern is toconsolidate power and restore essential functions andinstitutions of governmental authority. Neo-liberalpressures to institute policies of deregulation, privati-zation, and fiscal probity over institution building andsocial services may imperil effective reconstruction.Furthermore, current international strategies fail toaddress the need to transform persistent coping andshadow economies. As such, they remain vulnerable tocapture by potential peace spoilers who may use the

assets generated by illicit trade to thwart the restora-tion of legitimate authority.

Regional shadow economies have various effects uponpeacebuilding efforts, as these transnational linkagesoften existed long before the eruption of conflict andtend to be flexible and resilient both during hostilitiesand beyond the official end of violence. While actorsfrom neighboring states may be directly involved inthe economic exploitation of conflict which thrives inthe vacuum created by corruption, diminished stateauthority, and neglected, permeable border areas, notall regional activities are a threat and some may beharnessed to peace. In particular, regional illicitnetworks may provide the economic and social liveli-hoods for marginalized populations, thereby grantingsustenance for the dispossessed and a path throughbureaucratic impediment for other marginalizedgroups. These potentially benign activities includelegitimate and long-standing economic relationshipsand informal trade and production that may beintegrated into the formal economy during times ofpeace. The combination of the criminality of themafiosi and warlords together with the concrete socialand welfare benefits they may produce constitute,along with the chameleon-like nature of shadownetworks, a significant obstacle for peacebuilding.There are, however, a number of policy approaches thatmay properly integrate the regional political economyinto post-conflict reconstruction and peacebuildingand bolster peacemaking practice:

Building State Capacity

States emerging from armed conflict are faced with thedaunting task of rebuilding their social, economic, andphysical infrastructure in the aftermath of a debili-tating period of violence and civil unrest. Those statesthat do not have the human and capital resources torebuild need assistance from the internationalcommunity, with a focus on institution building andthe payment of fixed costs. The current neo-liberalconcept endorsed by IFI’s fails to see war transforma-tion as unique from economic crises unaccompaniedby physical violence. In particular, current programsplace an emphasis on achieving a minimal state, in



9

9 Paul Rogers, Losing Control: Global Security in the Twenty-First Century (London: Pluto Press, 2000).

contrast to the more robust authority over finances anddecision-making required by states in the process ofrebuilding. In some cases, pre-conflict insistence onstructural adjustment policies and a minimal state,such as in West Africa and the former Yugoslavia, havebeen listed as contributors to the eruption of violence.As such, lessons based on the sensitivities of conflict-prone and conflict-ridden societies to stringent neo-liberal policies must be reanalyzed. While privatizationis a laudable goal, without a functioning state, initia-tives designed to achieve that goal may never come tofruition.

As neo-liberal economic prescriptions combine withregional dynamics, regional conflict complexes maythreaten transformation strategies. In particular, theeconomic strictures mandated by the internationalcommunity may create an environment of weakcentral state authority and deregulation in whichregional conflict networks may thrive. Whereneighboring states are faced with asymmetricalstructural adjustment programs and different rates ofeconomic growth, such as in Afghanistan in thecontext of Central Asia, shadow networks may takeadvantage of discontent with fiscal belt-tightening andthe chaos that may attend rapid economic change tocement their control over trade networks and embedthemselves in ostensibly legitimate economic activities.Another side effect of deregulation and the devolutionof political authority is the proliferation of differentregulatory regimes, providing strong economicincentives to engage in smuggling activities. When thisis combined with longstanding criminal socialnetworks, the fragility of nascent state control, and thepotential for corruption in states just emerging frompatronage systems, the expansion of regional shadownetworks will be hard to combat. In this context, onlypolicy programs that take into account the uniquenature of borderlands and the need for comprehensiveregional measures will be successful.

Ad d i t i o n a l l y, the implementation of privatizationabsent strong domestic institutions provides warlordsand mafiosi with an opportunity to infiltrate theliberalized economy. This, in addition to providingthese unsavory individuals with an economic windfall,may enable them to supplement and expand their illicit

activities. Resulting corruption, in a vicious cycle, mayfurther ‘normalize’ the criminal. States such asAfghanistan, which continues to lack a vigorouscentral authority with a monopoly on domestic force,will have particular difficulty in combating the powerof regional warlords and the illicit networks thatsupport them.

