Rebuilding war-torn states:          tomorrow’s challenges for          post‑conflict reconstruction          Graciana del...
The record is indeed unimpressive. In fact, the United                     Moreover, security and economic challenges need...
phase. When this happens the peace (or political) objective               whether aid should be increased or eliminated al...
export-processing zones, which create mostly low-wage,                    crisis affected countries can ill afford and tha...
at all times. As a consequence, optimal economic policies                 agreements with large transnational corporations...
Economics of peace into the                                               7.	 Establish different programs for higher leve...
——, ‘Peace through reconstruction: an effective strategy for                 10	                                          ...
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Working Paper 04/2012 Rebuilding war-torn states: tomorrow's challenges for post-conflict reconstruction


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Working Paper 04/2012 Rebuilding war-torn states: tomorrow's challenges for post-conflict reconstruction

  1. 1. Rebuilding war-torn states: tomorrow’s challenges for post‑conflict reconstruction Graciana del Castillo Managing Partner, Macroeconomics Advisory Group, and former Senior Research Scholar, Columbia University > Paper 04/2012Peace through security versuseconomics: a critical dilemmaIn the aftermath of the Arab Spring and regime change inmany countries, with South Sudan joining the internationalcommunity as an independent state, and with countries asfar apart as Afghanistan, Liberia and Haiti obviously ‘off track’in their efforts to rebuild their war-torn or disaster‑affected The economics of peace or economic reconstruction (that is,communities, it seems a perfect time to review and re-assess the economic transition) represents an intermediate andpolicies, strategies and civilian‑military interactions for the distinct phase between the economics of war or chaostransition to stability and sustainable peace. (that is, the underground economy of illicit and rent-seeking activities that thrive in these situations) and the economics ofDespite the differing characteristics of each particular case, development. The main objective of this intermediate phasewhen countries at a low level of development emerge from should be to make peace irreversible. Unless this happens,civil war or other chaos they face the difficult challenge of war-affected countries will not be able to move into aresponding to the root causes of the conflict so as to make development-as-usual phase in which they will confront thepeace irreversible. In fact, countries embark on a complex, normal socio-economic challenges facing countries at lowmultifaceted transition—to pull back from violence and levels of development but not affected by conflict or chaos.2insecurity (the security transition); to transform a repressivepolitical regime into a participatory one based on the rule of ECONOMICS OF WARlaw and respect for human rights (the political transition); to ↓end ethnic, tribal, religious or class confrontations and initiate ECONOMICS OF PEACEa process of national reconciliation (the social transition); (or economic reconstruction)and to move away from large macro-economic disequilibria (or economic transition)and war-torn economies in order to engage in economic ↓reconstruction and so create a functioning economy in whichpeople can have access to basic services and earn a fair, licit ECONOMICS OF DEVELOPMENTand sustainable income (the economic transition).1 (or normal development) (or development as usual)1 ACMC Paper 4/2012 > Conflict prevention in practice: from rhetoric to reality
  2. 2. The record is indeed unimpressive. In fact, the United Moreover, security and economic challenges need to beNations estimates that roughly 50 per cent of the countries dealt with in an integrated manner rather than separately.that have embarked on the economics of peace have For this, military–civilian collaboration is essential. The needmoved backwards and reverted to conflict within a few for integration does not mean that every player shouldyears. Of the half that have moved forward into normal participate or have a say in every activity; this would be adevelopment, most have ended up highly dependent on aid. recipe for inaction. It means that the various parties involvedThis is an unsustainable situation in the aftermath of the should be well informed about what others are doing, bothglobal financial crisis, with its severe fiscal and employment inside the host government and among the internationalrepercussions in donor countries. community, so as not to be working at cross-purposes and to be able to benefit from the synergies these operationsThe economics of peace is broadly defined as including might create.not only the rehabilitation of basic infrastructure andservices ravaged during war and the demining of fields and The