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the social context. The central question needs to be how the peace can be preserved. At USAID, it was recognized that the usual guidance being offered by economic growth and private sector specialists reflected what they knew how to do, but not necessarily the appropriate policies for post-conflict environments. Consequently, USAID developed A Guide to Economic Growth in Post-Conflict Countries to train economists and others in new concepts suitable for these environments. Policies should not focus simply on achieving overall economic impacts but need to factor in distributional criteria. The aim is not just efficiency; who receives the benefits from the economy also matters greatly. Particular groups, like demobilized soldiers, need to find ways to gain an income through legal activities. Rather than focusing only on the growth rate, economic decisions need to look at the relative gains of differing segments of the population and at how the urbanrural divide is affected. For example, regional disparities that exacerbate access to economic participation may have been important in the conflict. What are the Most Important Economic Priorities? Economic policies in post-conflict settings need to take a number of actions in the early stages of transition. First, it is essential for stabilization to boost general well-being and employment through programs that get money quickly into the hands of ordinary people. What motivates people to engage in or support armed conflict are not only grievances but greed, in the sense of fulfillment of basic economic needs. Policies have to address these underlying economic motivations because individuals make decisions about which group they will follow based largely on who is going to make them and their family better off. Will people support a new regime that is still in formation, or existing leaders who control a resource and offer them an immediate income? It is critical to influence this calculus by showing that the future lies down a peaceful path and they should not return to violence. An earlier section highlighted the importance after a war of ensuring continued physical security. This is crucial, not simply from a personal standpoint, but from an economic one. Will there be a return to violence? How long can security be counted upon? The assurance that physical security is in place is very important to the kinds of investors who need to be attracted. To expect people who are interested in doing business or to invest in activities that will create a lot of jobs, there needs to be enough security for them to take a long-term perspective. Economists tend to take security for granted because in most of the countries Responding to Fragile States: Lessons From Recent Experience | 87
they work in it is not a major problem. But security in post-conflict countries remains a big hurdle for economic investment. The transition cannot really start until the conflict is ended. However, short term economic aid programs themselves can be useful even when counter-insurgencies are still active. Creating opportunities to work can hasten the cessation of armed activity. Some of the immediate need for income and jobs can be satisfied without accomplishing all that is necessary to revitalize the private sector, such as through directly increasing jobs in public services like health and education. Most international NGOs do this better than the governments, which are usually still too weak. In most countries, labor-intensive public works programs are started up to create temporary employment. Although development practitioners may prefer creating sustainable long-term jobs rather than supporting such make-work policies, those long-term, sustainable jobs cannot be identified for some time and employment opportunities are needed right away. Because make-work jobs can help to stem the insecurity, it is important not to be ideological about the balance between public-sector and private-sector activity. Similarly, early support for existing state-owned enterprises may also be fitting. While it is true that many state-owned enterprises may be on the edge of failure or have failed, if the rest of the economy picks up activity, it can still absorb the labor from these industries. In the meantime, it is unwise to eliminate those workforces right away, for that may lead many people to conclude that the new government is not good for them. Therefore, in Iraq, the Defense Department has invested in such enterprises to get people jobs security. However, providing help for state enterprises has been controversial. Previously, the State Department blocked such aid on the grounds that aid should not go to the public sector. Recognizing that this was not pragmatic, USAID in one country supported a bicycle manufacturer and a small tire factory, for example. Over time, these enterprises would likely face competitive pressures and die out because cheaper bicycles or cheaper tires of the same quality were going to come along. In the meantime, however, this support puts dollars into people’s pockets that can begin to create demand for other goods and services. In short, make-work policies are not only needed until an insurgency comes under control; getting money into the economy also begins to create demand for goods and services. Nevertheless, to create lasting employment and sustain the peace, the ultimate objective is to transition to a job-generating private sector. Providing an immediate economic stimulus through aid cannot give people the impression that the temporary programs will continue forever. The short-term programs need to be described and implemented so that people realize that make-work jobs are only a temporary band-aid in a longer term strategy. Aid to revive former state-owned enterprises cannot create the expectation that a continuing subsidy will persist. As 88 | Engaging Fragile States: An International Policy Primer
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Engaging Fragile States An Internat
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ACKNOWLEDGEMENTS This report would
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The compelling rationale behind the
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which had some forms of interactive
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Why are failed states relevant to U
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In 2009-2010, Pakistan, Yemen, and
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“ What is needed is government-wi
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All in all, between the undesirable
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Report Aims and Structure To help b
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What can be done to keep a state fr
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It is to be expected that countries
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Sources of Failure and Resiliency T
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all rankings come to the top, such
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“ Quite frequently, democratic go
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When such a crisis is imminent, fas
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How Can Decision-Makers Use Global
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For example, the United States star
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Why would the US and other internat
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It would be a mistake, for example,
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Life Cycle of Conflicts Peacemaking
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What Actions Have Prevented Potenti
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Page 51 and 52: 8 Train a responsible opposition gr
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Page 57 and 58: litical reform and economic develop
Page 59 and 60: Iraqi case may be turning around, b
Page 61 and 62: Can International Mediation Incenti
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Page 73 and 74: “ What was driving their extremis
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Page 79 and 80: local government in the United Stat
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Page 83 and 84: Can Responsible Governance Emerge f
Page 85 and 86: zero-sum game. If you do not captur
Page 87 and 88: “ It’s not going to be a state
Page 89 and 90: How Can “Islands of Stability”
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Page 93 and 94: here to help. We have training and
Page 95: “ What motivates people to engage
Page 99 and 100: inputs, inputting capital has a hig
Page 101 and 102: How Should Economic Policies be Dec
Page 103 and 104: ample, there are strong earmarks fo
Page 105 and 106: What is the most effective strategy
Page 107 and 108: However, the prevailing unilateral
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Page 111 and 112: in development aid, providing rough
Page 113 and 114: What Obstacles Stand in the Way? Un
Page 115 and 116: UN acts essentially as if in a cons
Page 117 and 118: “ The basic problem the EU shares
Page 119 and 120: tion in capacity-building and techn
Page 121 and 122: predictably defense planners have a
Page 123 and 124: “ Until Congress recognizes the d
Page 125 and 126: ties. This leads to the overall SRP
Page 127 and 128: How can the US effectively meet the
Page 129 and 130: Analytical tools for identifying th
Page 131 and 132: and political disputes. As Part I d
Page 133 and 134: atrocities from happening at all, a
Page 135 and 136: tition and bargaining among key lea
Page 137 and 138: tunities to build public interest-o
Page 139 and 140: fragile states, modest steps can be
Page 141 and 142: Endnotes 1 The State Fragility Inde
Page 143 and 144: Bibliography “10-Step BEFORE Appr
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