• Reconstruction policies that do not meaningfullyaddress the role of shadow economies willundermine the state-building initiatives of thecentral authority and permit grey-market actors,who thrive in border regions outside central statecontrol, to entrench destabilizing networks of illicitflows and threaten a sustained peace. Externalactors need greater understanding of the socialfunction that shadow economies can provide forwar-torn populations and to devise strategies thatboth address the pervasive coping and informaleconomies and create a positive social function forwar profiteers through channels subscribed byformal government structures.

• IFI aid in post-conflict settings where resourceshave played a role should aim to create andstrengthen resource monitoring to assist inresource management and revenue sharing thatwill feed into the economic and social develop-ment of formal state structures.

• In increasing state capacity and creating a crediblestate to protect its citizens and provide them withcrucial social welfare systems, it is important tonot only focus on building up the capital. Indeed,as is the case today in Afghanistan, operations thatsupport state capacity will need to take intoconsideration the deleterious effects of ignoringborderlands and sub-statal areas, which often lackformal state authority, gather violent resistanceagainst central state control, and serve as a conduitfor illicit trade networks.

Neutralizing Warlords and Mafiosi:An Unattainable Goal?

To reduce dependence on illicit economic activities,policy strategies seem fairly straightforward: offer



alternative incentives to dispossessed populations whoare part of the criminalized networks out of necessity.For those who lead the illicit activities, however,responses are thornier. In war transformation contexts,marginalizing warlords and mafiosi is not the onlyoption. C o - o p t a t i o n may occur through offeringincentives to warlords to invest in formal state activi-ties. Yet, co-optation obliges concessions with and thelegitimation of warlords, meaning that peace maycome at the price of just and accountable governance.The ramifications of adopting Keynesian policies ofeconomic development, another alternative, may bepositive in the long term because of the debilitatingrole that such actors serve for those who are impover-ished. However, such an approach is unlikely toaddress the immediate challenges of post-conflictreconstruction. While criminal policing w i t h o u tbroader incentives to attract involvement in the formaleconomy may result in further adaptation anddisplacement of the shadow economy, f u n c t i o n a lneglect, with regard to Afghanistan and the rampantand unchecked warlordism throughout the country,may undercut efforts to secure the rule of law. As inother policy areas, state authorities and the interna-tional community ignore regional dynamics at theirown peril; regional criminal networks and transbordermafioso alliances threaten the ability of any singlestate, working alone, to effectively combat criminalentrepreneurs. Examples of this phenomenon includethe participation of Italian and Albanian mafiosi in theBalkans, the participation of Lebanese and Ukrainiandiamond and arms dealers in the West African conflictcomplex, and the control of Pakistani criminal gangs,frequently based in Karachi, in the Afghan conflict.

• One of the difficulties in transformation will be toalter the social function that the shadow economyprovides to large sectors of the coping population;although warlords and mafiosi are corrupt,predatory, and manipulative, they also tend toreward those involved with patronage, clientalism,and employment. Neutralizing peace spoilers willbe especially difficult in the absence of anaccountable government with the ability to controlits resource revenues. The success or failure of eachof these approaches will depend on complementarysocial, political, and economic reform undertaken

at the national, regional, and global levels and willneed to take into consideration the individualpolitical contexts.

• Regional and international criminal elements,many of which may be more resistant than localactors to policies of cooptation, criminal policing,and function neglect, may require a differentapproach. Collaboration at the level of local,regional, and international organizations may beone effective way to combat interstate criminalalliance networks. States may work through bothregional security organizations, such as ECOWASand the North Atlantic Treaty Organization(NATO), and general regional organizations like theAfrican Union (AU) or the Mano River Union, toachieve coordination in tracking down the headsof criminal organizations and monitoring theactivities of transnational networks. On theinternational level, states may work with suchorganizations as Interpol and other specializedagencies to combat these actors.

