Breaking the Conflict Trap?

Addressing the Resource Curse in Peace Processes

Author(s): Achim Wennmann
Source: Global Governance , Apr.- June 2011, Vol. 17, No. 2, The Governance of
Extractive Resources (Apr.- June 2011), pp. 265-279
Published by: Brill

Stable URL: https://www.jstor.org/stable/23033734

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Global Governance 17 (2011), 265-279

Breaking the Conflict Trap?

Addressing the Resource Curse
in Peace Processes

Achim Wennmann

Does addressing the natural resource dimension of armed conflicts in

peace processes open opportunities for breaking the conflict trap? Based
on evidence reviewed from Sudan (North-South), Indonesia (Aceh), and
other cases, this article challenges the prevailing understanding of natural
resources as an enabler of armed conflict and obstacle to peace. It argues
rather that it is timely to ask: How can natural resources become part of a
solution to armed conflicts and consolidate a lasting peace? The article
contends that investment in natural resources can become an opportunity
for peacemaking and contribute to conflict transformation by tackling
economic conflict drivers and setting out new orders that govern a post
conflict peace. However, it is important to strengthen mediation support
and construct new partnerships for peacemaking, especially with the ex
tractive industries. Keywords: natural resources, conflict trap, peace nego
tiations, mediation support, extractive industries, Sudan, Aceh.

Scholarly research on the relationship between armed conflict and

natural resources has long emphasized the impact of the latter on security, gov
ernance, and prosperity.1 Such work has highlighted that natural resources are
a crucial element in the "resource curse." In the literature on civil wars, the re
source curse is mainly captured by the "conflict trap" in which "war wrecks
the economy and increases the risk of future war."2 In this context, natural re
sources foster recurring cycles of armed conflict because they provide a rev
enue base for belligerents, increase claims for secession, and perpetuate state
fragility through incentives for corruption and mismanagement.
In this article, I investigate whether addressing natural resources in peace
processes is an opportunity to break cycles of recurrent conflict and, thereby,
the conflict trap. I highlight that natural resources can have a strategic signif
icance for peacemaking activities. Especially for high-value, investment
intensive natural resources such as oil and mining resources, the continuation
of an armed conflict implies losses for all involved. An exclusive focus on nat
ural resources, however, will be an elusive strategy to counter the resource
course. Natural resource management must be integrated into larger dispute
resolution frameworks that address the new challenges once an agreement on
revenue sharing or a new future has been found.

I bb

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266 Breaking the Conflict Trap?

I first chart the role of natural resources in armed conflict before setting
out the rationale for addressing them in peace processes. I then present two
examples on the way that natural resources were managed in the peace
processes of Sudan (North-South) and Indonesia (Aceh). I also reflect on the
link between needs of informality to manage the parties' internal transforma
tion, and requests by third parties for transparent and accountable natural re
source management. In the conclusion, I distill the case evidence and explore
policy implications.
Overall, I argue that natural resource management must be integrated into
a broader political process in order to ensure that resource wealth translates
into development benefits. Peace processes represent an important framework
in which to negotiate the new future of a country and society. Natural re
sources are a crucial part of these negotiations because they represent the main
domestic economic base. However, for this transition to occur, there is a need
to strengthen mediation support activities and bring in the private sector.

Natural Resources and Armed Conflict

After the Cold War, a number of African conflicts placed the spotlight on the
relationship between natural resources and armed conflict. The issue gained
prominence through reports of the UN Security Council sanctions monitoring
mechanisms on Angola, the Democratic Republic of Congo, Sierra Leone, and
Liberia, and multistakeholder processes against conflict diamonds and abusive
and illegal behavior of companies in conflict zones.3 In addition, the World
Bank identified armed conflict as an obstacle to development and opened an
entire research stream on the economics of political and criminal violence.
Partly in parallel, partly in response, various scholars focused on natural
resources as part of the literatures on the political economy of conflict and
conflict goods such as oil, diamonds, drugs, and timber.4 Some emphasized the
importance of natural resources abundance as a factor to increase the risk of
armed conflict. This approach prioritized the role of pull factors (economic op
portunities, greed) over push factors (migration, overcrowding, grievance).5 A
popular claim at the time included that primary commodity exports substan
tially increase the risk of armed conflict because they provide opportunities for
extortion, and make rebellions feasible.6
Others showed that the relationship between natural resources and conflict
dynamics depends largely on the occurrence in nature of a natural resource (con
centrated or diffuse) as well as its geographical location (proximate or distant
from the capital), characteristics (lootable or nonlootable), and way of explo
ration (labour or capital intensive).7 In addition, as natural resource deposits
along remote international borders and far away from the capital have been
found to increase the duration of a conflict, so have gemstones and oil and gas