following section of this paper discusses theroads so that productive activity can begin, but also the characteristics of the economics of peace and what makesmodernisation or creation of a basic institutional and policy the challenges of this intermediate phase fundamentallyframework. This is essential for the successful re-integration different from those associated with development as usual.of former combatants and other crisis-affected groups into The third section discusses aid-related problems that affectthe economy, which is the basis for national reconciliation. economic reconstruction; in particular, it analyses theIt also entails dealing with ‘spoilers’, who will be reluctant various myths and realities of aid, which host governmentsto give up the illegal activities they engage in to benefit and the international community need to keep in mind whenthemselves during conflict. deciding on a strategy for peace. The fourth section argues that, despite the characteristics of each particular case,Because of the strong link between security and the a coherent, integrated and pragmatic strategy for peaceeconomy in the transition to peace, the interaction between through economics is central to stability and sustainability.military and civilian policies and strategies is especially Such a strategy requires moving away from humanitarianimportant. It is widely accepted that restoring security is an aid to reconstruction aid as soon as feasible and findingimportant challenge, even a pre-condition for re-activating a balance between military and economic assistance.the economy. Causality, however, goes both ways. It is less Without such a strategy foreign forces—national or NATOrecognised, but just as important to remember, that the forces or UN peacekeepers—will not be able to withdrawre-activation of productive activities, jobs and basic services from the country and leave behind a stable, sustainablefor the population at large is in turn central to establishing situation. Finally, recommendations for facilitating thelasting security. Failure in this area has been perhaps the economics of peace are made in the form of 10 basicprimary impediment to restoring and maintaining security in ‘commandments’. These could be used as the guidingmany countries. principles when designing, negotiating and implementingSo much is at stake, and the dilemma of ‘peace through future policies, strategies and civilian–military interactionssecurity’ as opposed to ‘peace through economics’ deserves for stability and peace.further debate. One can argue that an imbalance betweenefforts and resources in responding to the security andeconomic challenges has proved a major factor for countries Economics of peace versusrelapsing into conflict. Because of the way security and the development as usual:economy interact, the civilian–military collaboration duringthis phase is crucial in order to succeed in a number of areas: the main challenges>> eliminating the underground economy Because the economic transition takes place in the context of a multifaceted transition to peace—not independently>> rebuilding essential infrastructure and services from it—and because the transition requires a number of>> designing, implementing and monitoring disarming specific peace-related activities that are complex and costly>> developing and implementing demobilisation and re- but vital to keeping the peace, the economics of peace or integration programs that are sustainable over time the economic reconstruction phase differs fundamentally from development as usual. These additional activities have>> demining roads and fields important financial consequences that need to be given>> carrying out other activities that need to priority in budgetary allocations, and as a result the peace take place in the transition to peace. and the development objectives often clash during this2 ACMC Paper 4/2012 > Conflict prevention in practice: from rhetoric to reality
  3. 3. phase. When this happens the peace (or political) objective whether aid should be increased or eliminated altogether,should prevail at all times over the development (economic) rather than on how the aid can be made more The purpose of this phase is national reconciliation The challenge is to use aid to create dynamism and inclusionand peace consolidation, rather than optimal economic in countries emerging from war or chaos. So far, aid haspolicies. Obviously, without peace there is little chance for proved to be more of a problem than a solution: not onlydevelopment. have aid policies failed to achieve their basic objectives but, most worrisome, they have threatened the legitimacy ofThe similarities between countries in the process of government, created all types of distortions and facilitatedeconomic reconstruction and those undergoing normal corruption. This is particularly the case in countries thatdevelopment, while real indeed, should not lead to the have received large volumes of aid for long periods.conflation of policies.3 Policy making in countries