Organized violence, be it politically or criminally motivated, poses the most prominent risk to the socio-economic development of a country. Some 1.5 billion people worldwide are affected by violence, a disturbing number, revealed by the World Bank in “The World Development Report 2011: Conflict, Security, and Development”. The Report contains a major shift in focus regarding future strategies to fight poverty. The major aspects of this shift will be discussed in this article.

Set in a wider context the Report also appears to mark a welcome convergence between conflict and developmental studies on the one hand and political risk research on the other hand, where violence has traditionally featured as one of the significant factors impairing business investments. The Report deserves to be studied by a wide audience, including the private sector, which could play a significant role in the new strategic coalition for development.

Based on a plethora of data, excellent academic risk analysis, case studies and surveys, the World Development Report provides compelling evidence for the interrelationship between violence and poverty characteristic for fragile states. A close look at the domestic and external stresses that drive this vicious cycle, also displays the changing face of violence.

Violence and poverty

The overall risk of armed conflict, both interstate and internal, may be decreasing, but this positive development is more and more threatened by international terrorism and organized crime in many countries. One notorious example is the horrible death rate related to drug trafficking in some areas of Mexico and Central America.

How do the rebellions in North Africa and the Middle East fit into that picture. It should be noted, that, in principle, the popular uprisings pursued a non-violent strategy of regime change, and that violence has primarily been used by the autocratic governments seeking to oppress the movements – incidentally coined as “criminal gangs”. This reminds us, to be very careful when looking at the causes and sequences of violence.  It remains essential to differentiate between the political and criminal motivations for violence in each case.

Still, the overarching link is, that the risk of violence increases with the lack of legitimate institutions and capable governance. From that general insight follows a very concrete conclusion, namely that providing “citizen security”, justice, and jobs is the key to breaking the cycles of violence. The focus on these functional priorities resembles a shift in the general debate about development strategy, in which the concepts of formal democracy and economic liberalization for growth used to dominate.

An important empirical observation, driving the shift to a more focused and functional approach to reducing poverty, is the fact that violent countries fail to achieve the Millennium Development Goals as determined by the United Nations in 2000. Improving citizen security, in particular, is missing amongst these goals, and it appears that this crucial independent variable for development is finally coming to the fore.

Citizen security

The term “citizen security” coined in the Report, is actually rooted in the concept of “human security”, which is already widely acknowledged (see the Resolution issued by the UN General Assembly: 2005 World Summit Outcome; for continuous analysis of trends in organized violence, see the Website “Human Security Report Project“). Whereas human security comprises the components of freedom from fear, freedom from want and equal opportunities, citizen security actually concentrates on freedom from physical violence or the fear of it.

Obviously, such risks of violence do have a paralyzing effect on society, including the will to engage in business activities. Moreover, the costs attached to a lack of physical safety is also a major foreign investment barrier. Countries, such as Colombia, in which the security situation has significantly improved over the recent years, provide some important lessons about successful policing strategies.

One of the most important features of security is its spatial dimension, which requires the protection of major routes, for example, in order to guarantee the safe transit of people and goods. Development depends on people’s freedom of movement and secure transport lines. In addition, a sovereign state must provide protection across its entire territory, and not allow remote, rural areas to become strongholds of armed rebel groups or criminal gangs terrorizing the population.

In general, domestic security should be a job assigned to the police and not the military, in order to avoid the use of escalatory force and the risk of extra-legal practices. Setting the  focus on improving the policing functions in violent states, however, raises some further serious questions, in particular, in countries, where a dysfunctional and fragmented police force is part of the problem. Organizational police reforms, proper financial resources required for increasing force numbers, training, equipment, and payment, and finally the establishment of a strong link to a transparent, integer and effective justice system must go hand in hand.

Providing more financial, technical and legal assistance and political support for police reforms in order to prevent violence might be one new priority for international development agencies. Undeniably, this is a sensitive issue, and will likely lead to some controversies in the community. Therefore, the Report carefully avoids presenting readymade recipes and argues in favor of country-specific options that need to be adapted according to domestic conditions.

Inclusive reform coalitions

With respect to the domestic conditions, however, more thought-provoking insights are conveyed. So-called “elite pacts”, sometimes regarded as a mechanism suited to contain violence, are discarded. There are good reasons for doing so, since elite pacts are based on patronage, clientelism and corruption, and are not compatible with the idea of building accountable, effective, and legitimate institutions. Instead, the Report favors supporting the idea of a so-called “inclusive-enough-coalition”, which aims at improving the participation of all relevant stakeholders. Such participatory coalitions, in contrast to patronage elite pacts, are better suited to build the critical mass encompassing various societal sectors, including private businesses, for example, and local communities. This critical mass will create the strong momentum needed in order to promote political reforms.

A highlight of the Report is the integration of strategic and psychological approaches which this magazine also sees as an essential condition for changing actors behavior (see for example the previous article “Conflict Resolution II: A Risk Evaluation Tool for Mediators“). Credibly committing to improving the security situation of a country is necessary to build new popular trust and confidence, leading to changing expectations of collective action and to a motivational shift in individual behavior.  There are several ways for a government in a country affected by organized violence to signal its commitment to security reforms. The most important measure is making appointments that are not based on patronage but on the criteria of competence and integrity. This concerns not only the security sector, but also the judiciary aiming to fight corruption.

If integer people matter, so do accountable finances. In order to determine, whether a leadership is prone to change, one can look at the budget and the reallocation of financial resources towards the envisioned reform sectors. Different from cheap-talk and populist announcements, the appointments of qualified officers accompanied by transparent budgeting are quite reliable indicators for both domestic and international observers that a government might actually be serious about tackling violence and poverty.

The business of job creation

Such signals do not go unnoticed by international business, which is used to making investment decisions based on future expectations and the assessment of the reliability of reform initiatives in foreign countries. And, business investment by the private sector, both domestic and international, is what is needed in order to address the final element on the priority list for breaking the cycle of violence: creating jobs!

A lack of jobs is the major reason why young men, in particular, join armed rebel groups and criminal gangs. Next to security and justice, improving the conditions for job creation is actually the third significant strategy for preventing violence. This means, that the aforementioned “inclusive-enough coalition” must also focus on enhancing the perspectives for founding private businesses and promoting regular employment of both urban and rural populations.

This argument, contained in a report issued by the World Bank which is also connected to the International Monetary Fund, is insofar remarkable, as improving predictable and effective governmental regulation for doing business is not to be confused with the controversial doctrines of liberalization and privatization. What we see here, is a clear promotion of a strong state with legitimate institutions, which provide reliable physical protection and effective legislation in such a way that people can make their living in a safe and regular environment (see former article “Business and Investment Regulations Worldwide“).

Opportunities for farsighted investors

A strong state does not need to be protectionist. In fact, it will welcome international firms which can find many opportunities to invest in interesting projects, particularly in the area of basic infrastructure. The Report points out, for example, that the most serious constraints for enterprises usually is the lack of electricity.

Companies seeking new investment opportunities abroad might take notice of the political risk connotations contained in the Report. Violent and fragile countries are usually seen as high-risk for foreign investors. But things can change, and business leaders ready to observe the changes, based on the early indicators summarized above, have a chance to join the inclusive reform coalitions and build a reputation as responsible executives.