Rebuilding war-torn states in a cost-effective, inclusive, and sustainable way has proved to be a key missing factor in peacebuilding efforts across the world since Cold War-related civil wars faded a quarter of a century ago and new conflicts arose from the disintegration of the Soviet Union and the former Yugoslavia. Since then, a large and diverse group of countries – at low levels of development and scarred by civil war or other intrastate conflicts, rather that interstate wars1 – embarked, mostly with the support of the United Nations, on a complex and multidisciplinary2 transition to peace, stability, and prosperity. The use of these three terms is necessary to convey the idea that the transition involves more than just moving away from the conflict and insecurity of the past; there must be also economic and social gain for it to be sustainable. Supporting such transition has provided a serious challenge for an organization unprepared to deal with the economics of peace or political economy aspects of peacebuilding.
The UN capacity in this area remains inadequate. Not surprisingly, failure at addressing the economics of conflict resolution during peace negotiations, and the economics of peace during the post-conflict period, effectively continue to be a major obstacle to peacebuilding.
The main argument of this book is that the political economy of peacebuilding requires replacing the economics of war with the economics of peace promptly and with determination. This is imperative so that countries can avoid relapse into war or violent conflict, and can eventually fully engage in the economics of development. This of course, does not preclude a reactivation of development activities as soon as feasible.
But moving directly from the economics of war to the economics of development – as if war-torn countries did not have special needs with large budgetary implications, and as if policymaking in these countries could proceed as in others unaffected by deadly conflict – has led to a most unimpressive UN peacebuilding record.
It has also led to a huge cost in terms of blood and treasure – both to host countries and to what is collectively referred to as “foreign interveners”3 that support war-torn countries in transition. These consist of the UN system as a whole, including the Bretton Woods institutions (BWIs) – the International Monetary Fund (IMF) and the World Bank4 – member states, bilateral and multilateral donors, and regional and non-governmental organizations (NGOs).
UN support for the reconstruction of war-torn countries, that is, for their transition to peace, stability, and prosperity – encompassing simultaneous action in the political, security, social, and economic areas – put the organization temporarily back in fashion in the early 1990s. This was not to last, partly because of failures in Angola, Rwanda, and Somalia.
The record has hardly improved since then. An overwhelming majority of the countries that embarked on the transition with the support of UN peacekeeping and peacebuilding operations – encompassing both military and civilian support in the four areas – relapsed into violent conflict within the first decade (Table 6.1). Those that managed to keep a tenuous peace often relied on long-lasting and costly peacekeeping operations or foreign troops to avoid conflict recurrence.
Moreover, with guns gone silent – either through peace agreements or following military interventions – and despite large commitments in international assistance in the form of aid disbursement and technical support, most of these countries have been unable to stand on their own feet, let alone get back into a path towards sustained prosperity for the population at large. Most gains have gone to certain elites that have benefited both from the economics of war and from the economics of peace. This has led to growing inequalities and sowed the seeds for new conflicts.
Indeed, most countries have faced serious impediments to bringing about the necessary changes needed to resume the development path interrupted by war. This has been due to a combination of misguided policies – both involving foreign interveners and national policymakers – as well as misplaced priorities that violate basic premises, including those involving the sequence of policies in the post-conflict period (Chapter 8).5 In the process, many have failed to reactivate their economies productively and inclusively and have become highly aid dependent. Some, like Afghanistan and Liberia, have fallen into a chronic aid addiction during the first decade of the transition. Moving them out of the “aid trap” will not be easy. Afghanistan has the ominous distinction of having both relapsed into conflict and become the most aid-dependent country in the world. Liberia has only managed to keep the peace by having a large and costly UN operation in place for over 12 years. Both countries remain among the bottom 10 percent in the Human Development Index.
As Nobel Laureate Edmund S. Phelps stated in the prologue to my 2008 book Rebuilding War-Torn States, it could have been expected that when wars stopped, countries would have found their footing again and set about to make up the lost ground with regard to their development.6 But rebuilding from the ashes of civil war and other internal chaos in countries at low levels of development has proved quite unnerving.
