State Collapse as Business: The Role of Conflict Trade and the Emerging Control Agenda

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1 State Collapse as Business: The Role of Conflict Trade and the Emerging Control Agenda Neil Cooper ABSTRACT This article examines the role played by conflict trade in the process of state collapse. Conflict trade is defined here as the trade in non-military goods such as diamonds, timber and drugs that finances war. Such trade includes both the export and import of goods to a war zone as well as extra-territorial trade undertaken by supporters of a warring faction. It is argued that the decline of superpower military aid coupled with the broader effects of centre periphery exploitation mediated through a neo-liberal and western imposed version of globalization has meant such trade has a particular salience both in contemporary conflict and the process of state collapse. Equally, though, the reliance of warring factions on conflict trade means they are also susceptible to changes in the market for their goods, creating a vulnerability that can (and to some extent has been) exploited to promote peace. The emerging control agenda on conflict trade is currently characterized by a number of problems most notably, the risk that the control of conflict trade might become a substitute for action on arms exports; that international action has largely been undertaken within an inappropriate statist paradigm; that control has sometimes taken second place to economic or strategic interests and that policy has become hostage to a drugs and thugs agenda which risks undermining its effectiveness. INTRODUCTION Partly as a consequence of globalization and partly as a result of the decline of superpower military aid, actors in contemporary conflicts are increasingly utilizing connections to both the local and the global economy to generate profits for wealth creation and to finance military campaigns. This has led to growing concern over the role that the trade in non-military goods (conflict goods) plays in promoting state collapse and sustaining conflicts, as well as the challenges it presents for conflict prevention and post-conflict resolution more generally. This study begins by examining the significance of conflict trade in the process of state collapse and reconstitution as well as the implications such trade has for Luttwak s give war a chance thesis. It will then be suggested that, properly implemented, the control of conflict trade Development and Change 33(5): (2002). # Institute of Social Studies Published by Blackwell Publishers, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main St., Malden, MA USA

2 936 Neil Cooper may represent a particularly effective means of influencing the war and peace decisions of actors even under conditions of apparent anarchy. Despite this, however, the current focus on the issue of conflict goods (most notably diamonds and drugs) raises a number of problematic issues. Of these the most noteworthy are: the need for control action to be sensitive to the impact on local populations; the possibility that action on conflict trade might become a substitute for continued efforts to limit arms sales; that international action to date has largely taken place within a paradigm which views conflict trade as a prerogative of sovereignty; that ethical action on conflict trade has often taken second place to narrow commercial and political interests and that the policy agenda will become hostage to a drugs and thugs bias. DEFINING CONFLICT TRADE The terms conflict trade or conflict goods are used here to refer to the trade in non-military civil goods which is used to finance or perpetuate local war economies. The most obvious example is the way exports of conflict diamonds have funded war in Angola, Sierra Leone and the DRC. However, conflict trade can encompass a wide variety of goods and trading strategies. For instance, imports of goods may be just as crucial to maintaining war economies, both in the sense that materials such as food or oil may be necessary to sustain armies and in the sense that the profits from importtrade may finance war. In the case of the latter for example, Ali Mahdi, one of the faction leaders in the Somali conflict, earned funds from eight planes that flew the drug khat in from Kenya, whilst Osman Ato a financial supporter of another group, the USC reputedly earned US$ 128,000 a day from khat imports (Duyvesteyn, 2000: 103). Conflict trade may even take place outside the war zone itself. For instance, one US fund-raising cell for Hizbollah smuggled cigarettes from North Carolina to Michigan where cigarettes are taxed at a much higher rate. The profits from this operation (estimated at U$ 3,000 per truckload) were then either passed direct to Hizbollah in Lebanon or were used to buy high-tech equipment such as global positioning systems and night vision equipment (The Observer, 2000). This study will thus employ the following definition of conflict trade: conflict goods are non-military materials, knowledge, animals or humans whose trade, taxation or protection is exploited to finance or otherwise maintain the war economies of contemporary conflicts. Trade can take place by direct import or export from the conflict zone or on behalf of military factions (both government and non-government) by outside supporters. Conflict goods do not include arms, military aid or the services of mercenaries, although these may be paid for in kind with goods or concessions to trade in products which would then become conflict goods. A number of objections can be made to such a definition. First, if one accepts the argument made by some critics that the global economy is

