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Economics of Conflict and Peace.ppt

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					  Economics of
Conflict and Peace


    Topic 2: Peace and Conflict Factors in
              Economic Science
  Part 2: Economic Activity of Rebel Groups
                    Economic Activity of Rebel Groups
    T   here is considerable variation across conflicts in the ways that rebel groups operate in the economy. Sometimes they act as
         economic producers, providing public goods; often however they act as extractors. Such variation in their behavior has
         implications for the economic well-being of populations as well as for the course of the conflict.

                               HOW DO REBELS FINANCE THEMSELVES?
•       The ability of groups to control lucrative economic sectors determines whether they can launch
        and sustain a campaign (World Bank research);
•       Requirements needed to sustain a rebellion may be very low: examples of low-tech, low-cost but
        long-lasting rebel movements. Small arms can be very cheap. And so can labor. In cases where there
        is local support for the actions of rebel groups, as with Chechyan rebels, the Viet Cong, and the
        IRA, it may be possible for people with regular employment to serve as “part time guerillas”.
•       The primary means of financing is wealth derived from control over valuable natural resources
        such as drugs, oil, timber and “conflict diamonds.” However, rebel groups also rely heavily on
        agricultural products – such as cashew nuts, tangerines, hazelnuts or bananas – to finance their
        campaigns.
•       A second means for funding is money collected from nationals based overseas.
•       Another source of rebel financing is sponsorship from third party sources.
•       A final source of financing is voluntary transfers (notably “subscriptions”) and involuntary
        transfers (notably looting) from civilian populations. Such transfers may determine the viability of a
        rebel organization, and may condition its need for cash from other external sources.
Rebels as Economic Producers
         Rebel groups also engage in economic production, in
       some instances, by functioning as service providers and as
       organizers of economic activity, rebel groups may act as
       surrogate states, underscore the irrelevance of the
       government and develop support among civilian populations.
         There is, however, considerable variation in the extent to which
       and the form in which rebel groups provide services.
          While in some places groups imitate states as service
       providers, elsewhere, they imitate states as extractors, using
       forced labor to manage local economies.
           This variation in the extent to which rebel groups provide
       public goods is of substantive importance, it is also likely to have
       implications for the forms of violence, for whether a war is
       sustainable and for options for peace settlements.
             The links between rebel groups
                   and organized crime
       “Organized criminal group is a structured group of three or more
persons, existing for a period of time and acting in concert with the aim of
committing one or more serious crimes or offences in order to obtain directly
or indirectly, a financial or other material benefit” The United Nation Convention
against Transnational Organized Crime
      “Terrorism is a criminal act, but it is more than criminality; terrorism is
essentially a political act. Terrorist groups can be understood as criminal
organizations with a political or ideological objective and the readiness to use
violence to achieve it” Policy Working Group on the United Nations and Terrorism
      Hybrid forms of organisation that clearly combine an explicit political
or ideological goal with a desire to make profit through illegal activities and
willingness to use significant level of violence – both discriminate and
indiscriminate – in pursuit of that goal.
    In many cases rebel group is a hybrid organization: partly criminal group, partly
terrorist group and partly mercenary
     Transformation of a rebel group into an organized
                     criminal group
• A change in the ratio of profit-making activities to terrorist strikes;
• The loss of intensity in political demands and a lower public profile, reflecting
  a downgrading and ultimately an abandonment of the political agenda;
• A political settlement that leads to a cessation of terrorist strikes but is
  followed by an increase in organized criminal activities – resulting from a
  phenomenon that one observer has described as “fighters turned felons”;
• A reduction in the number of attacks on innocent civilians and ultimately an
  abandonment of such attacks unless they are related to profit-making
  activities or the protection of such activities;
• A growing concern with avoiding harm to victims of kidnapping and a
  concomitant emphasis on negotiations for ransom payments that will
  guarantee the safe release of those victims rather than killing them to coercive
  effect.
Transformation of an organized criminal group into rebel
                     organization
         Just as a terrorist group can become enamored of wealth rather than a political or
   ideological cause, an organized criminal group could become highly politicized and radically
   alter the focus of its activity from the accrual of profit through illicit business to bringing
   about political change through indiscriminate violence.

• Political rationalization for criminal activities such as drug trafficking,
  which are internally legitimized by focusing on their damaging impact on
  citizens of countries hostile to the cause;
• Donations by the group or some of its members to radical political causes;
• Regular and systematic associations between members of criminal
  organizations and known militants;
• A readiness to barter drugs or other trafficked commodities for weapons or
  explosives, rather than simply selling those commodities for profit;
• Adoption of political rhetoric as part of a more visible public profile.
An illustration of transition of organized criminal
         group into terrorist organization
                    The Madrid train bombing of 11 March 2004
                           The Madrid train bombings consisted of a series of
                     coordinated bombings against the Cercanias (commuter
                     train) system of Madrid, Spain on the morning of 11 March
                     2004 (three days before Spain's general elections), killing 191
                     people and wounding 1,800.
                           The official investigation by the Spanish Judiciary
                     determined the attacks were directed by a Muslim al-Qaeda-
                     inspired terrorist cell although no direct al-Qaeda
                     participation (only "inspiration") has been established.
                     Spanish Muslims who did not carry out the attacks but who
                     sold the explosives to the terrorists were also arrested.
                           There is an evident that the hashish trafficking group
                     became involved in the Madrid bombing. That might have
                     been primarily a result of the willingness of the head of the
                     group to die with the other perpetrators terrorists who killed
                     themselves rather surrender to the police surrounding the
                     house. However, this is very uncharacteristic for a drug
                     trafficker intent on profit it suggests that he had embraced a
                     militant form of fundamentalism.
       Organizational and operational similarities
    between organized criminal and terrorist groups
•   Both are generally rational actors;
•   Both use extreme violence and the threat of reprisals;
•   Both use kidnappings, assassinations and extortion;
•   Both operate secretly, through at times publicly in
    friendly territory;
•   Both defy the State and rule of law;
•   For a member to leave either group is rare and often
    fatal;
•   Both are highly adaptable, innovative and resilient;
•   Both have backup leaders and foot soldiers
                           Core reading
Dishman, Chris. Terrorism, Crime and Transformation. In: Studies in Conflict
   and Terrorism (Volume: 24, Number 1), January 2001, pp.43-58
Hirshleifer, Jack. 1988. Conflict and Rent-Seeking. Working Paper, University
   of California
Hirshleifer, Jack. 2001. The Dark Side of the Force: Economic Foundations of
   Conflict Theory. Cambridge, UK: Cambridge University Press.
Makarenko, Tamara. Transnational Crime and its Evolving Links to Terrorism
   and Instability: in Jane’s Intelligence Review. 2001. pp.22-24
Skaperdas, Stergios. 2001. “An Economic Approach to Analyzing Civil Wars”
   Paper presented at World Bank Conference on Civil Wars and Post-Conflict
   Transitions. U.C. Irvine. May 2001.
Skaperdas, Stergios. 1992. “Cooperation and Power in the Absence of Property
   Rights”, The American Economic Review

				
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