Program on Economic Agendas in Civil Wars: Principal ... · 4 Stephen J. Stedman, Donald Rothchild, and Elizabeth M. Cousens, eds., Ending Civil Wars: The Implementation of Peace

Program onEconomic Agendas in Civil Wars:

Principal Research Findingsand Policy Recommendations

International Peace Academy

Final Report

Karen Ballentine

APRIL 2004 ■ NEW YORK

Acknowledgements

The Economic Agendas in Civil Wars program enjoyed the generous support of a number of donor states andprivate foundations, including: the Canadian Department of Foreign Affairs and International Trade (DFAIT), theCanadian International Development Agency (CIDA), the Department for International Development (DfID) of theUnited Kingdom, the International Development Research Centre (IDRC) of Canada, the Government of Norway,the Government of Switzerland, the Government of Sweden, the Rockefeller Foundation, and the United NationsFoundation.

Table of Contents

I. Scope and Objectives of the Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1. Understanding the Political Economy of Armed Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. War Economies in a Regional Context. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23. Transforming War Economies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24. Improving Global Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

II. Principal Research Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

1. Greed and Grievance: Economic Agendas and Armed Intra-State Conflict . . . . . . . . . . . . . . . . 3i) The Limited Utility of the “Greed versus Grievance” Construct

in Explaining Conflict Onset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3ii) Economic Agendas are Consequential to the Character and

Duration of Civil War and Complicate Efforts at Conflict Resolution . . . . . . . . . . . . . . . . . 4Implications for Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2. The Regional Economic Dimensions of Armed Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Implications for Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

3. Transforming War Economies: The Challenges for Peacemaking and Peacebuilding . . . . . . . . . 7Implications for Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

4. Globalization and the Role of International Private Sector Actors in Conflict Zones . . . . . . . . 8

III. The Challenges for Global Regulatory Policies and Conflict Management. . . . . . . . . . . . . . . . . 10

IV. Promising Regulatory Initiatives and Recommendations for Policy Action . . . . . . . . . . . . . . . . 11

1. Curtailing the Conflict Trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11i) Targeted UN Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11ii) Naming and Shaming: the Role of Independent Panels of Experts . . . . . . . . . . . . . . . . . . 12

Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13iii) Commodity Certification: Lessons of the Kimberly Process . . . . . . . . . . . . . . . . . . . . . . . . 13

Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132. The Imperative of Good Governance: Promoting Responsible

Resource Management for Conflict Prevention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

3. Regulating Private Sector Activities in Conflict Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Appendix I: List of EACW Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

PROGRAM ON ECONOMIC AGENDAS IN CIVIL WARS: PRINCIPAL RESEARCH FINDINGS AND POLICY RECOMMENDATIONS

Contents

I. Scope and Objectives of theProgram

The Program on Economic Agendas in Civil Wars(EACW) was launched in 2000 in response to a conver-gence of political factors, academic interests, andpolicy concerns that pointed to the need for conflictprevention and resolution policies to be informed by asystematic understanding of the economic dimensionsof contemporary civil wars. Preliminary studiesundertaken by the International Peace Academy, theWorld Bank, and university researchers generatedmany of the broad propositions that guided theprogram’s research and policy development design.1

These included assumptions that:

• Economic factors are consequential to warringelites’ decisions to pursue war and peace;

• Economic greed and not socio-economic or politicalgrievance is the chief driver of armed conflict;

• Countries with a relatively high dependence onnatural resources are at higher risk of conflict; and

• Global economic flows (trade, aid, and investment)affect the incidence, duration, intensity, andcharacter of armed conflict.

Taken together, this line of inquiry suggested thateconomic linkages to conflict provide an important ifunder-explored avenue for policy interventions aimedat preventing and mitigating armed conflict. Consistentwith IPA’s mandate to promote more effective policiesof conflict prevention, resolution, and post-conflictreconstruction, the central aims of the EconomicAgendas in Civil Wars policy research and develop-ment program were three-fold:

• To improve understanding of the political economyof civil wars, through an analysis of the economicstrategies of belligerents and their followers.

• To inquire into the impact of economic globaliza-tion and the role played by transnational privatesector actors in conflict zones.

• To evaluate a range of policy and regulatoryresponses to curtail conflict-promoting economicactivities and perhaps, too, change the incentivesof warring factions to reduce the rewards ofviolence and to increase those of peace. Theprogram also inquired into the means of enhancingthe political and economic accountability of actorsinvolved in violent conflicts.

1. Understanding the Political Economy of ArmedConflict

The initial phase of research involved a series ofcountry-based empirical case studies, commissionedto test the propositions generated by earlier studiesand to explore and assess the following issues:

• The actual economic behavior of combatantparties and their principal sources of financialand military support.

• The relative importance of economic factorsvis-à-vis ethnic, political, social, and securityfactors to the incidence, duration, andcharacter of armed conflict.

• The ways that globalization affects theopportunities for combatant self-financing.

• The extent to which the particular conflictsstudied were amenable to targeted internationalinterventions, including development assistanceand economic sanctions and/or inducements.

I m p o r t a n t l y, these studies sought to extendknowledge by assessing the economic dimensionsof conflicts beyond the critical cases in Africa,and to examine separatist as well as non-separatist conflicts.2


Scope and Objectives of the Program 1

1 Many of these studies were published in the seminal volume Greed and Grievance: Economic Agendas in Civil Wars, Mats Berdaland David M. Malone, eds. (Boulder, CO: Lynne Rienner Publishers, 2000).2 The results have been published in The Political Economy of Armed Conflict: Beyond Greed and Grievance, Karen Ballentine andJake Sherman, eds. (Boulder, CO: Lynne Rienner Publishers, 2003).


2. War Economies in a Regional Context

While these country-based case studies helped toshed light on the political economy of specificconflicts, they also pointed up the weakness ofcountry studies in capturing a critical aspect ofmany contemporary intra-state conflicts: theirregional economic dimension. The role played byregional neighbors in fomenting conflict forstrategic or political reasons, while wellunderstood, has often obscured the many waysthat cross-border economic flows can also shapeconflict dynamics. These economic flows rangefrom spillover effects, such as refugees, to moresystematic economic networks of arms, commodi-ties, and mercenaries, and can be particularlysalient in regions where borders are weak andwhere there are interlinked conflicts in adjacentstates. Accordingly, the program commissioned amulti-authored volume that focused on theregional war economies surrounding conflicts inSierra Leone, Afghanistan, and Bosnia. Theobjectives of the study were to evaluate the scopeand nature of region-wide economic networks andvested interests that have supported war, and toidentify opportunities for improved policyresponses.3

3. Transforming War Economies

During the period of this research, several intra-state conflicts in which the violent competition forlucrative assets was a prominent feature wereended or were nearing resolution, some throughnegotiation, others through intervention, stillothers through military victory of one side.However, the war economies that sustained thempersisted. Preliminary studies on peace implemen-tation have identified combatants’ continuedaccess to lucrative resources and other sources ofself-financing as a major factor of failed peace

processes in the 1990s.4 An emerging issue forpolicy development, then, was to better understandthe challenges posed by war economies forsuccessful peacemaking and peacebuilding, suchthat their legacies were not left to underminefragile settlements. Under the rubric of“transforming war economies,” this set of researchissues was incorporated into commissionedresearch on regional economic dimensions andwas the focus of another set of studies on the caseof the Democratic Republic of Congo.5 In all, theaim was to help strengthen post-conflictreconstruction to mitigate against reversion tohostilities by identifying critical economiclegacies—such as the criminalization of thee c o n o m y, impunity of exploiters, collapsednational and regional law enforcement, and thedestruction of alternative livelihoods—andassessing how post-conflict policies for disarma-ment, the restoration of economic governance, andeconomic development strategies might bestrengthened to address these legacies.