3 State Collapse as Business 937 characterized by systematic exploitation of the third world by the first, and if one accepts the apparent link between poverty and the incidence of conflict, 1 then, in the broadest sense of the term, all goods could be characterized as conflict goods. Moreover, as will be noted below, there is a thin line between legitimate trade in weak states and conflict trade and an even thinner one between informal trade and conflict trade. Indeed, conflict trade may well draw on the same informal networks developed in the kind of mafia, neopatrimonial and/or survival economies that arise in response to underdevelopment. However, whilst effective policy responses to conflict trade need to be grounded in this recognition, it is equally true that a conceptual distinction can and must be made, between trade that directly supports the war effort of actors in conflict, and trade which is based on more general exploitation and structural violence (Galtung, 1971) even where the latter precipitates conflict and state collapse. Second, actors in conflicts, particularly long-established ones, may utilize the normal operation of global financial markets to invest the profits from illicit activities in perfectly legitimate companies both at home and abroad. This is a strategy used by the Colombian Revolutionary Armed Forces (FARC) for instance. There have even been (unconfirmed) suggestions that al Qaeda may have raised funds by speculating in the financial markets on the share price of companies likely to be affected by the bombing of the World Trade Centre (The Observer, 2001). To the extent that this occurs there is clearly a sense in which the normal operation of companies and/or industrial sectors which play a role, albeit unconsciously and indirectly, in the laundering or investment of profits from conflict thus becomes a constituent element in conflict trade. However, such companies are clearly not culpable in the same way as those more directly or consciously involved in such trade. Defining this kind of activity as conflict trade also leaves the concept so diffuse that it loses any focus at all. This is not to deny, however, that attempts to curb (for example) money-laundering, represent important elements in a broader strategy aimed at addressing the political economy of contemporary conflicts; nor is it to deny the important linkages that exist between these activities and the trade in conflict goods. Nevertheless, there is, again, an important conceptual (and campaigning) distinction that should be drawn between them. The definition adopted here, therefore, is perhaps narrower than that for which some commentators might argue. At the same time, international action on conflict goods has largely focused around a consensus which defines such goods as those things traded only by rebel forces or by illegitimate states (see below). In this sense then, the above definition is actually broader than that operated by many policy-makers. 1. As of March 2000, twenty-one of the world s thirty-four poorest countries were either involved in conflict or had recently experienced conflict (Willett, 2000).

4 938 Neil Cooper STATE COLLAPSE The definitional issues surrounding the term state collapse have been addressed elsewhere in this volume, and I do not intend to replicate those debates here. However, a few specific points are worth noting. First, the contemporary incidence of state collapse is perhaps best understood as a consequence of two main factors. In some cases it can at least partly be explained as a post-cold War re-ordering of the political map consequent upon the failure of communism (Bosnia) and the collapse of superpower patronage (Zaire/DRC). Second, and more significantly, it also reflects broader trends that have become especially powerful in the post-modern and particularly post-cold War era. The current phenomenon of state collapse can be viewed as an acute manifestation of a more general and contemporary crisis of the state precipitated by the iniquities of globalization under neo-liberalism, privatization, the growing influence of transnational organizations (from TNCs to mafia groups) and the end of ideology. This may seem an odd suggestion to make when collapse may be accompanied by competing claims to statehood, when the number of states in the international system has increased and when the international community is expending energy on maintaining states or proto-states in places like Bosnia, East Timor and Kosovo. However, there is a growing disjuncture between the prevailing popularity of the idea of statehood and the erosion of the legitimacy, authority and effectiveness of the individual state. In developed states this crisis has manifested itself in the rise of federalism, regionalism, voter cynicism about the capture of the state by narrow political elites, the decline of political parties and the rise of single issue radicalism. Ironically, it has also manifested itself in the rise of a discourse and politics centred around the need to defend the state from its crisis (witness the rise of the anti-european Eurosceptic wing of the British Conservative Party). In contrast, the incidence of contemporary state collapse in the developing world represents a particular and extreme response to the crisis of the state under conditions of under-development in weak states. Indeed, given the economic and social stresses experienced by many states in the developing world, what is perhaps surprising is not the extent of state failure but its continued infrequency a testament perhaps to the ongoing power of the idea of the state, even when all the evidence suggests many states should in fact be a busted flush. The prevalence of conflict trade is not a condition unique to collapsed states. Indeed, such trade has a long history both in facilitating more conventional inter-state wars (Barbieri and Levy, 1999: 45, n. 8), and in low-level violence in even strong states. In the latter case, for instance, the trade in drugs and other illicit contraband undertaken by street gangs and mafia groups in even the most developed states not only finances relative affluence but is also a cause of low-level violence and a means by which the acquisition of guns or protection can be financed. Indeed, the trade in the same packet

