Saturday, September 12, 2009

Financing Civil War

Over the past ten years or so, much of the focus of the study of civil war has been on financing. The starting point was essentially that the present of easily lootable resources such as diamonds or drugs facilitating the development of insurgencies and helped to prolong civil wars. In part, the idea was that other forms of money were taking the place of the superpowers in the aftermath of the Cold War. In part, the World Bank (Paul Collier et al), amongst others, noticed that poverty and civil war go together.

Quickly, the debate matured from whether grievances, such as discrimination, or greed (resources) drive civil war to the different impacts of various financing mechanisms. Jeremy Weinstein wrote a great book a couple of years ago about how the abundance or absence of resources shapes the destiny of the insurgency by shaping its organizational structure.

There is much work to do in this area, and I was struck that financing of an insurgency is less problematic than the first works in this area suggested. All you need is some smart people to figure out a comparative advantage, whether that is conflict diamonds (Congo and other African locales), location (the Balkans), poppies (the Taliban), the ability to hold oil pipelines hostage (Columbia, Nigeria), taxation/protection rackets (more than a few), a good pr story/spokesman (one of the implications of Clifford Bob's book, Marketing Rebellion), etc.

And today, I learned of a new mechanism, although it was used by the government's side, which usually not seen as the side needing extra money: the selling of kids.

Guatemala has the world's highest per capita rate of adoption and is one of the leading providers of adoptive children for the United States. Nearly one in 100 babies born in Guatemala end up with adoptive parents in the United States, according to the U.S. consulate in Guatemala.

Adoptions can cost up to $30,000, providing a large financial incentive in a country where the World Bank says about 75 percent of the people live below the poverty level. Officials fear that often times mothers are paid -- or coerced -- into giving up their children.

This should not be surprising, but it is. Killing parents so that one can sell of the children is about as awful as it gets. It confirms what I had always believed--an imagination/entrepreneurial spirit is a key ingredient for prolonged civil war. So, the finding that wealth (Gross Domestic Product per capita) is highly but inversely correlated with civil war may mean that the folks who could be crafting ingenious ways to fund insurgencies choose not to do in rich societies because they have less risky, more profitable ways to earn a living.

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