The Role of the Private Sector in Building Peace: It’s Essential

Another year of Secretary-General António Guterres's reform of the peace and security pillar of the United Nations is ending without fully addressing a main obstacle to peacebuilding in conflict-torn countries under UN intervention: sustainable economic recovery. The key question facing the UN is how to support economic reconstruction amid the political, security and social reforms that must take place simultaneously in such countries. Economic reconstruction in this case is fundamentally different from "development as usual" in countries unaffected by conflict — a reality the World Bank recognized a decade ago. A debate on peacebuilding recently in the UN Security Council, emphasizing economic reconstruction and recovery, was a welcome first step. It was appropriately chaired by the president of the Ivory Coast, Alassane Ouattara, a former deputy managing director of the International Monetary Fund and respected economist. Without a strategy for carrying out economic reconstruction and without appropriate economic expertise at the UN in every phase of its intervention — from conflict resolution to peacekeeping and peacebuilding — affected countries lose an opportunity to engage the private sector productively. As documented in my recent book, "Obstacles to Peacebuilding," more than half of the countries transitioning from war to peace relapsed into conflict within a decade. Of those that did not relapse, many developed an unsustainable dependence on aid and are unable to stand on their own feet. The record would be even worse using the Doyle and Sambanis criteria, which rightly code operations as "peacebuilding success" only after two years without peacekeepers and military forces present. As I argued in the book "Keeping the Peace," one of the most important lessons from the 1992 "arms-for-land" program in El Salvador — a main venue for productive reintegration — was that the design of a peace agreement is critical to its implementation. Those of us working in the UN secretary-general's office then learned this lesson the hard way. Because of lack of appropriate expertise during the negotiations, many of the provisions in the 1992 agreement turned them extremely difficult or impossible to implement. Unfortunately, the UN has no institutional memory in the economic aspects of peacebuilding. More than a quarter of a century later, UN peace mediators still lack rigorous expertise in economic and financial matters and cannot conduct a thorough analysis of the private sector in affected countries. This oversight means losing out on the opportunities that the private sector could bring to the peace process. What's needed, after all, is economic recovery beyond the unsustainable growth created by the mere presence of the international community (both military forces and civilians) in the country. Particularly lacking are peace-team members who understand the intricacies of budgetary, fiscal, investment, employment and financial policies — a crucial requirement for technical dialogue with IMF experts working on economic recovery, and to ensure that funding for peace-related programs is included in the country's national budget. Not surprisingly, peace agreements have created expectations that cannot be fulfilled. They may be mute on the topic of the private sector or make incorrect assumptions about the role that it will play. Here's what else can go wrong: Peacebuilders may create institutions and policies that don't align with the country's resources. They may fail to see the correct order of events: preserving peace in the short term and creating a stronger economy only after security stabilizes. The bleak UN peacebuilding record is hardly surprising, given that the UN system continues to conflate development as usual in other countries with economic reconstruction in those recovering from conflict. In stable countries, policymakers have the luxury of planning for the medium and long term. They can attempt to give equal weight to groups with similar needs. During economic reconstruction, as a country moves away from an underground economy, maintaining the peace is paramount. Thus, policymakers often must adopt emergency solutions to avoid relapse and give preference to some war-affected groups to ensure that even "spoilers" get a stake in the peace process. A critical challenge to mediators is involving the private sector in disarming, demobilization and reintegration programs for former combatants on both sides and warlord militias. As is well documented, without the participation of the local private sector, most reintegration ends up as short-term public and international community jobs, which makes it unsustainable. A quick shift away from an underground war economy may mean devising policies that are resisted by international financial institutions. They may include tax incentives, subsidies and other price-support mechanisms for improved irrigation, production and infrastructure development. (Gender empowerment can be one side effect, since women work the land in many conflict-affected countries and require access to credit, seeds and fertilizer.) All stakeholders must take ownership of economic reconstruction for it to succeed. This is why a mediator's team needs proper economic expertise to understand what is being negotiated, what it may incur and what is at risk — not just now but over the long term.

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