4. Improving Global Governance

From the outset, the program’s policy developmentefforts were predicated on the assumption that abetter understanding of the local, regional, andglobal economic dimensions of armed conflictcould contribute to more comprehensive andeffective conflict prevention and conflict resolu-tion. Several contemporary intra-state conflicts arehighly dependent upon combatant access to globalcommodities and financial markets, gainedvariously through transnational criminal organiza-tions and legitimate but weakly regulated privatesector activities. Together they create an opportu-nity structure for armed conflict that is highlypermissive. Increasingly, curtailing these economicactivities has become a matter of priority for thoseseeking to resolve and prevent violent conflict.

2 Scope and Objectives of the Program

3 Michael Pugh and Neil Cooper with Jonathan Goodhand, War Economies in a Regional Context: Challenges of Transformation(Boulder, CO: Lynne Rienner Publishers, 2003).4 Stephen J. Stedman, Donald Rothchild, and Elizabeth M. Cousens, eds., Ending Civil Wars: The Implementation of Peace Agreements(Boulder, CO: Lynne Rienner Publishers, 2002). 5 Karen Ballentine and Michael Nest, eds., The Democratic Republic of Congo: Economic Dimensions of War and Peace (Boulder, CO:Lynne Rienner Publishers, forthcoming).


Accordingly, the program undertook an inquiryinto the prospects for creating a comprehensiveinternational framework to address conflict-promoting economic activity. This involved twoparallel projects: the identification and assessmentof the emerging policy mechanisms and strategiesavailable to the UN, regional organizations,national governments, and the global privatesector for managing the resource dimensions ofintrastate conflict;6 and an assessment of the utilityof legal norms and mechanisms to addresseconomic activity in war-torn or conflict pronestates.7 Sensitive to both the nascent character ofthis policy agenda and the complexity of the issuesinvolved, these studies endeavored to explore thefull continuum of policy options and involvedextensive consultations with governments,multilateral agencies and representatives of theinternational private sector.

II. Principal Research Findings

The commissioned research generated several importantfindings, some of which have necessitated refining orrevising the guiding propositions. Other findings havehad research and policy implications unforeseen at theprogram’s outset, but which were subsequentlyincorporated into the research design and policydevelopment activities. In all, there was a recognitionthat the focus on the economic motives and behavior ofcombatants and other actors in conflict zones and theworkings of the global conflict trade needed to be bettersituated in the broader political economy of conflict,including the permissive opportunity structure forviolent rebellion created by weak states, economic

underdevelopment, corruption, and inadequate globalregulation of commodity and financial markets.

1. Greed and Grievance: Economic Agendas andArmed Intra-State Conflict

Earlier work by David Keen suggested that violentconflict has a variety of functions for those whoparticipate in it and that there “may be more towar than winning.” Viewing rebels as rationalactors, quantitative research by Paul Collier andcolleagues at the World Bank led to the controver-sial proposition that civil wars are fought for thepurposes of “doing well out of war” and are drivenby rebels’ loot-seeking motivations rather than byjustice-seeking motives grounded in political,ethnic, or social grievance. While initially focusedon motivations, later versions of this theoryfocused on the ways economic resources createopportunities that made insurgency feasible.8

EACW research confirmed the growing trends inthe self-financing nature of contemporary armedconflict, the strategic importance of lucrativenatural resources in many conflicts, the permissiveenvironment of liberalized international trade andcommerce, and the importance of undertaking astakeholder analysis of who benefits from armedviolence. However, it also suggested severalimportant qualifications:

i) The Limited Utility of the “Greed versusGrievance” Construct in Explaining ConflictOnset

• Analytical efforts to clearly distinguish

Principal Research Findings 3

6 Karen Ballentine and Heiko Nitzschke, eds., Towards Peaceful Profits: Managing the Resource Dimensions of Armed Conflict(Boulder, CO: Lynne Rienner Publishers, forthcoming).7 Legal Liability of Business Entities for Grave Violations of International Law: A Review of International Norms and NationalJurisdictional Approaches, a joint FAFO-IPA project (FAFO, forthcoming).8 Based on statistical models, Paul Collier and Anke Hoeffler posited that conflicts were more likely to be caused by “greed” than by“grievance.” Proxies for greed were seen as good predictors for civil conflict, proxies for grievance less so. The former included aneconomy largely dependent on primary commodities and large numbers of poorly educated young men. Proxies for grievanceincluded economic inequality, a lack of political rights, and government incompetence. See Paul Collier and Anke Hoeffler, “Greedand Grievance in Civil War,” Policy Research Working Paper 2355, The World Bank Development Research Group, May 2000 (updatedOctober 21, 2001), available at www.worldbank.org/research/conflict/papers/greedgrievance_23oct.pdf. Other studies have pointed tothe econometric limitations that render Collier and Hoeffler’s research findings problematic. See, for example, Nicholas Sambanis, “AReview of Recent Advances and Future Directions in the Literature on Civil War,” Defense and Peace Economics 13 (2002): 215-243.


4 Principal Research Findings

economic from political, social, or culturalcauses of conflict are complicated by themethodological difficulties of deducing motivefrom behavior, by the fluid nature of conflictdynamics over time, and by the fact that inmany of the conflict settings examined, whereprivate sources of wealth are few, the state isthe primary source of wealth as well as ofpolitical dominance.

• None of the conflicts studied can be accuratelycharacterized as pure “resource-driven” wars.Neither rebel loot-seeking nor the opportunityfor insurgency made available by access tonatural and financial resources figured as asole or even primary cause of conflict. In eachcase, the outbreak of conflict was triggered bythe interaction of economic motives andopportunities with long-standing grievancesover the mismanagement or inequitable distri-bution of resource wealth, exclusionary andrepressive political systems, inter-groupdisputes, and security dilemmas furtherexacerbated by unaccountable and ineffectivestates.

• Research conducted by the EACW programboth confirmed and extended the findings ofthe World Bank Development Research Grouppositing a significant correlation between acountry’s dependence on primary commodityexports and the risk of civil war throughgreed-driven rebellions.9 The high salience ofnatural resource endowments and violentconflict stems from the fact that most oftoday’s conflicts occur in developing countries,where governance is weak, corruption rife, andvalue-added manufacturing is undevelopedand further weakened by political instability.In all, this suggests that the dependency onvaluable natural resources is not in itself areliable indicator of where conflict is likely too c c u r. The correlation between naturalresource dependency and conflict risk is notdirect; variations in the state’s governance ofnatural resources are critical intervening

variables. Thus, formerly stable diamond-producing countries may become conflict-prone if poor management and corruption gainthe upper hand, as in Sierra Leone.