emergingfrom conflict—as in those emerging from other crises such In analysing the impact of aid on countries emerging fromas natural disasters or financial collapse—has less room severe crisis, it is clear that economic stabilisation andfor flexibility than under normal circumstances. Differences the re-activation of growth in these countries have provedarise in relation to the horizon over which economic policies much easier than the creation of productive, sustainablecan be planned (short-term emergency as opposed to employment for the population at large, without whichmedium- and long-term problems); the amount of aid (sharp peace might not be long-lasting.4 At least three mythsspikes as opposed to low and stable flows); the treatment of permeate an analysis of aid effectiveness.different groups (preferences as opposed to equal treatment The first myth is that growth-creating aid is effective infor all); and the involvement of the international community supporting the government reform agenda and re-activatingin national affairs (intense and intrusive as opposed to non- the economy. This is not necessarily so. Countries in theinterference). normal process of development receive levels of aid—As a result, emergency policies needed to overcome expressed as official development assistance over grosscrises should be adopted with a sense of urgency and of national income—of 3 to 5 per cent of GDP, whereas, withforgiveness for distortions. In such situations, contrary few exceptions, in countries emerging from war and majorto the process of normal development, there is no luxury disasters aid can, as noted, spike to 50 to 100 per cent ofto plan policies with medium- and long-term horizons in GDP in the immediate post-crisis period.5 Furthermore, largemind. Policy making in crisis situations should also involve a volumes of aid are highly correlated with a large internationaldisregard for the ‘equity principle’ that guides development presence in the country, including foreign military forces.policies and favour instead groups that have been most It is not surprising that large volumes of aid and theaffected by the crisis. At the same time, countries emerging international presence, by themselves, create growth,from such crises face the challenge of using large volumes of particularly starting from a low base.6 The question becomesaid (which can reach as much as 50 to 100 per cent of GDP whether such growth is positively affecting the population ator even more in a few cases) in an effective and non-corrupt large and is sustainable over time or whether it is supportingway. They also have to put up with the intrusive political a small elite and creating distortions that are hurting theinvolvement of the international community and often with economy and the ordinary citizen, not only in the currentthe presence of foreign troops. time frame but also in the future. The latter situation isIf peace is to have a chance, it is important to recognise clearly the case in Afghanistan, which has experiencedthat the short-term challenge of the economics of peace spectacular growth—showing annual growth of 12 per centis primarily to avoid relapsing into conflict and thus to on average a year in the past decade, which is even highercontribute to stability and national reconciliation—not to than China’s 11 per cent. Similarly, growth figures for Liberiadeal with the immediate challenges of development. The exaggerate the positive impact aid has had in the country.7latter involves a long-term proposition that can be properly The second myth is that rapid growth will generatedealt with only if peace is sustained. productive employment and will improve living conditions. This is not necessarily the case. In fact, aid is largely usedAid myths and realities in to finance foreign contractors for goods and services produced by companies in donors’ countries and foreignsupporting peace procurement of UN and other interested parties in theThe past few years have witnessed a hotly debated country. Furthermore, high rates of growth are oftencontroversy over aid that has erroneously focused on associated with mining and agricultural plantations or3 ACMC Paper 4/2012 > Conflict prevention in practice: from rhetoric to reality
  4. 4. export-processing zones, which create mostly low-wage, crisis affected countries can ill afford and that createlow-quality jobs—a source of resentment that can easily permanent dependency.11become a catalyst for instability. The mere presence of foreign workers and their activitiesThe third myth is that, by creating jobs and supporting puts pressure on prices, wages, rents, and transportationprivate sector development, aid will of necessity strengthen and other services. And, more troublesome, aid-relatedthe licit economy. During wars people can become really activities generally deprive the government of expertise: byentrepreneurial. By promoting private sector development, offering better wages (generally in hard currency) and moreaid can strengthen the corrupted entrepreneurial