The economy and peace.

 

Economic issues - global and local - are at the root of many contemporary conflicts and are crucial to their long-term resolution. Economic issues are also inextricably entwined with national, regional and global political, social and gender dynamics, especially when state institutions and revenues have been a means to enrich or benefit particular social groups. But the economic dimensions of peacemaking and political economy analyses are often deferred to later phases of conflict management or treated as distinct from the political and social dimensions of peacemaking, despite being an important source of ongoing conflict and competition.

Conflicts also create war economies with new winners and losers, meshing local and global economic interests with elite networks, many of which have strong interest in the distributional effects of any peace agreement. A post-conflict environment provides rich opportunities for criminal groups and illicit economic actors, often with links to armed groups or state elites. These powerful interests cannot be left aside as they affect everything from macroeconomic policies, infrastructure development, the provision of services, gendered access to land or employment and the distribution of state revenues from natural resources. Conflict-affected and fragile states often have limited fiscal and revenuegenerating capacities, magnifying the role of the business sector (local and transnational) in creating value and opportunities and providing basic services. Harnessing these limitations through greater advocacy and engagement with business actors can help sensitise them and their political constituencies to the importance of their role in building peace and stability and to the need for conflict and gendersensitive investment and commercial decisions. Shared norms, such as the Guiding Principles on Business and Human Rights, can provide a framework for deeper engagement. Today, a broader array of international development, financial and investment institutions are involved in peacemaking efforts, but more is needed to overcome the frequent misalignment of their efforts with the work of peacemakers. Sustainable development and sustainable peace considerations must advance in tandem and be mainstreamed throughout the process. Steps towards this could include: 

• moving from "conflict-sensitive" to "peace-responsive" international and foreign direct investment and development assistance, in cooperation with international development banks and financial institutions.
• understanding the conditions shaping effective involvement of economic actors in peacemaking and delivering the economic foundations of peace to identify the sectors and companies more likely and able to support peace-positive investments and activities.
• encouraging investment in local human and social capital, and institutions and enterprises that can flourish independently over the longer term, especially in regions where youth are prone to recruitment into criminal organisations, violent extremism or illicit activities linked to war economies.
• ensuring that the local economy can respond to economic shocks in a manner that protects local communities and institutions, by establishing legal and administrative frameworks that protect investments and livelihoods and minimise corruption and fraud at all levels.
• establishing a rules-based market that respects human rights, facilitates the economic inclusion of marginalised groups and contributes to decent labour opportunities to provide sustainable alternatives to informal, illegal and criminal market activities.
• encouraging systematic efforts to address structural inequalities and access to economic opportunities for disadvantaged groups.
• supporting the establishment of a basic social safety net for the population that is able to provide services such as health care and equal opportunities to access education and training supporting the development of a robust transportation and technological infrastructure to better integrate distant regions into national and international trade networks.
•  engaging with constructively oriented diaspora communities to facilitate their economic support and investment in reconstruction and sustainable development.

- Rationale -

International and private sector investment is often promoted as a panacea for peacemaking, based on the idea that development and growth will lead to peace and stability. This hands-off vision minimises the more direct positive - and negative - role that business actors can play in the entire process of peacemaking. Although their actions can directly advance sustainable peace, businesses' practices that are not conflict- nor gender-sensitive, and that do not follow due diligence and appropriate investment rules and practices, can exacerbate intercommunal and state-society tensions and fuel unrest, instead of contributing to dialogue and confidence building. The transition from a wartime to a peacetime economy is challenging, given the opportunities created by the existence of large-scale illicit or criminal activities and networks. "Crowding out" such large-scale activities through promotion of legal markets and opportunities to provide people with licit opportunities for income, as well as enforcement against illicit activities, are central to stifling criminal and armed group activity. The domestic business community has particularly important role to play in this regard and must also follow guiding principles on best practices for business and human rights. a The role of natural and renewable resource exploitation, including who accesses, controls, or profits from it, is a critical dimension of sustainable peacemaking. In conflict-affected counties, where human capital and other forms of investment may be scarce, the exploitation of natural or prominent renewable resources becomes an important revenue source for the state, which can be captured soon after violence ceases - or even as violence continues. Given the relatively great importance for state revenues, opportunities for corruption and unsustainable exploitation exist, and tensions often arise between the interests of local communities (who often face the negative externalities from resource exploitation) and revenue-seeking national authorities or multinational corporations. Natural and renewable resource exploitation is a sensitive economic sector that needs to be monitored carefully. While advances in corporate social responsibility and due diligence have been made, major actors (including international financial institutions and multinational corporations) often do not fully incorporate local interests or concerns around equitable distribution and shared benefits for the common good in their decisions.

The principle of subsidiarity can help address this issue by encouraging and supporting legitimate partnerships with diverse actors, including local, national, regional, international and business sectors. This differs from topdown approaches where development partners or business actors align with state institutions that have authority over local and civil society actors, often inhibiting genuinely inclusive ownership. Subsidiarity in economic terms can promote more efficient outcomes, while also mediating between individual and local community needs and interests and the broader common good. It can help align sustainable economic development policies with sustainable peacemaking programmes.