5 State Collapse as Business 939 of diamonds or drugs can sometimes act as a transmission belt that either funds or is the cause of violence in a number of states. Thus, the reconstitution of the Albanian state has been jeopardized by crime and corruption at least partly fuelled by its role as a staging post for Colombian cocaine transported via the Albanian diaspora in the US and ultimately destined for Western Europe (International Crisis Group, 2001a: 21). However, whilst conflict trade may not be unique to collapsed states, it is equally the case that the processes by which state collapse is instigated and perpetuated cannot be properly understood without reference to the role played by such trade. Indeed, the capacity for conflict trade may actually be a factor that facilitates collapse and impedes restitution of an effective state. For instance, Paul Collier (2000), in his controversial study of civil wars for the World Bank, argues that together with low national income, a country s dependence on primary commodity exports is a significant predictor of civil wars, largely because they provide easy opportunities for wealth creation (via taxation or control) on the part of guerrilla movements. Of course, not all civil wars necessarily lead to state collapse but state collapse is generally accompanied by internal conflict. Collier s analysis can be criticized on the grounds that he underplays the role of grievance, as opposed to what he labels greed, in fomenting conflict. Nevertheless, he does highlight the important role that resource predation plays both as motivation and means for conflict. It is certainly the case that the economics of resource control have played an important role in state collapse in a range of cases from Liberia to Sierra Leone and from Cambodia to the DRC. It is also the case, however, that the dynamics established in developing states by commodity dependence goes beyond the role commodities play as objects of predation. Crucially, they are also at the heart of the structural violence perpetrated on the developing world, which helps create the climate for conflict and state collapse. In theory, an abundance of tradeable resources should provide the basis for prosperity and social cohesion. However, the price of primary products has been collapsing, a process exacerbated by the uneven influence exercised by MNCs and producer states. For instance, between 1997 and 1999 the combined annual index of free market prices for primary commodities, which represent 80 per cent of Africa s export earnings, fell by 25 per cent (Willett, 2001: 38). Coffee prices have fallen by as much as 70 per cent since 1997 costing developing countries some US$ 8 bn in lost earnings (Oxfam, 2002). At the same time, the money paid to farmers accounts for a dwindling proportion of the retail price of coffee (now just 7 per cent). Instead, it is the coffee processing groups such as Philip Morris and Nestle which make the profits (Oxfam, 2001). In addition, whilst the international financial institutions and aid donors require developing countries to open up their markets to outside competition, the same donors fail to abide by the principles of free trade in those sectors where developing countries have a comparative advantage. For instance, agricultural subsidies to OECD countries are worth over US$ 320 bn a year

6 940 Neil Cooper (roughly equivalent to the entire GDP of Africa as a whole) and every cow in the European Union is subsidized to the tune of US$ 2 a day the same amount on which 450 million people in sub-saharan Africa subsist daily (Blair, 2002). Furthermore, the processes that add value to goods are often located outside weak states a phenomenon aggravated by the way developed world import duties on commodities rise according to the level of processing undergone by a product (Oxfam, 2002: 161). Thus, whilst Liberian timber exports funded the conflict in the country, Liberia cannot maximize the revenue potential of this resource as it is not adequately equipped to process timber locally (Global Witness, 2001: 3). Similarly, whilst gem quality diamonds are mined in twenty-two countries, most cutting and polishing takes place in just seven countries (principally India) (Runcie, 2000) and trading takes place in centres such as Antwerp and London. This makes a significant difference as value is added at every stage from cutting and polishing to the marketing of jewellery. For instance, whilst rough diamond production was worth approximately US$ 7.5 bn in 2000, diamond jewellery sales in the same year were worth US$ 57.6 bn, of which the diamond content was roughly US$ 13.7 bn (Smillie, 2002: 8). Countries such as Angola and Sierra Leone have not simply been cursed by their abundance of diamonds but also cursed by their inability to add value to these resources. Indeed, one of the ironies of the attempt to address the trade in conflict diamonds is that the current focus on rough diamonds may actually encourage the development of cutting and polishing centres in conflict states (see below). Thus, the combination of low prices and the absence of manufacturing processes that add value to raw materials means that states cannot maximize the growth potential implied by their natural resource wealth. When set against a historical backdrop of colonial exploitation and political violence this means such states face grave difficulties in escaping from poverty and underdevelopment. Africa s share of world trade (excluding South Africa) fell from 3 per cent in the 1950s to 1.2 per cent in the mid-1990s, whilst the average life expectancy of an African citizen is just forty-eight years and falling (Oxfam, 2002). Moreover, the fact of underdevelopment, combined with the way in which globalization, aid dependence and structural adjustment have undermined the institutions and legitimacy of such states, creates a particularly acute and virulent form of the crisis of the state which in turn creates the conditions in which collapse becomes a real, albeit not inevitable, possibility. In such circumstances it makes more sense for local elites to eschew long-term and inclusive state-building in favour of strategies designed to exploit their control over local resources and their links to both the formal and informal global economy in order to extract wealth and generate political support via the distribution of rewards to key supporters (Reno, 1997). Similarly, for many ordinary citizens, participation in shadow trade whether in peace