• While resource endowments do contribute tothe financing and, hence, feasibility of armedconflict, the opportunity structure for conflictis also shaped by a number of other variables.These include the presence of mobilizablesocial and kinship bonds, the presence ofregional allies, and the relative military,economic, and political weakness of the statebeing challenged. In the separatist conflict inKosovo, as well as the insurgencies in Nepal,the Democratic Republic of the Congo (DRC)and Sierra Leone, the outbreak of rebellionoccurred at moments when the legitimacy andmilitary capacity of the state was severelydiminished by a combination of externalshocks and internal corruption and decay,thereby contributing to both grievance andopportunity for rebellion. In the case ofBougainville, perceptions of inequitablesharing of natural resource wealth was centralto the eruption of violence, but resourcewealth played no role in sustaining theconflict.

ii) Economic Agendas are Consequential to theCharacter and Duration of Civil War andComplicate Efforts at Conflict Resolution

• Predatory economic exploitation was found tobe more critical in sustaining, prolonging, andtransforming conflict than in causing conflict;

• Access to and competition over lucrativeresource wealth by both state militaries andnon-state armed groups can entrench andprolong violent conflicts through severalmechanisms:

• By creating supplementary economicdividends to the entrepreneurs of violence;

• By generating second-order grievances

9 Collier and Hoeffler (2001).



among those dispossessed of land andproperty or among those whose labor hasbeen exploited by militarized production;and

• By triggering intra-group competition thatleads to military fragmentation, multipliesthe points of conflict, and creates disciplineproblems that make it difficult for leaders tocommit their putative followers to peaceagreements.

For example, in Sierra Leone and Angola,continued rebel access to illicit diamond flowsstrengthened peace spoilers and undermined hard-won peace agreements. In Colombia, the growingdependence of guerrilla and paramilitary forces onillicit drug revenues allowed them to expand theirwar-fighting capacities and defy successive peacenegotiation efforts, while also attracting fightersless concerned with ideological and politicalprograms than economic advancement;

• Mirroring the rent-seeking pathologies ofresource-dependent states, the politicalagendas of state challengers can mutate intoeconomic agendas as conflict proceeds andprovides new opportunities for plunder, pillageand the systematic capture of production andtrade. A telling indicator of this mutation is theinformal and periodic economic collusionbetween putative adversaries engaged in theillicit exploitation of natural resources, asoccurred in Sierra Leone and the DRC.

• The more that state and non-state combatantsdepend on the predatory exploitation ofnatural resources and other wealth, the moresusceptible they become to corrosion ofinternal coherence and discipline. Likewise, thegreater availability of economic capitalreduces combatant incentives to generate andsustain social capital among putativesupporters as well as to refrain from indiscrim-inate forms of civilian predation. Overall, thisfinding applies more to insurgencies than toethno-separatist conflicts, where ethnicsolidarity is a valuable source of legitimacyand social capital.

• Different natural resource endowments affectdifferent sorts of conflicts and combatantparties in distinct ways. “Lootable” (i.e. easilycaptured and transportable) resources, such asalluvial diamonds, illegal narcotics, coltan, andtimber are more likely to be implicated in anti-government insurgencies, compromise battlediscipline, and benefit a range of actors,including rebels, government forces, andconflict-dependent civilians. They also compli-cate conflict resolution efforts by introducingsecondary conflicts over resources andmultiplying the number of peace spoilers. Thesepathologies have been central to the later stagesof the DRC conflict. “Unlootable” resources,such as oil, gas, and deep-shaft mineral depositstend to be associated with separatist conflicts,as witnessed in Bougainville. While these typesof resources may be vulnerable to rebel obstruc-tion and extortion, as in Colombia, they dispro-portionately benefit state actors.

• Predatory exploitation of natural resourcesand other lucrative economic assets is mostsystematic and consequential to how conflictsare fought where the following factors obtain:where combatant groups have access to“lootable” and lucrative resources; whereresource-dependent states have been weakenedby patronage and rent-seeking; and whereinformal and shadow economies are alreadywell-established. These conditions haveobtained most prominently in Sierra Leone,Angola, the DRC and Burma/Myanmar. In eachcase, this allowed weaker parties to sustainwar-fighting capacity and to avoid hurtingstalemates, thereby prolonging conflict.

• Increased criminality is a recognized feature ofall war-torn societies. In conflicts whereresource predation is predominant, criminalityis more systematic. Combatant participation inthe capture of natural resources and flows ofdiaspora remittances has led some groups,such as the Liberation Tigers of Tamil Eelam(LTTE) in Sri Lanka, to adopt the practices andstructure of transnational criminal organiza-tions. In other cases, such as Kosovo and

Colombia, the effect has been to createdependencies of combatant groups on interna-tional traffickers of arms and illicit commodi-ties. Importantly, however, in most cases entryinto criminal economic enterprise has compro-mised but not supplanted the political andstrategic objectives of combatants. For thisreason, it would be inaccurate to regard theseconflicts as nothing more than extreme formsof criminal activity.

Implications for Policy

• There is a need to recognize the full dimensionsof the political economy of contemporary civilwars. Until now, in cases where policy effortshave been shaped by the assumption thatgreedy rebels are the main driver of conflict,there has been a focus on implementingcommodity embargoes and other sanctions thatseek to cut off insurgent access to globalm a r kets. While such measures may haveaffected the military balance of power in waysthat have assisted conflict resolution, alonethey are insufficient. Not only do they fail totarget the full range of state and transnationalactors who economically benefit from conflict,they also fail to address the governance deficitat the local, regional, and global levels, that liesat the root of these conflicts.

• A stakeholder analysis of who deriveseconomic benefits from conflict, and how,underlines the multifaceted nature of wareconomies and the importance for policyinterventions of distinguishing between thosewho exploit resources for war (conflictentrepreneurs), those who exploit war foraccess to resources (conflict exploiters), andthose, largely civilians, who participate inillicit economic activities as a matter ofsurvival (conflict dependents).

2. The Regional Economic Dimensions of ArmedConflict

Research has confirmed that many contemporaryintra-state conflicts have strong regional economic

linkages. Very often the most entrenched conflicteconomies are those that are embedded in regionalconflict formations, such as those in West Africa,the Great Lakes region, and South/Central Asia.These linkages go beyond “economic spillovereffects.” Taking advantage of traditional informaltrade and commercial networks and the absence ofstate control in peripheral borderlands, combatantshave established elaborate systems of cross-bordertrade in arms, men, and resources. Large profitshave accrued to combatants and regional tradersby exploiting the price differentials across borders.These factors have also led to patterns of conflictdisplacement to neighboring states that severelycomplicate efforts at conflict prevention andresolution, as the case of West Africa all tooglaringly confirms.


• Given the extensive cross-border linkages thatsustain conflict, traditionally state-centricconflict management approaches need tobecome more region-sensitive. In addition tobringing key regional actors into peace negoti-ations, this will also require the developmentof post-conflict reconstruction strategies thatexplicitly address the regional aspects ofdisarmament and demobilization, conflicttrade, and regional economic recovery.

• Insecurity and shadow economic activitiesthrive in marginalized borderlands, creatinghavens for peace spoilers. Typically, however,peace missions focus troop deployments tocapitals. As in Afghanistan, this can leave thehinterlands to the mercy of predatory warlordsand leave intact the regional networks thatsupport them, thereby reducing the odds forsuccessful peacebuilding. Strategicpeacekeeping deployments to highly traffickedborder areas should be considered.

• State-focused development assistanceprograms of donor countries and internationalfinancial institutions can create regulatorygaps that create incentives for illicit economicactivities that fuel conflict or displace it to



neighboring countries. As in West Africa, thiscan perpetuate renewed cycles of conflict.These risks may be mitigated by greateremphasis on regional economic strategies fordevelopment and reconstruction that promoteregional economies of scale and regionaleconomic protection.

