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The Political Economy of Violent Conflict Within States

Oxford Research Encyclopedia of International


Studies
The Political Economy of Violent Conflict Within States

Achim Wennmann
Subject: Conflict Studies, Political Economy, Security Studies
Online Publication Date: Feb 2019 DOI: 10.1093/acrefore/9780190846626.013.370

Summary and Keywords

The political economy of violent conflict is a body of literature that investigates how
economic issues and interests shape the dynamics associated to violent conflict after the
Cold War. The literature covers an area of research focusing on civil wars—the
predominant type of conflict in the 1990s and early 2000s—and an area of research
focusing on other types of violent conflict within states, such as permanent emergencies,
criminal violence, and political violence associated to turbulent transitions. The first area
involves four themes that have come to characterize discussions on the political economy
of civil wars, including research on the role of greed and grievance in conflict onset, on
economic interests in civil wars, on the nature of conflict economies, and on conflict
financing. The second area responds to the evolution of violent conflict beyond the
categories of “interstate” or “civil” war and shows how political economy research
adapted to new types of violent conflict within states as it moved beyond the “post-Cold
War” era. Overall, the literature on the political economy of violence conflict emphasizes
the role of informal systems behind power, profits and violence, and the economic
interests and functions of violence underlying to violent conflict. It has also become a
conceptual laboratory for scholars who after years of field research tried to make sense of
the realities of authoritarian, violent or war-affected countries. By extending the
boundaries of the literature beyond the study of civil wars after the Cold War, political
economy research can serve as an important analytical lens to better understand the
constantly evolving nature of violent conflict and to inform sober judgment on the
possible policy responses to them.

Keywords: political economy, civil wars, war economy, conflict financing, natural resources, permanent
emergencies, military-industrial complex, criminal violence, political transitions

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Introduction
This article reviews contributions on the political economy of violent conflict after the
Cold War. At its core interdisciplinary, the political economy of violent conflict represents
a literature that focuses on how economic issues and interests shape conflict dynamics—
or on how violent conflict starts, endures, escalates, or ends. The article underlines how
research on the political economy of violent conflict evolved after the Cold War from its
traditional focus on interstate warfare to civil wars, and then beyond, in order to make
sense of the constantly evolving nature of violent conflict in different regions of the
world.

The article distinguishes between an area of research focusing on the political economy
of civil wars—the predominant type of conflict in the 1990s and early 2000s with much
attention given to the study of rebel groups. The second area of research focuses on other
types of violent conflict within states over the past two decades. This research includes
political economy perspectives on intervention and permanent emergencies related in
particular to the wars in Afghanistan and Iraq; criminal violence in Central and South
America and southern Africa; and political violence and transitions in the Middle East and
North Africa.

This article limits its scope to contributions emerging from political science, sociology,
and anthropology in order to complement an existing review on the economics and
conflict in the Oxford Research Encyclopedia of International Studies (Schneider, 2010).
Given the richness of the literature, the article cannot systematically cover scholarship on
the political economy of interstate war, state-building, or development.

Situating the Political Economy of Violent


Conflict
In their introduction to The Oxford Handbook of Political Economy, Weingast and
Wittman (2006) describe the long intellectual tradition of political economy as a field of
study:

For Adam Smith, political economy was the science of managing a nation's
resources so as to generate wealth. For Marx, it was how the ownership of the
means of production influenced historical processes. For much of the twentieth
century, the phrase political economy has had contradictory meanings. Sometimes
it was viewed as an area of study (the interrelationship between economics and
politics) while at other times it was viewed as a methodological approach. Even
the methodological approach was divided into two parts – the economic approach
(often called public choice) emphasizing individual rationality and the sociological
approach where the level of analysis tended to be institutional. (p. 3)

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Building on the tradition of formal modeling, political economy research became


associated with “the methodology of economics applied to the analysis of political
behaviour and institutions” (Weingast & Wittman, 2006, p. 3). Different scholarly
disciplines follow this economic approach to political economy to study international
conflict. For instance, defense economics has relied on formal models to study the nature
and dynamics of international conflict or issues such as the arms race, bargaining,
alliance formation, or defense expenditure (Anderton & Carter, 2009; Brauer & Gissy,
1997; Brauer & van Tuyll, 2008; Hirshleifer, 1995; Hartley & Sandler, 1995). In political
science, scholars have studied “how political institutions constrain and create incentives
that shape cooperation and conflict” in contrast to different schools in international
relations (e.g., neorealism, liberalism) that focus on how “the distribution of power or
distribution of wealth among states (as rational unitary actors) determines interactions
leading to international conflict and cooperation” (Bueno de Mesquita, 2006, p. 832). By
the late 1990s, economists also investigated the political economy of civil wars, including,
for instance, research on economic explanations for the causes of civil wars by Collier
and Hoeffler (1998) discussed later.