Delinking Conflict and Trade: Improving Sanctions

In taking the violence and criminalization out ofeconomic activity, transformation strategies will needto reconsider current approaches aimed at regulatingcommodity flows. The UN Security Council is increas-ingly using sanctions as a tool for conflict resolutionby curtailing resource flows to combatants, as with thesanctions imposed on the RUF, Liberia and UNITA. Yetcommodity sanctions rarely affect those enmeshed inthe actual conflict. Rather, sanctions seem to hithardest throughout the coping economy and oftenresult in the targeting of individuals who are unable tooppose such restrictions. Additionally, rather thanacting as a lever to bring a conflict to a close or at leastto disconnect the resource from the violence, theregulatory regime, in the absence of broader systems ofeconomic and social support for the state and arecognition of the role that neighboring states mayplay in maintaining the conflict trade, may deepen theforce and criminalization of the shadow economy. Theconsequence should not be surprising, given thatsanctions routinely suffer from ineffective ornonexistent monitoring and implementation measures.



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Furthermore, sanctions busting and the displacementof conflict goods to surrounding states seriouslychallenges effective sanctions. The regional impacts ofsanctions regimes, such as the displacement effects andshadow economy dynamics discussed above, should betaken into account during each stage of the sanctionsprocess, including design, implementation, andwinding-down. One example of an attempt on the partof the international community to integrate regionalconcerns into a sanctions regime is the conflict-diamond certification system developed in the wake ofthe civil conflicts in West Africa. To supplement thecertification regime developed for Sierra Leone, the UNalso imposed a ban on the export of diamonds fromLiberia and Guinea introduced its own certificatesystem, with Côte d’Ivoire expressing interest in asimilar arrangement. In addition, the internationalcommunity introduced a global certification schemefor rough diamonds as of January 2003.

Yet, these measures cannot be regarded as a completesuccess. Ironically, this system as currently constituted,combined with both a lack of enforcement by theinternational community and a shift in the fightingfrom Sierra Leone to Liberia and Côte d’Ivoire, mayhave created perverse incentives, with many reports ofdiamond smugglers rerouting their activities backthrough Sierra Leone, where they circumvent thecertificate scheme at its place of origin. Similarly,although Liberia has been subject to an arms embargosince 1992, the daunting prevalence of small arms inWest Africa and inadequate measures to combatsanctions-busters permitted Charles Taylor toeffectively rearm despite the ban. In this sense,sanctions will continue to prove insufficient in haltingviolence if global demands for resources and the globaltrade in arms are not factored into the equation.

• As sanctions usually lack robust monitoring andimplementation approaches, a “Brahimi Condition”system, whereby certain conditions must be arequisite to the introduction of sanctions as well asa condition of their continued usage, could beintroduced. In particular, the introduction ofsanctions on conflict goods should also be

conditional upon a feasibility study on theeffectiveness and the believed future impact ofsanctions on the population as well as onneighboring states.

• The UN Security Council should include in themandates of its peacekeeping and observermissions a requirement to report sanctionsviolations for such actions10, and greater effortshould be made to impose secondary sanctions orsubstantial fines on those who attempt to evadesanctions. Furthermore, in light of the regionalaspects that underpin conflicts, the imposition ofsanctions on one state should take into considera-tion the impact that it may have for its surroundingneighbors, with a possible precondition of confer-ring necessary compensation. Implementationmeasures should also take into account regionaldynamics and capacities. Concrete measures in linewith this principle may include the development ofa regional monitoring capacity—through fundingfor training and infrastructure such as radar—andregional cooperation in the capture and prosecutionof sanctions-busters.

• In the case of conflict-specific conflict commodi-ties, global certification and sanctions regimes maynot be sufficient. Global measures are inherentlydiffuse and general, whereas regional regimes maybe more specifically tailored to local conditions,actors, and resources. For example, a regionaldiamond certification regime and timber regime inWest Africa, and a regional arms control regime inCentral Asia and Southeast Europe could allinclude specific measures aimed at preventingevasion by known regional individuals and groups.

Dismantling Displacement

Peacebuilding is currently restricted to a state’sphysical boundaries. As has been identified, shadownetworks tend to exploit regional ties that mayundermine strategies aimed at war transformation andmay imperil a delicate peace. In West Africa, forexample, a state-centric DDR policy has spurred the



10 The Stockholm Process on smart sanctions has identified the need to include in the mandates of UN peacekeeping missions amechanism to report sanctions violations. See http://www.smartsanctions.se/

regional movement of mercenaries and has exploitedregional arms smuggling networks, displacinginstability to neighboring states. Furthermore, informaleconomic networks are adept at finding methods tomanipulate taxes and evade customs duties andpolicing across borders. Punitive regulation often failsto root out illicit economic activities. Instead, thedisplacement of illicit economic enterprises is directedto surrounding territories.

