Using examples critically assess the importance of managing economic issues during post conflict peacebuilding

Table of Contents

Abstract

Financial regulations
Monetary policy
Debt relief
Private sector creation
Transparency in Employment
Access to public state service
Free market or free trade
Most favored nation (MFN) status.
Tax collection
Reparation
Women’s issue

References

Footnotes

Abstract

This paper seeks to critically look at how post-conflict stricken countries tend to have different options for the international community, regional, state corporations and the private sector to have the economic reconstructed. Thus, once a conflict in question is resolved, some groups tend to either directly or indirectly oppose the outcomes of the peace agreements or unilateral win by one of the adversarial groups. By giving examples on how the UN, IMF, World Bank has assisted not only in ensuring that peace exists but also at the forefront in rebuilding the capacities of the weakened populations to enhance the infrastructure and subsequently come up with ways to ensure a sustained economy.

Keywords: economic reconstruction, fiscal policy, infrastructure, monetary policy, post-conflict, privatization, reintegration, reparation, structural transformation

Peacebuilding activities mainly focus on social, psychological and economic aspects of a state previously in conflict. According to (Caplan, 2005) economic reconstruction includes physical reconstruction, structural transformation, and economic development. However corruption and organized black markets may hinder the achievement of the expected economic recovery.

According to (Collier & Hoeffler, 2001) study, an economic advantage played a critical role in the onset of a conflict rather than the social and political aspects. This is observed by the fact that the rebels often seek to control the natural resources so as to finance their objectives. The access to these lootable resources may, in turn, augment the intensity, nature, and longevity of a conflict (Addison & Mansoob, 2003). The exploitation of these resources is often promoted by the fact that the groups may have business relations with illicit groups such as human trafficking, small arms light weapons (SALWs) trade, money laundering, extortion, cyber terrorism among others. Such illegal markets are mostly preferred due to the fact that they are highly profitable compared to the legal global markets (Ballentine & Sherman, 2003). Mining and trading of ‘black diamonds’ financed the conflict in Sierra Leone even though it was a source of income to some people. The fact that Charles Taylor’s group profited from the illegal trade did promote the intensity and the longevity hence compromising peace. The absence of security means that there won’t be favorable conditions for a successful economy. The border regions are usually the ‘safe haven and or environment’ for the illegal trade as is the case with Lake Kivu along the Rwanda- Democratic Republic of Congo border. For purposes of ensuring that the exploitation of the resources does not become a problem during the post-conflict phase it is important to carry out a comprehensive DDR process and to some extent economic sanctions (regime, freezing bank accounts of the rebel leaders’, ban on the commodities among others. For example the ban of Charles Taylor in the Liberian conflict to Angola, Somalia, Ivory Coast believed rebel leaders freezing of assets (Rupiya, 2005) (Vines, 2003)

It is known that weak states and fragile states will tend to have criminals either individuals or organized groups that will at all times have the main objective of taking advantage of the economy either economically or to make a political statement. This may be seen with the case of Somalian Al- Shabaab who have flourished from lootable resources that are charcoal, oil, human trafficking, Colombian human extortion, drug trade by the Revolutionary Armed Forces of Colombia (FARC) and Ejército de Liberación Nacional (ELN), has financed the conflict for decades, the Angolan Civil War financed by alluvial diamond, Cambodia’s Khmer Rouge profiting from timber and the resultant forest destruction among others have at times stalled the peace process.^[1]

Wars will always have a negative impact on the economy by destabilizing the economy hence a need to reconstruct the economy through these approaches.

The following are the most important peace-building milestones: ceasing hostilities and violence; the signing of peace agreements; demobilization, disarmament and reintegration; return of refugees and internally displaced persons (IDPs); establishing the foundations for a functioning state; initiating reconciliation and societal integration; and commencing economic recovery (UNDP, 2008).

Economic issues

Economic infrastructure; to some extent, donors through Non- governmental organizations, states, regional organizations may choose to support the population caught out in conflict through various ways. This might either be through offering food donations, clothing, shelter, monetary support for the state-run banks, and medicine among others.

Financial regulations

This aspect entails revising and or stabilizing the financial systems inclusive of the Gross Domestic Product (GDP), revenue and spending controls, budget allocation, and resettlement funds. In the case of the economic diktat^[2] of Kosovo’s Constitution, the United Nations Mission in Kosovo (UNMIK) was the first body to be set up by the European Union (EU) Customs Assistance Mission helped to reform the collection system which subsequently raised the revenues threefold from 1999 to 2003. This was achieved due to the fact that the new system had traversed the crime measures (Caplan, 2004). It is therefore important that post-conflict countries re-establish monetary and exchange rate management regimes as soon as possible. A substantially autonomous and immune central bank that is clear of any political interference should be established.

Monetary policy

Monetary policy is an important part of macroeconomics; which is more inclined towards inflation and unemployment. At times low inflation may not always spell a problem rather with some other macroeconomic variables that may affect the economy such as unemployment. It is known that employment is the main driver of economic welfare. Failure by the government to address unemployment may cause high levels of poverty and inequality in the society.

The International Monetary Fund (IMF), the World Bank plays a critical role in assisting in the reconstruction of conflict-stricken economies. For example in the Bosnia- Herzegovina by reviving bank lending by preserving central bank independence; assisting vulnerable banks while improving nonperforming loan recovery and resolution agenda to revive bank lending; promoting coordination and cooperation among the bank supervisory and regulatory agencies; lowering fiscal risk from public development bank operations (IMF, 2016)

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^[1] This called for the establishment of UN Security Council Resolution in 2000 known as ‘Maintenance of Peace and Security, Particularly in Africa', and the subsequent UN Resolution S/RES/1318 which seeks to address the illegal trade and exploitation of high-value commodities among other formulated reports on the same subject.

^[2] A strict order, authoritarian decree towards a defeated party; Treaty of Versailles