This article recognizes this intellectual tradition of political economy research but focuses
primarily on contributions from political science, sociology, and anthropology because the
literature on economics and conflict is already well covered elsewhere (Humphreys, 2003;
Schneider, 2010; Kimbrough, Laughren, & Sheremeta, 2017). The contributions from
these disciplines build on history scholarship on the economic attributes of interstate
wars and their effect on state formation. The rising costs of war had important
transformative effect on states of 15th- and 16th-century Europe and led to the
development of extraction systems for rulers to acquire the resources for state-making,
war-making, and protection (Tracy, 1985; Tilly, 1992). The need to pay for wars had such
profound effects on European states that “financial history cannot escape dealing with
war” (Kindleberger, 1993, p. 7). Beyond the evolution of states, wars also shaped the
origin of major firms, which became the organizational response to satisfy the increasing
demand from states for war-making materials from the 17th century onwards (Chandler,
1992; Sen, 1984). Research on the political economy of international conflict has also
featured within international political economy, especially in relation to the study of
military-industrial and trade rivalries between states and international economic orders
(Gill & Law, 1988; Lake, 2006).

With the end of the Cold War, research started to shift its focus from interstate to civil
wars. Political economy research also took this turn, initially driven by the application of
formal economic methods (Collier & Hoeffler, 1998). Yet the emphasis on economic
reductionism and methodological individualism led to claims that the models were
inadequate to capture structural and relational change over time (Cramer, 2002).
International political economy research emphasized how easier access to global markets
transformed civil wars as they enabled the commercialization of local resources in the
global economy and facilitated the supply of know-how, manpower, and war-fighting
material to war theaters (Berdal, 2003; Berdal & Malone, 2000; Duffield, 2001; Kaldor,
1999). This literature responded to the many open questions of how to respond to civil
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wars in a historical context in which war economies became an integral part of


globalization (Friman, 2009; Naylor, 2002). While the literature evolved primarily within
an Anglo-Saxon research community, early work on the political economy of civil wars
evolved from French scholarship (Jean & Rufin, 1996; Misser & Vallée, 1997). Research
on the political economy of violent conflict was also part of a trend to broaden security
studies beyond state- and military-centered approaches after the Cold War (Buzan, 1991;
Krause & Williams, 1996).

At its core interdisciplinary, the literature on the political economy of violent conflict also
became a conceptual laboratory for scholars who—often after years of field research—
tried to make sense of the messy, contradictory, illiberal, unjust, and constantly changing
realities of authoritarian, violent, or war-affected countries from their respective
disciplinary perspectives (Cramer, 2006; Giustozzi, 2007; Menkhaus, 2007; Nordstrom,
2004; Rodgers, 2009; Reno, 1996; de Waal, 2015). Despite the different methods and
approaches used in this research, what their work may have in common is a “political
economy analyses” that enables a look “beneath the formal structures to reveal the
underlying interests, incentives and institutions that enable or frustrate change” and that
account for both formal and informal social, political, and cultural norms shaping political
and economic competition (Department for International Development, 2009, pp. 1–2).

Themes on the Political Economy of Civil Wars


Between the mid-1990s and the mid-2000s, a distinct literature focused on the political
economy of civil wars—a category of violent conflict that captured the predominant type
of warfare within this period in countries such as Angola, Bosnia-Herzegovina, Cambodia,
Colombia, the Democratic Republic of the Congo (DRC), Kosovo, Liberia, Peru, or Sierra
Leone. This section unpacks this literature by zooming onto four key themes that have
come to characterize discussions on the political economy of civil wars: research on the
role of greed and grievance in conflict onset, on economic interests in civil wars, on the
nature of conflict economies, and on conflict financing. An underlying current connecting
these themes is their aim to better understand economic dimensions of violent conflict
and how economic interests shape conflict dynamics. Shortly after the Cold War when
these discussions occurred, this aim was both new and bold when considering that much
policy and research on violent conflict was related to the military or political realm.

Greed and Grievance

Research on the causes of civil wars was spearheaded by Paul Collier and Anke Hoeffler
at the World Bank and culminated into the Collier-Hoeffler Model on Civil War Onset
(Collier & Hoeffler, 1998, 2004; Collier & Sambanis, 2005). This research came to the
conclusion that economic motivations are more important than grievance to explain the
occurrence of civil war, which contrasted the then prevailing narratives about ethnic
conflict that were supposedly caused by “irrational and essentially inexplicably primordial
qualities” of ethnic and cultural identities (Pugh, Cooper, & Goodhand, 2004, p. 97), and

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framed by a perception of anarchy in the “underdeveloped world” characterized by “the


withering away of central governments, the rise of tribal and regional domains, the
unchecked spread of disease, and the growing pervasiveness of war (Kaplan, 2000, p. 9).
Collier and Hoeffler conceptualized civil wars as a developmental problem. Since armed
conflict was mainly located in developing countries, civil war was characterized as
“development in reverse” (Collier et al., 2003, p. 32). From this perspective, civil wars
were an economic problem that legitimized the use of economic methods to explain the
occurrence, duration, and consequences of civil war (Collier & Sambanis, 2005, p. xiii).

The Collier-Hoeffler model may have been “the most widely reported results of any cross-
national study of civil conflict, ever” (Fearon, 2005, p. 484, emphasis in original). The
statistical methodology provided a basis to present the findings as objective and
apolitical. World Bank ownership gave the results authority and visibility. The findings
vindicated World Bank policy on economic diversification, the reduction of military
spending, growth- and trade-led economic development, and external intervention
(Collier et al., 2003). The findings also gave political momentum to efforts at the United
Nations to expose and undermine the financing of rebel groups in African conflict zones
(Klem, 2004).