class that attractive working and living conditions, the internationalexisted before. In encouraging better relations with local community lures the most qualified people away from thepartners at different levels of government donors have often civil service. Skilled workers and professionals who obtaincondoned corruption. Similarly, by channelling aid outside jobs as drivers and interpreters will soon lose their skills.the government budget donors have often encouraged This not only affects the government’s capacity to providebribes, rather than reduced corruption. Furthermore, many services and security in the short run; it also threatens theforeign contractors have proved corrupt themselves or future productive capacity of the country.12lenient about paying bribes to facilitate their operations in Moreover, aid is provided in a fragmented way, andthese countries.8 innumerable flagship programs tax governments’ limitedThe reality with aid in conflict- and disaster-affected capacity. By not channelling aid through the governmentcountries is often far from what the myths would lead us budget, donors have promoted a fragmented, rather thanto believe. Aid has failed to help countries stand on their integrated, strategy in which the recipient governmentown feet and has led to dependency. Disbursement of cannot have strong ownership, and lack of ownershipreconstruction aid is often delayed until the country has the generally leads to unsustainable projects. At the same time,right conditions in terms of political leadership, governance, ‘coordination’ is a catchcry among the aid community, butinstitutions and human capacity. In the meantime, no one wants to be coordinated. A truly integrated approachhumanitarian aid continues to be disbursed.9 Humanitarian among the different organisations has remained difficult toaid to save lives in the short run should not be neglected, but achieve, despite big improvements in their collaborationit should be recognised that such aid promotes consumption over the years.(rather than investment), creates price distortions and workdisincentives (just as welfare programs do in industrialcountries) and fails to build local capacity. A coherent, integrated andCountries must be weaned off humanitarian aid as soon pragmatic strategy for peaceas the situation allows it. Reconstruction aid to improve Each country emerging from war or chaos should end upinfrastructure, promote start-up companies and re‑activate with its own strategy, attuned to its own political, security,services, agriculture, small enterprises and mining socio-economic and cultural situation. Strategies will alsoshould start right away and should be the main focus differ according to the level of aid and other internationalof international aid commitments. It is unfortunate that support that countries can garner according to theirthe striking differences between humanitarian aid and geopolitical importance. Taking these factors into account,reconstruction aid have become blurred in the present the national authorities, with international support ascontext—with the same agencies, non-government needed, should prepare a tailored strategy, one basedorganisations or military forces often providing both.10 on national priorities and a sober assessment of existingSaving  ives is important but making them worth living conditions and resources and that is coherent, integratedshould be just as important. and pragmatic. Any such strategy needs to have broadAt the same time, aid creates all types of distortions. support among the population and must be coordinatedBy changing relative prices, food aid discourages local among the various interested parties.production and work. Donor-imposed policies designed to Whatever the strategy is, however, lessons from the recentliberalise trade—including those introduced by international past suggest that the economics of peace will be moredevelopment and financial institutions as well as bilateral effective in achieving the strategy’s goals if some basic rulesdonors—have led to cuts in tariffs on rice and other are followed. The first and most important of these is thatstaple products. Both initiatives have adversely affected economic reconstruction is not development as usual andfood security and have often led to floods of imports that the peace objective should prevail over the development one4 ACMC Paper 4/2012 > Conflict prevention in practice: from rhetoric to reality