Failure at effective reconstruction has also been associated with great human suffering. Indeed, relapses into conflict have been serious and often more bloody than previous conflicts, as the experience of Angola and Rwanda in the 1990s and Afghanistan and Iraq in the 2000s well attest. The genocide in Rwanda that followed the collapse of the Arusha Peace Agreement in 1994 (with close to one million people dead) and the collapse of the agreements in Angola in 1993 and 2001 (with about 350,000 dead) are examples of the high human cost of reverting to conflict. In Afghanistan and Iraq, about 6,750 American troops lost their lives, together with troops from allied countries, and hundreds of thousands of Iraqi and Afghan combatants and civilians. Moreover, failed states create a large number of refugees and displaced populations and become incubators for terrorism, trafficking of drugs and people, smuggling, extortion, and other illicit activities.
With war raging in the Middle East and with conflicts flaring up in Africa, Europe, and elsewhere, and with the international community engaged in post-conflict reconstruction following civil wars, military intervention, and/or regime change across various continents, it is indeed the perfect time to revisit and reflect on the peacebuilding record and find ways to improve it going forward by avoiding past mistakes and failures.
With António Guterres assuming power at the UN in January 2017, and with the year marking the 25th anniversary of the creation of the Department of Peacekeeping Operations (hereafter peacekeeping department) and the Department of Political Affairs (hereafter political department), and of the signature of peace agreements in El Salvador and Mozambique, it seems like the perfect time to analyze and assess: What have we learned from the past? What has gone right and what has gone wrong? How can we think outside the box to improve the disappointing and costly record (both in terms of lives and treasure) of reconstruction and peacebuilding.
Improving the record has now acquired a new sense of urgency given multiple and growing terrorist threats to global peace and security from extremist groups such as Boko Haram, Al-Shabaab, and Da’esh/Islamic State in Iraq and the Levant (ISIL). These and other extremists groups, in particular Hezbollah, Hamas, Al Qaeda, and the Taliban, increasingly recruit members and sympathizers by providing services and infrastructure, jobs, and other basic needs to those deprived of them in countries with ineffective and corrupt governments and feeble foreign interveners. Poor governance at the national level is associated with a variety of economic failures, including from the provision of aid. Terrorist groups in turn finance themselves to a large extent by drug and other racketeering activities that thrive in insecure areas lacking alternative livelihoods.
Moreover, terrorism and drug production are closely interrelated. War-torn countries are often large producers of illegal drugs and operate as safe havens for radical terrorist groups and drug trafficking in their regions. Production, manufacturing, and international trafficking of illegal narcotics attract international criminal syndicates and terrorist groups in a vicious circle that threatens global peace and security. As UN Secretary-General Ban Ki-moon notes, “The connections between drug trafficking, organized crime, corruption and terrorism are becoming more diverse and sophisticated, and fuel insecurity and political instability globally.”7 As an example of the critical role that some of the war-torn countries play in this vicious circle, the United Nations Office on Drugs and Crime (UNODC) notes that, of global annual flows of 430–450 tons of heroin and morphine, about 380 tons are produced exclusively with Afghan opium.8
The renewed sense of urgency also relates to the growing global repercussions of failed foreign interventions – particularly humanitarian crises and huge flows of refugees – which are having tremendous political, security, socioeconomic, and moral repercussions in Europe, the Middle East, and elsewhere. Migration has hit neighbouring countries and donor countries alike in a variety of ways with unpredictable global consequences. At the time of writing, the June 2016 referendum by British voters to exit the European Union cost Prime Minister David Cameron his job, roiled global markets, and led to a devaluation of the pound to its lowest level in decades.
A third factor relates to the spread of infectious diseases in humans, plants, and domestic and wild animals that recognize no borders. Among those affecting humans, the most notorious are infectious diseases such as malaria, Ebola, and the Zika virus. Ebola hit countries such as Liberia, Sierra Leone, and Guinea – three countries in the agenda of the UN Peacebuilding Commission – which failed to utilize aid to improve their health systems and other basic services. Misguided reconstruction policies in these countries made them more vulnerable to disease, with serious regional and global repercussions.