3. Transforming War Economies: The Challengesfor Peacemaking and Peacebuilding

To date, most policy responses to the economicdimensions of armed intra-state conflict have beenfocused on efforts to curtail the global conflicttrade as a means of ending conflicts. Thus far,h o w e v e r, little analytical attention has beendirected to the next phase: the operationalchallenges of transforming the ‘war economies’that have sustained conflict. Violent predation,official corruption, and systematic economiccriminality typically outlast the formal resolutionof active hostilities. Preliminary analysis alsosuggests that countries in which lucrativeeconomic resources have become central toconflict dynamics represent highly difficultenvironments for conflict resolution, peacemakingand peace implementation, and sustainablerecovery.

To d a y, this is most vividly demonstrated in theDemocratic Republic of Congo, where thecontinued scramble for resources has inhibitedconflict resolution in the eastern provinces, whilecompromising the legitimacy and stability of thetransitional government. Continued access tolucrative resources provides an incentive and ameans for peace spoilers and creates powerfulincentives against disarmament and demobiliza-tion This can impede successful peace implemen-tation and perpetuate the vicious cycle ofunderdevelopment and conflict. War economiesare sustained by regional and global linkages withboth licit and illicit actors, each with vestedinterests in the continuation of conflict andi n s t a b i l i t y. Both rebel and government combat-ants, as well as others who have benefited fromeconomic predation during war may act as‘ s p o i l e r s ,’ using force to undermine peace

processes. The economic opportunities andrewards available through predation may alsoinfluence combatants’ proclivity to voluntarilydisarm and return to a civilian life.


• Overall, peace agreements tend to emphasizepolitical and military issues to the neglect ofthe economic aspects of war. In settings whereeconomic predation and violent resourcecompetition have been major conflictdynamics, conscientious efforts should bemade to supplement power-sharing withresource-sharing agreements. In some cases,the need to secure the compliance ofcombatant parties, some of whom may resistefforts to block their room for economicm a n e u v e r, may make resource-sharingagreements impractical. Where politicallyfeasible, third-party mediators should seek toinclude provisions for resource-sharing inpeace agreements or establish benchmarks forresponsible resource management, that couldserve as reference for donors and civil societyto hold government accountable. Internationalfinancial institution (IFI) representativesshould be included in the peace processes,whether formally or informally, to ensurecoordinated policy action among third partiesand to match peace agreements with suitablepost-conflict economic recovery strategies.

• A careful and continuous assessment of theeconomic endowments and activities ofcombatants may help third-party mediators ofpeace processes to identify potential spoilers.Possible strategies for management of spoilersinclude cooptation, criminalization, or benignneglect. Alone or in combination, each strategyinvolves difficult tradeoffs that may underminesustainable peace.

• Disarmament, demobilization, and reintegra-tion (DDR) programs face additional challengeswhere the possession of arms is not just afunction of ongoing insecurity but is also animportant economic asset. In such settings, the



United Nations (UN) and the World Bank needto make disarmament and reintegrationparallel and complementary, not sequential,processes. Socio-economic support to formercombatants needs to be provided early on inthe DDR process, taking account also of thedifferent incentives of rank-and-file soldiersand middle-level commanders. Importantly,DDR programs must form an integral part ofnational post-conflict development andreconstruction strategies.

• Where DDR is not accompanied by adequatedevelopment of alternative economic opportu-nities, illicit economic behavior becomes anattractive option in post-conflict settings. Forexample, in the former Yugoslavia, narcoticsand human trafficking have become sources ofpower and impediments to good governanceand sustainable peace. This puts a highpremium on improving the capacity ofcomprehensive peace missions to anticipateand to deter post-conflict criminality. Thepolicy implications in this context need to berecognized by the UN Security Council and bythe UN Departments of Political Affairs andPeacekeeping Operations.

• Supply-side policies of interdiction and lawenforcement are unlikely to succeed in theabsence of demand-side policies of structuralprevention that strengthen both economic andpolitical governance. Just as developmentpolicy needs to be made more “c o n f l i c t -sensitive,” so too must efforts to prevent andresolve violent conflict be more consciously“development-sensitive.” To support thetransformation from war to peace, efforts tocurtail predation, illicit exploitation oflucrative natural resources, and economiccriminality through supply-side controls needto be complemented by “demand-side” policiesfor the strategic provision of alternative liveli-hoods for those combatants and civilians whohave become dependent on war economies.

• Post-conflict reconstruction packages need tobe complemented by more systematic regula-

tory interventions targeting trade andcommerce. Where the illegal exploitation orinequitable, unaccountable management ofnatural resources has been central to conflictdynamics, improved resource governanceneeds to be a central element of peacebuildingand post-conflict reconstruction strategies.This will require a more systematic operationalengagement of and coordination betweeninternational customs and law enforcementbodies, development agencies, internationaltrade bodies, and those actors—chiefly theSecurity Council—who are mandated to leadpost-conflict recovery. It may also require a re-evaluation of conventional donor assistanceobjectives of rapid macro-economic stabiliza-tion and economic liberalization, as thesepolicies often have perverse and negativeeffects for successful peace implementation.

4. Globalization and the Role of InternationalPrivate Sector Actors in Conflict Zones

A guiding proposition of the EACW research hasconcerned the role of globalization in creating apermissive opportunity structure for the financingof civil wars, particularly the nature and the extentto which private sector operations and investmentin conflict zones have exacerbated or complicatedconflict dynamics. The program’s research activi-ties and consultations with regulatory and privatesector actors have found that these factors havebeen consequential in a variety of respects:

• The uneven impact of globalization—particu-larly asymmetries in developing countryaccess to primary commodity markets—anddonor-driven market liberalization havegreatly contributed to the opportunitystructure for conflict by compromising theability of developing countries to diversifytheir economies, weakening their economicpotential and governance capacities, and oftenexacerbating the very corruption that marketforces are supposed to remedy.

• While international trade and commerce haslong been implicated in civil wars, the extensive



and rapid liberalization and decentralization oftrade and investment flows in a context ofgravely weakened state regulation has increasedcombatant access to global markets, providingthem with a proliferation of avenues to generaterevenues, whether used to finance militarycampaigns or for self-enrichment.

• These activities typically straddle thelicit/illicit divide and range from participationin transnational criminal economic networksto the extortion of companies with operationsin conflict zones. Combatants have beenparticularly adept at exploiting multinationalcompanies, whether by trading in “bootyfutures”—the selling of natural resourceconcessions to multinational corporations bycombatants claiming sovereign rights—as hasoccurred in the DRC; by the provision of laborand/or security to companies in return forcash; or by forcible extortion of companiesthrough actual or threatened kidnapping ofpersonnel and obstruction of companyoperations.

• Distinctions need to be made between theactivities of rogue companies—enterprises thatdeliberately seek to profit from conditions ofconflict—and legitimate company operationsthat can unintentionally fuel conflict.However, in the context of failed states andweak regulatory norms, and with theavailability of multiple and overlapping globaltrade and investment networks, distinguishinglegitimate from illegitimate economic transac-tions in war-affected countries remainsproblematic.

