What can companies do to ease transition in post-conflict zones?

Over the past few years, the broad debate about corporate responsibility has spawned a number of more specific themes. One of the most important of these is the role of companies in conflict zones. Organisations such as the International Business Leaders Forum, International Alert and the UN Global Compact have undertaken a great deal of work to identify the impacts that companies have, and to provide clear guidance for company managers.

As with many corporate responsibility-derived debates, work in the area has largely been conducted by practitioners working with interested companies, non-governmental organisations and government agencies. Excellent though much of this work has been, it has taken place in a vacuum, insufficiently informed by wider debates in the field of international relations.

This paper examines the implications of these wider debates for the role that companies should play in conflict zones – specifically in processes of post-conflict reconstruction. The full paper, available on the Ethical Corporation Institute website, contains detailed analysis of these three issues, fully referenced to the relevant literature. However, for the purposes of this synopsis, the key debates are as follows:

1. Changing global governance

A traditional view of global affairs places war – be that starting it, or clearing up the mess afterwards – firmly in the orbit of state power and authority. To even entertain the notion that the private, corporate sector might have a role to play is a significant divergence from this norm. However, the emergence of the phenomenon known as globalisation has itself already provoked a substantial debate about whether and how models of global governance are changing. What are the implications of the debates on globalisation for an understanding of the role of companies in post-conflict environments?

2. Analyses of post-conflict interventions

In the past 20 years or so, the international community has attempted the reconstruction of a number of post-conflict societies, from Cambodia to Kosovo. Some of these interventions are seen as having been successful, but many have failed to sustainably improve the post-war situation. What does the success, or otherwise, of these interventions say about the role that companies play?

3. The causes of war

Historically, war was seen, as Clausewitz put it, as “the extension of foreign policy by other means”. This assessment now seems less relevant in a world where the vast majority of conflicts are intra-state, not inter-state. The literature examining the causes of war cites ethnicity, material need, greed and a range of other factors. A number of writers speak of the need to analyse war at a number of levels, examining the impact of global, national and local factors in leading to conflict.

How can companies contribute to sustainable post-conflict reconstruction?

What light can these wider debates cast on discussions of the role of companies in conflict zones, and in particular in countries being re-built after war? How can we further illuminate the efforts of International Alert, IBLF, Collaboration for Development Action and others with conclusions drawn from work by academics and specialists in different fields?

Empowerment of local people and structures

A significant problem in post-conflict reconstruction is unwillingness, on the part of the international community, properly to trust and empower their local counterparts. Western “experts” – be those representatives of NGOs, development agencies or indeed western governments – tend to believe that they know best and should therefore decide what ought to be priorities in-country.

The reason why this matters comes down to credibility. If its international partners do not trust the government of a post-conflict society, why should its local population trust it? The people of Iraq and Afghanistan can see that the real decisions are taken in London and Washington, so why should they pay any attention to the governments in Kabul or Baghdad? The result is that local systems of government, and credible administrators and political leaders able to run these systems effectively are not given the chance to develop.

Companies working in post-conflict societies therefore need to ensure that they do not compound this problem, and do all that they can to empower different levels of government by treating them with the respect and deference they would accord to similar authorities in their home countries. Companies also have to be aware of the message sent out by their internal behaviours. Those who rely too much on ex-pats to run their operations, rather than empowering indigenous staff, tacitly send the message that local people cannot be relied upon.

Durable institutions

A central reason why the international community’s reluctance to trust local people and structures is damaging is because it hinders the development of state institutions. Yet the creation of indigenous ministries and other structures that are capable of providing social goods, and which are bigger than the individuals that occupy positions within them, is widely seen as a key element in sustainable reconstruction. In simple terms, a presidency must be more influential than the individual who happens to be president.

To what extent do corporate actions assist or undermine this process? Companies need to be wary of using their size to bully governments, and so undermine them. It is important that companies always work through state institutions, so giving them credibility.

There may also be a need to avoid the law of unintended consequences when it comes to the support companies give to a host society. For example, a programme to provide people with Aids drugs may be very generous, and indeed, necessary. However, in the context of a post-conflict society, it may highlight the inability of the government to provide such services, thereby undermining its credibility. In such a situation, a programme to help build the capacity of the host government to look after its people properly is more likely to be effective, and supportive of durable peace.

Developing new societal cleavages

It is almost axiomatic to argue that sustainable peace is aided by a move away from the social cleavages – be those ethnic, religious, cultural or any other – that have categorised conflict in the past. Political debate needs to assume greater normality, focusing on issues such as healthcare provision, infrastructure or education in such a way where political positions and views are held for reasons other than partisan, identity loyalty.

