Making Economics Work for Peace
Economists typically work in the realm of modeling rational economic behavior and drafting policies to foster growth, income and financial stability in that context. But when conflict strikes, the best designed models and the normal interplay of supply and demand can run head-on into some brutal realities. The disconnect between economic theory and real-world practice in societies torn by conflict is something that USIP’s Raymond Gilpin experienced firsthand early in his career as the research director of the Central Bank of Sierra Leone, his native country.
March 17, 2011
Economists typically work in the realm of modeling rational economic behavior and drafting policies to foster growth, income and financial stability in that context. But when conflict strikes, the best designed models and the normal interplay of supply and demand can run head-on into some brutal realities—the imperative of survival and the overriding priority that combatants place on fighting and winning a war.
The disconnect between economic theory and real-world practice in societies torn by conflict is something that USIP’s Raymond Gilpin experienced firsthand early in his career as the research director of the Central Bank of Sierra Leone, his native country. He had been working on policies to lower inflation and build up macroeconomic stability. But when rebels seized Sierra Leone’s capital in 1997, Gilpin quickly realized that the country’s progress—and his work—had reached an end. “All that meant nothing after 1997 because we could not keep the peace,” he says. In the ensuing violence and lawlessness, Gilpin’s own home was looted by militia men. He and his family left the country.
In the years that followed, Gilpin came to focus his energies on the role of economics in preventing and recovering from conflict. Since joining USIP in 2008, Gilpin, director of the Institute’s Center for Sustainable Economies (CSE), has been helping to develop this often neglected dimension of conflict resolution and stabilization in a number of ways, several of which are taking shape this year. A Ph.D. from Cambridge University and former professor at the National Defense University, he also teaches on economics and conflict at the Institute’s Academy for International Conflict Management and Peacebuilding.
CSE recently launched an initiative called the Business and Peace Task Force. Convened in partnership with George Washington University’s Institute for Corporate Citizenship, the group includes a diverse set of corporate and former government leaders who look closely at the linkages between U.S. foreign and security policy and business practices overseas. The Task Force will lay out case studies of investment and business models that have served the goals of transparency, growth and sustainability. The group aims to identify key “sound practices”—in essence, learning from past mistakes and picking out approaches that have enhanced prospects for peace.
The Defense Department’s Quadrennial Defense Review and the State Department’s Quadrennial Diplomacy and Development Review both allude to an important role for the business sector in promoting peace and stability in strife-torn regions—but without detail or much direction. Hence, as Gilpin puts it, there is an opportunity for USIP “to fill the gap” through the Task Force’s future analysis and recommendations for an enabling regulatory framework for companies operating in regions in conflict. It will not, says Gilpin, develop an international code of conduct for multinational companies—work that others have done before. Rather, the Task Force will seek to show how doing good business can also serve the ends of peace. So the group is expected to sketch out the sort of rules and regulations that developed countries such as the United States, Japan and those of the European Union can consider to foster positive corporate behavior—paying taxes, shunning bribery, living up to environmental requirements and keeping their operations as open to scrutiny as possible. Says Gilpin, “It hasn’t been done. We are breaking new ground here.”
“USIP is really a leader in this field,” says Willene Johnson, who heads a Virginia-based consultancy and is the former U.S. executive director of the African Development Bank. “Business can play an effective role in building peace, but it requires that everyone involved – local entrepreneurs, donors, even militaries – share some common values that support that goal.”
From March 14 to 25, the Task Force is hosting a public eSeminar on business and peace issues on the Institute’s new International Network for Economics and Conflict (INEC), another initiative out of USIP’s Center for Sustainable Economies. INEC has the ambition of serving as a one-stop tool for governments, international organizations, corporations and nongovernmental organizations working on development issues in fragile conflict zones. The site is ramping up by posting research on economics and conflict issues, as well as blogs from specialists. Ultimately, development practitioners using INEC will be able to pose questions on issues they are encountering to specialists. INEC is to become a flexible, online library and information-sharing mechanism.
Gilpin is also writing a handbook on the economic dimensions of peace negotiations to be published later this year. Research by the United Nations Environment Programme on peace accords since 1975 has discerned an important tendency: Those agreements that fail to lay out economic arrangements between previously warring parties are about twice as likely to fail—and relapse into violent conflict. In Sudan, a comprehensive 2005 peace accord has held—even through the recent Southern Sudan referendum on self-determination—in part because it spelled out a formula for sharing Sudan’s oil wealth and for resource transfers from north to south. By contrast, efforts to resolve the continuing violence in the northeastern part of the Democratic Republic of Congo did not involve agreement on the region’s economic disputes. The handbook, says Gilpin, will offer step-by-step advice on how to include economic disputes in a negotiating process.
With its wide-ranging expertise in conflict analysis, USIP has perhaps unmatched depth to integrate economic issues into efforts at peacebuilding. “USIP is better positioned,” he says.