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 Achim Wennmann

resources been found to intensify secessionist armed conflict.8 In terms of con

flict financing, natural resources are merely one of multiple financing strategies.
Especially oil. diamonds, and drugs are effective sources of conflict financing
because their revenue streams are relatively high and immediate, and they can
be easily centralized.9
In this brief discussion, I have underlined that natural resource wealth can
have a whole range of adverse consequences on a country. It can weaken the
economy and state-society relations, shape the means and motivations of bel
ligerents, and influence the dynamics of armed conflicts. Generally, therefore,
natural resources have been perceived a problem for peace and an enabler for
armed conflict. In the next sections, I attempt to turn this observation around
and explore if natural resource wealth can support ending armed conflicts and
contribute to eventually breaking the conflict trap.

Natural Resources and Peace Processes

For peace processes, natural resources are related to a conflict in three ways:
they can be a cause of the conflict if disputes over the control of natural re
sources are factors in conflict onset, they can be a means of the conflict if nat
ural resources contribute to the financing of the belligerents, and they can be
a potential resource for economic recovery. In this way, income sharing is part
of backward-looking functions of peace processes that address the ends or
means of past disputes as well as forward-looking functions that shape the vi
sions of a new economy and society.10
Natural resources can be integrated in power-sharing deals. Power shar
ing refers to the reconstitution of "normal" politics in a postconflict society
through new institutional arrangements including different degrees of auton
omy and federalism, or governance arrangements." Power sharing shapes in
centives of belligerents so that the benefits from participating in a government
of national unity or autonomy arrangements are greater than challenging or
overthrowing the government.
Constitutions can play an important role for revenue arrangement, sharing
principles, and transfer modalities.12 In Iraq, for example, efforts by the
George W. Bush administration to broker new oil legislation allegedly under
estimated the impact of constitutional provisions that prioritize regional over
national laws. While oil legislation may have been able to clarify specific is
sues in oil management, sharing, and exploration status, it was unable to ad
dress the hierarchy of laws established by the constitution. The Iraqi
constitution provides oil-rich regions with the powers to override or derogat
from national oil legislation, thus placing constitutional reform at the heart of
regulating the oil sector and income sharing.13 The absence of a clear legal and
political situation has consistently soured relations between regional and na

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268 Breaking the Conflict Trap?

tional authorities as each side questions the validity of the other's agreement
with foreign companies.14
Addressing natural resources can also play an important role in managing
war-to-peace transitions. Talking about income sharing from natural resources
is crucial for preparing postconflict economic recovery, and crafting an eco
nomic vision for the future in which both excombatants and conflict-affected
populations can start to believe. In this way, peace processes facilitate disar
mament, demobilization, and reintegration processes and the return of
refugees or internally displaced persons. Recent evidence on postconflict vio
lence has emphasized the importance of nurturing alternative visions of soci
eties during peace processes.15 Ensuring that the violence stops is important
but, if combatants and populations do not have a notion of what comes next,
some may think that their life during the conflict was more profitable and re
vert back to violent appropriation as a livelihood strategy. The results can be
criminalized parallel economies, or even full-scale renewal of fighting.16 In
come-sharing arrangements are important in managing war-to-peace transi
tions and in fostering among negotiating parties and their constituencies the
belief in a tangible prospect of a better life after war.
Addressing natural resources effectively also implies working on the pre
vention of future conflict. Natural resource management in a postconflict setting
regulates access to finances that could potentially be used to renew armed con
flict. Income sharing from natural resources is therefore important in reducing
access to revenue sources for spoilers and providing an indigenous revenue base
for economic recovery. Thus, getting natural resource management right in the
peace process is a strategy for preventing the recurrence of armed conflict and
hedging against future losses of billions of dollars that are invested each year
into peacebuilding and development programs in postconflict situations.
In summary, then, a focus on natural resources in peace processes ad
dresses key elements of peacemaking. These include ending or transforming a
past armed conflict, setting out a new vision of future society and economy in
which belligerents and populations can believe, and preventing the resumption
of renewed armed conflict over natural resources. But what is the evidence of
such transformative negotiations? How have natural resources been negotiated
in peace processes?