• Because natural resource endowments arestrategically important and site-specific, andbecause accessing them is capital- and time-intensive, extractive industries and theircontractors are more likely than other types ofenterprises to retain a presence in conflictzones. While these companies and their assetsare vulnerable to conflict, their operations and

investments can also have unintendedconflict-promoting effects. Well-documentedexamples include the role of De Beers inpurchasing rough diamonds from networkswhich benefited state and non-state groups inAngola and Sierra Leone in the mid-1990s andthe role of several major oil companies inproviding untransparent concessionarypayments to the Angolan government thatprovided discretionary funds for war-makingand self-enrichment.

• Many private multinational companies have ademonstrated interest in promoting predictableand stable business environments. Yet theirinclinations to integrate conflict-mitigatingand preventive measures in their businesspractices, such as conflict impact assessments,transparency initiatives, and public-privatepartnerships for responsible revenue manage-ment, not to mention more robust commit-ments to security and human rights, areconstrained by a number of concerns, some ofwhich are legitimate and must be addressed,notably including:

• Concern that needed measures will be costly,particularly for smaller companies;

• Concern that non-compliers—particularlystate-owned enterprises and privatecompanies in countries with minimalconcern for regulation—will benefit at theexpense of those engaged in progressiveconflict-preventive efforts;

• Concern that in the absence of clearlyestablished minimum standards as to whatactivities are unacceptable, they will bevulnerable to constantly moving goal posts;

• Concern that they are being asked toshoulder responsibilities of governanceproperly belonging to states.

A central challenge for policymakers is to developforms of regulation that mitigate conflict-promoting activities while protecting otherwiselegitimate and beneficial trade and investment.



III. The Challenges for GlobalRegulatory Policies and ConflictManagement

From the outset, the program’s policy developmentefforts were predicated on the assumption that abetter understanding of the local, regional, and globaleconomic dimensions of armed conflict couldcontribute to more comprehensive and effectiveregulatory policies and mechanisms. As otheranalysts have observed, contemporary civil wareconomies present policymakers with a “malignproblem structure,”10 characterized by a heteroge-neous set of actors with strong incentives to evaderegulation, a lack of empirical and normativeconsensus as to which activities are legitimate andwhich are illegitimate and ought to be regulated,competing and ill-defined regulatory jurisdictions,and asymmetrical costs and benefits. Ongoingresearch on available and emerging policy responsesand consultation with different regulatory actors hasled to the following conclusions:

• There are a number of existing international andregional conventions, national legislation, andbilateral agreements with some potential toaddress important aspects of egregious forms ofeconomic predation and to limit the resourceflows that sustain armed conflict. These includeconventions against bribery, smuggling, money-laundering, and terrorist financing, as well as anever-growing plethora of voluntary codes ofcorporate conduct. Designed for other purposes,many of these have not been tailored to addressthe particular problems of war economies,h o w e v e r, and it is far from certain that they willconfer the necessary jurisdiction to effectivelyrespond to the problem.

• Voluntary self-regulation and cooperative regula-tion through public-private partnerships are thepreferred approaches of companies and nationalgovernments, which is why, to date, most policy

efforts to address the negative impact of privatesector activities have relied on them. Such initia-tives play an important role in developingconflict-sensitive corporate culture and practices.H o w e v e r, they suffer from a number of limita-tions: the proliferation of competing standards atthe firm, sector, and multi-sector level createconfusion and code-weariness; they lack bindingand credible enforcement; and their coverage isi n c o m p l e t e .

• The existing ad hoc regulatory framework isneither uniform in its application nor comprehen-sive in its reach, facilitating the ability of criminalsand sanctions-busters to subvert legal norms andconfusing the efforts of legitimate actors to complywith them.

• Efforts to effectively redress economic predation invulnerable and war-torn states have beenhampered by the absence of a clear consensus as towhich sorts of activities are deemed unacceptable.While plunder, pillage, and spoliation are prohib-ited as war crimes, their application in contexts ofintra-state conflict is not yet universally accepted.Further, there is a range of activities that occupy agray area, including the status of contractualeconomic activities undertaken by legitimateparties but in conditions where these activitiesdirectly or indirectly contribute to conflict. Manywould agree that any profit-making activity thatbenefits from or contributes to conflict isunethical, yet there is no common standard bywhich activities may be described as clearly illegaland dealt with accordingly.

• Both normatively and politically, doctrines of statesovereignty complicate regulatory efforts, some ofwhich remain to be developed. On the normativeside, states are recognized as the legitimate reposi-tories for the management of national wealth,while international trade and investment ispredicated on sovereign lending rights. Politically,efforts to curtail conflict trade have shown adistinct state-centric bias. For example, the


10 The Challenges for Global Regulatory Policiesand Conflict Management

10 Leiv Lunde and Mark Ta y l o r, with Anne Huser, Commerce or Crime? Regulating Economies of Conflict ( FAFO Institute: Oslo, 2002), 22.

established definition of conflict diamonds isnarrowly construed as rough diamonds used byrebel groups to engage in violence against stateauthorities, thereby criminalizing some actorsrather than the activity itself. Likewise, in the caseof the DRC, considerations of sovereignty andsovereign interests initially focused policyattention on the predatory activities of the rebelsand their foreign allies while obscuring similaractivities undertaken by “sovereign” agents andtheir own external associates.

• Effective regulation of the conflict trade and thepermissive environments that enable it to flourishrequires the full use of regulatory options at allstages of the conflict continuum. This requirementputs a premium on systematic coordinationbetween a variety of public and private sectoractors and agencies, including the SecurityCouncil, the UN Development Programme, the UNDepartment of Peacekeeping, the UN Office ofDrugs and Transnational Crime, internationalfinancial institutions, the World TradeOrganization, international law enforcementagencies, bilateral donors, the departments oftrade, justice, and foreign affairs of member states,and private sector associations. Too often, the lackof coherence and coordination leaves openopportunities for conflict entrepreneurs and warprofiteers.

• The problem of coherence is also affected to someextent by the absence of a set of agreed norms aspart of a regulatory framework and the lack of asystematic vision as to how the various regulatoryoptions can be made to fit together and mutuallyreinforce each other.

• The UN has an important role to play in supportingnational and regional efforts to control illiciteconomic behavior in civil wars—many of whichhold particular promise. The UN can also play arole in the establishment of norms concerning suchbehavior and in addressing issues of structuralprevention and jurisdiction noted above. The UN isclearly moving in these directions, but more workremains to be done.

IV. P ro m ising Regulatory Initiative sand Recommendations forPolicy Ac t i o n

Policy efforts to prevent and resolve violent conflict byaddressing the economic conditions and activities thatfuel it are still nascent. Like all new policy areas, theseefforts have been marked by caution, selectivecoverage, and weak enforcement. This said, there are anumber of promising initiatives and mechanisms thatbear further development:

1. Curtailing the Conflict Trade

i) Targeted UN Sanctions

Perhaps the single most robust instrumentdeployed to curtail the reciprocal flows offinances, natural resources, and arms to combatantgroups are the commodity and arms embargoes,travel bans, and financial freezes imposed by theSecurity Council against rebel and/or governmentactors in Angola, Cambodia, Sierra Leone, Liberia,Angola, and Somalia. While in some cases,sanctions have contributed to successful war-termination, they have done so by shifting themilitary balance rather than by altering theincentives of targeted groups in favor of peace.H o w e v e r, sanctions have also had unintended andundesirable impacts. They have added to theregulatory burdens to front-line states, increasedthe incentives for criminals to engage insanctions-busting, and deprived civilians whohave become dependent on the illicit conflict tradeof a needed means of coping and survival. Allthree factors continue to impede robust sanctionsimplementation and enforcement.