As a result of—or perhaps because of—this significance, the Collier-Hoeffler model


generated much debate and critique. Overall, the model was thought to provide an
additional theory for the onset of civil war, especially as an alternative to theories
focusing on ethnic or religious identity (Berdal, 2005, p. 688). In addition, the model
clearly specified opportunity structures for rebellion (Fearon, 2005, p. 485) and provided
an economic understanding of armed conflict beyond its political and military dimensions
(Klem, 2004, p. 18). Moreover, due to its polarizing nature, the model provoked the
academic community and thereby stimulated new research (Fearon, 2005, p. 484).

A major source of criticism was the methodological orientation of the study mirroring a
broader discussion between quantitative and qualitative approaches to the social sciences
and between various epistemological positions on international relations (Hollis, 1994,
pp. 15–20). In this context, the emphasis on economic reductionism, the creation of
truths, and methodological individualism led to claims that the model was inadequate to
capture structural and relational change over time (Cramer, 2002, p. 1850; Herbst, 2000,
p. 274).

The thrust of the critique, however, was aimed at the execution of the research. Nathan
(2005) argues that the model “is filled with empirical, methodological and theoretical
problems that lead to unreliable results and unjustified conclusions” (p. 2). Klem (2004)
purports that “indicators are subjective and inadequate. . . . the jump from correlation to
causation is large” (p. 5). A report evaluating World Bank research noted a “lack of an
appropriate conceptual and empirical framework. As a result, the regression analysis of
these studies [on civil war] cannot be used to support the conclusions they ostensibly
reach . . . An important and promising topic was marred by poor execution” (Banerjee,
Deaton, Lustig, & Rogoff, 2006, p. 64). A key issue was data on conflict areas that led to

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the omission of 34 cases out of 113 in the earlier models and the omission of 27 out of 79
civil wars in the 2004 revision. These omissions compromised the validity of the findings
of the research produced up until the mid-2000s (Fearon, 2005, p. 485; Fearon & Laitin,
2003, p. 76).

With hindsight, the “greed and grievance” research following Collier and Hoeffler’s 1998
article, and the response to it, may be compared to the movements of a pendulum, as
described by Zartman (2005):

Putative explanations emerge and draw momentum of scholarship to them, lining


up true believers and drawing fire of true doubters, until a counterproposition
appears in turn and the pendulum swings in a new direction. The movement
encourages exclusivist and exaggerated claims in order to draw attention to a new
explanatory angle, and so fuels the work of debunkers. Much value is lost in the
process, and the pendulum only comes to rest on one side or in the middle much
later, often unnoticed as the debate moves elsewhere. (p. 257)

That middle ground became understanding the role of economic factors in conflict
dynamics in specific conflicts (Arnson & Zartman, 2005; Ballentine & Sherman, 2003) and
in terms of how they interact “with socioeconomic and political grievances, interethnic
disputes, and security dilemmas in triggering the outbreak of warfare” (Ballentine, 2003,
pp. 259–260). Much of the initial determinism of the greed and grievance discussion was
also softened as the discussion evolved with the intention to “lay to rest the ‘greed versus
grievance’ caricature. . . . Greed and grievance should not be seen as competing
explanations of conflict—they are often shades of the same problem” (Bannon, 2003, p.
xi). Work using anthropological methods also developed a much more contextual
understanding of conflict drawing on human stories (Nordstrom, 2004; Rodgers, 2009;
Uvin, 2009). With hindsight, therefore, the legacy of the greed and grievance debate may
be that it debunks single-factor explanations of how violent conflicts start, evolve, and
end and that it situates the analysis of economic dimensions of violent conflict more
within international political economy rather than economics.

Economic Agendas in Civil Wars

Research on civil war occurred at a moment when natural resources took a prominent
role in many African conflicts, and the United Nations and the World Bank adapted their
policy accordingly (Bannon & Collier, 2003; Ballentine & Nitzschke, 2005B; Collier et al.,
2003). In the early 2000s, a series of reports of the United Nations Security Council
(UNSC) Sanctions Monitoring Mechanisms on Angola, the DRC, Liberia, or Sierra Leone
exposed the link between natural resource exploitation and human suffering and fatalities
and initiated a policy of “naming and shaming” governments and businesses involved in
war economies (e.g., UNSC, 2000). The reports also provided political momentum for new
sanctions regimes including commodity or financial sanctions and travel bans (Biersteker
& Eckert, 2001; Cortright & Lopez, 2002; Biersteker, Eckert, & Tourinho, 2016), as well
as multistakeholder natural resource management schemes such as the Kimberley

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Process against conflict diamonds (Smillie, 2005). Different advocacy groups did their
part to expose the deal-making of war-fighting governments and rebel groups as well as
their corporate or governmental supporters (e.g., Global Witness, 1998, 2001; Smillie,
Gberie, & Hazleton, 2000). The involvement of companies in war economies also
triggered policy efforts on business and human rights that led to the adoption of the
Guiding Principles on Business and Human Rights in 2011 (see Ruggie, 2013).

An area of research accompanying these developments focused on the “complex web of


motives and interactions” emerging from the interplay of vested interests in prolonging
civil war (Berdal & Malone, 2000, p. 2; see also Duffield, 2001). This research was rooted
in a functional understanding of violence, which means that violence is the result of
purposefully organized actions and is motivated by psychological, political, social, or
economic functions (Kalyvas, 2006; Keen, 1998). Underlying this “rational kind of
madness” are questions such as “What use is violence? What functions does it assure? In
what strategies is it integrated?” (Keen, 1997, p. 68).

