CIAO DATE: 05/02

Private Sector Actors in Zones of Conflict: Research Challenges and Policy Responses

Executive Summary

• Increasing attention is being paid to the involvement and the relative influence of international private sector actors in the political economy of countries and regions experiencing violent conflict. This expert workshop was convened in order to assess the nature of business activity as it relates to violent conflict, to delineate areas where further research is needed, and to consider what policy responses may be needed to mitigate the potentially destabilizing effects of private sector activity in war-torn countries.

• As a consequence of globalization, international private sector actors have become more influential to the peace, security, and prosperity of developing countries than in previous decades. Foreign direct investment (FDI) may stimulate economic growth and facilitate economic and political liberalization. Under certain circumstances, however, and particularly in the natural resource extraction sector, FDI may contribute to the pathologies of weak states and to the outbreak and/or continuation of violent conflict, regardless of the intentions of the particular corporation concerned.

• There has been little by way of systematic research on the relationship between private sector activity and violent conflict. Much public discourse on the issue is guided by the untested assumption that all forms of private sector activity in countries at war are malevolent in effect, if not also intention. Participants agreed that there is a compelling need for more careful, refined analysis. In particular, several distinctions need to be made: between private sector activities per se and their actual "complicity" in conflict; between those actors (such as arms traders and mercenaries) who deliberately seek to profit from war and those — far more common — actors whose legitimate business activities have undesirable but unintended effects; and between the differing impacts of corporate involvement in different sectors, licit as well as illicit.

Full text (pdf)