Economy driven diplomacy for conflict prevention

Written by Guido Lanfranchi

Introduction

In 2014, Pope Francis claimed that the world is currently witnessing a “piecemeal World War Three” (Reuters 2014). Although undoubtedly bold, this statement has been proved well-grounded. According to a report by the Institute for Economics & Peace, in 2016 only ten countries in the whole world have been completely free from conflicts (The Independent 2016). Although significantly different in intensity, all conflicts are characterised by the fact that they result in severe hardships for the population. Therefore, it comes as no surprise that throughout human history considerable efforts have been aimed at developing strategies to resolve or to prevent conflicts. The focus of this essay will be on conflict prevention, which I maintain to be a relevant conflict management tool due to its pre-emptive nature. More specifically, I will focus on the role of economics as a potential driver in conflict prevention strategies. Drawing upon the experience of the European Coal and Steel Community (ECSC) in the 1950s, I will provide a framework aimed at reducing the likelihood of conflicts among rival factions through the promotion of strong economic interdependence.

In the first section of this essay, I will discuss some of the challenges posed by contemporary conflicts, and I will briefly point out the main conflict prevention strategies in the literature. Then, I will focus on one specific economic-based strategy that has been found within the literature, and I will highlight its strengths and weaknesses. The second section will be dedicated to the policy proposal. The ECSC will be used as a successful example of conflict prevention; starting from this experience, this essay will develop a policy framework that could be applied to other contexts in order to prevent the emergence of conflicts. Moreover, I will analyse the problem that this extension might provoke. Finally, in the last section, I will try to confront some of the critiques that might be taken against the solution proposed in this essay.

Conflicts, a problem looking for a solution

Throughout human history, conflicts have always represented a serious concern, mainly because of the serious cost that they impose on society in terms of social relations, economic conditions and, above all, human lives. Nowadays, the problem of conflict is still very relevant, given that most countries in the world are in some way tangled in at least one conflict (The Independent 2016). Concerning the loss of human lives, the situation is critical. In 2016, the Global Peace Index 2016 report (IE&P 2016, 24) estimated 101,406 deaths in battles; moreover, it is also worth noting that this figure has been rising steeply over time, showing a fivefold increase over the last eight years. Looking at conflicts from an economic perspective, the very same report (IE&P 2016, 42) has estimated that in 2016 armed conflicts globally induced a loss of $742 billion; this figure, which represents 0.7% of the world’s GDP, and is equivalent to a $0.30 daily tax levied on every single person in the world. Furthermore, if the accounting of military spending is included, the cost of conflicts jumps to $6.942 trillion, which is equivalent to the 6.7% of world GDP and to a global daily tax of $2.5 per capita. 

In response to the challenges posed by conflicts, scholars have developed a wide range of conflict management strategies (Ramsbotham, Woodhouse and Miall 2012). Among them, the most relevant are conflict prevention, peace-keeping, peace-making, peace-building, post-war reconstruction and reconciliation. Amidst this great variety of solutions, I will focus on conflict prevention strategies that exploit economic-based mechanisms. In this field, the work of Guisan (2011) is particularly interesting. The author considers the establishment of the ECSC as an example of a pragmatic, successful strategy of conflict prevention. Drawing upon this example, Guisan tries to devise an analogous strategy to tackle the troubling conflict between Serbia and Kosovo. More specifically, her brief but striking proposal calls for shared management of the Trepça mines by the Serbians and Kosovans, under the careful supervision of the European Union (Guisan 2011, 551-556). 

Guisan’s scheme is a good representation of the core idea of this essay, which is the use of the ECSC experience as a model for conflict prevention strategies in other areas of the world. However, I argue that Guisan’s analysis of the ECSC development over-stresses the importance of emotions behind the Schuman declaration. While she seems to point at a gentle, reconciliatory French behaviour towards Germany (Guisan 2011, 548-550), other more detailed evidence (Gillingham 1991, 97-177, 228-301; Petzina, Stopler and Hudson 1981, 456-459, 462-466) reveals in fact a different attitude of the French throughout the negotiations, namely an attitude primarily focused on securing industrial and military superiority over Germany. In the solution that I am going to outline in the next section, I will try to leave aside any claim related to emotions or moral values, since I believe that these elements are unlikely to be effective arguments in the context of state-based negotiations over a conflict. By contrast, I will try to devise a framework in which the attention of the involved actors gravitates around the economic benefits of a diplomatic, non-violent solution.