Through a functional lens it became possible to discern that the civil wars of the 1990s
departed from Clausewitzean notions of war as a contest between two armies in which
war is the means to achieve political goals. Rather, war became an end in itself, and the
aim of fighting was no longer to win against an enemy but to perpetuate the conflict for
economic reasons (van Creveld, 1991, pp. 57–62, 217). Through the functional lens, civil
wars were no longer characterized as purely political contests but became “the
continuation of economics by other means” (Keen, 1998, p. 11). Civil wars were “not
simply a breakdown of a particular system, but a way of creating an alternative system of
profit, power and even protection” (Keen, 1998, p. 11).

These characteristics of civil wars debunked the so-called “give war a chance” thesis,
which argued that “too many wars nowadays become endemic conflicts that never end
because the transformative effects of both decisive victory and exhaustion are blocked by
outside intervention” (Luttwak, 1999, p. 44). In the absence of intervention, wars would
be “allowed to run their natural course” as the belligerents would exhaust their military
force (Luttwak, 1999, p. 36). However, if the belligerents are conducting an armed
conflict for economic reasons, Cooper (2002, pp. 943–944) argued that waiting for the
military exhaustion “may be like waiting for Godot,” making reference to a play by
Samuel Becket in which the main characters await the arrival of someone named Godot,
but this person never arrives.

In addition, a functional lens helped correct the depiction civil wars as “chaos.” Keen
(2000) argued that

disciplines like economics and political science usually focus on a restricted area
that is ordered and predictable; and when messy phenomena like contemporary
civil war do not fall easily within the orbit of these systems of analysis, the
temptation to wheel out the label of chaos is very great. (p. 22)

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The literature therefore situated civil wars as part of broader transformation processes in
which people adapted their behavior in order to survive, minimize risk, and maximize
opportunities. In these circumstances, armed groups benefitted from the absence of legal
authorities and accumulated profits through violence, which in turn fostered an interest
to perpetuate the conflict, but not to win it (Keen, 1998).

The functional perspective also developed as a critique to policy efforts that mainly
focused on cutting-off financing from rebel groups as a means to end a civil war. Herbst
(2000), for instance, recalled the partisan nature of sanction regimes that are “an implicit
call for the military defeat of the rebels by the government,” noting also that “the
vocabulary of victory and defeat has been transferred to the more neutral and
technocratic language of sanctions and restraints on the trade of natural resources” (p.
271). In a similar vein, Keen (1997) remarked that

a focus on the costs of war only takes us so far. Unless we look also at the
functions of war, it is difficult to see how wars can be brought to an end. . . . If we
try to assess who is benefiting from war and in which ways (as well as who is
suffering from war and in which ways), we will be well placed to suggest policy
innovations that will alter the balance of costs and benefits for those effecting or
contemplating acts of violence. (p. 73)

Conflict Economies

Conflict economies have been another area of research of the political economy of civil
wars. This focus on rebel groups established a counterpoint to history scholarship on war
economies associated with states. As a starting point, Jean and Rufin (1996) described
Mao Tse Tung and Che Guevara’s doctrine of guerrilla warfare. According to these
doctrines, guerrilla forces are dependent on local populations for protection and
resources because they tend to be weaker than government forces in terms of number of
soldiers and hardware. They should therefore form a symbiosis with the local population
and its natural environment. However, except for China and Cuba, relying only on
symbiosis is rarely sufficient for mobilizing resources to maintain guerrilla activities,
which explained why insurgents needed to move around from one community to the next
while ensuring external support through military or humanitarian sanctuaries (Rufin,
1996, pp. 21–23).

Naylor (2002, pp. 45–47, 53–54) investigated the dynamic features of conflict economies
based on the interaction of the type of conflict economy (predation, parasitic, extraction)
and the military strategy of armed groups (contention, expansion, control). He
distinguished three stages in this evolution including “predation-contention” (the
economy is predatory and the military strategy is based on contention with government
forces), “parasitic-expansion” (insurgents grow in size and territorial reach with the
economy developing increasingly parasitical characteristics), and “extraction-territorial
control” (insurgents establish control over an area from which the state is excluded). The
latter stage has received further analysis in the literature on de facto states where a de
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facto government runs state-like institutions, public services, as well as justice and
taxation systems and has control over a population yet is not recognized as a state by the
international community (Pegg, 1998).

The evolution of conflict economies described by Naylor (2002) applied to a range of


rebel groups including the Shining Path in Peru, the National People’s Army in the
Philippines, the Bougainville rebels in Papua New Guinea, the Khmer Rouge in Cambodia,
the Tamil Tigers in Sri Lanka, União Nacional Para a Independência Total de Angola
(UNITA) in Angola, the Maoist rebels in Nepal, and the Fuerzas Armadas Revolucionarias
Colombianas (FARC) in Colombia. These experiences suggested that the evolution of
insurgency economies can over time become similar to those of states. While in the initial
stages of an insurgency insurgents use different methods of financing, the methods
become similar with the increasing degree of control over territory and populations. As
insurgencies become larger and increase their operational space, costs of maintaining
their activities increase and lead to pressures to build institutions to administer at scale,
which in turn means the need to diversify sources of income (Naylor, 2002, pp. 45–47, 53–
54). More recently, the political and social transformations within the territories
controlled by rebel groups have become part of the study of rebel governance in civil
wars (Arjona, Kasfir, & Mampilly, 2015) and of the study of the Islamic State in Iraq and
Syria (ISIS) (Mohamedou, 2018).