7 State Collapse as Business 941 or war represents the means by which those excluded from, or relegated to the periphery of the global economy reincorporate themselves into its workings. For instance, in Angola as little as 10 per cent of the country s GNP is thought to be produced through the formal economy (Duffield, 2001: 141), whilst in Afghanistan an estimated 80 per cent of the economy and 30 to 50 per cent of the population have been involved in some aspect of the drugs trade (International Crisis Group, 2001b). This is not to suggest that informal trade does not reflect much the same inequalities as formal trade. For instance, just 1 per cent of the proceeds from drugs grown in Afghanistan actually remain in the country, with a kilo of heroin worth US$ 300 inside the country likely to fetch US$ 30,000 by the time it reaches Europe (International Crisis Group, 2001c). The difference is that exploitation by transnational criminal networks has the simple advantage of tending to pay better than exploitation by transnational corporations thus in Afghanistan, opium yields profits five times higher than the next best crop, usually wheat or onions (Cornell, 2002: 10). Moreover, the same features that characterize the weak and collapsed state minimal or no control over territory, corruption and feeble mechanisms of accountability also represent a comparative advantage that can be exploited for market share in the informal sector. Consequently, the line between the trade in conflict goods and legitimate or informal trade in peace may be an extremely thin one, determined by the scale (and not the fact) of violence, by the externally defined legitimacy of a government and the economic interests of outside actors. Indeed, the trade in conflict goods frequently represents just a more violent version of the neo-patrimonialism and external trade relations that characterize many developing states and which often serve to exacerbate the processes of state collapse. Conflict Trade and Peace The political economy of conflict trade can also influence the nature and effectiveness of post-collapse reconstruction as well as the process of postconflict peace-building more generally. At its most extreme, as in Angola and Sierra Leone, the profits from conflict trade can provide peace spoilers with both the incentive and the ability to independently fund a return to war. In contrast, and without external patronage, the absence of resources with which to fund recidivism can be equally influential in determining the success of peace agreements (Steadman, 1997: 42). Even where peace agreements hold, however, the influence that war elites establish over key economic sectors during conflict can reverberate through the process of state reconstruction and peace-building, effectively perpetuating war economies under conditions of non-war. For instance, in Cambodia the illegal logging that was a feature of the country s war economy has continued,

8 942 Neil Cooper much of it perpetrated by the military who often create zones of insecurity to prevent external monitoring (Hendrickson, 2001: 73). Thus, whilst the government s logging revenue in 1998 amounted to some US$ 15 million, an estimated US$ 100 million per annum is lost to illegal logging. At the same time, the military consumes a full 45 per cent of government spending (Doyle, 2001: 98). Moreover, the post-war persistence of both a shadow economy and weak state institutions as well as new demands created by the internationals drafted in to re-build states, can create novel forms of shadow trade (postconflict trade), that pre-existing war elites exploit, often drawing on the same global networks previously utilized to fund war. For instance, in postconflict Kosovo there is now a booming industry in the trafficking of women into the country (IOM Kosovo Counter-Trafficking Unit, 2001) to service a sex trade that has been fuelled by the arrival of the international community. Give War a Chance? Focusing on the role of conflict trade in state collapse also highlights the flaws in the argument propounded by Edward Luttwak (1999) in particular, that the international community should give war a chance. For Luttwak, wars have a natural evolution which means that left unchecked they ultimately burn themselves out, either through victory or war exhaustion on the part of belligerents. International intervention merely serves to perpetuate conflict by providing support to the militarily weak and by allowing factions to re-arm under the guise of an internationally negotiated (temporary) truce or peace agreement. It can also be argued that historically, war and military innovation has spurred both state formation and economic progress (Tilly, 1990) and that in the long term, it ultimately makes more sense for rentseeking warlords to settle down and start raising taxes properly. However, in contemporary post-cold War conflicts economics is increasingly replacing ideology as the motive or legitimizing force for conflict. Such conflicts do not so much represent the continuation of politics by other means as the continuation of business by other means. At its most extreme, this gives rise to the kind of warlord politics often typical of collapsed states where the aim is control of people and acquisition of booty more than to control territory in the conventional military manner (Ellis, 1995: 185). This has been exacerbated by the post-cold War decline of military aid from the major powers. For instance, the UNDP (1994: 53) has estimated that the value of global military assistance from the US, the Soviet Union, Western Europe, the Arab states and China declined from a total of US$ 21 bn in 1987 to US$ 4.6 bn in The effect has been to simultaneously reduce the incentive to articulate and pursue a vision of governance (if only to leverage funds from actors sympathetic to that vision) whilst also reinforcing the

9 State Collapse as Business 943 salience of booty and conflict trade in the war economies of contemporary conflicts. Indeed, even Cold War movements such as UNITA have moved from a strong ideological agenda to one dominated by economic aims (Keen, 1998: 34). To the extent that actors are interested in capture of the state, it is often as a vehicle for enhancing and legitimizing (and thus facilitating) profit-making rather than with the aim of reconstituting an effective state. Thus, even if war exhaustion does produce peace, it may well be a homicidal peace characterized by continued violence and resource exploitation, whilst the state is likely to be reconstituted as a collapse-in-waiting. For instance, the Liberian Strategic Commodities Act of mid-2000 gives Charles Taylor sole power to negotiate contracts for the exploitation of all natural and mineral resources, as well as cultural and historical items (Global Witness, 2001). Indeed, Taylor s continued exploitation of Liberia s resources is estimated to have netted him an income of some US$ 200 million. In comparison, the Liberian state budget amounts to roughly US$ million, most of which funds Taylor s ATU paramilitary and other security services. Not surprisingly perhaps (at the time of writing) Taylor himself now faces an insurgency in Lofa county in Northern Liberia, albeit one that appears to have been encouraged by external powers. In this context, state collapse should not necessarily be viewed as an aberration from the norm in the zones of war (Singer and Wildavsky, 1993). Rather, it is a phase which a growing number of states may periodically enter, leave and return to, as they continuously traverse the spectrum from shadow to failed to collapsed to reconstituted, without the fundamentals of their perpetual crisis ever being addressed a case in point being the recurring processes of collapse and restoration experienced by the Congo/ Zaire/DRC. Moreover, the nature of contemporary, post-modern conflict means that, as a policy, waiting for war exhaustion may be akin to waiting for Godot. Indeed, as Luttwak himself points out, contemporary conflicts tend to be post-heroic wars (Luttwak, 1995) characterized by the avoidance of conflict, and even co-operation and trade between belligerents (for instance, trade between the Maı Maï and RPA coltan dealers in the DRC), predation on civilians and conflict trade with external actors. Thus, whilst civilian populations may indeed grow war weary, local warlords tend not to be involved in the kind of total warfare that brings exhaustion (and certainly not quickly). Indeed, during the conflict in Sierra Leone, Foday Sankoh the leader of the RUF, actually spent a year in Abidjan in the Ivory Coast living either in the Hotel Ivoire or in an adjacent villa as the guest of the Ivorian government (Hirsch, 2001: 43). Moreover, war elites may well have developed substantial economic interests which are better served by the continuation of war (Keen, 2000: 2). In addition, the search for economic resources means that wars may spill out into other states provoking a trail of state collapse, as occurred when