Last but not least, the sense of urgency also relates to climate change, environmental sustainability, and biodiversity depletion. War-torn states have often seen the depletion of forested areas, including for the use of wood stoves for cooking and for heating during winters. Local communities and foreign transnational corporations often encroach on forested areas to convert them into plantations, to deal with population pressures, and to graze animals in forested areas, often affecting wild plant diversity and spreading diseases. These countries are particularly prone to overexploitation of natural resources, including illegal timber and other wood and medicinal plant products. Some are subject to slash-and-burn farming practices, soil erosion, and other environmental damage, often resulting from years of war, lack of investment, and illegal and unregulated exploitation of natural resources.
Because of the global repercussions of war and insecurity, war-torn countries have a disproportionately large political, security, social, and environmental impact in comparison with their small contribution to the global economy in terms of production and trade. A few war-torn countries also account for a large share of aid from donor countries, leaving others as aid “orphans,” which creates its own set of problems in terms of peacebuilding efforts.
Afghanistan is perhaps the best example of a country whose political weight in the foreign policy agenda of the United States and other major donors has been incommensurate to its tiny economic share of only about one-fifth of one percent (0.02 percent) of global output.9 In the past, this was related to the important role Afghans played as allies and main protagonists in the Cold War against the Soviets. In the new millennium, its potential for regional and global disruption was most clearly illustrated by 9/11. The country’s political importance is related mainly to its geopolitical and strategic location at the crossroads of Asia and Europe on what was once part of the Silk Road, and the fact that, as M. Ishaq Nadiri remarked in 2009, “seven atomic owning nations were vying with each other in Afghanistan (Pakistan, India, China, Russia, possibly Iran, the United States, and the United Kingdom).”10
At the time, President Obama was deciding on the military surge, and there was ample concern that Afghan problems could have security, political, and economic repercussions well beyond its borders – particularly in nuclear-armed Pakistan, but also in the Central Asian countries – as it had after the United States had abandoned the country following the demise of the Soviet Union in the early 1990s.11 As Moisés Naim of the Carnegie Endowment for International Peace has warned, as criminal organizations fuse with weak and corrupt governments, nuclear deterrence might become more difficult.12
Other war-torn countries have also had a political impact well beyond their impact on the global economy. Iraq did not start as a global problem, but it certainly became one. The U.S. invasion in 2003 led to strained relations between the United States and Europe, created a split among the permanent members of the Security Council, and often led to violent opposition to U.S. policies across the world. U.S. recognition of the unilateral independence of Kosovo in February 2008, and Russia’s recognition of independence in Abkhazia and South Ossetia following the Georgian war in August of that year, led to the worst confrontation between the United States and Russia since the end of the Cold War. Russia’s annexation of Crimea in 2014 following military intervention added to the polarization between Russia and the United States at the Security Council. At the present time, perhaps Syria and to a less extent Yemen illustrate best this situation.
War-torn countries have also affected the operations of the multilateral system, particularly the UN, in a major way. As Thomas Weiss noted, picking up the pieces after the dust of conflict has settled “has become the growth industry in the United Nations’ conflict business.”13
The dimension of the problem calls for an improved operational capacity at the UN to deal with peacebuilding. The 2016 Global Peace Index14 compiled by the Institute of Economics and Peace, a leading think tank in this area, shows that the world has become a less peaceful place in the last year – reinforcing the declining trend of the last decade. Results also show growing inequality – with the most peaceful countries continuing to improve and the least peaceful falling into greater deadly violence and conflict.
In a 1994 Foreign Policy article entitled “Obstacles to Peacebuilding,” Álvaro de Soto and I questioned the capacity of the UN to tackle the new institutional challenges as the organization was coming out of the marginalization of the Cold War in the early 1990s.15 Multidisciplinary missions set up to support war-to-peace transitions went far beyond the military aspects of traditional UN peacekeeping and encompassed diverse civilian peacebuilding activities. The latter included economic reintegration of former combatants and other war-affected groups and involved a variety of actors from inside and outside the UN system. The main purpose of such activities was to make peace long-lasting by avoiding recurrence of violent conflict.
Countries embarking on the transition to peace in the aftermath of the Cold War were at low levels of development and emerging from civil war or other internal conflict, which required special efforts at national reconciliation. Reconciliation was imperative so that combatants from both sides could return to their villages and communities could rebuild their social fabric. The fact that they were at low levels of development made reactivation of their economies a whole new ball game. Both factors made economic reconstruction very different from the successful Marshall Plan.