Policy proposal

This policy proposal is based on the hypothesis that the power of the economy can be exploited to foster peace among rival factions. The historical processes of industrialisation and globalisation have significantly increased the influence that the economic sphere exercises in shaping present-day society. I argue that this influence per se is neither positive nor negative; in fact, it is a tool, and as a tool, it can be used in positive or negative ways. The policy proposal I hereby present wants to exploit this tool in a positive way – specifically, the core idea is to take advantage of the economy’s strong influence on society in order to foster peace among rival actors.

One might rightly wonder whether this idea is practically feasible, or if it simply looks good on paper. I argue that this proposal is absolutely feasible and that the European Union is a striking example of that. Despite some failures accumulated over the years, it must be recognised that the European Union has managed to achieve a terrific result. In the span of 70 years only, it has smoothed the ancient hostilities amongst European powers, transforming Europe from a bloody battlefield into a peaceful continent where armed conflict among member states is barely imaginable. Therefore, it is worth having a closer look at how this integration process developed, and analysing whether present-day policymakers can take from it some relevant hints on how to foster peace and stability in new conflict situations. 

Although the process of European integration saw its first accomplishment in 1951 with the Treaty establishing the ECSC (ECSC 1951), the efforts towards a closer cooperation in the field of coal and steel date back to the early 1920s (Gillingham 1991, 1-28; Petzina, Stopler and Hudson 1981, 460-462; Vernon 1953, 186). After three decades of intermittent progress, in the late 1940s and early 1950’s the process of European economic integration finally took off. Envisioned by a dynamic French political elite and backed up by the wealthy and influential United States (Gillingham 1991, 97-177), the ECSC resulted from the blending of political and economic issues (Petzina, Stopler and Hudson 1981, 462-466), and its early development was characterised by a marked emphasis on concrete actions and mutual interests, rather than on abstract concepts (Gilingham 1991, 97-177; Guisan 2011, 547; Vernon 1953, 184). The project was initially received with scepticism by the public opinion, but as time passed it did manage to achieve some positive results, and eventually gained a more favourable reputation among the European citizens (Guisan 2011, 550; Vernon 1953, 183).

As early as the year 2000, the effectiveness of the European Union in preventing intra-European conflicts was already affirmed, to the point that Jacques Delors proposed, although vaguely, employing an ECSC-like framework in the context of the Western Balkan conflict (Guisan 2011, 543). Guisan’s proposal (2011, 551-556) was a further step in that direction, but it failed to generate a consistent follow up by policymakers, and thus it was not implemented. 

While Guisan’s proposal was focused on the conflict between Serbia and Kosovo, in this essay I will refrain from going into the details of one specific case study, and I will instead focus on devising a general framework for the use of economic relations in the field of conflict prevention. The proposed framework consists of two sequential stages: the research stage and the implementation stage.

The research stage is the starting point of the whole process, in which policymakers shall study in extreme detail the economies of the two factions involved in the potential conflict. The final aim of this research is to discover sectors in which the different factions can economically cooperate in a win-win scenario. More specifically, such a scenario can occur mainly in two cases, that is, in the case of similar economies and in the case of complementary economies.

Two economies are similar if they operate in the same sector and produce similar goods or services. In such a case, the pooling of resources, physical capital and technology among enterprises belonging to the rival factions can help these enterprises to scale up their production processes. If the pooling is applied to activities with increasing returns to scale, it will lead to higher economic efficiency, thus yielding gains for all the actors involved (Krugman 2015, 140). By contrast, complementary economies are specialised in different sectors and production processes. In this situation, the key to the win-win scenario is to analyse the comparative advantage of different enterprises in different sectors. Once the right sectors are identified, a process of trade liberalisation between the rival factions could, again, yield gains for all the actors involved (Krugman 2015, 131-151).

