A conflict economy is literally defined as a system of producing, mobilizing and allocating resources to sustain competitive and embedded violence, both directly and indirectly. The conflicts in Iraq, Libya, Syria and Yemen have killed hundreds of thousands of people and displaced millions. In seeking to explain the violence that has struck the Middle East and North Africa over the past two decades, analysis to date has focused predominantly on ideological and identity-based factors. Economic motivations, at the individual and group level, are key to understanding the wars in these countries, yet have tended to be overlooked in the Middle East and North Africa context.
As the wars have progressed and evolved, the national and local economies in which conflict is embedded have also changed. Such motivations can offer an alternative or complementary explanation for armed group membership and armed group behaviour. While some groups will fight to promote or defend a particular identity, others fight for economic survival or enrichment. For many more actors, these motivations are tied together, and separating out ‘greed’ and ‘grievance’ is a difficult, if not impossible, task.
Even if economic motivations did not spark the wars in Iraq, Libya, Syria and Yemen initially, it is clear that such factors now play a critical role in the persistence of open fighting, localized violence and coercion. Traditionally, the idea of a conflict economy has been tightly linked to the funding for arms, ammunition and fighters. Further, most analyses of conflict economies are conducted at the national level.
According to Cheng Goodhand Cheng of London School of Economics ‘competitive violence’ can be defined as violence ‘deployed by warring elites to contest or defend the existing distribution of power’. Fighting between rival armed groups for control over resources and rents, among other things, usually falls into this category. ‘Embedded violence’, in contrast, underpins ‘how a political settlement works, as the deals agreed between elites may revolve around who has the “right” to use violence’.
Economic scholars stressed that in practice, this could mean that one group is ‘permitted’ to use violence against another group and no punishment will be enforced. A number of research studies indicated that the use of armed force to assert the status quo to limit the number of ruling elite members is one example of embedded violence. Analysis of conflict economies has mostly focused on state-level dynamics. However, less attention has been paid to the development of conflict sub-economies that are specific to certain types of location.
Different researchers demonstrates three distinct types of conflict sub-economy: capital cities; transit areas and borderlands; and oil-rich areas. The analysis highlights how each sub-economy creates distinct location-based patterns of resource production, mobilization and allocation to sustain competitive and embedded violence. The rents available in these areas vary. In capital cities, rents focus on control of the distribution of revenues and assets from the state and private sector. In transit areas and borderlands, rents centre around taxation and arbitrage. In oil-rich areas, rents are related to control of the area itself and therefore the ability to levy taxes upon the oil sector, bearing in mind that the level of achievable taxation depends on the extent to which a given actor controls the supply chain.
Dr. Faisal Doud of Cairo University stated that factors specific to each sub-economy type play a role in conditioning the nature of economic activities in each locality, and in determining whether and by which means violence is dispensed. For this reason, national-level generalizations and in-country comparisons of conflict economies are inadequate. For example, the conflict sub-economy of Baghdad has more in common with that of Tripoli than that of al-Qaim, an Iraqi town on the border with Syria. In turn, the conflict economy observed in al-Qaim has more in common with that of al-Mahra in Yemen than al-Mahra does with Sanaa, the Yemeni capital.
Dr. Faisal Doud recommend that in developing policy responses, policymakers must first accept that any aspiration to ‘do no harm’ is illusory. In conflict sub-economies, taking calculated risks with the aim of doing ‘less harm’ is the best option open to policymakers. In Syria, for example, the conundrum for donors is that humanitarian aid is instrumentalized by the regime of President Bashar al-Assad as a means of countering its economic failure, but is also critical to the coping ability of local populations. Donors must here accept that any intervention is likely to have unforeseen and/or negative consequences.
According to Dr. Faisal Doud, these risks are best managed through developing a deep understanding of the operating environment in order to honestly assess whether there are opportunities to change conflict sub-economy dynamics through partnerships, incentives or leverage. Such an approach also requires pragmatic acceptance of those elements of the conflict economy that policymakers cannot change.In designing interventions, policymakers should develop incentives for peaceful cooperation rather than relying solely on enforcement mechanisms, which have demonstrated little success to date.
Cracking down on illicit economic practices without offering viable alternative livelihood opportunities, for example, may have a displacement effect that can lead to something worse or simply encourage armed actors, or their associates, to take up alternative forms of profiteering.When considering how to target specific illicit activities through enforcement mechanisms, policymakers should acknowledge that ‘legality’ is a relative, not fixed, concept in conflict economies. Legal measures therefore often lack potency as a policy intervention tool. It is notable that the legality of a given practice may be decided by a single conflict actor, as in Syria, with the Assad regime.
Rather than focusing on compliance with the law per se, it is more pragmatic to assess how political and economic gains and losses from conflict economy activities are distributed horizontally across groups and vertically within groups. In choosing which illicit activities to target, policymakers should focus on those with shorter supply chains, where financial gains are not redistributed within or across groups, and where local coping economies are less likely to be affected. Financial and property crimes are good examples of this.
In contrast, certain forms of smuggling, such as of subsidized goods and fuel, involve longer supply chains and wider networks of direct and indirect beneficiaries. For the greatest impact at the lowest cost to those in need, Western policymakers should therefore target bottlenecks where rent-seeking is most concentrated. In doing so, they must adopt clear, transparent, consistent and enforceable criteria in order to be taken seriously.