In October 1998 the Development Assistance Committee (DAC) Task Force on Conflict, Peace and Development Cooperation agreed to commission a number of case studies to examine the use of overseas development aid (ODA) as an incentive or disincentive in situations of violent conflict. Four cases were selected which reflected different conflict situations: Afghanistan, Bosnia-Herzegovina, Rwanda and Sri Lanka. 
The studies examined objectives sought through the use of incentives and disincentives; contextual variables and determinants of effectiveness; available development cooperation instruments; donor coordination; and policy trade-offs and unintended consequences. In May 1999 the studies were reviewed in a workshop, and in August a synthesis and commentary report  was reviewed by an expert group. These form the basis for a consensual policy development process that will be submitted to DAC and then incorporated in the next edition of the Guidelines, currently scheduled for December 2000.
The definitions of incentive, disincentive and conditionality were refined only after the case studies had been completed. According to the synthesis report:
Incentives for peace refer to all purposeful uses of aid that strengthen the dynamics that favour peace, by influencing actors behaviours, by strengthening pro-peace actors capacities, by changing the relations between conflicting actors (ethnic groups; the state and civil society), and by influencing the social and economic environment in which conflict and peace dynamics take place. Disincentives do the opposite: they weaken and discourage the dynamics that favour violence. Incentives and disincentives can occur in a conditional or in an unconditional manner (i.e., with or without reciprocity requirements, with or without an expected immediate response).
1. The influence of aid in affecting the course of violent conflict is limited. While aid always has economic and political implications creating incentives and disincentives for peace or for war the political economies of war, with few exceptions, are driven by international, national and local interests of greater magnitude than the financial or political clout of external aid.
2. Aid inputs cause both intended and unintended results, and always have an incentive or disincentive quality. Far from being a neutral factor, aid and aid agencies are seen as players in the conflict matrix. Aid can have a net negative effect, exacerbating conflicts rather than supporting peaceful processes, and in many cases perceptions are at least as important as facts.
3. In attempting to positively influence conflicts, aid agencies have increasingly used conditionality in recent years. The effects, however, have been disappointing. Conditionality does not work well except in specific circumstances, and when applied in a coordinated manner.
To become more effective in pursuit of peaceful change the aid community will have to change at many levels, from policy making and financing to implementation. This should include the following:
1. Aid agencies will need to improve their capacity to understand the environments in which they operate, including how they are perceived by various key actors. Analytical capacity should be used to develop peace and conflict impact assessments as a starting point for programme planning in conflict prone areas. Aid agencies will also need to improve their strategic vision in terms of their involvement in conflict areas. Since aid has the potential to play a role in shifting the balance of incentives from war to peace, optimal uses must be identified for the relatively small amount of economic and political resources at the disposal of the aid community.
2. Aid agencies should agree to coordinated implementation approaches. As noted in the Guidelines, however, coordination is voluntary in the current international assistance regime.  ODA policy is subject to the domestic agenda of donor countries, and is usually treated as a part of foreign policy. There is often a lack of clarity on the goals of cooperation, and a lack of coherence in the strategy of donor countries with political aid and security interests not always working in concert.
3. To be effective, aid agencies will need to influence international actors in other sectors, such as diplomacy, military, trade and finance, if they are to develop coherent policies conducive to peace. This can only occur through a collective understanding and commitment among the diverse aid community as a basis for encouraging and lobbying for policy coherence among other international actors.
Problems to overcome
A reliably positive effect of aid on conflict situations will require more analysis, strategising and coordination. Blockages to cooperation in these areas are well understood. As noted in the Guidelines,  coordination is currently voluntary in the international assistance regime. Multilateral agencies and international NGOs in particular face a conflicted situation, with the financing structure of humanitarian and development assistance placing aid agencies in competition with each other. This means that coordination becomes a mixture of cooperation, competition and conflict. Debilitating competition and conflict among multilateral agencies is a structural problem that can only be addressed by a major restructuring of the current governance and financing regime.
In being responsible to their primary institutional interests, as well as the pursuit of fulfilling their responsibility to save and preserve life, aid agencies often find coordination more of a burden than a useful part of their modus operandi. A realistic vision that humanitarian and developmental goals can be better achieved through coordinated action is only now beginning to emerge.
Leadership among donors or groups of donors has been pointed to as an option to consensus-based approaches to coordinated action that have not proven effective. It remains to be seen whether coalitions of the willing can proceed without slipping into divisive unilateral action. At a minimum, for this strategy to succeed there will need to be transparent communication.
 Uvin,P, The Influence of Aid in Situations of Violent Conflict: A synthesis and commentary on the lessons learned from case studies on the limits and scope for the use of development assistance incentives and disincentives for influencing conflict situations; OECD, Paris, 1999. The case studies, and synthesis report are now available on the web at http://www.oecd.org/dac.