After this analysis is completed, policymakers should move forward into the implementation stage. In this phase, the main concern is the actual application of suitable economic policies, which will have been determined during the research stage. Specifically, in the case of similar economies, negotiators might want to design rules that promote the pooling of industries belonging to rival factions; in the case of complementary economies, instead, their focus might be on the reduction of trade barriers between the rival factions. Once the suitable economic ties are established, the rival factions should gradually become more and more economically interdependent. When the two factions reach a certain level of interdependence, an armed conflict between them would be so economically counterproductive that both sides will likely refrain from engaging in a war against one another. In summary, while moral rationale has, historically, seemingly been inadequate in preventing wars, economic self-interest might be a more effective deterrent against armed conflicts.

However, it is worth noting that the implementation process raises a set of problems. The first is the thorny issue of collaboration between rivals. Although the prospect of economic benefits should considerably smoothen the attitudes of all the parties involved, usually technical-economic negotiations can become very long and painful – as shown in the negotiation process leading to the ECSC Treaty (Gillingham 1991, 228-298). A second problem is clearly highlighted by Vernon (1953, 188-190, 195-202). Through analysing the ECSC Treaty, he claims the long-term effectiveness of complex economic collaborations is directly proportional to the level of sovereignty that the negotiating parties are willing to surrender in the deal. Moreover, he points at a general trend of reluctance to surrender sovereignty, arguing that this often leads to weak and short-lived agreements. The third problem concerns the imbalance of power among the negotiating parties; if one party holds a disproportionate amount of power over the other, the increasing demands of the former are likely to discourage the latter from negotiating. Finally, the last problem concerns the opposition that is likely to arise inside of each party in response to the negotiation. Historically, these pressures have often been strong enough to steer the outcomes of the process (Vernon 1953, 183-185), and therefore they should be carefully considered.

There are different ways to tackle these problems, in a direct as well as in an indirect way, some of which will now be briefly listed. Concerning the negotiation standstills, the parties’ unwillingness to surrender sovereignty and the possible power imbalances, past experiences suggest that the presence of an external enforcer, such as the United States during the ECSC development, may help to manage these issues (Petzina, Stopler and Hudson 1981, 465-466; Gillingham 1991, 148-177). Moreover, Gillingham (1991, 263-264) suggests that policymakers should differentiate the integration process across different threads, in order to avoid the complete disruption of negotiations in the presence of a major deadlock along one of these dimensions. Concerning the pressures coming from inside each party, Kriesberg (1959, 36) highlights some of the factors related to the citizens’ endorsement or rejection of negotiations; his analysis provides interesting hints for policymakers on how to cope with the civil society’s reaction. Finally, it is worth reminding that the pace of the integration should not be fixed a priori; on the contrary, it might be useful to adapt the pace to the external circumstances in order to exploit favourable pressures and contain unfavourable ones.

Counterarguments

In this section, I will analyse three main critiques that may be presented against my arguments, and I will try to provide appropriate responses to them.

At first, one might argue that the policy proposal previously illustrated is an attempt at exporting a Western model in regions of the world where it might not be suitable. In regard to this, it is worth making clear that the aim of this work is not to replicate the European experience within a different context. In my analysis, the account of the ECSC establishment is simply a valuable source of ideas from which policymakers can, and should, take useful lessons. However, each conflict requires the elaboration of a tailored solution, and a mere translation of the European experience in a different setting would be an error. As Guisan (2011, 546-547) put it: “interpreting historical precedents provides ‘exemplars’ of goodness, wisdom or courage (not ready-made solutions or replicable patterns)”. 