Oil and Income Sharing in Sudan's North-South Peace Process

Natural resources have played a crucial role in some peace processes, be that as
part of the formal agenda or as a sensitive topic that remained outside the talks.
In Sudan's North-South peace processes between 2003 and 2005, oil resources
contributed to the parties coming to the negotiation table. High levels of armed
violence in oil-producing regions prevented the government to fully benefit
from the revenue potential of the oil wealth because it undermined its efforts to

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 Achim Wennmann

attract foreign investors. Some oil companies, such as Lundin Petroleum, made
the case to all belligerents that the end of fighting and a peace process were the
best strategies to ensure a sustainable oil production and benefits for all. Its
board member Carl Bildt, who had been Swedish prime minister from 1991 to
1994 and involved in various peacemaking capacities in the former Yugoslavia,
led informal talks and made the case that "oil represented an incentive for peace
in so far as oil activities could not be pursued in a war context."17
In this case, oil was part of larger incentive structures for ending the con
flict that contributed to tactically informed choices to relocate the fighting
from the battlefield to the negotiation table. Oil exploration required high lev
els of foreign investment as well as a minimum level of collaboration between
northern and southern Sudan to reap benefits from its potential high-value rev
enues. Oil therefore became an issue that appealed to the parties' economic in
terests. However, oil remained an intensely political issue and was integrated
into a larger negotiation process. While the parties had agreed in previous
peace processes on the principle of income sharing, a detailed treatment was
possible only after a principle agreement on other political issues, such as self
determination, the relationship between state and religion, and security
arrangements, had been reached.18 Thus the treatment of natural resources in
peace processes cannot be divorced from larger political and military contexts.
Once the parties agreed to open a negotiation on income sharing, a hard
fought negotiation unfolded where they managed to solve a number of impor
tant issues. The ownership of land and natural resources was one of the most
contentious issues because it went right to the heart of the dispute over the
government's sovereignty and self-determination of the South.19 For the gov
ernment, the state ownership of surface and subsurface land was the prerequi
site for an equitable distribution and long-term development planning. In its
view, the government was the only legitimate and capable institution to redis
tribute national resources. The Sudan People's Liberation Movement/Army,
however, made reference to principles of customary land use rights and em
phasized that it was the legitimate owner of the land and oil because its con
stituencies lived on that land. The problem could be resolved by addressing the
issues of ownership independently from revenue sharing and the management
of the oil sector. The parties agreed to leave the issue of ownership unresolved.
In this way. disagreement on a fundamental issue did not prevent progress on
wealth sharing, which was central to both parties' economic interests.20
A special issue related to the existing contracts with Chinese oil compa
nies and adjusting their payment modalities. As in many other African coun
tries, China paid for Sudanese oil with the export of a range of consumer
goods and services. However, an important component of the wealth-sharing
deal was that oil revenue would accrue through cash payments that would then
be divided. Existing barter arrangements between the government and Chinese
oil companies were an obstacle to revenue sharing, and China's resistance to

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270 Breaking the Conflict Trap?

shift to financial transfer became a major obstacle in the negotiations. Ulti

mately, China adjusted payment modalities due to the recognition of its com
mercial interests in an overall agreement under increasingly strong
international pressure.21
The issue of ownership and existing contracts are just two examples of the
kind of problems for which solutions have to be found if natural resources are
addressed in peace processes. Ultimately, the 2004 Agreement of Wealth Shar
ing (AWS) became an important component of the 2005 Comprehensive
Peace Agreement. It included the establishment of new institutions such as the
National Land Commission, the National Petroleum Commission, and the
Bank of Southern Sudan as well as reconstruction funds for both northern and
southern Sudan. A major achievement was the agreement of the parties on a
sharing formula whereby 50 percent of net oil revenue accrues to the govern
ment of southern Sudan and the remaining 50 percent to the government of
Sudan (Article 5.6), after 2 percent of oil revenue has been allocated to pro
ducing states or regions in proportion to their production (Article 5.5).
As part of the AWS framework, income sharing between northern and
southern Sudan has occurred since 2006. A first transfer to the government of
southern Sudan of $800 million reportedly was made in February 2006, but it
occurred without any indication of a reference period or whether it would cor
respond to the agreed formula.22 By 2008, collaboration on income sharing
improved with the government being recognized to have paid arrears for the
period 2005-2007.23 Since 2007, the government of southern Sudan has re
ceived payments amounting to $1.5 billion in 2007. $2.9 billion in 2008, and
$1 billion in 2009.24
The fact that billions of dollars of oil revenue are now flowing into the
South is a remarkable success of peacemaking in Sudan. However, the Sudan
case also shows that sharing the revenue cannot be the only ambition of peace
making. Once income sharing from natural resources is agreed on, there are new
challenges for which the parties must be prepared. These include, for example,
issues related to resource allocation and disbursement that underline the impor
tance of ongoing assistance in dispute resolution in the aftermath of a peace
agreement. Only when income sharing is linked to the political changes neces
sary to invest natural resource revenues in the service of development can a
country start to escape the vicious circles that end in the conflict trap.