The regional dimensions of economic channels are notonly well entrenched, they are also very malleable. Assuch, regulating conflict trade or enforcing customsand policing controls can lead to displacementthroughout the region. In Afghanistan, for example, aban on poppy production by the Taliban resulted in anexponential increase in opium production in Burmaand in Northern Alliance controlled regions, placeswhere the drug was not previously found to runrampant. While regulation may generate displacement,the pervasiveness of shadow economic channels canalso give rise to displacement of conflict goods.

• In devising war transformation strategies, moreattention needs to be paid to the displacementeffects brought forth in part by a state’s economicreconstruction, its move to a formal economy, andthe imposition of regulation. IFIs in particular needto adopt regional initiatives that take into consid-eration the impact of differential tax and regula-tory practices on one state for neighboring statesthroughout the region.

• One approach to tackling the pervasive issue ofdisplacement is to introduce regional regulatoryframeworks simultaneous to national and interna-tional regulation efforts. For example, creating aregional regulation of diamonds in West Africamay deter the displacement of conflict goods fromone state to another, addressing more completelythe shadow trade networks that contribute toconflict, and paving the way for enhanced cooper-ation among neighbors in the region.

• Creating regional regulatory regimes must also becoupled with a greater understanding of the waythat illicit resource production traverses from one

state to another. In regions where drug cultivationis rife, simply banning the drug is not enough.Alternative livelihood systems will need to becreated both within the state as well as withinaffected neighboring states and borderlandregions, where, if left unaddressed, cultivation willspread.

Creating More Effective Regulation:A Regional Approach

In war transformation, shadow economies, which oftenexisted before the outbreak of conflict and have provento be extremely resilient in a post-conflict context,have their own variants of transnationalism to defendand maintain. Strong regional organizations may, inthis context, provide a secure framework for thedevelopment of peace. Not only would regional regula-tion properly address specific security issues afflictingthe region, it may also serve as an alternative tocurrent trade controls, which are, at best, marginallysuccessful. At worst, international agendas tend to bevoluntary in nature, diminutive in effectivelycombating the profusion of conflict goods, and neglectthe potentially harmful affects incurred by local wareconomies by global aid, trade, and investment. Itwould be undesirable to think of regional approachesto peacebuilding as a panacea; indeed, regional initia-tives may not always be possible. A regional approachpresupposes strong connections that extend beyondnational boundaries, yet fails to address to some degreethe impact that globalized economic structures have onnon-state entities. Furthermore, regional attempts atdevising peace may be required to deal with thedemands of a regional hegemon, such as with Nigeriain West Africa. Nonetheless, developing or rediscov-ering links with regional neighbors to protect andassert control over economic exchange, production,terms of trade, employment, and social welfare has thepotential to change the current dynamics of transfor-mation for the better and offers states plagued byconflict an alternative to the narrow options currentlypresented to them by outside world.

• In order to generate more sustained peacebuildingresults, the creation of regional organizationscould address the particular problems plaguing a



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region, such as by creating regional regulatoryregimes based around arms transfers, the prolifer-ation of mercenaries, and conflict goods, all issuesthat perpetuate shadow trade. In the case of drugcultivation, approaches may include addressing thecross-border environment through bilateralcooperation on poverty eradication, alternativelivelihood development, and socio-economicintegration of neighboring communities in borderareas. In areas rife with small arms and conflict,regionally based DDR policies may prevent thedisplacement of weapons and preclude combat in aneighboring state.

• Regional NGO monitoring groups with a mandateto track conflict goods and illicit resourcesthroughout the region should be established towork in concert with existing global monitoringNGOS. The regional approach would invite greatertransparency on the issues, ensure similarobjectives at the regional and global level, andprovide the wider NGO monitoring communitywith a greater understanding of the forces at playin the region.

