'Economic initiatives' have become a fashionable tool for resolving armed conflicts. For example, it is now common to hear in policy circles that if people can be given 'an economic stake in their own future', then the costs of a turn or return to violence will be sufficiently high that violence will become much less likely. More generally, many have come to believe that economic initiatives (broadly, sanctions or the threat of sanctions, aid, investment and favourable trading arrangements, or the promise of these) can provide effective incentives for giving up - or abstaining from - violence. This paper is intended to give a sense of some of the potential, problems and dilemmas that surround the use of economic initiatives.
It is argued here that various kinds of economic initiatives do indeed have an important role to play and that giving people an 'economic stake' can indeed have a significant and helpful impact. At the same time, the paper stresses that it is crucial to understand - and engage with - what are often very complex political processes if the application of economic tools is to have any chance of success. Short-term economic interventions are unlikely to tackle the deep-rooted causes of armed conflicts and may simply 'paper over the cracks'. Moreover, in the absence of robust political and context-specific analysis, economic initiatives can easily exacerbate conflict and reinforce abuse. To guard against these problems, we need a 'political economy' analysis that is political as well as economic. As part of this argument, the paper looks in some detail at two reports that have been influential in promoting the idea that economic initiatives can contribute powerfully to conflict resolution: first, the Portland Trust report 'Economics in Peacemaking: Lessons from Northern Ireland' (May 2007); and second, the Balls/Cunliffe report 'Economic Aspects of Peace in the Middle East' (September 2007), which deals with the Israel/Palestine issue.
Occasional Paper No. 9, London, UK; Crisis States Research Centre, 42 pp.