Conflict can benefit certain sectors of society, thus creating vested interests in perpetuating conflict and impeding peace. The political economy of conflict is thus an important consideration in implementing conflict sensitivity.

Many conflicts are understood to have their origin in an unaddressed “grievance”, for example ethnic or religious discrimination, horizontally unequal distribution of resources and dramatic increases in unemployment. Researchers⁹ have recently begun to emphasise the role of “greed” in conflicts, and draw attention to the benefits that accrue from participation in conflict – employment in armed forces, access to scarce resources, power. Rarely is the political economy of conflict clearly delineated as simply “greed” or “grievance”; often, one can observe a shift over time from “grievance” to “greed”.¹⁰ For example insurgents need funds for food and supplies, which they often have to raise by illegal commercial activity or “taxes” (eg ransoms from kidnappings); this fundraising can cease being a means to an end and become an end in itself. Many observers argue that in Colombia, for instance, warring factions are now less concerned with addressing outstanding grievances than with controlling the illicit narcotics trade.

Over time, violent conflict encourages the emergence of a war economy dominated by politicians, commanders and fighters, whose interests are to generate new forms of profit, power and protection¹¹. Key activities include the taxation of legitimate and illicit economic activities, asset stripping and looting, and the economic blockade of dissenting areas.

At the same time, a shadow economy emerges to make high profits at the margin of the conflict. Political and other entrepreneurs benefit from the general insecurity and lack of rule of law to extract precious natural resources, to trade in illicit goods (eg drugs), and to smuggle high value commodities.

The results of all this are concentrations of power and wealth, the destruction of economic assets, and impoverishment of vulnerable groups. Without conflict sensitivity, international assistance can make matters worse by adding to the vested interests who benefit from prolonging the war: for example local leaders, who usually come to control, and profit from, at least part of the conflict-related relief; and otherwise unemployable educated youth, offered well-paid jobs by development agencies. The economic structures created by conflict are among the most powerful blockages to making peace.

Development agencies, then, need to factor the political economy of conflict into their strategies and approaches to ensure they do not fuel existing conflicts through boosting war economies. Because over time there is a propensity for conflict to shift from “grievance” to “greed”, all parties including development agencies need to focus on the early treatment of grievances. Addressing the political economy early and effectively is key to ensuring conflict sensitivity. Chapter 3 Module 1 on planning provides some specific suggestions for how to approach this work.