State Secretary Sigrun Møgedal, Ministry of Foreign Affairs

The Economics of Civil War

Soria Moria, 11.06.01

First of all let me say how pleased we are to see the partnership between Norwegian institutions and the World Bank in this "case-study project", and even more pleased to see the broad contribution from developing country researchers to the programme. This research theme has a lot to do with good methodology. But also a good deal to do with who is looking at the problem, with the glasses through which both contextual factors and findings are being examined.

Economic aspects of conflict and war are moving upwards on the global policy agenda, in a development policy perspective as well as in terms of security policy and foreign policy. The great relevance and importance of these issues are clearly demonstrated on the floor of the Security Council. But also in the arenas for development policy debate, such as now recently at the spring meetings of the World Bank, where the challenges facing countries during and after conflicts were particularly addressed. This also applies to the recent annual meeting of the African Development Bank and to recent meetings of the UNDP.

Low-intensity conflicts, civil strife and war are major barriers to sustainable development and economic growth. We know that the forces involved are extremely complex, each situation with its unique patterns of interests, power and powerlessness, devastation and prosperity. Widespread poverty and armed conflict go hand in hand in countries rich in resources. Development efforts are not only halted or damaged, but actively targeted and undermined.

The world is acknowledging to an increasing extent that economic ambition and greed drive a large number of conflicts, with the interested parties often far away from the site of the struggle. This is obviously not a new phenomenon. But it is remarkable that only now are we willing to say explicitly that economic agendas play a key role in civil wars, and put them up front. It makes the picture more complex, since it reveals links and double agendas, including those that cross boundaries and borders, from the local to the global arena and back again. What appears to be local is often international.

Both at the local and at the international level, economic interests and agendas sustain conflicts. At the same time, economic interests benefit in the long term from peace and conflict resolution. The question is who is served by what, at what time, and how these interests can be transformed into a shared interest in conflict resolution, reconciliation and confidence-building – for governments and opposition movements, civil society and private sector actors.

Lack of security for people, communities and groups fosters a short-term focus, away from long term development. Given the momentum of the Millennium Declaration, the International Development Goals and the shared commitment to poverty eradication and sustainable development, we have no choice but to push on with our commitment to conflict resolution and peace-building. This applies to those of us who work for this on the development side as well as those that have a peace and security or foreign policy perspective.

It is indeed strange that it has taken us so long to discover that these concerns cannot be tackled in isolation.

This is the basic reason why the Ministry of Foreign Affairs is supporting the research programme on the Economics of Political Violence. The World Bank is well placed to generate more knowledge on economic aspects of conflict, and to contribute such knowledge to the broader discourse on war and peace and to the joint global efforts being carried out through the UN and its member states.

But let us be careful about depicting conflict as a dominating element. Not long ago I attended the annual meeting of the African Development Bank. Before the meeting there was a Symposium on Partnership for African Development. The African leaders did not avoid speaking about devastating conflicts, vulnerable democracies and the stumbling blocks to good governance. But they were concerned to help development partners discover Africa as a variety of countries, in different circumstances, facing different challenges.

We heard about a new momentum in regional integration efforts. African leaders claimed the right to lead, respect for their leadership and space for their own ability to find solutions. The international community was advised to discuss performance based on realities in the field and not on sweeping perceptions. This view is also highly relevant for approaching the issues that will be discussed here.

The reality for countries and the reality for people. We need a better balance in our attempts to capture reality, bridging the North-South divide also when it comes to what counts in the academic arena and how knowledge is made use of in public policy, diplomacy and politics. This need for more local and country-specific knowledge is why I consider the launching of the Case-Study Project at this conference so important. Particularly the way you have organized the 20 country studies, building on a partnership of local and external researchers.

Our position in the Security Council is that UN intervention, in the form of peace operations, has a major role to play in international conflict management. But, while the goal of conflict management in the past was to maintain or recreate the status quo, the goal today must be to manage the development process so that the underlying motives and causes that drive conflict are changed. Identifying these factors, and finding approaches to social inclusion and negotiated strategies that overcome barriers and expose undermining agendas, must be the way forward. This requires a comprehensive and long-term approach to peace-building. This is our main focus for our period in the Security Council.

This is also a key challenge for us as a development partner. What does it mean in the context of poverty reduction strategies, particularly as regards including different interests in the consultation process and making special efforts to identify who is being included, whose interests are being served and how these interests are linked? What does it mean in terms of building a constituency for peace, a constituency for truth and a constituency for trust in all development activities and arenas?

While being prepared to act on warning signals in situations that are deteriorating, we must also be prepared to act on encouraging signals in situations that are improving in some way. In other words, we must act not only to put a stop to what is going wrong, but also to support of what is going well.

Preventing conflict and building peace cannot be based on unstable solutions – the root causes of conflict must be addressed. Therefore we need better clues about the range of different factors involved and analytical tools to better explain how they are interlinked. This applies to links to the root causes of poverty and the nexus of factors sustaining poverty. Links to the complexities of the Hiv/Aids disaster must also be made visible, and the gender dimensions of all these factors and forces must be understood.

Comprehensive peace-building has to be based on local circumstances, and the instruments used should be flexible in order to deal with these circumstances. Each conflict situation is unique in terms of its causes, actors and political structures, and, ultimately, in terms of effective strategies for peace-building afterwards. This means that if we are to be relevant partners in these processes we must improve our capacity to listen and learn and to base our actions on the knowledge thus acquired.

One of our guiding principles must be to ensure local ownership of peace building. This needs to be a locally oriented process. Where possible, local government and local institutions and actors must be in the lead. In all our talk about the need for building ownership, we must be able to discern that it is there – if we allow it to unfold.

We need more knowledge about the mechanisms and conditions for building local ownership. In my view this is very much a question of incentives. The incentives to build peace and reconciliation must be stronger than the incentives to generate conflict. In this regard economic incentives are crucial. I hope that this research programme will generate more knowledge about which incentives work and which do not, and what are the real barriers to making them work.

Development aid can play an important role as a catalyst for change. But this requires us to use development aid more intelligently, we need more "smart" solutions that generate the right incentives. In this context perhaps the biggest challenge to finding such solutions is our own limitations.

You have chosen a very appropriate setting for your discussion. In Norwegian folklore Soria Moria is a fairytale castle where our dreams come true. On the way to the castle, there are trolls. The only way to defeat the trolls is to bring them out into the daylight, expose them to the sun. Economic agendas in civil wars are trolls that need to be brought into the daylight, for all to see. This will open the way to the castle of peace, through a valley of development that is pro-poor and sustainable.

I wish you a successful conference and every success with this important research programme.

Thank you for your attention.