At a strategic level, companies need to co-operate, where appropriate, with wider initiatives to change the terms of political debate operated by the host government or by international development agencies. It is however at a local level, in relationships with communities near their facilities, where companies can potentially do most. By being aware of historic tensions, they can ensure that they do not, however unwittingly, inflame tensions and cleavages that have led to conflict in the past. By creating open-handed relationships with different communities, they have the potential to develop processes for debate that do not cause division or tension along traditional lines.

Processes for generating consensus and resolving disputes

However, where dispute still remains, it is important that new processes are developed to allow these to be resolved peacefully. At a statewide level, it is necessary to create legal structures, systems of justice and processes for selecting governments that command widespread confidence and support.

Although the development of western-style democratic practice, and in particular the holding of post-conflict elections have been central to the international community’s engagement in post-conflict environments, writers express considerable concern about how realistic a proposition this is. However, whether or not western-style democracy is the best way of doing it, post-conflict societies need to develop sustainable, peaceful processes for generating consensus, resolving disputes and selecting governments. It is important that companies support such efforts.

At an operational level, the opportunities for companies to demonstrate good practice in consensus-building and dispute resolution is significant. In its relationships with staff, or with local communities for example, a business has the opportunity to develop ways of working which can act as models for wider society.

Economic regeneration

It is evident from the work of Oxford economist Paul Collier and others that low per-capita income significantly raises the risk of conflict. Self-evidently therefore, economic regeneration is a vital plank of successful post-conflict reconstruction. In principle therefore, the corporate sector would appear to have a natural role to play since economic growth lies at the heart of what companies exist to do.

Companies operating in post-conflict societies need to ensure that they focus not only on the narrow agenda of their own profitability, but also on how their activities promote broad-based economic regeneration. Central issues will be hiring and procurement processes.

Protection of resource assets, ‘rents’ and economic diversification

It is evident that corruption – apart from its other deleterious impacts – is also a significant impediment to post-conflict reconstruction. It results in the financial benefits of natural resource extraction, for example, accruing to a small elite, rather than to society as a whole.

It is also evident that promoting a diverse economy is necessary to successful reconstruction processes. The World Bank and others conclude that excessive reliance on primary resource export is a conflict risk factor. What steps do corporate investors in post-conflict societies take to help this happen? At a strategic level, it is important that companies work with host governments and other agencies to reduce reliance on a single strand of the economy. However tempting it may be for that government to focus only on the immediate benefits to be gained from raw material exploitation, it will store up problems for long-term development and stability.

Developing skills amongst the indigenous population

However, economic development, no matter how broad-based, is no use if local people are not able to benefit from it. To do this, they need the skills to enable them to do so: in a post-war environment, many key groups may lack those skills.

Of particular concern are young men who have been part of warring factions. If they are not enabled to develop the skills to help them to find peacetime occupations they will be more prone to resort to fighting. Ensuring that they benefit from post-conflict economic growth means that they will have an interest in the new status quo, and will be less likely to be recruited into violence.

However, other sets of skills will also need to be developed if a stable society at peace is to emerge. Public sector officials such as customs officials, financial planners and judges will need to be trained. In the private sector, entrepreneurs and business managers will need to be brought on, so that a stable and dynamic country can emerge.

Time scales

There is considerable agreement amongst a number of authors that a key reason for the failure of reconstruction efforts is the unwillingness of the international community to devote sufficient time or resources to the effort. Western governments believe that they can transform post-conflict societies in a few years, instead of recognising that the task will potentially take decades or even generations to achieve.

Conversely, some companies are obliged, by the nature of their business to make a long-term commitment to a country – the extractive sector, for instance. Such companies are well placed to take up some of the slack that international governments and aid agencies leave when their own time horizons, or domestic political pressures cause them to leave post-conflict.

Moreover, there is also no reason why companies, even those whose business is trade-related, or more short-term, should not seek to integrate themselves into processes of reconstruction even if their likely stay in a country is limited. In doing so, they can provide support to reconstruction efforts in a considered and sensible way.

Security

Physical security is widely regarded as a sine qua non of successful reconstruction: indeed ongoing security concerns indicate that the conflict has not completely ceased. And without security, all those factors so necessary for successful reconstruction cannot develop since people are afraid and therefore unable to go about their business. As a result they cannot regularly attend work, so the economy suffers; they are unable to develop relationships with their fellow citizens, so trust does not develop; and there is no return to a stable peacetime society.