Research between the mid-1990s and mid-2000s also emphasized the importance of case
studies and field research in advancing the understanding of conflict economies.
Wennmann (2007A, p. 63) identifies at least 63 case studies in this period across 30
different civil wars. Exemplary of this work are articles on Afghanistan by Rubin (2000)
and Goodhand (2000) and on Bosnia and Herzegovina by Woodward (1995) and Donais
(2003). The work on conflict economies highlighted the important social and economic
transformations taking place during armed conflict (Cramer, 2006; Douma, 2003). It
showed that an economy not simply collapses in times of war but transforms itself to
fulfill the needs and objectives of a war-fighting state or non-state armed groups. It also
highlighted the role and limits of outside interveners in shaping social systems of conflict-
affected countries (Anderson, 1999; Duffield, 2001). War- or violence-induced
transformations also represent such an important change of economic relations and
opportunities that postconflict reconstruction needs to connect to these new realities, for
instance by adopting a conflict-sensitive, postconflict economy policy (Addison & Brück,
2009; Del Castillo, 2008; Kamphuis, 2005).

Conflict Financing

Research on conflict financing has been informed by case studies of the various rebel
groups in the mid-1990 to mid-2000s; especially in Africa (e.g., Angola, Ivory Coast, the
DRC, Eritrea/Ethiopia, Liberia, Mozambique, Rwanda, Sierra Leone, Somali, Sudan, and
Uganda) but also in South America (Colombia, Peru), Asia/Pacific (Cambodia, Indonesia,
Nepal, Sri Lanka, Papua New Guinea), Europe (Bosnia and Herzegovina, northern
Ireland), and the Middle East (Lebanon, Turkey). This research has been presented in

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The Political Economy of Violent Conflict Within States

several seminal case study volumes including Jean and Rufin (1996), Ballentine and
Sherman (2003), Pugh et al. (2004), Arnson and Zartman (2005), and Collier and
Sambanis (2005) and is connected to research on the behavior and functioning of rebel
groups (Balencie & de La Grange, 2001; Bøås & Dunn, 2007; Clapham, 1998; Hazen, 2013;
Metelits, 2010; Weinstein, 2007).

Research on conflict financing initially continued to emphasize the multitude of financing


methods available to rebel groups (Jean & Rufin, 1996; Kaldor, 1999). However, in the
early 2000s, natural resources received much scholarly and policy attention with natural
resources being a defining characteristic of several African civil wars, especially Angola,
Sierra Leone, Liberia, and the DRC (Cilliers & Dietrich, 2000; Smillie et al., 2000). Le
Billon (2001) developed a typology of resource conflicts based on four geographic
characteristics (resources are concentrated/diffuse or proximate/distant to the capital)
and four types of armed conflict (competition for state control, secession, rebellion, and
warlordism). Ross (2003, 2004) added the dimension of “lootable” and “obstructable”
resources. Lootability refers to the ease with which resources can be extracted and
transported by individuals or groups (e.g., diamonds, drugs); obstructability refers to the
ease with which the transportation of a resource can be blocked (e.g., oil, gas, deep-shaft
minerals). Several volumes in the early 2000s were dedicated to this topic (e.g.,
Ballentine & Nitzschke, 2005B; Bannon & Collier, 2003; Renner, 2002), and the United
Nations Environment Programme and associated partners fostered research that was
ultimately published in six volumes between 2012 and 2016 (Bruch, Muffett, & Nichols,
2016; Jensen & Lonergan, 2012; Lujala & Rustad, 2012; Unruh & Williams, 2013;
Weinthal, Troell, & Nakayama, 2014; Young & Goldman, 2015).

The importance of natural resources in conflict financing was explained by the trend for
rebel groups to replace their declining support from Cold War patrons—a claim that has
since been qualified by various scholars. Patronage payments during the Cold War tended
to be mainly a feature of Western power politics rather than a general phenomenon.
Western powers devoted a higher degree of support to different rebel groups in
comparison to the Soviet Union and China (Naylor, 2002, pp. 80–81). Moreover, even
during the Cold War, rebel groups were able to rely to some extent on natural resource
extraction and taxation as well as generate income through other economic activity
(Wennmann, 2007A, p. 94). It was also misleading to assume that direct support stopped
after the Cold War, as illustrated by the direct state support to the civil war in Bosnia and
Herzegovina (Bojicic & Kaldor, 1997). What did change, however, was that state support
was “no longer the only, or necessarily the most important, game in town” (Byman et al.,
2001, p. xiii). Herbst (2004, p. 367) emphasized that the access to natural resources
provided some rebel groups the means and an incentive to challenge weak states.

The tendency to emphasize the role of natural resources in rebel group financing was
surely adequate in many African civil wars, but overall it did not provide a balanced
picture on conflict financing generally. Many other rebel groups had a range of financing
methods, including, for instance, external assistance from governments or diasporas,
asset transfers from civilians, the printing and forging of money, protection rackets,

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The Political Economy of Violent Conflict Within States

landing fees, kidnapping, portfolio investments, and legitimate business ventures. The
kinds of financing strategies available to armed groups also depended on the
opportunities for money-making in the specific territories they controlled, the
geostrategic significance of this territory, and the international political context that
shaped the conflict (Wennmann, 2007B).

