Understanding the political economy of armed conflicts can contribute greatly to enhancing the security of humanitarian operations. Since the mid-1990s, the body of literature on war economies has grown steadily. Following a political economy approach, scholars and practitioners started looking at how armed conflicts redistribute wealth and power within war-torn societies. This article discusses how this approach can assist humanitarian organisations in improving the security of their staff and operations.
In the aftermath of the Cold War, academics and policy-makers had difficulty grasping and dealing with the so-called new wars afflicting weak and collapsed states such as Liberia, Sierra Leone and Somalia. The analytical framework inherited from the Cold War, with its focus on EastWest rivalry and ideological confrontation, was of little use in trying to understand these brutal conflicts. The political economy approach offered a new framework to analyse civil wars by focusing on their economic dynamics. Surprisingly perhaps, the first major contributors were not economists but humanitarian practitioners and political scientists. Until the end of the 1990s, economists generally regarded civil war as an exogenous event impervious to rigorous economic analysis. By the turn of the century, studies undertaken by the World Bank under the leadership of Paul Collier had sparked a lively debate on greed versus grievance, i.e. on whether war was motivated by economic rather than political objectives. In an article entitled Homo Economicus Goes to War Christopher Cramer provides a detailed account of the way economists started to explain rebellion as rational behaviour by profit-maximising agents.
The political economy approach explained
The political economy approach focuses on how an armed conflict redistributes wealth, income, power and destitution in a given historical and institutional context. It asks three main questions:
- How do belligerents pay for war?
- Who wins and who loses from war (and peace)?
- What are the socioeconomic functions of armed violence?
To address the first question, it is useful to classify war economy activities into four broad categories. The first comprises activities that directly contribute to financing the war effort, like diamond or timber extraction and trading in the Mano River region of West Africa in the 1990s. These activities can be a root cause of conflict, or become the main reason for its perpetuation. The second category consists of illegal activities made possible by the climate of impunity and lawlessness that civil war helps to create (e.g. poppy and coca cultivation in Afghanistan and Colombia; looting of cultural treasures in Cambodia). Globalisation fosters a third category of war-economy activities, which includes trans-border exchanges through global trade and financial networks involved in arms, gems, drugs and other illicit activities. The fourth category consists of survival activities and coping strategies carried out by the people caught up in armed conflict. This includes not only vulnerable people engaged in subsistence farming, for example, but also those involved in poppy cultivation in Afghanistan or in prospecting for alluvial diamonds in Angola, the Democratic Republic of Congo (DRC) and Sierra Leone.
All four economic activity categories are closely intertwined. They underscore that war economies function within the realm of the market and therefore can be both examined and addressed through standard economic tools and policies. They respond to price signals and other standard incentives. Regulations and sanctions, however, are often ineffective in the face of weak judicial systems and ineffective enforcement mechanisms. Longstanding efforts to eradicate poppy cultivation in Afghanistan and promote alternative cash crops and livelihood options show how difficult it is to transform war economies. Buying warlords off by offering them money or key political positions may yield some quick wins, but these are generally short-lived and provide perverse incentives by instilling a culture of rewarding violence and potential peace spoilers.
Addressing the second and third questions regarding winners and losers requires taking a look at the costs and benefits of civil war. Costs are generally much higher and more widely distributed than benefits, and the vast majority of the population loses out of war. Indirect costs resulting from the erosion or absence of essential public services are often more severe than the direct costs associated with the destruction caused by armed violence itself. But there are also winners who benefit from looting, racketeering, diverting aid resources and by getting a form of salary by joining the regular security forces, the insurgents or private security firms. Beyond economic benefits, violence can fulfil several other functions. Joining an armed group may be a way to enhance ones own security. Exerting violence may be a way of securing higher social status and prestige, or a sense of group identity in highly fragmented societies. The politico-economic and military elites as well as leaders of non-state armed groups can make extraordinary profits from illegal activities made possible by the weakness or sheer lack of law enforcement mechanisms resulting from civil war. They often draw rents by controlling the black market and maintaining an artificial monopoly over the provision of essential goods and services, pushing prices up by restricting supply.
Depending on the characteristics of the armed conflict and of the goods and services available for exploitation and trade, war benefits can either be substantial and highly concentrated, or they can be limited and diffuse. For example, it is easier and cheaper to loot and sell alluvial diamonds than oil or gas. A situation of low-intensity conflict makes it more attractive for war entrepreneurs to invest and trade than situations of all-out violence, where risks can be prohibitive, even for activities which yield quick returns.