In the new context, foreign interveners pressured countries to embark on a complex multidisciplinary transition to peace, and in this sense reconstruction was different from previous ones in Korea and Vietnam. While the Security Council assumed leadership in the “political” and “security” areas of this transition, the IMF and the World Bank assumed leadership in the “economic” and “social” ones.
Through their technical advice and lending conditionality, the BWIs promoted rapid and wide-ranging transformation of these countries through market-based and private sector-focused economic policies. Various other organizations in the UN system and bilateral agencies in donor countries participated in supporting roles during the transition.
The case of El Salvador was an early example of the new context in which UN-led peacebuilding would take place. As discussed by Álvaro de Soto in the Foreword, with the support of the Security Council, the UN had mediated for the first time through 1990 and 1991 an internal conflict to end the long war between the government of El Salvador and an insurgent group, the FMLN (Spanish acronym for the Farabundo Martí National Liberation Front).
Strikingly, the 1991 initialling of the peace accord on New Year’s Eve at UN headquarters in New York had no effect on the approval by the IMF Board of Directors in Washington, DC on 6 January 1992, less than one week later, of an economic program that did not incorporate the financial needs of the peace agreement. On the contrary, it contained strict fiscal and external targets that deprived the government of any flexibility with respect to domestic financing in 1992.
As the year unfolded, it soon became clear that lack of financing would affect critical peace-related programs. There was an understanding between the government and the IMF that expenditures resulting from the peace agreement would have to be financed by additional public savings (including from a reduction in military outlays), reallocation of public expenditure, or external resources (including foreign aid and borrowing).16 Given that military expenditure during the war was largely foreign financed, this was not only an unrealistic scenario, it was oblivious of Lord Keynes’ dictum following World War I that peace has high economic consequences.17
With its tough economic conditionality and lack of concessionality from the BWIs,18 the IMF-sponsored economic program in 1992 became a major obstacle for the Salvadoran government to start and implement various aspects of the UN-negotiated peace agreement, including the arms-for-land program and the creation of a civilian police force, programs that were crucial to the consolidation of peace and its sustainability. Not surprisingly, as former Under-Secretary-General Marrack Goulding put it at the time, only nine months after the signature of the peace agreement in Mexico City on 16 January 1992 (the Chapultepec Agreement) the country was back on the verge of war.19
This experience allowed de Soto and me to identify a problem that would continue to haunt countries in the transition to peace for the next quarter of a century: the UN and the BWIs were involved in separate but simultaneous political and economic processes which most often placed them on a collision course.
While many analysts and practitioners interpreted our Foreign Policy article as simply calling attention to the lack of coordination between the UN and the BWIs, our message went far beyond. We argued that, in countries transitioning from war, preventing recurrence of conflict must have overriding priority over any other economic or political goal. Thus, in the absence of sufficient foreign aid, funding for critical political and security projects may have to come from “scarce domestic resources,” which might create a real dilemma for the government.20
We asked rhetorically, “Should it [El Salvador] sacrifice economic stabilization to proceed with implementing the peace accords, or should it strictly carry out its stabilization and structural adjustment program, perhaps endangering the peace?” We posited that “[n]either path is independently sustainable. There is an overriding need to harmonize the two processes so that they support, rather than counteract, each other.”21
De Soto and I noted that El Salvador’s dilemma offered a stark example of the need for the “integrated approach to human security” that Boutros-Ghali advocated, particularly in the case of war-torn countries. We also argued that international organizations should support a country facing such dilemma to help it “avoid a collision between competing processes, insisting on the pre-eminence of peace over narrow economic objectives.”22
The practical consequence of accepting that the “political or peace” objective should prevail at all times – including in budgetary allocations – is that, in such a process, the “economic or development” objective may be stalled, at least temporarily. Thus, national policymakers and foreign interveners must accept delays in economic stabilization and structural reform, as well as in basic development benchmarks (health, education, and infrastructure) whenever peace is at stake. They also need a different yardstick to measure “success.”
Because of the “political” nature of peacebuilding activities – including those in the economic area – de Soto and I emphasized the leading role that the UN had to play vis-à-vis the BWIs and other UN agencies in setting priorities, both strategically and operationally on the ground. However, the UN never had the operational, technical, and human capacity needed for such a task – nor, we have argued, has it ever taken steps to fill that need effectively.