10 944 Neil Cooper Charles Taylor supported the RUF in Sierra Leone; or that wars initially begun for strategic reasons become more firmly entrenched, as in the DRC. Without effective international intervention and/or a remarkable leader of the Mandela ilk, the political economy of contemporary warlordism and state collapse thus points to more of the same rather than a Hobbesian evolution into something better. Furthermore, the give war a chance thesis ignores the fact that outsiders are already intervening via their trade relations with local warlords and via the broader effects of centre periphery exploitation mediated through a neo-liberal and western imposed version of globalization. The choice is not between intervention and non-intervention in the problems of collapsed states, but between different types of intervention. Finally, give war a chance presupposes that once war is over it is possible to return to the status quo ante and pick up the normal path of state-building, development and nonwar once again. However, one of the features of the war economies of contemporary conflicts, and particularly so in collapsed states, is the extent to which the absence of effective government permits rapacious and unsustainable resource extraction. For instance, the UN Panel of Experts on the DRC has noted that since 1998 the Ugandan Thai company DARA- Forest has been exporting approximately 48,000m 3 of timber per year with no consideration for sustainable forest management or even sustainable logging (United Nations, 2001: 10 11). Giving war a chance thus implies giving war elites a free hand to plunder a country s resources, eviscerate its future economic potential and entrench their influence in and over any reconstituted post-conflict state that may eventually be created. This is not to suggest of course that current international interventions are particularly successful at preventing this process or that they may not even exacerbate it on occasions. However, this is not so much an argument for abandoning intervention but rather, for transforming the modes and methods of intervention. THE CONTROL OF CONFLICT TRADE: ADVANTAGES AND CHALLENGES Contemporary state collapse is often explained as a simple descent into anarchy fuelled by irrational hatreds and characterized by vicious human rights abuse perpetrated by the mad or the bad. In reality, however, actors in so-called collapsed states may not only maintain alternative (non-state) forms of governance as in northern Somaliland, but generally pursue rational strategies of resource accumulation (albeit sometimes by amoral and vicious means). Indeed, they often maintain sophisticated economic networks that are highly sensitive to changes in market conditions. For instance, actors in the DRC swiftly moved from mining gold to mining coltan as the price of the latter rose exponentially in world markets between

11 State Collapse as Business and late 2000, allowing Rwanda, for example, to earn up to an estimated US$ 250 million in eighteen months (United Nations, 2001: 29, para. 130). This very sensitivity to market change also, of course, represents a potential vulnerability that can be exploited. This has significant implications for international attempts aimed at either preventing state collapse or dealing with its consequences and for conflict prevention and resolution more generally. These may be better served by the adoption of strategies that target the war economies of military factions with a view to raising the economic costs of conflict and/or lowering the profits from war. Indeed, such strategies may actually be more effective in ultimately promoting peace than arms embargoes or initiatives aimed at curbing weapons proliferation. At the very least, they represent an important adjunct to more traditional strategies of weapons/technology control. This is particularly the case where the trade in conflict goods depends on companies operating in legitimate markets (diamonds, timber and so forth). Such companies have to work within the framework of domestic and international law, restrictions on their operations are not as frequently perceived to impinge on core issues of national security, and their profits are more vulnerable to trends in the purchasing practices of civil society (at least in market economies) than even those of defence firms with civil subsidiaries. Consequently, both international agreements and pressure from civil society has the potential to influence the willingness of such actors to support the trade in conflict goods. To some extent at least, the international community has now begun to address the problem of conflict goods, particularly in relation to the trade in rough diamonds and drugs. For instance, the UN has now imposed embargoes on diamonds from UNITA in Angola and the RUF in Sierra Leone. Sanctions have also been imposed on the export of rough diamonds from Liberia in recognition of its role as a conduit for RUF diamonds. In addition, states, industry and NGOs have come together in the Kimberley process to develop an international certification scheme for rough diamonds. The declared aim is to guarantee that rough diamonds traded around the world are not conflict diamonds. Although elements of the scheme still require finalization, full implementation is scheduled to begin by the end of 2002 (US General Accounting Office, 2002). The link between drug production and the war economies of contemporary conflicts has also been recognized and with that recognition has come the development of strategies to address it. Most notable of these is the controversial Plan Colombia which supporters claim combines US military aid targeted against the narco-traffickers in Colombia with efforts to promote the production of alternative crops. Critics, on the other hand, question both the aims of the project (arguing that it is a front for a traditional US counter-insurgency operation rather than a serious effort to address the problem of drug production in Colombia) and its likely effects (see below).