Political economy analysis and humanitarian action
What does all this mean for the security of humanitarian organisations? First, the political economy approach highlights that the traditional interlocutors of humanitarian workers, such as rebel or army commanders and government officials, often wear several hats. Beyond their official positions and political agendas they are also entrepreneurs with vested interests in the war economy. Factoring an analysis of political leaders business interests into programme design and security risk assessment and mitigation can help to enhance safe and effective programme delivery. For example, the governor of a province in the Great Lakes region granted an official security guarantee to a humanitarian organisation for a food and seeds distribution. Yet behind the scenes he organised several security incidents that forced the agency to stop the distribution. The governor also owned a micro-credit scheme that enjoyed a monopoly over the provision of high-interest loans, which farmers required to buy seeds. A free distribution of seeds by the humanitarian agency would have competed with the governors business interests. Second, when war profiteering becomes a major driver of armed violence and a key objective for armed groups, criminality increases and aid agencies are likely to face a higher risk of hostage-taking, racketeering and looting of aid resources and assets, and may need to resort to public or (more often) private security providers.
When responding to humanitarian needs in conflict-affected countries, humanitarian agencies often establish close working relations with local business people in the transport, warehousing and logistics sector, and through the local purchase of goods and services. Yet they often miss opportunities to benefit from the business communitys analysis and understanding of the conflict, which would complement the perspectives provided by other humanitarian agencies, the UN and donors. Business people often provide a different and perhaps more accurate assessment of the political economy and of the needs and vulnerabilities of affected communities since the success of their business activities critically depends on a sound understanding of the conflict and of the coping mechanisms of those affected. For instance, a humanitarian agency consulted local traders in a government-held enclave of the Angolan Planoalto between 2000 and 2002. The traders and farmer associations all encouraged the agency to continue distributing food, but insisted that it should pay its local staff in hard currency. This suggested that beneficiaries did not represent a commercial interest for lack of purchasing power, confirming that the food distribution responded to real needs and did not compete with local businesses. It also suggested that local businesses welcomed humanitarian agencies because they boosted effective demand for goods and services by paying wages in US dollars.
Humanitarian organisations have much to learn from interaction with economic actors in a conflict situation. The information gathered can improve programming, security management and the safety of field staff. There is one important caveat, however: building relationships with the business community must be a transparent process. This requires making clear from the outset that the sole objective of a better understanding of the political economy of war is to enable the agency to better protect and assist vulnerable people. It also requires showing no interest in criminal economic activities for reasons which are not directly related to legitimate security concerns and the capacity to carry out humanitarian work. Recent experiences in the DRC and Sudan show that agencies with a strictly humanitarian mandate should explicitly dissociate themselves from research conducted by expert panels or advocacy groups aimed at naming, shaming or prosecuting war profiteers. Failure to do this can compromise the security of relief workers on the ground.
Understanding the political economy of war and how humanitarian action interacts with it is a valuable asset. It provides information that helps enhance humanitarian space and improve the security of relief agencies, as well as their outreach and networks. By analysing how belligerents finance the war and who the winners and losers of armed violence are, humanitarian organisations can gain a better grasp of the economic interests of the political elite and the links between political leaders, war entrepreneurs and armed group commanders who are often the same people wearing different hats.
There is a whole range of tools and instruments that humanitarian workers can use to analyse how their intervention fits into the political economy of war. In his Network Paper The Political Economy of Armed Conflict: What Humanitarian Agencies Need To Know, Philippe le Billon presents a Relief Access Mapping (RAM) tool. This consists of a simple table, reproduced here, which helps to identify at each stage of the aid operation the interests of local actors, how these interests might be affected by the operation and any potential associated security risks.
Taking the example of a food distribution, RAM helps identify how the interests of key political leaders, economic agents, intended beneficiaries, armed groups and others might be affected, and thus how they might react at each stage of the distribution process. Although RAM does not tell agencies how to manage security risks, it enables them to identify and discuss potential risks associated with humanitarian aid from a political economy perspective.
In the past, some economists who promoted the political economy analysis of civil war often portrayed rebels only as greedy entrepreneurs who used violence solely as a means of maximising profits. This tended to define rebels as simple criminals, with no political cause to fight for, enabling repressive regimes to deny the legitimacy of rebel complaints as well as combatant status under international humanitarian law. Despite this bias, political economy analysis has done a useful service by highlighting the economic dimensions of civil war. Political economy analysis can help to improve the security of humanitarian workers in the field through a better understanding of the economic interests of the actors involved, and how humanitarian operations interact with those interests.
Gilles Carbonnier is Professor of Development Economics at the Graduate Institute of International and Development Studies, Geneva.
 See for example Jean-Christophe Rufin and François Jean (eds), Economie des guerres civiles (Paris: Hachette, 1996); David Keen, The Economic Functions of Violence in Civil Wars, Adelphi Paper 320 (Oxford: Oxford University Press, 1998); Philippe le Billon, The Political Economy of War: What Relief Agencies Need To Know, Network Paper 33 (London: ODI, 2000); and Mats Berdal and David Malone (eds), Greed and Grievance: Economic Agendas in Civil Wars (Boulder, CO: Lynne Rienner, 2003).
 Jean-Bernard Veron, A propos des économies de guerre, in J.-M. Chataiger and H. Margo (eds), Etats et sociétés fragiles: entre conflits, reconstruction et développement (Paris: Karthala, 2007), pp. 14152.