  5. 5. at all times. As a consequence, optimal economic policies agreements with large transnational corporations, ratherare not always feasible or desirable in the short run. The than with smaller firms from the region that might havesecond rule is that policy and legal frameworks should be experience in comparable countries: the latter mightkept as simple, flexible and transparent as possible, given bring technologies and practices that are cheaper andthe existing constraints and limited government capacity to more readily adapted to local conditions. Additionally,execute such policies.13 governments must decide on the scale of some projects: the experience of Iraq has shown that small projects can workOnce the government builds up consensus for its overall better than large ones in an insecure environment or in onestrategy, it should design the specific policies and set up where the operational capacity and maintenance abilities ofpriorities in budgetary allocations. An appropriate and fair the country are and regulatory framework for the distribution of gainsand risks, as well as for ensuring accountability based on If political conditions allow it and the support of regionalresults, is essential for improving efficiency and fairness development banks is forthcoming, regional infrastructureand avoiding corruption. Unfulfilled expectations on the could be built to make these countries more competitive bypart of disgruntled groups can seriously endanger the bringing cheaper electricity or power to some parts of theirtransition to peace. territory or to create roads and other infrastructure that could facilitate and decrease the costs of travel and trade.The development of physical and human infrastructure isoften necessary throughout the country, and governments Governments need to make crucial decisions aboutmust decide what basic infrastructure and services are exploiting natural resources and creating resource funds.essential to create social capital and re-activate agriculture, They need to find a combination of incentives and coerciontourism, mining, or whatever other sectors they want to to bring large investors into the peace process and ensure astimulate. While some elements of infrastructure can be fair allocation of resources—between investors and citizensa prerequisite for production (dams in some areas, for as well as between present and future generations. Althoughexample), development of others (such as road, ports or the exploitation of natural resources has great potentialrailways) could be postponed to coincide with the generation in terms of re-activating production and employment, asof mining or agricultural produce for export. well as in improving the fiscal and external stance of the government, it can also become a lightning rod for conflictBecause many countries emerging from war are at very low among local indigenous groups or a focus for sabotage bylevels of development, aid should be immediately targeted insurgencies in countries with ongoing conflict.16at developing basic human infrastructure. The aid systemhas been more effective in rebuilding clinics and schools, Just like large influxes of aid, large export proceeds fromroads and other physical infrastructure than it has been in natural resources could appreciate the local currency,building the social capital necessary to have effective public thereby discouraging other exports—an effect usuallyeducation and health services. Capacity building in the referred to as ‘Dutch disease’. Despite the fact that Dutchformer areas should be done on a holistic basis, rather than disease has not been a problem among recipients of largein a fragmented way. It should also be done on an emergency amounts of aid such as Afghanistan and Liberia, internationalshift since the inadequacy of these services has not only financial institutions often recommend that governmentsbeen a major deterrent to re-activating production but has create resource funds in order to save the proceeds from thealso give rise to great frustration among the population. exploitation of natural resources for future generations.17Both national and international companies can participate Whether or not to follow this advice is one of the toughestin the construction or rehabilitation of national and local decisions national governments have to make: will futureinfrastructure. Local entrepreneurs should be encouraged generations be better off if export proceeds are savedto participate in bidding projects, alone or in joint in a fund (and probably invested in international capitalventures. Because financing is always a serious constraint, markets) or will they be better off if most of those proceedsgovernments must explore different forms of concessions are invested in human and physical infrastructure that willunder public–private partnerships.14 In post-crisis situations also benefit future generations? The answer to this questionprivate investors hardly ever become involved unless it is depends on how productively the funds can be invested inin partnership or with guarantees from the government, infrastructure as well as in improving the human capacity ofdonors or multilateral agencies.15 young populations.18In choosing the foreign partners, governments must alsodecide on the pros and cons of entering into contract5 ACMC Paper 4/2012 > Conflict prevention in practice: from rhetoric to reality