Regional Settlement for Durable Peace

Peace processes suffer from a state-centric bias. Forexample, although there has been recognition thatAfghanistan’s peripheries are in need of dedicatedeconomic attention, although the Stability Pact forSouth Eastern Europe has been in place since 1999,and although some conflict trade controls have aregional dimension in West Africa, there are still nocomprehensive policy approaches to the transforma-tion of regional conflict complexes that will reducetheir potential for future conflict. The ‘spill over’ and‘spill into’ effects of regional networks are not one-time or solitary occurrences but rather individualmanifestations of a pervasive and interconnectedsystem. To date, however, the characteristics andnature of regional complexes have not played a centralrole in conflict analysis, peacemaking, andpeacebuilding. A comprehensive approach to wartransformation, in this sense, must take care not todismiss regional war economies as a monolithic set ofillicit undesirables. The malleability, resourcefulness,and deep-seated survival instincts of these tenacious

actors are demonstrated in Sierra Leone and Bosniaand Herzegovina.

• Developing war transformation strategies andpeace agreement instruments designed to addressthe range of actors involved in regional networksis critically important. While it may be the casethat regional actors—with competing interests—create further dissension on how to properly securea sustainable peace, the incorporation of regionalactors and local participants in settlements couldalso generate responses tailored to the region’sspecific conditions.

• A process that acknowledges the interconnected-ness of conflicts from a regional perspective shouldbe incorporated into region-wide peace talks. Theprocess could include synchronizing domestic andregion-wide initiatives aimed at conflict goodssuch as diamonds and timber, arms control,agreements on the cessation of specific conflicts,and the way in which national and regionaleconomic systems can be better placed within thewider global systems of trade. One approach totake note of is the New Partnership for AfricanDevelopment (NEPAD), which utilizes economicplatforms such as debt cancellation, aid packages,and greater market access of specific goods as anincentive to bring about greater reforms related topolitical and economic governance.

• Regional economic programs specifically includedin peace agreements would help to simultaneouslybuild up and protect small national markets andweak institutions, and tackle chronic poverty andunemployment by combining national resources sothat the region would not find itself so reliant uponexternal aid.

Regional Development and Regional Protection

A regional approach to economic development throughtrade and infrastructure should be explored, as it maycreate legitimate and beneficial alternatives to regionalshadow networks that are undermining successfulpeace and development. Furthermore, a regionalstrategy of economic development may improveregulation of transnational trade, combat the chaos of



borderlands, and promote regional developmentthrough enhanced investment in regional infrastruc-ture. Where region-wide initiatives exist, they usuallyfocus on suppositions of macroeconomic stability. Inmost fragile, post-conflict economies, this approach iscounterproductive. Selected regional protection may bebetter suited to prevent spiraling back into the abyss.

• A focus on regional development and protec-tionism may act as a shield against neo-liberalpolicies that have a tendency to result inreductions in purchasing power, a decrease informal employment opportunities, a rise in shadoweconomic activities, and the stifling of economicproduction. For example, diamond-polishingcenters could be established in West Africa, whereprofits could be generated back into the regioninstead of sending the rough diamonds outside theregion for polishing. The regional focus could have

beneficial effects on borderland areas, which couldbecome places of interest for governments throughofficial industry sites located in greater proximityto neighboring markets.

• Already-established regional frameworks, such asECOWAS and the South Eastern Europe StabilityPact, could erect common customs policies as away of sheltering their economies from outsidepressures that may be particularly damaging tocountries just out of war. This approach could aimto do away with import duties between membersbut could maintain common tariffs (to begradually lowered) to protect their nascent orailing industries, create intra-regional specializa-tion of certain products, bolster production bymaking use of currently underemployed resources,and increase the bargaining power of theseeconomies in the global market.



15

War Economies in a Regional Context:The Challenges of Transformation

Neil Cooper and Michael Pugh, with Jonathan Goodhand

Lynne Rienner Publishers, 2004

A Project of the International Peace Academy

Contributors

Neil Cooper is a Principal Lecturer in International Relations at the University of Plymouth and member of thePlymouth International Studies Centre. He has written extensively on the arms trade and post-conflict demilita-rization and has acted as a consultant to the Geneva-based Small Arms Survey. He has also published extensivelyon the dynamics and control of the trade in conflict goods.

Michael Pugh is the Director of the Plymouth International Studies Centre, University of Plymouth, and editor ofthe Cass book series on Peacekeeping and of the quarterly journal, International Peacekeeping. He has publishedarticles on peacekeeping and humanitarianism and is editor of Regeneration of War-torn Societies (Macmillan,2000). From 2000-2003, he was a member of the Core Group of the International Peace Academy’s Program onthe UN and Regional Organizations.