This last issue relates to a second critique, which might point at the problem arising in transferring the European post-WWII experience in a different target domain. Concerning this point, I would like to stress again that the ECSC example is meant to be a source of inspiration, not an omni-comprehensive package that can be shifted from one context to another. In order to critically analyse how the ECSC example can be exploited without committing dangerous mistakes, it is worth considering some insightful analyses concerning policy transfer. Dolowitz and Marsh (1996, 351) differentiate policy transfer processes on the basis of the “degree of transfer”, that is, how much of the policy is moved from one domain to the other. In the case of the policy transfer process involved in the framework exposed above, I exploited the concept of “inspiration” (Dolowitz and Marsh 2000, 12-13), which implies a direct transfer of the broader idea only, leaving ample scope to adapt the resulting policy to the target setting.

Finally, the third objection that may be brought about is that Europe had to witness the catastrophic effects of two World Wars before it found the political will to set up proper conflict prevention mechanisms. This is unquestionably true. Indeed, the aim of the framework here is to avoid the repetition of these historical dynamics – an aim that justifies this work’s focus on conflict prevention. Hopefully, this framework may convince policymakers that periods of relative peace should be exploited to establish economic cooperation mechanisms among rivals, with the double aim of furthering the economic interests of all sides, as well as preventing the outbreak of potential conflicts. Such a boost to pre-emptive diplomacy may finally break the ill-fated mechanism that nowadays requires the occurrence of bloodshed for negotiations to succeed.

Conclusions

In this essay, I have tried to build a framework through which economic interactions could be exploited in the context of conflict prevention to foster peace. After a brief overview of the damages resulting from conflicts in the contemporary world, I restricted the inquiry to economy-based conflict prevention strategies. More specifically, I examined Guisan’s (2011) analysis of the Western Balkans conflict; her work is rich in interesting suggestions, but her analysis is limited to the Serbian-Kosovan conflict, and her account of the ECSC negotiations over-stresses emotive and moral issues. By contrast, the core section of this essay provided a generalised framework for conflict resolution that tries to minimise the impact of emotive and moral questions, focusing as much as possible on economic interests. 

Drawing inspiration from the experience of the European Coal and Steel Community in the early 1950s, I have proposed a framework composed of two stages. The initial research stage is aimed at gaining the necessary knowledge of the rival factions’ economies – specifically, policymakers should search for similarity and complementarity aspects across these economies, and exploit their findings to build a win-win economic scenario in which all the negotiating parties can benefit. In the following implementation stage, the parties must put in to practice the scenario previously envisioned, setting up the due economic and legislative measures. On the grounds of past experiences in the history of the ECSC, I have outlined some of the problems that might arise in such a process, namely the difficulty of collaboration between rivals, the reluctance to surrender sovereignty and domestic pressures against negotiations. However, history also provides some hints regarding potential countermeasures; the more relevant ones concern the presence of an external enforcer and the differentiation of the negotiation process into multiple threads. 

Finally, I have tried to pre-emptively tackle three potential critiques that may arise against my work. Firstly, I stressed the fact that the proposed framework only suggests taking inspiration from European history, without entailing any enforcement of pre-constructed solutions in different contexts. Then, I suggested that, through a careful analysis of the policy transfer literature, it is possible to avoid major errors while drawing upon the ECSC example in the elaboration of new policies. Finally, I have clarified the fact that this framework is designed to act pre-emptively, trying to prevent, rather than fix, disruptive events. 

Further research is unquestionably needed in this field. On the one hand, I suggest that such research could focus on improving the framework discussed in this essay; on the other hand, it could put this framework into practice to devise innovative, and hopefully effective, conflict prevention strategies in zones particularly prone to armed conflict. The value of this research should not be underestimated – if we are to address the current “piecemeal World War Three,” a strong engagement from researchers and policymakers alike will be needed.

Guido Lanfranchi is currently a master’s student in International Security at Sciences Po Paris, as well as a reporter and associate editor for Diplomat Magazine The Netherlands, a Dutch diplomatic magazine. After graduating in Biomedical Engineering from Politecnico di Milano, Guido decided to switch to the field of international relations. He pursued a BA in International Studies at Leiden University, specializing in the Middle East and interning for five months at the Council of the European Union in Brussels. He is now continuing his academic career in Paris. Guido’s main interests include conflict issues, mediation, as well as the economic dynamics related to war and peace. 

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