Recommendations

• Work to create a more comprehensive andobjective definition of “conflict commodities”that prohibits unacceptable activities regard-less of the actors involved.

• Design targeted sanctions to extend to the full


Promising Regulatory Initiatives andRecommendations for Policy Action

11

range of conflict entrepreneurs and warprofiteers, including rebel groups, roguecompanies, members of transnational criminalorganizations, and complicit state authoritiesand multinational enterprises.

• Strengthen sanctions implementation byadopting the recommendations of theStockholm Process, including, inter alia , morerobust follow-on action by the SecurityCouncil, particularly by more systematic use ofsecondary sanctions, impact assessments, andsupport for local sanctions monitoring.

• Member states should be urged to adoptappropriate legislation to criminalizesanctions-busting and commit themselves toholding their own nationals accountable.

• Consider adapting the technical assistancemodel of the Counter-Terrorism Committee(CTC) to assist front-line states to develop theintelligence, customs, and policing capacityessential to effective sanctions implementationand improved compliance. This may entail theprovision of supplementary forms of interna-tional technical and financial aid.

• In several cases, civilian livelihoods in conflictzones have become dependent upon informaland illicit trade and production. As withinterdiction and eradication efforts, targetedsanctions should be designed to minimize thepotential harm to civilians and to providealternative livelihoods to replace foreclosedeconomic opportunities.

ii) Naming and Shaming: the Role of IndependentPanels of Experts

The creation of the UN Panels of Experts by the UNSecurity Council was a creative and innovativeeffort to promote more effective sanctionsmonitoring and a clearer understanding of thesorts of economic activities involved in illicit tradeand commerce as they have affected conflictdynamics in Cambodia, Angola, Sierra Leone,Liberia, Afghanistan, the DRC, and Somalia. In

addition to identifying sanctions violators andthose who have otherwise benefited from the illicitexploitation of natural resources in conflict zones,the successive panel reports have demonstratedboth the utility and limitations of “naming andshaming.”

The positive impact has been two-fold: for thoseactors—typically state officials and leadingmultinational corporations—with reputationalconcerns, the publication of their involvement inthe conflict trade has led to improved complianceand investigations of nationals suspected of partic-ipation in prohibited activities. “Naming andshaming” has also served to empower civil societyactors in their efforts to make their governmentsand companies accountable—particularly in thecase of the DRC, where civil society groups, armedwith Expert Panel reports, were able to place theissue of illicit resource exploitation on the agendaof the Inter-Congolese Dialogue.

However, the effectiveness of the UN Expert Panelmechanism remains limited in a number ofrespects. Almost by definition, naming andshaming can only deter those with reputationalconcerns or with aspirations to legitimacy. It isunlikely to affect criminal and rebel groups whoare at the center of the conflict trade.O p e r a t i o n a l l y, the Expert Panels have beenhampered by unclear or partial Security Councilmandates, lack of intra-panel communication andcoordination, unclear standards of evidence, andthe lack of consistent procedures for listing andde-listing of sanctions targets. Politically, theirpotential effectiveness has been undermined by thelack of consistent follow through by the SecurityCouncil. With few exceptions—such as the imposi-tion of arms and diamond bans, and also the long-overdue imposition of timber sanctions, againstCharles Taylor’s government in Liberia—the vastmajority of Panel recommendations have not beentaken up by the Security Council. Still otherrecommendations, such as the review of companiesnamed as complicit in the illicit exploitation ofresources in the DRC, have been undertaken in acautious, perfunctory, and incomplete manner.Without more concerted Security Council action,


12 Promising Regulatory Initiatives andRecommendations for Policy Action

the deterrent effect of naming and shaming islikely to suffer from diminishing returns.

Recommendations

• The Security Council and the Secretariatshould jointly undertake to strengthenadministrative support for the work of theExpert Panels, while preserving theirindependent status—the sine qua non of theircredibility.

• The Security Council should ensure that ExpertPanels have clear mandates as well as clearand transparent standards of evidence forlisting and delisting targeted individuals.

• The Security Council should redouble itsefforts to undertake timely and decisivefollow-up on Panel findings and recommenda-tions, particularly as concerns prosecution ofknown and repeated sanctions-busters.

• The UN Office for Drugs and Crime andInterpol should be formally included in morecoordinated efforts to curtail conflict trade,particularly in tracking the involvement oftransnational criminal groups in order tostrengthen the enforcement of existingnational and international prohibitions on thetrade in narcotics, money-laundering, andsmuggling of arms and other contraband.

• Panel mandates should be broadened toinclude economic and humanitarian impactassessments.

iii) Commodity Certification: Lessons of theKimberley Process

Commodity certification has emerged as anotherpromising mechanism for addressing the illicittrade in commodities that fuel violent conflict. Asan alternative to indiscriminate consumerboycotts, certification has offered a way topreserve the economic benefits for responsiblediamond producing and consuming countries,while reducing the vulnerability of rough

diamonds to capture by criminal and rebel groups.It also shows promise for effective and construc-tive tripartite efforts on the part of companies, civilsociety organizations, and national governments,where major corporate and state actors havesufficient will and incentive to participate. There isstill significant debate as to whether the Kimberleyprocess of diamond certification can fulfill itsobjectives in curtailing the trade in roughdiamonds, however. Critics point to the lack ofexternal/independent monitoring and to the lackof any minimum regulatory requirements, apartfrom participation in the chain of warranties, forcountries joining the process. In addition, itremains unclear whether certification can beadapted to other conflict goods, or whether theparticular specificities of the diamond industry thatenabled certification will obtain in other sectors.

Recommendations

• Efforts should be made to strengthen themonitoring element of the Kimberley Process.

• Countries that are known to lack effectiveenforcement should be given probationarystatus so as to preserve the integrity of theprocess and to provide time for them toacquire the needed tracking and enforcementcapacities.

• Commodity tracking may be more effectivewhere complemented with parallel tracking ofsupporting financial transactions.

• Consideration needs to be given to the applica-bility of inclusive commodity certificationregimes to other commodities implicated in theconflict trade, including other gems, preciousminerals, and timber.

2. The Imperative of Good Governance: PromotingResponsible Resource Management for ConflictPrevention

In parallel with policy measures undertaken tocurtail the trade in conflict commodities, there hasbeen growing policy attention to the need for



13

complementary efforts to promote the responsiblemanagement of natural resources in vulnerablestates and in countries emerging from conflict.Notable examples include the private-publicconsortium for developing the Chad-Cameroonpipeline, which includes provisions for externallymonitored fiscal management and social-revenuesharing, and the United Kingdom (UK)-sponsoredExtractive Industries Transparency Initiative,which seeks to promote fiscal transparency amongmultinationals and host governments that arepartners in the development of oil and gas conces-sions. These initiatives are designed to mitigate theconflict-exacerbating effects associated withnatural resource exploitation and revenue distribu-tion, primarily by supplementing the resourcemanagement capacities of host states. Doing so iscritical to conflict prevention and to ensuring thatnatural resource wealth does not perpetuate a“conflict trap” of corruption and underdevelop-ment. To date, however, these initiatives have beenconceived largely as a means of preventingconflict rather than assisting countries to recoverfrom war in contexts where the illicit trade innatural resources has become a central conflictdynamic, as with Sierra Leone, Angola,Afghanistan, and the DRC. As these initiatives arestill ad hoc and in their infancy, assessing theirperformance remains difficult.

