Tag Archives: conflict

The Fragile States Index 2013: A Snapshot of Global Stability

fragile-states

The year 2013 proved to be politically dynamic, with many countries seeing political strife or even regime change — among other crises, Ukrainians took the streets to demand more political and economic freedoms and closer ties with the West and the civil war in Syria raged on. The Fragile States Index (FSI) attempts to measure the factors driving such upheaval on a country-by-country basis.

Created by The Fund for Peace and published by Foreign Policy, for ten years the FSI has tried to put into perspective the relative stability of nations and rank them accordingly. The index develops an aggregate total score for each country by taking in a host of different social, political, economic factors: demographic pressure, the quantity of refugees and internally displaced persons, group grievances, human flight and brain drain, the unevenness of economic development, poverty and economic decline, state legitimacy, public services, human rights and the rule of law, the security apparatus, factionalized elites, and external intervention.

According the FSI, the lower the score, the more stable the country. This year’s index is lead by Finland in 178th place, receiving the lowest total score of 18.7, with relative newcomer South Sudan ranking 1st with an aggregate 112.9 (the United States is close to the top, occupying 159th place with a score of 35.4).

One conclusion established by the FSI is that states rarely fundamentally change from year to year. For instance, 9 out of 10 of 2013’s most fragile states still occupy the lowest spots. That being said, the FSI is useful for determining significant and surprising developments and trends. This year’s notable changes and scores included:

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Repairing a Shattered Syrian Economy in the Midst of War

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The common thread that unites all of CIPE’s partners around the world is their dedication to the principles of democracy rooted in private enterprise and free market economics. In all other respects, their diversity is remarkable and represents one of CIPE’s greatest sources of strength.

Ranging from the smallest of local business associations and youth groups to large chambers of commerce and some of the world’s most respected think tanks, our partners all work hard to advance freedom and secure new opportunity for their fellow citizens. They also operate under circumstances as varied and complex as the global geo-political landscape itself. Some of our partners work in conflict environments that require a particular blend of courage and creativity in order to advance their democratic objectives.

The current catastrophe in Syria certainly presents unique challenges to CIPE’s partner the Syrian Economic Forum (SEF), an independent think tank formed in 2012 by business people from across Syria to inform the public policies that will be needed for the country to emerge from conflict and transition to democracy. It may sound starry-eyed to speak of peace and democracy with the war now in its fourth year, at a cost of more than 160,000 lives, over 2.8 million refugees, $143.8 billion in economic losses (as of the end of 2013), three-quarters of the population living in poverty, and incalculable social trauma.

However, SEF and the moderate business community it represents see no other alternative. Independent small and medium business people from across the country, representing the mosaic of religions and ethnicities for which Syria has long been renowned, are a unifying force with the potential to repair and rebuild a now shattered society.

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How Democratic and Economic Factors Drive Conflicts in Africa

UN peacekeepers patrol the North Kivu, where democratic failures, lack of economic development, and a dangerous neighborhood have led to years of violence. (Photo: UN)

UN peacekeepers patrol the North Kivu region, where democratic failures, lack of economic development, and a dangerous neighborhood have led to years of violence. (Photo: UN)

Recently I heard Jakkie Cilliers present his paper “The future of intrastate conflict in Africa: More violence or greater peace?” at The Center for Strategic and International Studies (co-authored by Julia Schunemann for the Institute for Security Studies in South Africa). I went to the event thinking the discussion was going to focus on current conflicts and tensions in Africa, and I was going to leave debating whether or not intrastate conflict will ruin the progress African countries have achieved. I was surprised to find that instead the discussion focused on drivers of intrastate conflict in Africa and even more surprised to find that a majority of the drivers are related to democratic and economic factors.

The authors have identified seven correlations associated with internal conflict:

  1. Poverty and Instability
  2. Transitions from Autocracy to Democracy
  3. A Democratic Deficit
  4. Unemployed or Underemployed Youthful Populations
  5. A Tendency toward Repeat Violence
  6. The “Bad Neighborhood” Effect
  7. Poor Governance

Excluding a tendency toward repeat violence, the other six correlations can be grouped into two larger categories, democracy and economy. In terms of democratic factors, the authors purport that it’s a lack of democracy and democratic governance that correlates with violence in Africa. Research shows that “[s]tates that experience stalled transitions from autocracy to democracy or adverse regime changes” are more likely to experience intrastate conflict.