  6. 6. Economics of peace into the 7. Establish different programs for higher level commanders, providing for them orientation, training,future: 10 basic commandments credit and technical assistance. The United Nations acknowledged better results from ‘Plan 600’ inIn responding to tomorrow’s challenges for economic El Salvador than from programs for lower-rankingreconstruction in countries emerging from war or another combatants, which lacked a similar level of support.type of crisis, as well as in countries that are clearly off trackin their efforts to rebuild their economies, it is imperative 8. Increase support for non-government organisationsthat civilian–military donors and partners heed 10 basic with successful records in creating entrepreneurscommandments. in rural development, in carpet weaving, jewellery design, construction or any other activity the country1. Apply TE Lawrence’s dictum, that it is better to let wants to encourage. Active policies for promoting new them do it than it is to try to do it better for them. start-ups and local companies’ expansion through Let national negotiators and local leaders and credit, training and technical support are imperative. communities determine what their economic needs and priorities are, and let insurgents determine 9. Establish economic reconstruction zones to jump- their preferred avenue for re-integration. Unless the start sustainable economic activity, create jobs participants are empowered and assume ownership, and export earnings, improve aid effectiveness and programs will not be sustainable, resources accountability, and avoid aid dependency. The zones will go to waste, and peace will not endure. could combine integrated rural development and light industries for domestic consumption and labour-2. Ensure the integration—rather than merely the intensive manufacturing and agro-businesses for export. coordination—of economic factors into the political The United States and other countries should open and security agenda. This would entail using re- their markets to goods produced in these zones.19 integration and other economic programs as a carrot, even during peace negotiations. Such programs are 10. Ensure that the political or peace objective prevails at all central to supporting peace and national reconciliation. times, even if this strategy might delay the attainment of economic stability and development. This often means3. Support a peace agreement or a peace strategy, accepting that optimal and best-practice economic as the case may be, designed in accordance with policies are not attainable—or, indeed, even desirable.20 the country’s financial and technical capacity to implement it. This requires reasonable projections for domestic tax revenues and aid, as well as the right Bibliography mix of foreign and domestic expertise. Avoid overly Addison, Tony (ed.), From Conflict to Recovery in Africa, Oxford optimistic projections that lead to unworkable plans University Press, Oxford, UK, 2003. and unreasonable expectations the government will Boyce, James K (ed.), Economic Policy for Building Peace: the lessons not be able to fulfil, as happened in Guatemala. from El Salvador, Lynne Rienner, Boulder CO, 1996.4. Channel aid through the central government budget, del Castillo, Graciana, ‘The economics of peace: military vs civilian earmarked for local authorities as appropriate, so that reconstruction—could similar rules apply?’ in Expeditionary officials can acquire legitimacy by providing services, Economics: toward doctrine for enabling stabilization and growth, infrastructure and security to their communities. West Point US Military Academy NY, forthcoming.5. Ensure that such aid moves quickly from short-term ——, ‘Aid and employment generation in conflict-affected countries: humanitarian purposes—to save lives and to feed policy recommendations for Liberia’, in Foreign Aid and Employment , and shelter those renouncing war or affected by Working Paper no. 2012/47, UN/WIDER, Helsinki, 2012. it—to reconstruction activities aimed at creating ——, The Economics of Peace: five rules for effective reconstruction, investment in a holistic way so as to build social capital, Special report #286, US Institute of Peace, Washington DC, 2011a. improve productivity and financing, ensure food ——, Reconstruction Zones in Afghanistan and Haiti: a way to security, and enable people to live dignified lives. enhance aid effectiveness and accountability, Special report #292, US6. Establish well-planned and synchronised Institute of Peace, Washington DC, 2011b. programs for demobilisation, disarmament and ——, ‘The Bretton Woods institutions, reconstruction and re‑integration. These are the sine qua non for making peacebuilding’, in Mats Berdal and Achim Wennman, Ending Wars, the transition from war to peace irreversible. Consolidating Peace: economic perspectives, Adelphi Series of Books, IISS, London, 2010a.6 ACMC Paper 4/2012 > Conflict prevention in practice: from rhetoric to reality