Recommendations

• In contexts where natural resource predationhas been implicated in the onset or conduct ofarmed conflict, restoring effective andtransparent government control over theseresources should be made a priority ofpeacemaking and peace implementation.

• The success of natural resources governanceinitiatives rests with building the capacity ofaffected governments and civil administra-tions to manage natural resource endowmentsso that they may become a blessing for peaceand development rather than a curse. In theshort term, this will require a coordinatedeffort among governments, international

donors, development agencies, and privatesector partners to provide targeted technicaland financial assistance in support oftransparent and equitable resource-revenuemanagement, as well as support for localeconomic diversification. In the longer term,sustainability will depend on improvedgovernance as well as enhancing the capacityof civil society to hold governments toaccount. The UK-sponsored ExtractiveIndustry Transparency Initiative represents apromising step in this direction.

• National governments in resource-dependentstates should be held accountable for ensuringcommunity and environmentally sensitiveextractive operations, as well as sociallybeneficial distribution of profits. Donorsshould consider targeting recovery assistanceand development aid to rewarding progress inthese areas.

• For countries where a UN-mandated peaceoperation is deployed, consideration should begiven to ensuring the restoration of effectivenatural resource management well in advanceof the timetables for the draw down andconclusion of that peace operation.

• Those mediating peace agreements in suchcontexts should endeavor to complementpower-sharing with resource-sharing as anintegral part of peace accords. Where thisproves to compromise the likelihood ofsuccessful agreement, the restoration ofeffective management of natural resourcesshould be made the priority of reconstructionefforts.

• Given the close regional economic linkagesunderpinning civil wars and the high risk ofregional conflict displacement, the successfultransformation of war economies will requireregionally sensitive post-conflict strategies,such as regional trade and customs regimesthat give regional economic actors a mutualstake in economic development.



3. Regulating Private Sector Activities in ConflictZones

As many trends of the past decade indicate, theexpansion of globalized economic activity cancontribute to economy prosperity and improvedquality of life in many areas of the developingworld. However, the benefits of liberalized globalaid, trade, and investment have not been uniformlydistributed, particularly where these activitiesoccur in vulnerable or war-torn states, where thereis often neither capacity for nor a commitment togood economic governance. In such settings,business actors can become part of the problem ofconflict rather than part of its solution. Thequestion as to whether and how and by whomeconomic activities should be regulated in settingswhere regulation is effectively absent is the subjectof ongoing debate, in which issues of statesovereignty, contractual obligations of economicentities, and the proper scope of business obliga-tions are all hotly contested. There is as yet nonormative consensus among governments, theinternational community, and civil society andprivate sector actors as to which activities shouldbe regulated and in what ways. Without a clearand common standard, the risk remains that legiti-mate and benign multinational economic activitieswill be judged the same as harmful and predatorybehavior of rogue companies. Creating a commonregulatory playing field is essential to overcomingcompetitive market dynamics that create collectiveactive problems.

This is a strong argument in favor of a multilateralapproach to the problem. Achieving more effectiveregulation requires careful attention to the legiti-mate interests of economic actors, including theirdesire to protect their contractual obligations andtheir concern that conflict prevention initiativeswill be costly and cumbersome and without clearbenefit. Given both the technical and politicalcomplexity of the problem, achieving an effective,fair and workable framework of global governanceis a long-term objective. In the interim, however,governments and multilateral actors should workin cooperation with the international private sector

through coordinated efforts to strengthen existingmechanisms such as the conventions againsttransnational organized crime, terrorist financing,and the Organisation for Economic Co-operationand Development (OECD) mechanisms forcombating money-laundering and promotingcorporate behavior that respects human rights.Governments should take full advantage of the UNGlobal Compact, the G8 and regional initiativessuch the New Partnership for African Development(NEPAD) to develop common objectives and policymechanisms.

Complementing soft regulation with the gradualdevelopment of a framework involving some hardlaw addressing the most egregious forms ofeconomic predation and war profiteering in conflictzones is desirable, if not necessary. Here, theguiding principle should be to establish a minimumnorm of “do no harm,” building upon well-established international humanitarian law, humanrights standards, the laws of war, and the conven-tions against genocide and crimes againsth u m a n i t y. A bold multilateral initiative focused onachieving the broadest possible normativestandards could enhance the legitimacy of domesticaction by states to regulate corporate behaviorwithin their jurisdictions and help to clarify theinternational obligations of companies. In thisregard, the recent work of the UN Sub-commissionon the Promotion and Protection of Human Rightson the Norms on the Responsibilities ofTransnational Corporations and Other BusinessEnterprises with Regard to Human Rights m a yserve as a useful framework for discussion.U l t i m a t e l y, however, even the most stringentinternational prohibition will be insufficient in theabsence of complementary enabling legislation atthe domestic level. In the long term, the develop-ment of robust domestic legal mechanisms offersthe promise of effective accountability,predictability and clear expectations, and thereduction of impunity.

Recommendations

• To improve the effectiveness of private sector



15

self-regulation, there is a need to simplify andharmonize common codes of conduct from themultitude of competing and overlapping codesthat currently exist.

• To create a level playing field as well as easethe burden on smaller companies, govern-ments should encourage the creation ofinclusive industry-specific codes that coverbasic issues of security, human rights, conflictimpact assessments, and fiscal transparency.

• The coverage of existing multilateral regula-tory tools, including the OECD Guidelines forMultinational Enterprises, the OECD FinancialAction Task Force, and international conven-tions against bribery and money-launderingshould be extended to address the particulari-ties of private sector activity in conflict zones.

• In conjunction with the UN and other multilat-eral bodies, governments should undertake aprocess towards the creation of a framework oflegally binding regulations at the international

and national levels, derived from existinginternational law to address the mostegregious of economic crimes and abuses byeconomic actors in vulnerable and war-tornstates. The UN Norms on the Responsibilities ofTransnational Corporations and OtherBusiness Enterprises with Regard to HumanRights should be promoted as a framework fordiscussion.

• In this regard, the efforts of the InternationalCriminal Court and the International CriminalTribunals to prosecute economic war crimesand crimes against humanity committed by oraided and abetted by economic actors deservesupport.

• To complement international enforcement,governments should nationalize regulation, byadopting the necessary legislation tocriminalize sanctions busters and to holdaccountable national business entities forgrave violations of international criminal andhuman rights law.



Appendix I: List of EACW Publications

Books

Towards Peaceful Profits: Managing the Resource Dimensions of Armed Conflict , Karen Ballentine and HeikoNitzschke, eds. (Boulder: Lynne Rienner Publishers, forthcoming)

The Democratic Republic of Congo: Economic Dimensions of War and Peace, Karen Ballentine and Michael Nest,eds. (Boulder: Lynne Rienner Publishers, forthcoming)

War Economies in A Regional Context: Challenges of Transformation, Michael Pugh and Neil Cooper, withJonathan Goodhand (Boulder: Lynne Rienner Publishers, 2004)

The Political Economy of Armed Conflict: Beyond Greed and Grievance, Karen Ballentine and Jake Sherman, eds.(Boulder: Lynne Rienner Publishers, 2003)

Greed and Grievance: Economic Agendas in Civil Wars, Mats Berdal and David M. Malone, eds. (Boulder: LynneRienner Publishers, 2000)

Policy Reports*

Private Sector Actors in Zones of Conflict: The Legal Dimension (forthcoming), by Heiko Nitzschke and KaysieStuddard. Policy Report on the international legal framework regulating private sector activities in conflict zones,including accountability for complicity in the violation of international law.