In addition, research on conflict financing has tended to focus on the income produced
from specific financing methods, not on an extended analysis to compare such revenue to
the cost of a specific military strategy. Research on mobilization costs emphasized the
importance of the relationship between available revenue sources and the financial
requirements to organize the type of military strategy needed to reach a particular
objective (Killicoat, 2007; Wennmann, 2009). This relationship between available funding
and mobilization costs provides new insight into what constitutes an “effective” source of
conflict financing at three levels: first, resources that are easy to centralize and generate
a high value and immediate revenue stream (which is key to initiate a conflict); second,
resources providing constant revenue over time (which are key to maintain a conflict),
and third, minor resource flows that can motivate commanders and troops to keep a
conflict alive but that on their own are insufficient to pay for a conflict (Wennmann,
2009). Many analyses of conflict financing obsess over how much money a specific group
controls but do not ask the question about how much money they need and what for. The
emphasis on mobilization costs produces a more nuanced analysis of conflict financing.

Beyond Civil War


Over the course of the past two decades, the categories of “interstate” or “civil” wars
became increasingly ill-suited for understanding the constantly evolving nature of violent
conflict (Krause, 2014). Scholarship focused on various other types of violent conflicts,
including, for instance, research on the military interventions in Afghanistan, Iraq, and
elsewhere, as well as on a political economy perspective on anti-terror policies. It also
focused on criminal violence in Central and South America, the Caribbean, and Southern
Africa and the increasing merger between political and criminal agendas. Other research
looked at political violence and transition in the Middle East and North Africa that
highlights the interaction between de facto political orders and foreign interventions
through stabilization, state-building, or peace-building programs. What connects these
strands of research—and what makes them part of the study of political economy—is their
focus on the interaction of formal and informal power in establishing control over political
and economic resources and opportunities and how this interaction affects the dynamics
of violent conflict.

Intervention and Permanent Emergencies

The wars in Afghanistan and Iraq introduced a new era of military interventions and
“liberal” development assistance related to state-building, economic reform, or peace-
building (Chandler, 2010; Paris, 1997; Richmond, 2006). These interventions involved the

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export of Western-style political institutions and participatory politics to these two


countries that were also part of a broader ambition to stabilize and develop other
postconflict states (Autesserre, 2014; Berdal & Zaum, 2013; Boege, Brown, Clemens, &
Nolan, 2009; Mac Ginty, 2011; Paris & Sisk, 2009; Putzel & Di John, 2012). Research on
the political economy of violent conflict shifted the focus from non-state armed groups to
the overt or clandestine roles of state security forces, private security firms, and other
international actors in war zones (Coll, 2004; Singer, 2003). It also looked at the
implications of military interventions and war economies (Costantini, 2016; Dodge, 2005;
Felbab-Brown, 2013; Giustozzi, 2007; Moore & Parker, 2007), also connecting to research
on the political economy of development from area studies, especially on the Middle East
(Cammett, Diwan, Richards, & Waterbury, 2015; Haddad, 2012; Heydemann, 2004).

From a political economy perspective, this era of intervention opened new questions
about the functions of far-away conflict for war-fighting states and their defense
industries. Keen (2012) applies the rationale behind economic agendas in civil wars to
war-fighting states, illustrating the power of vested interest in and institutional dynamics
behind “permanent emergencies.” He emphasizes that many governments and defense
industries have become dependent on a mode of politics and business that requires
permanent emergencies, saying that “a declared war against a ‘demon’ enemy turns out
to be an ‘excellent’ context in which a wide variety of violent, profitable and politically
advantageous strategies can be pursued with a great deal of impunity” (Keen, 2012, p.
236).

Hossein-Zadeh (2006) positions the dynamics of permanent emergencies within the sale
and profit motives associated to the U.S. military-industrial complex—hence connecting to
a well-established research in international political economy (Gill & Law, 1988). He
argues that historically many major powers have been constituted as bureaucratic
military empires, and consequently their military industries “were owned and operated by
imperial governments” and were “not subject to capitalist market imperatives” (Hossein-
Zadeh, 2006, p. 6). In contrast, he holds that

private ownership and the market-driven character of the United States arms
industry have drastically modified the conventional relationship between the
supply of and demand for arms: it is now often the supply (or profit) imperatives
that drive demand for arms. In other words, imperial wars and demand for arms
are nowadays precipitated more by sales and/or profits than the other way
around. (p. 6)

According to Boggs (2017), the consequence of these dynamics in the United States has
been the creation of a “warfare state” described as “a broad ensemble of structures,
policies and ideologies” including elements such as a permanent war economy; a national
security state; a global expansion of military forces; and a merger of state, corporate, and
military power (p. 3). With its roots in the perpetuation of the military industrial system
created for World War II, the warfare state has been “legitimated through a deeply
entrenched culture of militarism” in which “corporate military statism has become a

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defining feature of American politics” (Boggs, 2017, pp. 3, 5). The entrenched power of
U.S. military industries is also illustrated through the lens of industrial policy. McCartney
(2015) observes that “defence contractors have learned that the surest way to get
Congress to approve defence projects is to locate the manufacturing of weapons and
other products and services in as many states and congressional districts as possible” (p.
38). In this way, military industries pressure members of Congress with job losses, foster
symbiotic relationships, and create an extended “military-industrial-congressional
complex” (McCartney, 2015, p. 45). Der Derian (2008) studies the extension of these
strategies with respect to the “military-industrial media-entertainment network.”

