Tag Archives: post-conflict

Beyond Cronyism, Beyond Violence: Reconstructing the Syrian Economy

This image from Aleppo Media Center, authenticated by the Associated Press, shows damaged buildings in Syria's former economic heartland.

This image from Aleppo Media Center, authenticated by the Associated Press, shows damaged buildings in Syria’s former economic heartland.

The stories coming out of Syria nowadays paint a picture of an economy taken over by violence, in which legitimate private-sector business activity has nearly ground to a halt. Rival groups raid a textile factory, promising protection in return for money; the factory is burned down when the two groups start fighting. The owner of a brake-lining plant does not know what happened to his machinery after it was looted—he only knows that his “entire wealth and life” have been dismantled. No longer able to rely on legal remedies, some businesspeople flee with their capital to countries such as Egypt, where they may remain even after the war has ended.

The statistics reported by the Syrian Center for Policy Research confirm this grim picture. Economic loss totals $103.1 billion. Almost half the population is unemployed, with 2.33 million job opportunities lost since the beginning of the conflict. The price of consumer goods has tripled. Energy prices continue to rise while private consumption and investment continue to fall. Sanctions have chopped oil exports in half, and the decreasing value of the Syrian pound has not led to an increase in non-oil exports. Manufacturing and mining barely contribute to GDP (just 4 percent), and textile factories—located largely in areas that have witnessed the most fighting—have closed by the hundreds, or possibly even thousands. A Byblos bank report estimates that 75 percent of production facilities in Aleppo are no longer operable.

It can be easy to lose sight of the importance of economic recovery amidst the urgent need to stop the fighting. But rebuilding the Syrian economy will be crucial to any long-term peace and reconstruction efforts, as will the manner in which it is rebuilt.

Before 2011, economic benefits mainly accrued to a small group of well-connected elites. Smaller enterprises could hardly expand, thwarted by contradictory laws, a weak financial system, corruption, and limited export capacity. Future reconstruction efforts should focus on rebuilding Syria’s economy in a way that replaces crony capitalism with a private sector in which all citizens have the opportunity to participate and thrive. Reforms that increase competition and bolster small- and medium-sized enterprises will stimulate economic growth and give more citizens a stake in the country’s economy and future.

The private sector should play an active role in reforming the Syrian economy once the conflict ends. To this end, the Syrian Economic Forum (SEF), a CIPE partner, has already begun taking steps to organize the private sector to advocate for necessary economic reforms.

In its First Annual Conference in Gaziantep, Turkey, SEF gathered Syrian businesspeople from inside the country and abroad to discuss recommendations for rehabilitating factories, amending investment laws, and improving educational opportunities for Syria’s youth. While it will certainly take a long time before the dire economic situation in Syria can even begin to improve, efforts such as SEF’s will help to ensure a future democratic Syria with an economy that offers all Syrian citizens the opportunity to achieve welfare and prosperity.

Peako Jenkins is a Public Service Initiative Fellow for the Middle East & North Africa at CIPE.

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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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.

Southern Sudan’s imminent secession

With only two months left on the clock to referendum, building a prosperous and democratic new state in the turbulent Horn of Africa region has become a challenging undertaking for the semi-autonomous government of southern Sudan. The referendum to vote for either unity or secession will take place in southern Sudan in January, 2011, according to the Comprehensive Peace Agreement signed by the north and the south in 2005 to end Africa’s longest civil war in modern history, and to establish a crucial framework for democratic transformation in the country.

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Urgency and Legitimacy in Post-Conflict Countries

Wade Channell shares great insights on reconstructing legal structures for lasting success in his new essay, “Urgency and Legitimacy: Tensions in Rebuilding the Legal Structure for Business in Post-Conflict Countries.”

“Urgent lawmaking is not the same as urgent building projects…  Normally, laws derive from the surrounding culture and power dynamics, with strong historical underpinnings as well. Unlike a machine in which parts can simply be exchanged, the legal system is dynamic, much more akin to a human body in which parts cannot simply be exchanged because of the complexity of factors involved in the transplant… The primary victim of urgent lawmaking is legitimacy.”

Mr. Channell calls for a voice for business in post-conflict reforms in order to foster legitimate economic reforms that address urgent business priorities while building long-term stability. The essay was published by USAID’s BizCLIR (Business Climate Legal & Institutional Reform).

Women Entrepreneurs Help Rebuild Post-Conflict Economies

Reviving an economic base is one of the first priorities in post-conflict reconstruction. When large companies have suffered too great loses to resume operations quickly, and while foreign investors may still be wary of the security situation, local small and medium-sized enterprises (SMEs) are often the first signs economic rebirth. Increasingly, women are joining men in creating their own SME ventures, contributing both to supporting their own households and to their countries’ recovery. But much remains to be done to empower those women: analysis of emergency and post-conflict spending patterns done by the UN Development Fund for Women shows that just 2 percent of post-conflict budgets target women’s empowerment or gender equality.

The presence of women entrepreneurs in post-conflict societies matters for several important reasons:

1) Women are often the ones left behind to support their families after their husbands and brothers went off to war and their ability to provide that support is crucial for survival of the entire communities.
2) Women are typically among the most trusted members of society following a conflict given their role of bystander or victim rather than perpetrator, and – as new economic leaders – they can foster reconciliation.
3) Countries struggling to alleviate post-conflict poverty need to harness all human capital available to succeed, making entrepreneurship a means for overcoming traditional social barriers to women’s economic participation.

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A Balancing Act toward Economic Reconstruction

There is widespread understanding that social and economic reconstruction in the immediate post conflict phase is not only a key to preventing a recurrence of conflict, but is also a critical step toward long-term development. Despite the importance of foreign aid in this endeavor, ultimately, effective and sustainable reconstruction is largely determined by the commitment and capacities of local populations, including civil society and grassroots groups that are at the front lines of recovery, to maintain and cultivate the process.

In an in-depth look at the reconstruction of war-torn economies, CIPE Middle East and Africa Regional Director Abdulwahab Alkebsi appeared on Counting the Cost, Al Jazeera’s weekly television program that highlights business and economic news from around the world, to discuss how nations can begin “picking up the pieces” and restore economic prosperity.

The instability that conflict brings to a nation often leaves the economy crippled, with the Middle East being no exception. The program notes, however, that economic conditions are beginning to change for the West Bank city of Nablus.

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