12 946 Neil Cooper However, whilst these initiatives at least recognize the economic agendas that influence decisions on war and peace, they also raise as many questions as they answer. First, whilst conflict trade may be characterized by predation and exploitation of a country s resources for the benefit of war elites it will, to varying degrees, also provide benefits to the local population often only as a means of scratching a living in a war-ravaged economy, but sometimes in more extensive ways. Thus, any attempts to control conflict trade need to be grounded in a sensitivity to their effects and an awareness of the need to provide alternatives either during or after a conflict. For example, the FARC in Colombia has developed a sophisticated social safety net which is supported by the profits made from various illicit activities. This includes a minimum wage for coca leaf pickers, a minimum price that must be paid to farmers and a social security system which, amongst other things, provides pensions for retired guerrillas (Sua rez, 2000). Crude initiatives that attempt to address the link between drugs and conflict which exists on all sides in Colombia without putting into place an alternative system of profit and power 2 designed to promote peace, may actually serve to further exacerbate conflict. This, in essence, is the critique that has been levelled at Plan Colombia. Critics argue that it is militarizing the conflict between the Colombian government and guerrilla groups, creating refugees, destroying legitimate crops and wreaking ecological damage all with little impact on drug production (Byrne, 2002; The Guardian, 2000). Similarly, in Afghanistan, the return to opium farming since the demise of the Taliban and the outbreak of violent protests at the new government s attempts to eradicate the crop (despite the offer of US$ 500 for each acre destroyed; see The Guardian, 2002) illustrates the way in which the trade has delivered benefits not only for avaricious warlords but also for poverty-stricken farmers. This has implications for the development of strategies to prevent state collapse and promote reconstruction. There is a temptation to view all illicit trade as bad. In the long term this may well be the case. However, intervention strategies may nevertheless require careful consideration of the appropriate balance between the long-term need to promote order and the legitimate economy, and the short-term requirement to maintain reasonable levels of economic satisfaction. Indeed, this problem has already been faced by KFOR peacekeepers in post-conflict Kosovo who, for instance, have been confronted with the quandary of whether to permit illicit trading activities which contribute to the economic well-being of communities, and thus reduce tensions, or whether to crack down on such activity because of its longer-term effects on social order and the economy. 2. As Keen has noted, guerrilla war economies themselves represent alternative systems of profit and power (Keen, 1996). Strictly speaking, therefore, there is a need for alternative, alternative systems of profit and power.

13 State Collapse as Business 947 Second, notwithstanding the merits of action to limit conflict trade, there is a risk that the narrow targeting of conflict trade becomes a substitute for continued action to limit arms sales. Indeed, focusing on conflict trade has an added advantage in that much of the discourse on this issue effectively pins the blame for conflict on avaricious warlords rather than on the arms sold by avaricious governments. For instance, whilst the UK has been in the forefront of the campaign on conflict diamonds, New Labour has continued both the subsidization of defence exports and a largely permissive approach to the arms trade. The disjuncture between these two policies has led to some striking contradictions. For example, the UK has led action in the UN to ban the import of diamonds sold by the rebel RUF in Sierra Leone and has backed UN sanctions against Liberia because of its role in supporting the RUF and in acting as a conduit for RUF diamonds. At the same time, the UK is not only the largest supplier of arms to the government of Sierra Leone, but it failed to take any action against the UK-based company Air Foyle when it was discovered to have been involved in shipping arms to the RUF in Sierra Leone in breach of a UN embargo. Indeed, the company was subsequently awarded a Ministry of Defence contract to deliver helicopters to South Africa. Failure to take action against Air Foyle was justified on the grounds that the company had only flown the arms to Burkino Faso, from whence they were transported to Sierra Leone, and that the company (rather incredibly) claimed not be aware of their final destination (Cooper, 2000). Thus, whilst Liberia s role as a conduit for RUF diamonds has meant it has experienced sanctions on its diamond exports, Air Foyle has enjoyed immunity for supplying weapons to a country widely recognized as a conduit for RUF arms. This contrasts sharply with the position of the UN panel of experts on Angola which argued for forfeiture of any planes caught sanctions-busting (United Nations, 2000: para. 166). Similarly, whilst the UK has criticized the conflict trade in the DRC it has also licensed the export of spares for Hawk aircraft being used by Zimbabwe to prosecute its war, and thus facilitate its own conflict trade in the Congo. Third, attempts to address the problem of conflict trade have been hamstrung by three interrelated (but not always complementary) factors, namely: international action has been located largely within a statist conception of a just international system; it has been de-limited by the operation of national economic or strategic interests; and it has tended to reflect a post-cold War security discourse which seeks to legitimize the maintenance of high Western defence expenditures by reference to apparent threats from rogue actors such as drug barons, pariah states and most recently terrorism. These factors will be examined in more detail below. States Do not Engage in Conflict Trade The development of an agenda on the control of conflict trade in legitimate goods (as opposed to, say, drugs) is still a very recent phenomenon and one