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Eat your chocolate and strengthen democracy too

(Photo: Sarah Gerrity/Sweetsonian.com)

Conflict chocolate is nothing new. West African countries produce seventy percent of raw cocoa worldwide, led by conflict-ridden Cote d’Ivoire and its 1.3 million tons of annual production. But new efforts to curb illicit flows of cash could be the first steps toward limiting the ability to support violent conflict with funds from trading in valuable commodities such as cocoa.

A 2007 Global Witness Report illuminated the primary structures used to siphon off cocoa trade revenues to fund violent conflict in Cote d’Ivoire. Besides paying for more guns and bullets, the abuse of these funds also means fewer dollars going to cocoa farmers and less trust in public institutions.

According to that report, the national Cocoa and Financial institutions created under former President Laurent Gbagbo to centralize cocoa sales and exports offered $20.3 million in direct support for war efforts on top of export revenues that Gbagbo’s Government tapped for $38.5 million more in arms purchases between 2004 and 2007; meanwhile the opposition Forces Nouvelles movement simply seized control of cocoa export tax revenues over part of the country’s cocoa producing region, bringing them $30 million between 2004 and 2007.

Plenty of those dollars are just a few degrees of separation from the wallets of consumers in the United States and Europe. But there’s a bigger picture here than the consequences of self-indulgence.

While Global Witness and its supporters aimed to convince the global cocoa industry to be more transparent and to avoid funding conflict through its raw cocoa purchasing, the report did not address the issue of how governments and opposition movements manage to store and exchange such large sums of money for purchasing large volumes of small arms on the black (and gray) market.

As financial systems have become increasingly globalized and the technology to manage them has shrunken to the point where you can fit gigabytes upon gigabytes of data onto servers into a closet with an internet connection, it has never been easier to store and exchange money safely and in large volumes.

Such ease has been a powerful force for extending greater global economic opportunity to an unprecedented percentage of world population. Unfortunately, some of that opportunity has been in illicit trading of small arms – along with drugs, endangered animal species, counterfeit goods, and human beings, all vividly documented in Moises Naim’s Illicit: How Smugglers, Traffickers and Copycats are Hijacking the Global Economy.

Washington, D.C.-based Global Financial Integrity (GFI) has emerged over the past few years as the leading voice on the topic of illicit financial flows – the use of tax havens, legal loopholes, transfer mis-pricing, secret bank accounts and other tools to store and transfer large volumes of money. The vast majority of illicit financial flows comes from multinational corporations trying to reduce or eliminate tax obligations in developing country jurisdictions with typically low tax collection infrastructure. But governments, opposition movements, criminals and violent outfits of all types use many of the same tools to store stolen or siphoned funds and to pay small arms dealers. It’s much safer than carrying briefcases full of cash around war zones.

GFI is the lead member of the Task Force on Financial Integrity & Economic Development, a global coalition of civil society organizations and over 50 governments working together to reduce illicit financial flows and raise awareness of their effects–perpetuating armed conflict, hobbling economies, and eroding democratic governance in places like Cote d’Ivoire, to list a few. The World Bank and the International Monetary Fund recently announced their own internal efforts targeting illicit financial flows in one form or another. If successful, these efforts alongside countries coordinating on financial transparency across borders would help to curb or even eliminate the ability to store and transfer funds for destructive purposes.

By promoting financial transparency, you can eat your chocolate and help strengthen peace, prosperity, and democracy too.

The military is not the answer

A typical street scene during 2009 in Colombo, Sri Lanka's largest city. (Photo: Biel Calderon via Flickr)

For more than 25 years, Sri Lanka had been consumed by an ongoing civil war. With the defeat of the Liberation Tigers of Tamil Eelam in 2009, Sri Lanka has turned its focus to governance and economic growth. Although the end of hostilities has brought relief, moving from war to peace has its own challenges.

One of those challenges is what to do with a military whose soldiers are no longer needed for the job they were recruited for. Sri Lanka has found plenty of tasks for them to do, everything from building bridges and houses to selling vegetables and operating an air-ticketing agency. The military can be a capable institution, but relying too heavily on the military can prevent the development of other institutions necessary for a healthy, functioning democracy. Whether its managing government services, or running businesses, turning to the military should be a last resort.

For many countries, the temptation to employ the army for roles beyond defense is too much to resist. Militaries tend to be highly structured and efficient organizations. In a country with few or weak institutions, the military is often the one institution seen as able to ‘get things done.’ But turning to the military to solve non-military problems can be perilous. Once the military starts taking on additional roles, it can be hard to stop.