Executive Summary: Legal Liability of Business Entities for Grave Violations of International Law: A Reviewof International Norms and National Jurisdiction Approaches (FAFO-IPA, forthcoming). Report of the joint IPA-Fafo Institute research program, aimed at promoting a normative consensus on the most problematic manifesta-tions of impunity and complicity by private sector actors in war economies.

War Economies in a Regional Context: Overcoming the Challenges of Transformation, by Kaysie Studdard. Keyfindings from a volume commissioned by the EACW program on the regional causes and consequences of wareconomies in Bosnia and Herzegovina, Sierra Leone, and Afghanistan; analyzes the impact that the role ofeconomic factors play in peacebuilding and peacemaking.

Transforming War Economies: Challenges for Peacemaking and Peacebuilding, by Heiko Nitzschke. Report ofthe 725th Wilton Park Conference, in association with the International Peace Academy, held at Wilton Park, UK,on 27-29 October 2003.

Beyond Greed and Grievance: Policy Lessons from Studies in the Political Economy of Armed Conflict, byKaren Ballentine and Heiko Nitzschke. This policy report provides a synopsis from analytical and country casestudies on the political economy of armed intra-state conflicts, and offers findings for improved policies forconflict prevention and resolution.


Appendix I 17

The Political Economy of War and Peace, by Charles Cater . A report of the IPA New York Seminar held at WestPoint on 6-10 May, 2002, to examine the legacies of war economies and the challenges they pose for peaceoperations, including peace implementation and sustainable post-conflict peacebuilding.

Policies and Practices for Controlling Resource Flows in Armed Conflict, by Jake Sherman. A conference reportsummarizing discussions at the Conference on Policies and Practices for Regulating Resource Flows to ArmedConflicts, co-sponsored by the Rockefeller Foundation and held at the Rockefeller Foundation’s Bellagio Study andConference Center, May 20–24, 2002, Bellagio, Italy.

Controlling Resource Flows to Civil Wars: A Review and Analysis of Current Policies and Legal Instruments,by Philippe Le Billon, Jake Sherman, and Marcia Hartwell. Background Paper for the Conference on Policies andPractices for Regulating Resource Flows to Armed Conflicts, co-sponsored by the Rockefeller Foundation and heldat the Rockefeller Foundation’s Bellagio Study and Conference Center, May 20–24, 2002, Bellagio, Italy.

Options for Promoting Corporate Responsibility in Conflict Zones: Perspectives from the Private Sector, by JakeSherman. A report of the Working Group on “The Role of Private Sector in Armed Conflict,” held April 5, 2002,at the Mission of Luxembourg, to examine private sector actors’ perceptions of and experiences with certain keyexisting and prospective measures, both voluntary and regulatory, to manage their behavior in conflict zones.

Economic Agendas in Civil Wars: Defining and Developing the Role of the UN, by Alexandra Guaqueta. Policyrecommendations emerging from the Symposium held March 25, 2002, co-organized by the International PeaceAcademy and the Fafo Institute for Applied Social Science, Programme for International Cooperation and ConflictResolution (PICCR), and sponsored by the Government of Norway during its Presidency of the UN Security Council.

The Economics of War: The Intersection of Need, Creed and Greed, by Jake Sherman. A conference reportsummarizing panel discussions held on September 10, 2001, and co-organized by the Woodrow WilsonInternational Center for Scholars and the International Peace Academy, on the intersection between the economicdimensions of conflict and prospects for developing policy approaches to address the political economy of violentconflict.

Private Sector Actors in Zones of Conflict: Research Challenges and Policy Responses, by Jake Sherman. A reportbased on an expert workshop held on April 19, 2001, and co-sponsored by the Fafo Institute for Applied SocialScience, Programme for International Cooperation and Conflict Resolution (PICCR), and the International PeaceAcademy EACW program.

*All reports are available as pdf documents on the International Peace Academy website at www.ipacademy.org(see EACW webpage).


18 Appendix I

About the EACW Program

Senior Associate: Karen Ballentine [email protected] Program Officer: Heiko Nitzschke [email protected] Officer: Kaysie Studdard [email protected] Program Officer Jake Sherman September 2000-January 2003Associate Alexandra Guaqueta September 2001-July 2002

Duration: September 2000-December 2003

Initiated in September 2000, the EACW program followed 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. (Boulder:Lynne Rienner Publishers, 2000). The program addressed the critical issue of how the economic agendas of armed factionssustain violent conflict and inhibit durable peace, while also assessing the role of globalization in creating new opportu-nities for combatants to finance their military operations. This hitherto under-developed field of research holds particularpromise of policy relevance for those international and national actors seeking more effective strategies for both conflictprevention and conflict termination.

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

• 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 proceeded 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) andcommissioned research. In successive meetings, both individually and in joint sessions, the deliberations of the working groupsallowed consultation and collaboration with a variety of conflict analysts, regional specialists, private sector actors, and regula-tory officials. This process informed the research design and methodology employed, permitted a refinement of the researchquestions to be pursued, and generated interim reports that reflected the evolving policy issues and challenges. Discussions witha range of corporate representatives and consultants in the context of the Working Group on the International Private Sectorand Conflict proved to be particularly fruitful, as they permitted a better understanding of the business perspective and a clearersense of the challenges they face when engaged in operations in vulnerable and war-torn states.

The program’s research and policy development activities also benefited from collaborative partnerships with relatedresearch projects at a variety of other international institutions. In collaboration with the “Economies of Conflict Project”of the FAFO Institute in Oslo, the EACW program convened a high-level symposium for UN Actors during the NorwegianPresidency of the Security Council in March 2002. With Fafo and International Alert, EACW held an interim stock-takingexercise to share and compare respective research findings on regulatory and policy options for addressing business andconflict. In the fall of 2002, FAFO and EACW jointly launched a comparative research study on The Legal Liability of BusinessEntities for Grave Violations of International Law, known as the Stenersen Process. This study has involved five country casestudies as well as a review of international norms in an effort to add clarity to the rights and obligations of companiesunder international criminal and human rights law. The Woodrow Wilson Center and the Institute for Security Studies co-sponsored conferences on War Economies and on the Economic Behavior of Combatants in Civil Wars, each of whichpermitted us to bring these issues to a wider international academic and policy audience. With Oxfam GB, the programundertook a study of the war economy in the DRC, with a focus on assessing the challenges of transformation facingoperational peace and reconstruction missions on the ground. ). The Program also built a virtual network of experts andpolicy practitioners through sponsorship of an electronic list-serve, [email protected].

Finally, EACW staff participated in a number of parallel research projects and policy processes, including the World Bankproject on Natural Resources and Conflict, the UN Global Compact Dialogue on Private Sector Actors in Conflict Zones, andthe Stockholm Process on the Implementation of Targeted Sanctions.

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

Documents

Program on Economic Agendas in Civil Wars: Principal ... · 4 Stephen J. Stedman, Donald Rothchild, and Elizabeth M. Cousens, eds., Ending Civil Wars: The Implementation of Peace