Tony Addison

Credibility and Reputation in Peacemaking

This article analyses credibility and reputation in the context of peace negotiations. The model is applicable to the credibility of peace agreements in post-conflict situations in the immediate aftermath of civil war, where there is a danger of conflict breaking out again. The analysis is motivated by the empirical regularity with which peace agreements break down in the context of civil war, as for example in Angola, Sierra Leone and many of the conflicts in the Caucasus region. Where war provides economic gains to one side, peace is not incentive compatible, and peace agreements will necessarily degenerate, as they become time inconsistent. The party that has something to gain from surprise warfare, agreeing to peace but reneging on it, will do so and return to war. The levels of conflict chosen by this group are an increasing function of greed and capturable rents, but decreasing in the direct costs of war. In this context, action by external powers could lower the risk of civil war reigniting. Basically, these involve a greater commitment to peace, induced by policies known as commitment technologies. Sanctions, aid and direct intervention, if effective, could eliminate conflict, as well as help in devising commitment technologies to peace. In a multiple-time framework, uncertainty about the type of the group that may renege on peace generates extra costs in terms of greater fighting, and the key role of the discount rate in trading off present versus future consumption enters the analysis. High discount rates and the impatience to consume at present engender greater conflict.

The Chronic Poverty Report 2008/09: Escaping Poverty Traps

Over the last five years, in an era of unprecedented global wealth creation, the number of people living in chronic poverty has increased. Between 320 and 443 million people are now trapped in poverty that lasts for many years, often for their entire lifetime. Their children frequently inherit chronic poverty, if they survive infancy. Many chronically poor people die prematurely from easily preventable health problems. For the chronically poor, poverty is not simply about having a very low income: it is about multidimensional deprivation – hunger, undernutrition, illiteracy, unsafe drinking water, lack of access to basic health services, social discrimination, physical insecurity and political exclusion. Whichever way one frames the problem of chronic poverty – as human suffering, as vulnerability, as a basic needs failure, as the abrogation of human rights, as degraded citizenship – one thing is clear.Widespread chronic poverty occurs in a world that has the knowledge and resources to eradicate it. This report argues that tackling chronic poverty is the global priority for our generation. There are robust ethical grounds for arguing that chronically poor people merit the greatest international, national and personal attention and effort. Tackling chronic poverty is vital if our world is to achieve an acceptable level of justice and fairness. There are also strong pragmatic reasons for doing so. Addressing chronic poverty sooner rather than later will achieve much greater results at a dramatically lower cost. More broadly, reducing chronic poverty provides global public benefits, in terms of political and economic stability and public health. The chronically poor are not a distinct group. Most of them are ‘working poor’, with a minority unable to engage in labour markets. They include people who are discriminated against; socially marginalised people; members of ethnic, religious, indigenous, nomadic and caste groups; migrants and bonded labourers; refugees and internal displacees; disabled people; those with ill health; and the young and old. In many contexts, poor women and girls are the most likely to experience lifelong poverty. Despite this heterogeneity, we can identify five main traps that underpin chronic poverty.

Transnational Terrorism as a Spillover of Domestic Disputes in Other Countries

This paper models transnational terrorism as a three‐way strategic interaction involving a government that faces armed opposition at home, which may spill over in the form of acts of terrorism by the states opponents against the governments external sponsor. The external sponsor also utilises deterrence against potential terrorists, which only lowers terrorism if terrorists are not intrinsically motivated by a deep‐seated sense of humiliation. The model highlights the importance of intrinsic motivation. A rise in the external powers preference for deterrence against terrorism may backfire in these circumstances. Increases in the governments military efficiency against the rebels, who are also terrorists against the governments sponsor, raises overall levels of violence.

Debt Relief and Civil War

Reducing or writing off the debts of the 41 heavily indebted poor countries (HIPCs) can potentially reduce social conflict by releasing resources from debt-service to enable governments to make fiscal transfers that lower the grievances of rebels (when conflict is partly rooted in grievances over past allocations of public spending and taxation). To explore these issues, this article presents a model of a civil war between a government and rebels, with both sides maximizing their expected utility from the states of war and peace. The government may accept debt relief but then renege on any promise to donors to use the resources to buy peace and instead keep the resources for itself and raise its military capability. The outcome that prevails depends on which party (peace or war) has the greatest influence on the government of the day. Unfortunately, even if debt relief is forthcoming, the fiscal system may be so institutionally weak that it cannot achieve the promised transfer. Also, the rebel leaders may capture most of the fiscal transfer, leaving the grievances of their followers to ferment into further conflict. And a transfer that could have prevented conflict may be insufficient to stop a war once it begins. The international community has only limited influence over these problems. But the international community can change the modality of debt relief itself so that peace-seeking governments can receive faster debt relief, thereby at least ensuring that peace is not delayed by the inevitable difficulties that wartime governments face in meeting donor policy conditionality.

