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