14 948 Neil Cooper of the problems that both NGOs and governments have faced is in actually defining what constitutes such trade. This has applied particularly to the case of conflict diamonds. It is striking that the emerging control regime on conflict diamonds is developing on the basis of an exceedingly restrictive definition which describes them as things that are traded by rebel groups or, at the outside, pariah states. For instance, under the Kimberley Process, conflict diamonds are defined as: rough diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments, as described in relevant United Nations Security Council (UNSC) resolutions... or in other UNSC resolutions which may be adopted in the future (cited in Smillie, 2002: 7, italics added). In essence, action on conflict diamonds, not surprisingly perhaps, is being constructed within the same statist paradigm that legitimizes the sale of arms to governments on the grounds that states have a right to self-defence. Thus, even if the conflicts in Angola and Sierra Leone were still going on, government diamonds would not be conflict diamonds, whilst those sold by UNITA or the RUF still are. This is despite the obvious fact that diamond sales raise funds that can contribute to the war effort of rebels and governments alike. Indeed, the introduction of the certification scheme in Sierra Leone meant the government s diamond revenue rose from US$ 1.5 million in 1999 to US$ 6.4 million in the period from October 2000 to January 2001 (Wilson, 2001). Of course, from one perspective this precisely demonstrates the way that action on conflict trade can promote the reconstitution of states by reducing the economic base of often vicious warlords and enhancing the resources of claimants to be a legitimate government. However, the dominance of the view of conflict trade as a prerogative of sovereignty has meant that, as in the DRC for instance, organized resource extraction by neighbouring governments has not (to date at least) met with the same response as that experienced by the RUF and UNITA. Indeed, both Rwanda and Uganda have continued to receive bilateral aid from the UK, Denmark, Germany and the US, and in the case of the latter, budget support increased from US$ 26.1 million in 1997 to US$ 51.5 million in Similarly, the World Bank has praised Uganda for its economic performance (despite the fact that this was based in part on the exploitation of resources in the DRC) and has failed to question the increase in its exports of natural resources (United Nations, 2001: 39 para. 189). It is possible that this situation may change as a UN panel of experts has recommended an embargo on the import or export of coltan, niobium, pyrochlore, cassiterite, timber, gold, and diamonds from or to Burundi, Rwanda and Uganda. So far, however, the response of the Security Council has simply been to ask for more reports. To date, the only state to face sanctions on its conflict trade has been Liberia, but as will be noted below this seems to be a function of Charles Taylor s pariah status as the Milosevic of West Africa rather than an intrinsic willingness to take action against predatory states in general.

15 State Collapse as Business 949 Economy, not Ethics The extent and nature of action on conflict goods has also been heavily influenced by the economic and political concerns of developed world states, as opposed to an intrinsic concern to alleviate conflict in the developing world. Sometimes, narrow national economic or other interests have actually led states to support action against conflict trade or at least particular aspects of it. For instance, in the case of Angola, it has been suggested that Western interests in one sphere of conflict trade (namely oil contracts with the government) was a factor influencing Western support for the campaign to ban diamond sales from UNITA (Naidoo, 2000). In other respects, however, narrow economic interests have served to delimit the willingness of states to take action. The most glaring example to date has been the exemption of Liberian timber exports from the UN sanctions imposed on the country. Liberian timber exports actually play a far more important role in sustaining Charles Taylor than do diamonds, and as with diamonds, a significant portion of this income has been used to fund RUF arms, training and logistical support (Global Witness, 2001). However, despite initially being included in the draft resolution on sanctions against Liberia, timber was eventually dropped after objections from China and France who are the largest importers of Liberian timber. Even action on conflict diamonds has been constrained by economic considerations. Some of these are quite legitimate. For instance, both the diamond industry and governments have stressed the fact that action on conflict diamonds should not hurt the legitimate trade in diamonds. For countries such as Namibia, South Africa and Botswana, for instance, the legitimate diamond industry plays a significant role in their economies. In the case of the latter, diamonds account for two thirds of government revenue (Sub-Committee on International Relations, 2000). Similarly, some 800,000 people are employed in the diamond cutting industry in India (The Guardian, 2000b). However, it is also the case that current proposals for an international certification scheme for diamonds have been constrained by state and industry interests, with the result that the putative regime is likely to lack teeth. For instance, monitoring and enforcement is by self-regulation and some elements of the system are merely recommended or subject to voluntary participation. This has led the US General Accounting Office to note that, as currently envisaged, the scheme may simply provide the appearance of control, whilst still allowing conflict diamonds to enter the legitimate diamond trade (US General Accounting Office, 2002: 11). Moreover, the current certification scheme only applies to rough diamonds. The industry is developing a warranty scheme which may ultimately extend through the supplier chain to include diamond jewellery but this scheme is voluntary and it remains to be seen how extensively, and with what rigour, it will be adopted. The current focus on rough diamonds represents a