  7. 7. ——, ‘Peace through reconstruction: an effective strategy for 10 The different impact of these two types of aid was actively debatedAfghanistan’, Brown Journal of World Affairs, vol. XVI/II, Spring/ at the time of the Marshall Plan. Dulles (1993) argued that it wouldSummer, 2010b. be a waste of money merely to provide humanitarian aid to feed the Europeans for a year or two. Reconstruction aid was necessary to——, ‘Economic reconstruction of war-torn countries: the role of the give them the tools without which they would have little chance ofinternational financial institutions’, Setton Hall Law Review, vol. 38, righting their own (postwar) economies. He stressed that policiesno. 4, December 2008a. adopted in the first year of the plan would be decisive in determining——, Rebuilding War-torn States: the challenge of post-conflict how effectively reconstruction proceeded. The same is still true in theeconomic reconstruction, Oxford University Press, Oxford UK, 2008b. present context.——, ‘Auferstehen aus Ruinen: Die Besonderen Bedingungen des 11 For example, President Clinton publicly apologised in March 2010 atWirtschaftlichen Wiederaufbaus nach Konflikten’, Der Überblick the Senate Foreign Relations Committee for championing policies that(Germany’s Foreign Affairs), issue 4, December, 2006. destroyed Haiti’s rice production. As he pointed out, ‘It may have been good for some of my farmers in Arkansas, but it has not worked. It was a—— and Charles Frank, ‘Innovative methods for infrastructure mistake’. See Katz (2010).financing: case studies’, Paper prepared for the Inter-American 12 At the same time, efforts at building the national capacity by usingDevelopment Bank for discussion in the framework of the Integration aid to embed consultants in the local ministries have not generallyof Regional Infrastructure in Latin America, 2003. worked. Independent consultants have a stake in perpetuating the needde Soto, Alvaro and Graciana del Castillo, ‘Obstacles to peace- for their own services. It would be best if governments and relevantbuilding’, Foreign Policy, vol. 94, Spring, 1994. companies sent experts on secondment for short periods to help buildDulles, Allen W, The Marshall Plan, Berg Publishers, Providence/ national capacity. Companies should also be willing to do this andOxford. (Original 1948 manuscript is in the Allen W Dulles Papers at send their own staff on short-term assignments since bonding withPrinceton University.) the government would give them a head advantage once business reactivates in the country.Katz Jonathan M, ‘With cheap food imports, Haiti can’t feed itself’, 13 For a detailed analysis of these rules, both for civilian-led andWashington Post, 2 March 2010. for military-led reconstruction, see del Castillo (2011a). For the international financial institutions position, see del Castillo (2010a,Notes 2008b). 14 For the experience of innovative ways of financing infrastructure1 See del Castillo (2008a, Chapter 1). See also the bibliography for through PPPs in different parts of the world, see del Castillo and Frankreferences on the economic transition in countries emerging from war (2003).or chaos. 15 This may be different in the case of the Chinese where there is often2 To avoid repetition, the terms ‘development as usual’, ‘normal a tenuous distinction and a symbiotic relationship between private anddevelopment’ and ‘long-term development’ are used interchangeably. public companies.The terms ‘economic transition’, ‘economics of peace’, ‘economicreconstruction’ and ‘reconstruction’ are also used interchangeably. 16 See del Castillo (2011a).3 See del Castillo (2008a, Chapter 3). 17 Although Dutch disease was rife in El Salvador, the reason it has not been present among other large aid recipients is mainly that a4 In fact, stabilisation policies have often been an impediment, or at large part of it goes to pay for foreign contractors and experts, foreignleast a constraint, to building up peace in crisis-affected countries. See procurement of UN and other stakeholders in the country, and otherdel Castillo (2010a, 2008a, 2008b), Addison (2003), Boyce (1996), and imported goods and services. It is also associated with the fact thatde Soto and del Castillo (1994). local elites and expatriates producing in the country often take their5 In countries such as Afghanistan and Liberia the spikes have been profits out of the country.unusually large and long. See del Castillo (2012, 2011b, 2010b). 18 The experience of Timor-Leste is relevant in this regard. For details6 Former UN Secretary-General Kofi Annan has said that Africa-wide see del Castillo (2008a, 2006).growth rates of 5.5 per cent are impressive. In a region where annual 19 For the details on reconstruction zones, see del Castillo (2012,income per capita can be as low as $200 in some countries, and not 2011b).much more in others, with few exceptions, such a level of growth is notas impressive as that. 20 See del Castillo (2008a, 2010a).7 See del Castillo (2012, 2011b).8 See del Castillo (2008a).9 A serious problem with aid in Afghanistan and Haiti has been theexorbitant humanitarian aid in relation to reconstruction aid providedover the years. See del Castillo (2012, 2011b).7 ACMC Paper 4/2012 > Conflict prevention in practice: from rhetoric to reality