Business and Finance

Business, Conflict – and Peace?

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Participants at the workshop. Photo: Jennifer Giroux

On November 14, 2011 a workshop on the role of business in conflict zones took place at the Europainstitut in Basel. Jointly organized by the ETH’s Center for Security Studies (CSS), swisspeace and Peace Research Institute Frankfurt (PRIF/HSFK), various invited speakers examined the business-peacebuilding nexus from differing angles: Some discussed service industries, others legal concerns, conflict resolution, or human rights. The conference showcased the diversity of research being undertaken in the field of ‘business in conflict zones’ – and also highlighted that this is a relatively new, exciting and understudied subject with practical relevance to development and growth.

Panel I
Local and Transnational Actors

The three topics discussed in this panel fell under the umbrella of reconstruction and conflict in Afghanistan and the Middle East. Dr Graciana del Castillo, visiting professor at Columbia University, opened the proceedings with her push for the development of local ‘reconstruction zones’ as an accepted policy choice for those engaging in post-conflict economic efforts. National reconciliation through DDR programs is a necessary tool for the consolidation of peace, as society moves from conflict-relevant disequilibria to ‘normality’, but problems of funding and aid dependence related to such programs can distort the bigger picture while simultaneously not addressing specifically economic causes of conflict. Dr del Castillo noted that the fastest-growing economy in Asia is not China, but Afghanistan; but how much of this ‘growth’ has contributed to the stability of Afghanistan, and created much-needed employment opportunities?

Dr del Castillo proposed – in conjunction with the creation of Export Processing Zones (EPZs) – the creation of ‘local reconstruction zones’ which would create infrastructure for local producers, giving them the possibility of beginning to compete with imported products, or indeed innovating and finding new markets. These local production zones should also receive trade preferences for goods processed in these zones. These zones present an opportunity for improving the complex trade/aid balance. Rather than throwing aid – i.e., taxpayers’ money – at post-conflict states, countries should instead open up their markets to products from these states.

The second and third presenters, Can Deniz of swisspeace and Susanne Fischer of the Universität der Bundeswehr München, examined more practical concerns: Swiss firms’ motivations for engaging in post-conflict situations, and tourism in Palestine respectively. In his research, Mr Deniz investigated the policy of Swiss SMEs Burri Agricide and Felco toward engagement in Afghanistan, and compared this to the approaches of the much larger Swiss companies Nestlé, Syngenta and Migros. His research discovered that the SMEs were much more prepared to invest – but only through NOMADES – as they knew that there is a demand for high-quality products due to previous lack of regulation flooding the market with sub-standard machinery/chemicals etc. For Nestlé, the competitiveness of a product was the most important aspect: they look at the price and buy from the cheapest source; they are a business, not a charity. Syngenta also declined to invest due to the small market size and the need for trained farmers, an education they were not prepared to provide themselves (at that point in time). Furthermore, as a panel member pointed out, there is a great deal of uncertainty regarding long-term horizons as many businesses require licenses, which are renewed – or not – on an annual basis, not a long-enough time span for many.

Local Business Actors: Spotlight on South Asia

This panel was themed around South Asia: Sri Lanka, India and Nepal. Rina Alluri’s (swisspeace) research examined corporate engagement in the peace processes in Sri Lanka, in the context of liberal peacebuilding. Her work focused on the emergence of ‘Sri Lanka First’ and the ‘Business for Peace Alliance’ and their efforts to engage in conflict resolution. Sri Lanka First was composed of the Ceylon Chamber of Commerce and influential business people in Colombo; a very much top-down approach which was labeled ‘anti-government’ and disbanded after the failure of the initial peace process. The Business for Peace Alliance focused more on rural SMEs and regional chambers of commerce and rather than lobbying as the SLF did, instead aimed to provide a common platform for discussion, with a focus on business – not conflict resolution per se. Issues of ownership and grievances, and liberal peacebuilding’s over-emphasis of the economic peace dividend were also assessed.

An audience member pointed out that business can be at the forefront of political reform and legislation but business is not in the business of peacebuilding in the community: they do not have the technical capabilities to sustain initiatives.

Safal Ghimire of NCCR examined media houses in post-conflict Nepal; though 2005 saw the suppression of media in the state, their response was to campaign for freedom of expression, simultaneously raising public awareness of the king’s tyranny. However, media houses were also involved in labor disputes which led to disruptions in distribution and the vandalizing of offices. Rather than negotiation, the media houses chose instead to publicize the labor unrest. Ghimire noted that media houses and their publications are in a position to be responsible change-makers – their exertion of influence can have positive outcomes. But, he also noted, it can derail change just as much. Furthermore, he questioned whether their campaign for ‘freedom of expression’ was not a campaign for ‘freedom to do business’ in disguise.

Finally, Bishnu Raj Upreti presented his research on Public Sector Undertakings in Assam, north-east India. Rather than directly contributing to conflict resolution and peace, PSUs are instead themselves a source of conflict, suffering from labor disputes, bad governance and corruption; the government’s focus on economic development via PSUs for pacification is at odds with the identity-based grievances of the rebel fighters. Dr Upreti warned that frustrations with PSUs could ultimately lead to conflict escalation and further regional instability.

Legal Considerations

Presenting her MA thesis, Andrina Frey from the University of Basel discussed the lack of international jurisdiction over TNCs operating in unstable environments: currently, there is no forum capable of holding companies (as legal entities) criminally liable for their actions.

If such a web of responsibility were to be created, how could it be developed? Ms Frey suggested a ‘top-down’ acclimatization approach whereby international agreements on the most serious crimes – genocide for example – would be signed; this would then be followed with agreements on other serious crimes, working down to ‘lesser’ criminal acts. The expansion of the statute of the ICC to include jurisdiction over corporations would be another avenue to explore. But then, as Ms Frey pointed out: What of subsidiaries and sub-contractors? This is a very complex issue where the lines are somewhat blurred – what is clear is the inadequacy of the existing legal framework, lagging as it does behind the reality of corporate action.

Further panelists focused on human rights from a more economic perspective: Dr Susan Aaronson from George Washington University examined WTO strategies to link human rights and trade in conflict zones. She mentioned Syria, where sanctions are clearly not working: the EU, Canada and the US are continuing to trade. But, would business leaving advance human rights? She argued that trade incentives are much better than sanctions, but current WTO rules provide no guidance in this respect. There is no mention of human rights (or indeed conflict) in the various rules, but what complicates the possibility is the principle of non-discrimination: WTO rules have to be applied equally to all members. Could a special set of rules for states in, and emerging from, situations of conflict be created with more emphasis on peacebuilding/human rights issues? It could be possible, but is it the best solution? Other presenters included Professor Christine Kaufmann of the University of Zürich, and Melanie Coni-Zimmer and Annegret Flohr of PRIF.

Further Resources:

*swisspeace have a research stream dedicated to the interaction of business and peace.

*International Alert also have a program dedicated to economy and peacebuilding.

*Numerous papers and articles are available through the Business & Human Rights Resource Centre’s Business, Conflict & Peace Portal

*More practical guidance can be found in the UN Global Compact’s Guidance on Responsible Business in Conflict-Affected and High-Risk Areas: A Resource for Companies and Investors.

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