CIAO DATE: 04/03

Economic Priorities for Peace Implementation

Executive Summary

There has been surprisingly little systematic analysis of how economic factors contribute to the success or failure of peace agreements. What is clear however, is that economic factors play a more significant role in the failure of peace agreements than they do in the success of such initiatives;

Peace agreements are often very weak on economic aspects. This is problematic because the success of the first phase of peace implementation is largely dependent on three economic factors: sufficiently rapid economic revival to generate confidence in the peace process; adequate funding to implement key aspects of the peace agreement; and, for a sustainable peace, there must be sufficient funding to enable the establishment of government institutions and the transition to a peace-time economy;

Five important lessons have emerged from experience in the area of peace implementation over the last decade:

1. The need for broad-based impact assessments At present, assessments tend to measure whether an aid project was implemented as planned, not whether it contributed to a sustainable peace. As a consequence, important opportunities to make informed mid-course adjustments in long-term programs and to develop more effective programs are lost;
2. An early emphasis on employment is critical Active employment is critical to redirecting behavior and encouraging support for the peace process. The success of crucial programs such as those for the demobilization and reintegration of former combatants and the return of refugees and internally displaced persons are also linked to the availability of employment;
3. Invest in Building Institutional and Social Capital Conventional approaches to post-conflict economic recovery tend to emphasize macroeconomic stability at the expense of economic infrastructure. However, in post-conflict settings, the financial and legal institutions so necessary to implement economic policy and ensure good governance are either weak or nonexistent. More attention must be paid to financing the development of basic public sector capacities and social capital.
4. Donor decisions about whom to assist and what to fund have lasting political impacts Donor monies influence government policy, whether directly through the imposition of explicit conditions or in more indirect ways. Lending decisions also influence the political landscape within the recipient county and the behavior of third-party implementers;
5. An international presence introduces economic distortions It is seldom acknowledged that the economic impact of international peace missions runs contrary to the aims of self-government and economic and political sustainability. As a consequence, decisions about implementation and exit are extremely important;

There is an urgent need for a new economic strategy that addresses the challenges of post-civil war environments.

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