Companies can work in this space, for example by cooperating with and supporting programmes to re-train ex-combatants with peacetime skills; or indeed, by providing employment opportunities. In relation to their own operations, the Voluntary Principles on Security and Human Rights (developed by the International Business Leaders Forum and Business for Social Responsibility) assume considerable significance, since they provide a framework to ensure that companies’ own security forces do not compromise the security of wider society. It may be that companies can extend training they provide to their own staff to local police and security forces.

Understanding local circumstances

Ultimately, checklists like this one will only be generalisations. As many writers make clear, whilst commonalities may be drawn between conflicts, they ultimately need to be understood in their own individual circumstances. Comparative analysis is relevant, but only provides part of the picture. It seems clear that post-conflict reconstruction faces problems precisely because the international community tries to apply a generic template, rather than seeking to understand the peculiarities of each country.

But are companies any better than governments and aid agencies at understanding the peculiarities of the markets where they work? The fact that, for example, International Alert has seen fit to focus considerable effort on tools to help companies with conflict-risk awareness strongly suggests that existing systems are not as good as they need to be. Companies that are serious about optimising their impacts on conflict-prone countries need to pay careful attention to guidance like this, and work to integrate it into their operating processes.

Processes of collaboration

There is considerable concern about the legitimacy of companies’ participation in these issues. Considerable concern – suspicion even – exists about the wider, developing role of companies in international relations.

Part of the problem is that the existing, state-based structures for debating issues of global concern, and processes of global governance, allow no space for the corporate sector. However, the same is also true of civil society groups such as NGOs, yet they have succeeded in gaining a voice, for example through the UN’s Economic and Social Council, and through their ability to reflect popular concern on various issues.

The problem for the corporate sector is suspicion of their motivation. Whilst NGOs are trusted, rightly or wrongly, to reflect wider social concerns, the fact is that companies exist to make a profit. Even authors who are trying to propose a positive role for multinational corporations appear to start from the assumption that multinational corporations’ impacts are otherwise likely to be deleterious. Yet at the same time, it is evident that companies are playing a wider role, and can provide many of the resources necessary for successful post-conflict reconstruction.

To date, the reconciliation of these conflicting factors has been through voluntary initiatives such as the Voluntary Principles on Security and Human Rights and the Extractive Industries Transparency Initiative, under which governments and oil and gas companies agree to disclose sums handed over in natural resource contracts. These have allowed companies’ abilities and assets to be leveraged to address key issues, but in a context where they gain legitimacy through acting in collaboration with governments and civil society groups.

Such multi-stakeholder partnerships have certainly not been immune to criticism. The Voluntary Principles, for example, nearly collapsed in early 2007 because of criticisms from several NGO and corporate participants that some member companies were not translating their membership of the initiative into concrete actions in their business. However, such attacks reflect a wider concern that such voluntary initiatives are not the correct approach to managing corporations’ behaviours, and that in fact, binding laws at an international level are needed.

Conclusions

It is evident that the multinational corporate sector does have a significant role to play in sustainable post-conflict reconstruction. At strategic and operational levels, and in their interactions with local communities, their ability to impact on those issues that mitigate in favour of successful reconstruction is substantial.

As yet, however, this potential is under-utilised. This is the result of many factors. Among the most significant is a mistrust of the corporate sector, and a belief among governments, academics and NGOs that engaging for-profit organisations in political issues like post-conflict reconstruction is not legitimate. Equally, it is also true to say that few companies make the effort properly to understand the conflict dynamics where they operate and so optimise their impacts on key issues.

However, perhaps most worryingly, a significant reason why companies do not play the larger role in post-conflict reconstruction is because all too often reconstruction plans themselves are ill conceived. Iraq may be an extreme example, but in many instances where the international community has attempted to rebuild states after war, reconstruction planning is at best insufficiently thought-through.

There is often a desire to paint corporations as the global bad guys. However, it is apparent that despite the impacts of what we call globalisation, power in the world still rests principally with states. Companies’ ability to contribute positively to post-conflict reconstruction therefore remains dependent on the ability of the international community and the governments of post-conflict states having a coherent plan for sustainable reconstruction.

Peter Davis is a director of the Ethical Corporation Institute and politics editor of Ethical Corporation magazine. You can download his full research paper “The role of multinational corporations in post-conflict reconstruction – what companies can do to make real and lasting change in recovering nations” from www.ethicalcorp.com/eci