Oil, Gas, and Autonomy in Aceh

Natural resources also played an important role in the Aceh conflict in Indone
sia, even though they were addressed much differently in comparison to
Sudan. In this case, natural resources were mainly addressed by the govern
ment as part of Aceh's special autonomy legislation. Preparations for the 2001
Law on Special Autonomy for the Province Naggro Aceh Darussalam (here

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 Achim Wennmann

after the NAD law) predated the 2000 peace process and were part of a larger
attempt by then president Jusuf Habibie to address Indonesia's center periph
ery relations after decades of authoritarian and centralized rule. These efforts
were marked by the independence of East Timor, and the subsequent resist
ance to further devolution in Jakarta.25
Habibie's successor, President Megawati Sukarnoputri, ratified the NAD
law with the intention to provide an alternative exit option for the Gerakan
Aceh Merdeka (GAM) out of the conflict. This option entailed unprecedented
powers of self-governance and control over natural resources in exchange for
cessation of hostilities and the renunciation of independence.26 A central point
was that Aceh would receive 70 percent of the revenues generated from Aceh's
rich oil and gas fields, with the remaining 30 percent going to the central gov
ernment. After an eight-year period, this share would be equalized to 50 per
cent. The government claimed that the special autonomy law was much more
generous than previous legal provisions.27
However, the NAD law had many limitations as a peacemaking instru
ment. It failed to realistically address Aceh's economic grievances and
prospects; most important, to build confidence among local populations that
the government was indeed committed to its implementation. Neither did the
law include baseline assessments on economic reserves or specific modalities
of revenue sharing. Moreover, no consideration was given to Aceh's economic
prospects once reserves would be depleted.28 It was also unclear if the oil and
gas revenues referred to the total production in the province or simply part of
it.29 In addition, the fact that revenue would first be collected by Jakarta and
then be disbursed to local officials fueled suspicious among Acehnese that
payments were intended as instruments to exert political leverage.30
Consequently, revenue sharing was perceived as a means to provide in
cumbent political elites with additional opportunities for corruption. Even if
some government officials presented the NAD law as a flexible starting point,
the complete omission of political representation, the reduction of Jakarta's
military presence, and investigations into past atrocities fanned the perception
that the NAD law was a ploy.31 The law was also conceived without any input
by the GAM or Acehnese civil society, and was therefore devoid of any own
ership, thus reflecting a widespread lack of grassroots support and a prevail
ing mistrust against Jakarta.32
Partly because of the NAD law, natural resources were a relatively uncon
troversial aspect in the 2005 Helsinki negotiations. From the side of the gov
ernment, issues related to oil, gas, and wealth sharing had already been dealt
though the NAD law and even had been approved by parliament. Thus, the
government had no reservations on the principle of wealth sharing.33 In addi
tion oil and gas production in Aceh had already peaked during the 1990s, and
since then production had steadily declined. Some projections even held that
oil and gas reserves would be depleted within the next decade.34 At the time

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272 Breaking the Conflict Trap?

of the negotiations in 2005, it was therefore clear that future oil and
enues would be relatively unimportant for Aceh's economy.
Natural resources were brought to the negotiation table as part of the
GAM's case for compensation of past exploitation of natural resources. One
of the challenges was the identification of the income that the government had
drawn from Aceh. The GAM and Martti Ahtisaari, who was the mediator be
tween the GAM and the government, asked on several occasions to clarify the
matter. But the government responded that the tsunami had destroyed all ac
counts and past records. As a result, Ahtisaari urged the GAM to not dwell on
the matter and look toward the future while the GAM noted that the issue of
the past revenue from Aceh's natural resources should be put forward at some
point in the context of a truth commission.35