Jonathan Goodhand is a Lecturer in Development Practice, Department of Development Studies, School of Orientaland African Studies, University of London. He has undertaken extensive research on Afghanistan with a partic-ular focus on the opium economy in the northeast. Previously he was Research Coordinator, University ofManchester, United Kingdom, where he conducted a major research project on the role of humanitarian agenciesworking in areas of protracted conflict. He has served as a consultant for number of agencies and institutes andhas written widely on complex emergencies, donor policy, conflict prevention, and role of NGOs.


16 Contributors

About the EACW Program

Senior Associate: Karen Ballentine [email protected] Program Officer: Heiko Nitzschke [email protected] Officer: Kaysie Studdard [email protected]: September 2000-December 2003

Initiated in September 2000, the EACW program follows from a conference held in London in 1999, which produced theseminal volume, Greed and Grievance: Economic Agendas in Civil Wars, Mats Berdal and David M. Malone (eds.) (LynneRienner, 2000). The program addresses the critical issue of how the economic agendas of armed factions sustain violentconflict and inhibit durable peace, while also assessing the role of globalization in creating new opportunities for combat-ants to finance their military operations. This hitherto under-developed field of research holds particular promise of policyrelevance for those international and national actors seeking more effective strategies for both conflict prevention andconflict termination.

Beginning with an overall commitment to durable conflict resolution, the broad aims of the program are:

• to improve understanding of the political economy of civil wars through a focused analysis of the economic behaviorsof competing factions, their followers, and external economic actors in conflict zones;

• to examine how globalization shapes the economic interests of belligerents as well as creates new opportunities forcompeting factions to pursue their economic agendas through trade, investment and migration ties, both legal andillegal, to neighboring states and to more distant, industrialized economies; and

• to evaluate the effectiveness of existing and emerging policy responses used by external actors, including govern-ments, international organizations, private sector actors, and NGOs, to shift the economic agendas of belligerents fromwar towards peace and to promote greater economic accountability in conflict zones.

Policy research and development proceed along two tracks: four expert working groups (Advisory Group, Working Group onEconomic Behavior of Actors in Conflict Zones, Private Sector Working Group, and Policies and Practices Working Group)and commissioned research. EACW publications (all at Lynne Rienner Publishers) include: The Political Economy of ArmedConflict: Beyond Greed and Grievance, Karen Ballentine and Jake Sherman (eds.) 2003; War Economies in a RegionalContext: The Challenge of Transformation, Michael Pugh and Neil Cooper, with Jonathan Goodhand, forthcoming; and TheDemocratic Republic of Congo: Economic Dimensions of War and Peace, Karen Ballentine and Michael Nest (eds.)forthcoming. A volume of analytic studies assessing policy responses to the economic dimensions of armed conflict will bepublished in Spring 2004. Other products include periodic meeting reports, policy briefs and background papers, which areavailable electronically on our website.

Policy development also involves on-going consultations with international experts and practitioners, academic confer-ences, and workshops and briefings that bring together relevant UN actors, governments, private sector actors, and NGOs.As part of a continuous outreach effort, the program has engaged in several partnerships, including with the Fafo Instituteof Applied Social Science (Oslo); the Institute for Security Studies (Pretoria); the Woodrow Wilson International Center forScholars (Washington, DC); the International Institute for Strategic Studies (London) and the World Bank’s DevelopmentResearch Group (Washington, DC). We have also built a virtual network of experts and policy practitioners through sponsor-ship of an electronic list-serve, [email protected].

Acknowledgements:The EACW program enjoys the generous support of a number of donor states and private foundations, including: theCanadian Department of Foreign Affairs and International Trade (DFAIT), the Canadian International Development Agency(CIDA), the Department for International Development (DFID) of the United Kingdom, the International DevelopmentResearch Centre (IDRC) of Canada, The Government of Norway, the Government of Switzerland, the Government of Sweden,the Rockefeller Foundation, and the United Nations Foundation.

More information on program events and all of the program reports are available on the program website athttp://www.ipacademy.org

International Peace Academy777 United Nations PlazaNew York, NY 10017-3521Tel: (212) 687-4300Fax: (212) 983-8246www.ipacademy.org

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