The Bottom Line of Conflict Resolution

Is the private sector willing to invest in peace?

Three United Nations workers were killed Wednesday while working in a refugee camp in West Timor where pro-Indonesian militias still roam the countryside. It is a situation that has become all too familiar in various parts of the world—from Ambon and Rwanda to Somalia and Sierra Leone, among other places. All these countries have depressed economies and extreme disparities in wealth, making it difficult for them to offer their citizens economic alternatives to taking up arms. This has become one of the principal dilemmas in conflict resolution: how to provide economic opportunities as an incentive for militias to disarm.


	Jose Ramos-Horta, 1996 Nobel Peace Prize Laureate, East Timor

Jose Ramos-Horta, the 1996 Nobel Peace Prize Laureate from East Timor, has implemented a microcredit program in East Timor where militias receive access to credit in exchange for turning in their weapons. Ramos-Horta said that unless these people are offered a viable way to support themselves, they will not disarm. He believes that multinational corporations have the ability to create such jobs and the incentive to do it on the grounds that business will be more profitable in a stable democratic society. According to Ramos-Horta, companies would save millions of dollars in bribe money in a more transparent political climate. "In Indonesia, companies paid millions to the Suharto family trying to get things done," he said.


	Nat Colletta, Social Scientist and Post Conflict Manager at the World Bank

But Nat Colletta, manager of the Post-Conflict Unit at the World Bank, points out that the private sector has an aversion to areas of the globe that are conflict-ridden. According to Colletta, in the past decade, the strife-torn continent of Africa received only a two percent share of all Foreign Direct Investment (FDI). African countries that were in a state of conflict received a paltry one-half percent share of FDI. Even when they do invest in developing countries, says Colletta, it doesn't always result in significant job growth and economic gain for the country, especially if the investment is in extractive industries.

According to Ramos-Horta, the economic destabilization of Indonesia that followed Suharto's downfall was similar to what occurred in Russia after the disintegration of the Soviet Union. "In times of transition, a country needs a leader of great moral authority," he said. In Russia, the World Bank funded the Russian treasury, which provided loans to the private sector for the purchase and operation of state-owned industries. Colletta said the problem was that the only people who qualified for the loans were government bureaucrats so, in essence, the same people remained in control of the economy.

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