In May 2016, de Soto and I published a follow-up article entitled “Obstacles to Peacebuilding Revisited” in Global Governance. In it, we assessed how the major obstacle to peacebuilding – that is, the difficulty in integrating the political and economic aspects of the transition to peace – that we identified in the case of El Salvador in 1992 had evolved over the next quarter of a century.
Such assessment is timely in light of the bleak record with war-torn countries and peacebuilding (Tables 6.1 and 6.2), where a large majority relapses into conflict within the first decade in transition and/or becomes dependent on peacekeeping operations to keep the peace and on aid to finance the country’s basic economic and security needs. I argue that a combination of misguided policies, misplaced priorities, ineffective aid, and widespread corruption – involving both national governments and foreign interveners – lie behind the bleak record.
Countries have found it particularly difficult to move from the economics of war to the economics of peace, and the UN has not been able to provide much assistance. Failure to reactivate economies in an inclusive way from the very beginning has deprived the large majority of the population of a peace dividend in terms of improved living conditions and income-generating opportunities. This has fostered public discontent and fuelled insurgencies and illicit activities. In turn, this has impeded efforts at improving governance, the rule of law, justice, and human rights; has worsened security; and has made national reconciliation elusive.
In particular, our 2016 article analyzes whether the UN institutional and operational capacity to overcome obstacles has improved in light of the so-called Peacebuilding Architecture adopted in 2005. We found that the operational capacity of the organization to assist war-torn countries to reduce the risk that conflict will recur has not improved.23
Moreover, the new architecture has failed to overcome the potential clashes of competence, waste of resources, and bureaucratic hurdles that are imperative to consolidate peace in a cost-effective and sustainable way. Indeed, we found that, after ten years of existence, the architecture might have even contributed to such problems, and we made some recommendations on institutional changes that could help improve the UN capacity for peacebuilding going forward.24
The purpose of the book is to discuss in a more detailed, rigorous, and referenced way – including through the use of relevant country illustrations and statistical evidence – many of the obstacles to peacebuilding that de Soto and I discussed in our Foreign Policy and Global Governance articles.
Because obstacles to peacebuilding relating to security stabilization, political governance, human rights and transitional justice, and social reconciliation are well discussed in the academic literature, this book will focus on the “economic transition,” “economics of peace,” “economic reconstruction,” or “the political economy of peace” (terms used interchangeably), as a key but much-neglected aspect of peacebuilding in war-torn countries in the post-Cold War period.
The book proceeds as follows: Chapter 1 addresses the conceptual development of the term “peacebuilding,” as defined in Secretary-General Boutros-Ghali’s An Agenda for Peace and its use in contrast with the concept of “preventive diplomacy.” The chapter also discusses the concept of “an integrated approach to human security” and analyzes how these concepts have evolved over time and across institutions.
Chapter 2 analyzes the path from war to peace, including the four distinct aspects of the war-to-peace transition: security (or stabilization), political (or governance), social (or national reconciliation) and economic (the economics of peace or economic reconstruction). The chapter argues that these transitions have been mostly analyzed by policymakers, other practitioners, academics, and pundits with a “silo mentality” when in fact these four transitions are closely interrelated, and failure in any one of them puts the others at risk.
Chapter 3 focuses on the economics of war, the economics of conflict resolution, the economics of peace, and the economics of development and the nonlinear connection between these phases. The chapter analyzes “the economics of peace” and argues that this intermediate phase – whose main objective is to ensure that conflict will not relapse – must not be conflated with the “economics of development,” i.e., normal development in countries not affected by violent conflict. Conflation of the two has had dire effects.
Chapter 4 analyzes how the conceptual thinking about these issues evolved at the UN and at the BWIs in the 1990s and 2000s. The chapter shows how many of the ideas developed at the UN and opposed in Washington have gradually spilled over to the work of both the World Bank and the IMF.
Chapter 5 analyzes how “peacebuilding” evolved from Boutros-Ghali’s conceptualization to its operationalization in the field and its actual performance. Since improved lives and livelihoods of the population at large are key factors in peacebuilding, the chapter analyzes the impact of the Peacebuilding Architecture in this area after ten years of existence, to assess whether it has improved or hindered UN efforts in this area.
