What is the relationship between the regional dimensions of war economies and peacebuilding in post-conflict situations? This report, published by the International Peace Academy, argues that the failure to consider the regional dynamics of war economies undermines peacebuilding efforts. Policy-makers should distinguish between economic activities that pose a threat to peace processes and activities that contribute to social and economic stability. Certain informal regional economic activities that are presently ignored or criminalised should be incorporated into peacebuilding and reconstruction strategies.
In the post-Cold War environment, the decline in superpower support has shaped the self-financing nature of contemporary civil wars. Various actors have turned to the exploitation of lucrative natural resources, illicit trade networks and informal economies to support military efforts. Policymakers recognise that economic factors may exacerbate and perpetuate civil conflict. However, little attention is paid to the economic ‘spill over’ or ‘spill into’ effects of internal conflicts on neighbouring states.
A distinction is needed between informal regional economic networks that perpetuate conflict and economic activities that contribute to peacebuilding efforts. A more nuanced and complex understanding of the regional war economies should include the following elements:
- The combat economy, which exploits natural resources and illicit goods such as drugs and small arms to sustain conflict and profit from war.
- The shadow economy, which is motivated by the economic opportunism of actors who thrive on the ability to operate outside the formal economy, but are not necessarily committed to the pursuance of conflict.
- The coping economy, which consists of individuals who seek to maintain a basic level of economic subsistence in the absence of a functioning state.
- The three-fold distinction between conflict, shadow and coping economies simplifies a complex reality because war economies are intertwined and coexist at various levels.
- War economies are extremely resilient and rarely dissipate after the official end of conflict. For example, ‘spoilers’ that are marginalised by peace processes continue to exploit weaknesses in the informal sector through regional networks.
- Shadow economies may become stronger in post-war situations if the state is unable to govern effectively. In addition, members of the coping economy often rely on war economies to provide for their economic and social livelihoods.
- Certain informal regional economic activities may contribute to social and economic stability, including: shadow networks that can be incorporated into the formal economy; natural resource industries; and informal economic and trade activities, particularly traditional activities.
The failure to consider the regional dynamics of war economies undermines the effectiveness of conflict management and peacebuilding efforts. Policy-makers should adopt specific measures to integrate the regional aspects of war economies into post-conflict strategies by:
- Remedying the state-centric bias of peace processes by incorporating non-state local and regional actors into peacebuilding efforts, particularly, actors from regional formal and informal economies.
- Devising strategies to deal with spoilers, which may involve co-opting spoilers with a view to reintegrating them into the formal economy.
- Improving regulatory effectiveness through region-wide economic development programmes to address transnational shadow networks and creating regional regulation that identifies the specific conflict commodities that plague a region.
- Addressing insecurity in borderland regions where marginalised populations often rely on shadow activities for their survival. In the absence of formal coping mechanisms, borderlands can be seized by those who resist peace.
- Assisting war-torn societies to establish a functioning state with the capacity to control its own finances, social programmes and institutional decision-making.
- Recognising the limitations of donor policies that encourage minimal states. Policies aimed at privatisation, foreign direct investment and deregulated markets may have debilitating effects on peacebuilding.
