Understanding the relevance of political settlements for the Bank’s work

The post-conflict literature amongst practitioners (including the Bank’s WDR 2011 and the OECD’s INCAF) has increasingly focussed on the role of ‘inclusive enough’ political settlements as a precondition for political stability and economic growth.  What does this mean? Can an understanding of political settlements help mould the Bank’s responses to moments of crisis in our client countries or inform our “business as usual” operations in countries where the seeds of future violence are apparent or looming?  How do we recognize tenuous settlements, where grievances are likely to lead to an outbreak of, or return to, widespread conflict? 

Security is ultimately the outcome of a political settlement that is sufficiently inclusive of a society’s major elite factions with capacity to mobilize organized violence.  These factions often have varying levels of organization and may mobilize supporters (militias, disaffected former security sector actors; gangs or organized crime elements) or sometimes powerful external actors (often neighbouring countries with strategic interests in the relevant country or aligned to internal factions, ethno-linguistic or religious groups). Being the product of power struggles, political settlements are dynamic and open to renegotiation.  Precisely what sorts of settlements emerge depend on the rents and resources available, and the evolving relationships between elites and wider social actors. To be sustainable and control widespread violence, a society needs a set of institutions to achieve minimal levels of economic and political viability, essentially providing benefits for different groups in line with their relative power.  Thus, where powerful groups have been excluded from a formal peace settlement and a legal order that is constructed in its image, it is simply a matter of time before the settlement breaks down because it is so far out of step with the reality of power in a country.  The concept of inclusive settlements derives from a rich academic discourse – while there are contested points, the literature is converging in several respects.
 
To uncover the “anatomy” of the political settlement in a country, some basic questions need to be asked:

• What are the sources of rents, on-budget and off-budget, their relative importance and the patterns of economic distribution? Key concepts are those of rent creation and distribution. Elites divide control of the economy in developing country polities, so understanding distributive arrangements is important in grasping how the elite bargain works. In fragile contexts, a myriad of off-budget and illicit rents (logging, trafficking in people, drugs or arms) are often pivotal.
   
• What are the formal and informal arrangements among elites regulating competition over power and resources? Do they embody an elite consensus on the desirability of avoiding violence and the handling of differences in non-violent ways?      
   
• Has the exclusion of sizeable groups created obvious injustices, which may drive conflict or exacerbate historical grievances?  What are the axes of exclusion -- ethnic, religious, regional, ideological, party political affiliation?    Do excluded groups have the power to mobilize violence?

1. Does the formal political or legal architecture like a peace agreement or Constitution perpetuate exclusion (eg. specify an official language that many citizens do not speak)?
2. Does one group control state institutions or the economy? Is there discriminatory access to services and productive assets or inter-communal conflict emerging from contests over natural resources?  Do current patterns of exclusion echo historical ones?

• How strong are the factors that bind or fracture citizens’ identification with the state?

1. What is the nature of center-periphery relations in the polity? Are there regional tensions, fights for autonomy or lagging regions?  Do regional imbalances and existing or constructed ethnic or social divisions have resonance?
2. How strong is national identity, is it nurtured by the political leadership and are efforts being made to address historical exclusion and grievance?
3. Is there evidence of broadly developmental aspirations, despite widespread  corruptionwidespread corruption and capture?
4. Are there rudimentary “rules of the game” emerging, that are broadly understood and seen by citizens as legitimate?

Two factors used to characterize the scope and depth of the settlement, and its potential durability are  the ruling elite’s ability to (i) impose a centralized system for managing rents and (ii) use modalities that ‘project authority and distribute resources  to places where people live, including them in the settlement by delivering public safety, services, livelihoods and other opportunities’ ( Craig and Porter).

In the immediate post-conflict period, elite capture seems unavoidable, but rudimentary legitimacy and ‘justice’ in the eyes of the population is necessary for stabilization, established through what the WDR 2011 calls “credible signs of change”.  Citizens may be willing to accept capture, corruption and poor governance in the short term, if this appears necessary to avoid a return to violence. Indications of a distinct break from a conflict-ridden past (with a focus on security, justice and jobs) can buy a regime time for longer term institutional change.  Targeted tools of public policy and spending have at times been used to give disaffected groups a stake in the new political and economic order.
 
Ultimately local elites will devise the most durable institutional arrangements where the incentives to cooperate with one another are primarily locally, rather than externally, derived .  A fascinating recent analysis by Sarah Philips makes the point emphatically. Why did the civil wars in Somaliland end while Somalia's continued? In the author's analysis, limitations to external finance and political backing were critical to elites perceiving cooperation to be in their mutual interest in Somaliland and forging a more durable peace.  The case offers insights into why some domestic power struggles -- including violent ones -- build the foundations for relative peace while others perpetuate cycles of economic malaise and political violence, and has broader implications for external actors operating in conflict-affected situations. 
 
While international interventions can help maintain social order and territorial integrity, and provide valuable breathing space for locally acceptable political settlements to be forged, they can  evade these issues entirely or overbear them in ways that are unhelpful. Think Somalia, Afghanistan, Iraq or Solomon Islands. The key question is whether domestic incentives are being blunted by the external security presence and accompanying ’war economy’ or whether elites are using that time to forge a durable settlement that will be sustained after the departure of foreign troops. Timor-Leste provides an example. Prime Minister Gusmão knew he had only a few years in which to forge a bargain (UNMIT came after the 2006 violence and left in 2012). He managed to stabilize the country more quickly than most imagined, the new bargain forged through a large expansion in public spending (as petroleum revenues hit the state coffers). Although UNMIT had executive policing responsibilities until 2011, the Timorese police answered to its command from 2008 and handled internal threats itself. A settlement with a distinctively Timorese cast emerged, into which the UN had difficulty in inserting itself, but it is locally legitimate and thus has brought stability in recent years.  Its first real test will be when Gusmão steps down later this year.
 
Sarah Phillips is presenting her paper at a BBL at the Bank on Monday 31 March 2014.