The previously cited scholarship illustrates how the economic agendas and business logic
of defense industries align behind an objective to neither necessarily “win” a particular
war nor to make a specific place any safer, showing that a state of permanent emergency,
fear, and insecurity is a necessary business environment for the defense industry to
thrive. The political economy of permanent economies therefore

challenges the traditional and “common sense” model of war as a contest between
two (or more) sides aiming to win . . . When winning is not the aim of fighting it is
important to distinguish the intention to eliminate an enemy and the usefulness to
actually succeeding.

(Keen, 2012, pp. 168, 236, emphasis added)

This rationale also applies to the ever-growing humanitarian marketplace in which a


great variety of actors—from the international to nongovernmental organizations to
private firms—compete for the lucrative business of humanitarian aid or disaster relief
(Carbonnier, 2015). While much of this work is driven by the genuine objectives to save
lives, alleviate suffering, and defend human dignity in the face of the worst possible
atrocities, scholarship has also shown how the incentive to maintain and fund a specific
institution, mandate, department, or position has tended to trump the purpose of these
institutions or departments (Barnett & Finnmore, 1999). These incentives have been
particularly evident with respect to field-level operations of international organizations or
nongovernmental organizations. They have made institutions less agile to adapt to
changing contexts, fortified professional silos around different concepts, and opened a
gap between institutional practices and local needs for support (Autesserre, 2014; Uvin,
2009).

Criminal Violence

Since the late 2000s, a strand of conflict research has shown that the great majority of
violent death occurs outside traditional conflict settings associated with the categories of
inter- or intrastate wars (Geneva Declaration Secretariat, 2008; Human Security Report
Project, 2013; World Health Organization, 2014) and proposed a new research agenda on
armed violence reduction (Krause & Muggah, 2009; Organisation for Economic Co-
operation and Development [OECD], 2011). This agenda emphasizes that violence
manifests itself in different forms in different places and connects to the proliferating
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study on the micro-dynamics of conflict, violence, and development (Justino, Brück, &
Verwimp, 2014). From a political economy perspective, the research opened a new
window on how the interaction of formal and informal power and control over economic
resources and opportunities generate violence and insecurity at the local level (Rodgers,
2009; Skaperdas, 2002).

First, this research clarified the regulatory functions of violence that are directly related
to the maintenance of organized crime. Violence can be a result of intergroup competition
over criminal markets or a means of arbitration. As the “underworld” is outside a legal
mechanism of dispute resolution, violence becomes a means of dispute settlement
between groups (Serrano, 2002, pp. 16–20, 23). Violence also occurs if competitors want
to break into a market and those challenged react to this competition violently (Naylor,
2002, p. 31). In principle, criminal networks do not like to use violence because it attracts
the attention of law enforcement, can interrupt established business channels, and can be
perceived as a sign of weakness (Dubinsky, 2007, p. 385; Naylor, 2002, pp. 31–32).

Second, the research clarified the political power and strategies of organized crime that
act as a “major force shaping contemporary global affairs” (Cockayne, 2016, p. 6).
Especially in Central and South America, researchers have applied network analysis to
chart how crime networks reconfigure political institutions (Briscoe, Perdomo, & Uribe
Burcher, 2014; Garay Salamanca & Salcedo-Albarán, 2012; InSight Crime, 2016). In
conflict-affected and fragile states, organized crime ensures that “the new rules of the
game are enforced in ways that maximize criminal actors’ control of criminal markets and
criminal rents” (Cockayne, 2013, p. 11) but pursues such political strategies to ensure a
business opportunity rather a political vocation (Dubinsky, 2007, p. 381). In a sense,
“Much like lobbyists seeking to influence political decisions and systems, organized crime
groups work politically to shape the state, the economy, and the society to fulfill their own
interests” (Wennmann, 2014, p. 256). From this perspective, weak states represent a
comparative advantage because they offer a proximity to the main markets, purchasable
state officials, a desperate population, and an ineffective police force (Dubinsky, 2007, p.
403; Wennmann, 2011, p. 117).

Third, the research emphasized the limits of heavy-handed strategies against drugs,
crime, or gangs. These responses exerted a tremendous humanitarian and human cost
and fanned rather than reduced violence (Inkster & Comolli, 2012; Jütersonke, Muggah,
&Rodgers, 2009; Kennedy, 2008; Kenny & Serrano, 2012). The research also showcased
the inability of institutional responses to armed violence to go beyond strategies that
target either political or criminal actors:

If they are political actors, perhaps they can become partners for peace. If
criminal, then surely they must be targets for law enforcement. . . . A conflict-
based approach will bring military and diplomatic resources into play; a crime-
based approach will lead us towards policing and law enforcement based
responses.