Chapter 6 discusses the bleak 25-year peacebuilding record of UN operations. The chapter argues that lack of economic expertise at the UN to deal with the economic aspects of peacebuilding is a major factor behind the disappointing record.
Chapter 7 identifies critical economic issues that have affected peacebuilding in UN operations, both positively and negatively.
Chapter 8 presents basic premises for effective peacebuilding based on country experiences with economic reconstruction in the last quarter of a century presented in Chapter 7. Although every conflict is unique, the parties to peace agreements, peace mediators, and foreign interveners must consider these premises, and adapt them to their own context as they negotiate and design peace agreements or implement peace processes.
Chapter 9 proposes “reconstruction zones” as a way to overcome the difficulties of the past and think about ways of moving forward in a more cost-effective, integrated, inclusive, and sustainable way to ensure that countries can eventually stand on their own feet and move to a path of peace, stability, and prosperity.
1 All societies experiment with different degrees of conflict. Except where otherwise indicated, the book uses the term “conflict” interchangeably with “violent conflict” or “deadly conflict,” as in civil war or other internal chaos.
2 The term “multidisciplinary” is preferable to indicate the different expertise needed, but the terms “multidimensional” or “multipronged” have also been used in this context.
3 The term “foreign interveners” is preferable to “international community” since not all member states participate in supporting war-torn countries.
4 The UN system includes all departments in the Secretariat as well as the UN programs and agencies. Although as agencies the IMF and the World Bank are part of the UN system, due to their specific role in economic stabilization and financing, they are also referred to as the BWIs or are included as part of the international financial institutions (IFIs), which also include the regional development banks.
5 Throughout the text, the chapter in brackets indicates that the topic is addressed in more detail there.
6 Edmund S. Phelps, Prologue in Graciana del Castillo, Rebuilding War-Torn States: The Challenge of Post-Conflict Economic Reconstruction (Oxford: Oxford University Press, 2008), vii.
7 UN, Report of the Secretary-General on the work of the Organization (New York: General Assembly document A/70/1, Supplement 1), 22 July 2015.
8 UNODC webpage.
9 Calculated by the author using 2009 data. For details, see del Castillo, Guilty Party: The International Community in Afghanistan (Bloomington, Ind.: XLibris, 2nd edition, 2016), 199.
10 M. Ishaq Nadiri, “Economics as a Pre-Requisite for the Stability of Afghanistan and the Region,” Paper presented at the “Conference on Peace Through Reconstruction” (New York: Columbia University, Center on Capitalism and Society and Earth Institute: 23 October 2009).
11 Del Castillo, Guilty Party, 95–100.
12 Moisés Naim, Illicit: How Smugglers, Traffickers, and Copycats Are Hijacking the Global Economy (2005).
13 Thomas G. Weiss, Prologue in Rob Jenkins, Peacebuilding: From Concept to Commission (London: Routledge, 2013), vii.
14 All indices mentioned in this book can be found online by name.
15 De Soto and del Castillo, “Obstacles to Peacebuilding,” Foreign Policy, 94 (Spring 1994) 69.
16 IMF, El Salvador: Article IV Consultation – Staff Report (Washington, DC: July 1991). For details on El Salvador, see case study in del Castillo, Rebuilding War-Torn States, 95–136.
17 John M. Keynes, The Economic Consequences of the Peace (New York: Harcourt, Brace and Howe, Inc., 1920).
18 Lending from the BWIs was at market rates rather than at concessional terms because Salvadoran per capita income was above the threshold.
19 Marrack Goulding, Peacemonger (London: John Murray, 2002), 241–45.
20 De Soto and del Castillo, Obstacles to Peacebuilding, 71.
21 Ibid.
22 Ibid., 77. See also S. Neil MacFarlane and Yuen Foong Khong, Human Security and the UN (Bloomington, Ind.: Indiana University Press, United Nations Intellectual History Project Series, 2011).
23 De Soto and del Castillo, “Obstacles to Peacebuilding Revisited,” Global Governance, 22 (April–June 2016), 219–225.
24 Ibid.