Aid to conflict‐affected countries: lessons for donors

The first section looks at the implications of conflict for aid effectiveness and selectivity. We argue that, while aid is generally effective in promoting growth and by implication reducing poverty, it is more effective in promoting growth in post-conflict countries. We then consider the implications of these findings for donor selectivity models and for assessment of donor performance in allocating development aid among recipient countries. We argue that, while further research on aid effectiveness in post-conflict scenarios is needed, existing selectivity models should be augmented with, inter alia, post-conflict variables, and donors should be evaluated on the basis, inter alia, of the share of their aid budgets allocated to countries experiencing post-conflict episodes. We also argue for aid delivered in the form of projects to countries with weak institutions in early post-conflict years. The second section focuses on policies for donors operating in conflict-affected countries. We set out five of the most important principles: (1) focus on broad-based recovery from war; (2) to achieve a broad-based recovery, get involved before the conflict ends; (3) focus on poverty, but avoid ‘wish lists’; (4) help to reduce insecurity so aid can contribute more effectively to growth and poverty reduction; and (5) in economic reform, focus on improving public expenditure management and revenue mobilisation. The third section concludes by emphasising the fact that there is no hard or fast dividing line between ‘war’ and ‘peace’ and that it may take many years for a society to become truly ‘post’-conflict’. Donors, therefore, need to prepare for the long haul.

Development Finance in the Global Economy: The Road Ahead

Today, large volumes of global savings move through an increasingly integrated global capital market in search of investment opportunities. Capital is abundant. The developing world is receiving an increasing share of these flows, to the benefit of private investment — in production, trade and infrastructure — as well as to the balance of payments (with foreign direct investment (FDI) providing the most stable form of capital flow). Running alongside this story of private capital flow is one of increased official flows, official development assistance (ODA) having rebounded since its mid-1990s slump. And the flows of private and official capital run together at times, as with the international finance facility (IFF) which aims to leverage and front-load ODA by borrowing from international capital markets. The IFF, together with the French airline tax and proposals for global environmental taxes, the currency transaction tax (CTT) and the Global Premium Bond, constitute the new class of innovative financing mechanisms. Last, but certainly not least, the new philanthropy (increasingly in partnership with development agencies) is adding considerably to already well-established and growing flows from the charitable sector — and this source of capital has an especially close relationship with the goal of reducing poverty.

Post-Conflict Reconstruction in Africa: Some Analytical Issues

In contrast to much of the twentieth century, when warfare between rich states was the norm, contemporary conflict now occurs almost exclusively in poor developing countries and is mainly internal in nature (although external parties and neighbouring countries may support internal belligerents). The period 1990–2000 saw nineteen major armed conflicts in Africa, ranging from civil wars to the 1998–2000 war between Eritrea and Ethiopia (Wallensteen and Sollenberg, 2001). Although the picture is grim, there has recently been some good news: a peace agreement has been signed in Angola; the governments of the Democratic Republic of the Congo (DRC) and Rwanda have signed a peace agreement; talks have resumed between the government and the rebels in Sudan. Sadly, these positive developments need to be counterbalanced with the empirical regularity with which peace agreements break down (Walter, 2001). Ensuring that the benefits of reconstruction are broad-based rather than narrow in their benefits, it is important to minimize the chances of conflict reigniting, since grievances will otherwise fester. Accordingly, the containment and reduction of inequality, and not just a reduction in absolute poverty, may be central to broad-based reconstruction.

Social Policy and State Revenues in Mineral-Rich Contexts

At the time of writing1 it seemed that the different impacts and implications of the recent economic crisis - which occurred mostly in developed economies, but was spreading towards the developing world - would also affect mineral-rich developing countries (MDCs) by reducing both demand for and prices of minerals and metals. Yet, this effect is still to be seen. The economies of mineral-importing countries such as China and India do not seem to be shrinking significantly - at least not to the same extent as those of the countries of the Organisation for Economic Co-operation and Development (OECD).2 Furthermore, it is expected that measures taken to prompt economic recovery all over the world will again stimulate the expansion of mineral industries - an expansion that is more likely to occur in MDCs, since the constraints on developing mining activities in Western Europe and North America are stronger (Otto et al. 2007).3

Reconstructing and Reforming the Financial System in Conflict and 'Post-Conflict' Economies

Reconstructing the financial system in countries affected by violent conflict is crucial to successful and broad-based recovery. Particularly important tasks include: currency reform, rebuilding (or creating) central banks, revitalising the banking sector, and strengthening prudential supervision and regulation. Encouragement of private capital into the banking sector must be balanced by protection of the public interest, a task made more difficult by the nature of war-to-peace transition. Bank crises can destabilise economies in recovery from war, and their fiscal burden takes resources away from development and poverty spending – thereby threatening ‘post-conflict’ reconstruction itself.

Resolving the HIPC Problem: Is Good Policy Enough?

Unless we understand, and act upon, the causes of the present HIPC problem, its recurrence is almost certain.1 Poor countries, and poor people, will be condemned to live through repeated cycles of borrowing, default and recession. But this is easier said than done. The voluminous literature on debt relief emphasizes everything from bad policy to terms of trade shocks to political instability to globalization. Depending on one’s personal preferences (and biases) you can ‘pick and mix’ virtually any combination of explanatory factors.