Sri Lanka would be wise to study the role the military plays among its neighbors. With Bangladesh’s democratic government mired in corruption, the military stepped in to form a caretaker government in 2006. Although largely welcomed as a stabilizing force, the caretaker government was no better at overcoming Bangladesh’s challenges, and created problems of their own. According to the International Crisis Group:

In its first year in power, the government made some 440,000 arrests ostensibly linked to its anti-corruption drive, creating a climate of fear in the country. Its poor handling of the economy and natural disasters has aggravated underlying scepticism over its real intentions. The continued state of emergency and efforts to undermine popular politicians and split their parties have left many questioning its sincerity.

Elections were held in 2008 and Bangladesh returned to civilian rule. Bangladesh has regularly topped the list of most corrupt countries. Desperate for a solution, the caretaker government offered a glimmer of hope. Fighting corruption requires institutional changes that remove the incentives for corruption in the first place. The military proved capable at arresting anyone suspected of corruption, but was wholly unable to enact the institutional changes necessary.

Pakistan faces its own challenges with its military. Although no longer a military government, the military is still the dominant player, bringing in billions of dollars in foreign assistance, not to mention its vast businesses with $10 billion in assets. In total, Pakistan’s military businesses make up over 7 percent of GDP. But is the military contributing? In her book, “The Military Inc: Inside Pakistan’s Military Economy,” Dr. Ayesha Siddiqa Agha finds that many of the Pakistan military’s businesses are operating at a loss, propped up by the government. These businesses crowd out more legitimate private businesses and dry up resources that could be used more efficiently. But taking away support from an institution like the military is no easy task.

In many countries, the military is a highly respected institution, often viewed as bound by honor and above partisanship. When a country is facing challenges, it can be easy to look to the military to solve them. But tasking the military with duties beyond defense invites new challenges. Militaries are not designed for such tasks, and however well intentioned, they will likely fail.

The 21st Century Ideological Battle

The 20th century saw the rise and fall of fascism and communism – one went with a bang and the other with a whimper.  At the turn of the millennium many in the West were convinced that we were facing the end of history, with Francis Fukuyama telling us as much in 1989.  For a decade or more many in the West felt confident that markets and democracy had won at last and the world would live in an era of peace and prosperity.  In 1996, Thomas Freidman even came up with the “Golden Arches” theory to describe the new era of peace since no two countries with a middle class large enough to support of McDonald’s had ever gone to war (this theory was put to rest with the 2008 Russia-Georgia conflict).

History, however, seems to be carrying on.  The ideological battle of the 21st century will be fought between “good capitalism” and “bad capitalism.”  The characteristics of each system are laid out in a 2008 book of the same name by William J. Baumol, Robert E. Litan, and Carl J. Schramm. 

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Tourism: Another Casualty of the Georgian Conflict?

As Georgia and Russia move from the battlefield to the negotiating table, there is hope that Georgians soon may be able to put the messy incident behind them and get on with their daily lives. However, a study conducted by the Association of Young Economists of Georgia (AYEG) points to a particular issue that may hinder Georgia’s return to normalcy – the war’s effect on the country’s tourism industry.

The study, which AYEG conducted as part of a CIPE-supported project, focused on the conflict’s impact on the Georgian business environment. AYEG asked representatives of 1,000 businesses of all sizes what effect the conflict had on their ability to conduct business and on their plans for the future.

Among the key findings of the study was that that, while most industries reported decreased demand and trouble securing loans, the tourism sector was particularly hard-hit. Of tourism-related businesses surveyed, 45% reported a decrease in sales of 81-100%, compared with 10% of manufacturers and 15% of service providers. Respondents from the tourism industry were also relatively pessimistic about their ability to recover quickly. Only 5% of tourism-related businesses believed that the recovery period could take fewer than three months, while 21% of manufacturers and 15% of service providers believed the recovery could be accomplished in that time frame.

While tourism is not among Georgia’s top industries, it has grown rapidly in recent years and thus represents an important factor in the country’s overall development. According to UN data, tourism in Georgia grew from $97 million to $313 million from 2000-2006. Fallout from the conflict with Russia has the potential to reverse this trend.

This article in Transitions Online details the harsh impact the conflict had on Georgia’s resort operators. On August 7, the day the conflict began, the port city of Ajara hosted 34,000 vacationers, most of who understandably fled. Instead of travelers with fat wallets, guesthouse owners found themselves hosting Georgian civilians displaced by war. In all, Ajara’s tourist industry suffered losses of around 6 million lari (more than $4 million), which equals its total revenue from 2007. Georgia must now find a way to reestablish its image as a welcoming destination of unique culture and beautiful landscapes, rather than a land racked by violence and separatism.