(Cockayne, 2013, p. 10)


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Such thinking still predominates within many international organizations and


governments, especially when these need a well-defined enemy for political or
institutional purposes. But armed violence reduction and prevention strategies managed
to place responses to violence within “the wider dynamics of armed violence rather than
focusing exclusively on insecurity directly connected to what are traditionally defined as
armed conflict and post-conflict dynamics,” which in turn required attention “not just to
the instruments of violence, but also to the political and economic motives of agents and
institutions implicated in violent exchanges at all levels of social interaction” (Krause &
Muggah, 2009, p. 137). In this way, a political economy perspective became integrated
into a more holistic study of conflict associated with criminal violence.

Political Violence and Transitions

Informed by United Nations data, Kumar (2011) suggested that “87 countries in all of the
world’s regions . . . [are] facing the prospects of potential violence, prolonged deadlock,
or a relapse into violent conflict over the next two to three-year period” (p. 384). With
hindsight, this assessment has proven largely accurate. In contrast to inter- or intrastate
armed conflict, political violence and turbulent transitions do not evolve as a political
contest in which one of the parties aims to win—as noted earlier—but take on the
characteristics of a “slow-onset emergency” that “emerges gradually over time, often
based on a confluence of different events” (Office for the Coordination of Humanitarian
Affairs, 2011, p. 3) and as a result of long-term trends associated with population growth,
urbanization, climate change, geopolitical tensions, and other mega-trends (OECD, 2012).

A focus on political violence and transitions is cognizant of the “hybrid” nature of political
governance that is driven by different non-state forms of order and governance (Boege et
al., 2009; Kalyvas et al., 2008; North, Wallis, & Weingast, 2009). In many countries, state
functions are performed by gangs, private networks, local militias, guerrilla armies, or
customary authorities, leaving countries splintered into different zones of autonomy
(Clunan & Trinkunas, 2010; Rapley, 2006). Some of these actors may create their own
insecurities and inefficiencies, but “partly due to their success in providing security, these
sub-state groups often become the most legitimate political authority in areas that they
control” (Reno, 2008, p. 143). De Waal (2014) conceptualized the workings of such power
systems as a “political marketplace” in which governance is characterized “by pervasive
monetized patronage, in the form of exchange of political loyalty or cooperation for
payment” (p. 1).

This research emphasizes the unintended consequences when development or military


assistance is given without due attention to the workings of a political market or de facto
political order (Andrews, 2013; Autesserre, 2014; Berdal & Zaum, 2013; Paris & Sisk,
2009). One study finds that

institutional reforms that do not align with the prevailing interests and incentives
of power-holders, or do not redirect these incentives so as to support the new

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The Political Economy of Violent Conflict Within States

formal arrangements, are liable to be subordinated to and incorporated within the


logic of informal power and the political marketplace.

(Anten, Briscoe, & Mezzera, 2012, p. 4)

In addition, de Waal (2015, p. 182) illustrates how military or counter-terror assistance—


representing the global extension of the military-industrial complexes described earlier—
have come to rival, if not surpass, rents from natural resources and illicit finance
accruing to incumbent elites. Such rents have allowed incumbent political elites to
further distance themselves from any need for popular political support, hence
confirming a process toward more exclusive governance hitherto associated with oil rents
(Beblawi & Luciani, 1987; Varieties of Democracy Institute, 2018).

It seems just to be a matter of time when the tendency toward more exclusive control
over political and economic opportunities—also termed “limited access orders” by North
et al. (2009)—and the commutation of systemic risk (OECD, 2012) will translate into more
turbulence and political violence. For instance, by 2050 the United Nations forecasts that
there will be 1 billion Africans under the age of 18 (UNICEF, 2014). For Africa alone, the
urban population will increase by a staggering half a billion people by 2035—the
combined populations of present-day Nigeria, Ethiopia, Egypt, and Tanzania (Bello-
Schünemann, Cilier, Donnenfeld, & Aucoin, 2017, p. 26). Limited-access governance and
economic systems will be unable to provide the opportunities necessary to satisfy the
ambitions of so many young people to find a meaningful prospect in life. As the pool of
unsatisfied people grows, there will likely be increased rallying for a more pronounced
political change; and these demands may result in elites resorting to further repression.
Over 90 significant political protests took place in the past decade in over 40 African
countries, and these may be only the beginning (Branch & Mampilly, 2015). In the words
of de Waal (2017), “the long-term challenge is for the transactional politics of the political
marketplace to be supplanted by the institutional politics of the rule of law and the
functioning of democratic institutions” (p. 3). Yet this may not happen anytime soon in an
ear in which the support for such managed transitions is orphaned and cashless
(Ikenberry, 2018). As the world may be bracing for more turbulence in limited-access
orders, a political economy lens may help inform sober judgment on the possible
responses to the evolving nature of violent conflict.

Conclusion
This review has focused on a body of literature that investigates how economic issues and
interests shape the dynamics associated with violent conflict after the Cold War. The
article distinguished between an area of research focusing on civil wars and an area of
research focusing on other types of violent conflict. In order to complement existing
reviews that focus on economics and formal models, the article focused on the literature
in these areas of research from political science, sociology, and anthropology. This
research emphasizes the role of informal systems behind power, profits, and violence and
the economic interests and functions underlying violent conflict. By extending the
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boundaries of the literature beyond the study of civil wars, this article has emphasized
how political economy research can serve as an analytical lens to better understand
different types of violent conflict as they evolve over time. Within a context of rapidly
changing strategic landscapes, this lens will remain important for understanding conflict
dynamics and for informing relevant policy responses.

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