16 950 Neil Cooper significant loophole. A good analogy here is with arms embargoes against states. One of the ironic effects of such schemes is that (as in the case of apartheid South Africa, for instance) they frequently encourage the targets of such embargoes to create their own domestic industry or to seek out suppliers whose monitoring of such schemes is not particularly rigorous. As currently envisaged, a global certification scheme may simply encourage traders in conflict diamonds to set up their own cutting centres. Indeed, Rwanda is already reputed to be establishing a cutting centre in Kigali (House of Commons, 2001: col. 150WH) whilst UNITA has reportedly used factories in the United Arab Emirates to polish its diamonds (Global Witness, 2000). Only Pariahs Trade Conflict Goods and Only Certain Pariah Products are Conflict Goods The agenda on conflict goods might also be seen as part of a broader process which reflects not so much a concern to deal with the link between such goods and violence per se, but rather a focus on the role these goods play in supporting actors deemed pariah by the West. The obvious example is the case of US military aid to Colombia ostensibly provided as part of its war on drugs. Not only is this drug war partial in that it ignores the more significant role played by government forces and in particular right wing narcoparamilitaries (Stokes, 2001) but it seems more like a front for a traditional US counter-insurgency operation. Indeed, Campbell argues that both the domestic and external elements of America s drug war have more to do with the continued need to reinscribe notions of American identity and state control than any objective threats:... given the lack of success in reducing the level of drug trafficking, and the instances in which United States Foreign Policy has itself condoned drug trafficking in the service of other security goals, the attention focused on the threat from outside can be seen as part of a practice that externalises the danger of drugs as a means of sustaining the notion of sovereignty. (Campbell, 1992: 188) This is perhaps best reflected in the different responses to the Afghan opium trade under the Taliban and the new regime installed by US military action. Whilst the Taliban regime eventually managed to all but eradicate opium production in 2001, the aid it had expected in return failed to materialize. Even before September 11 it was also faced with additional sanctions. In contrast, the new government s attempt to replicate the Taliban ban have so far failed, and the UN Office for Drug Control estimates that the opium harvest between March and August 2002 will be between 1,900 and 2,700 metric tons (UNODCCP, 2002). Despite this, the Bush administration has now waived narcotics sanctions against Afghanistan (Agence France Presse, 2002). This is not to suggest that the latter policy is necessarily wrong merely to highlight the way in which both discourse and policy on

17 State Collapse as Business 951 conflict trade in general (and drugs in particular) has less to do with an actor s complicity in this trade and more to do with economic interests and/ or the way in which actors are represented in relation to the contemporary construction of threat. Similarly, whilst the role of diamonds in funding the pariah RUF in Sierra Leone has been highlighted and also the role played by the belatedly pariah Charles Taylor as a conduit for RUF diamonds, the role of Nigerian peacekeepers in supplying drugs for diamonds, and receiving bribes to permit the continued activities of the RUF have not been met with anything like the same degree of condemnation. Arguably, this is because many Western countries have a mix of interests which make it advisable not to make too much of this issue for instance, oil interests in Nigeria and a concern to promote Nigeria as a regio-cop (Hirsh, 2000) so that Western troops can be kept out of messy regional conflicts. Perhaps what is most striking about the control agenda on conflict trade, however, is the general silence that has been constructed around the complicity of a broad range of Western companies and economies in conflict trade. Whilst particular attention has been focused on the role of the diamond industry, a wide range of other industries in the West benefit from the trade in conflict goods, whether it be timber, oil, gold, copper, ivory, rare animals or coltan (which itself is vital to the manufacture of mobile phones, jet engines, air bags, fibre optics and most of all, capacitors in computer chips). Yet the recipients of this more generalized trade have, despite the sterling efforts of NGOs such as Global Witness, not been subject to the same odium as those that sell it, or even those like Charles Taylor who act as a conduit for such goods. Indeed, to take the latter as an example, coltan from the DRC has reportedly been flown from the DRC to Europe by the airline company Sabena. The mineral itself has been imported by Germany, Switzerland, the Netherlands, Belgium, Kenya, India, Pakistan, Russia and the UK (United Nations, 2001: Annex 1) yet the countries and companies that receive such goods have largely escaped international condemnation. Similarly, action to date has been focused around very specific conflict goods, most notably drugs and diamonds, although there is arguably an emerging control agenda being pushed by NGOs over what have been termed the logs of war. This is problematic as many conflicts are characterized by economic activity across a number of sectors and by actors who utilize a variety of trading strategies. For instance, over 50 per cent of the income of the FARC in Colombia comes from economic activities other than the narco-trade, whilst the other main insurgent group in Colombia, the National Liberation Army (ELN), obtains just 6 per cent of its income from drug trafficking (Suarez, 2000: 585). Similarly, an estimated 60 to 70 per cent of the Taliban s US$ 100 million war budget was actually derived from revenue earned through the smuggling of fuel, consumer and other durable goods rather than drugs (Rashid, 2001: 404). Perhaps the best example of