Natural Resources, Transparency, and Peace Negotiations

From a peacemaker's perspective, omitting natural resources from peace talks
can make a lot of sense: avoiding a sensitive topic can save agreement in other
fields and avoid stretching a process beyond the traffic it can bear. Even if the
peace process will ultimately be less comprehensive, focusing on fewer issues
may at least ensure the signing of a cease-fire or limited agreement. However,
omitting natural resources from the agenda does not necessarily mean that
they are unimportant. On the contrary, not having a consensus between the
parties to make an issue a part of the agenda may imply either that it is one of
the central disputes, or that the parties prefer an informal arrangement.
While the Sudan case emphasized that income sharing is possible, it
should not be forgotten that the AWS regulates only the "visible" or official
economy while the "invisible" part of the economy relating to patronage gov
ernance in both northern and southern Sudan was left out. This certainly was
not coincidental because both parties govern through informal networks and
sought to increase control over revenue sources to strengthen their respective
power bases.
Natural resources were also left out in the 1994 Lusaka Protocol in An
gola. The protocol allowed the parties to continue controlling their respective
revenue source—diamonds or oil. In the case of UNITA, such an arrangement
was hoped to provide the material base to transform the rebel group into a po
litical party that would participate in Angola's new multiparty political system.
The revenue from diamonds was supposed to cover the expenses for this tran
sition as well as be a local resource base to pay for the participation in demo
cratic politics.36
While Angola was ultimately an unsuccessful example, the wider point is
that transition contexts require a certain space for informal arrangements that
allow the parties to manage complex internal negotiations and transformations
related to the parties' military and political structures. If belligerents are ex

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 Achim Wennmann 273

pected to disarm and transform into a political party, the structures created to
finance the conflict may initially become the foundation to enable this transi
tion. As a result, peacemakers must find a workable balance between the par
ties' requests for informality to manage their own internal transformation and
external requests for transparency, accountability, and compensation.
Finding this balance is not easy and can be answered only with reference
to specific cases. Portraying transparency issues as the outcome of a temporally
defined transition process—and not as an immediate demand—can help bridge
these competing requests. Insisting on transparency and accountability right
from the beginning is unfortunately an unrealistic assumption for talks because
it could jeopardize an entire peace process. In many contexts, placing natural
resources on the agenda means touching on the parties' financing structures,
and may be interpreted as an unacceptable constraint to their mobilization. The
result is alienation from the peace process, if not outright rejection of it.37
In the 2002 peace negotiations in the Democratic Republic of Congo, for
instance, economic issues were addressed only vaguely, even though natural
resource exploitation was a central issue in the conflict. In order to avoid ex
posure of their economic agendas, none of the belligerents or complicit third
parties wanted to openly acknowledge the conflict's economic dimensions.
The few references that were included in the agreement resulted from external
pressure and were never given much credit by the parties. Instead, the parties
focused on power-sharing arrangements that, in their view, would regulate the
control of resources once the armed conflict was over. However, economic
agendas did not fully undermine the peace process because the parties had
enough interest in the success of the process. They saw the economic value of
a political settlement that would supply them additional opportunities through
access to state positions and resources while maintaining control over natural
resource profits through the shadow economy. Had economic issues been ad
dressed more explicitly in the negotiations, the parties would have withdrawn,
leading to collapse of the peace process.38

Conclusion
Addressing natural resources in peace processes is not a "magic bullet" to end
armed conflict and transform peripheral areas into blooming landscapes. The
transition from war to peace is by far too complex, messy, and unpredictable
as to place too large an expectation into addressing natural resources as the
single most important factor for conflict resolution. As faulty as unicausal ex
planations are for the onset of armed conflict, so are they for its termination.
The cases reviewed above underline that addressing natural resources dur
ing peace processes is political. The solution to the conflict trap therefore must
be rooted in politics. Divorcing natural resources from the political, cultural,
social, or military contexts is not conducive to finding permanent arrangements

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274 Breaking the Conflict Trap?

that transform natural resources into lasting development yields. One starting
point for breaking the conflict trap is therefore to understand natural resources
in context, and ensure that the expectation of future benefits are related to what
natural resources can realistically achieve. If not, the enthusiasm associated
with the cessation of an armed conflict can easily mutate into disappointment
and frustration of the population, nurture the remobilization of armed groups,
increase criminal violence, and ultimately foster the conflict trap.
A context-sensitive understanding of natural resources also acknowledges
that sometimes it is not possible to include natural resources on the agenda of
peace talks. The exploitation, partnerships, and revenues involved in oil or
mineral exploitation can be far too sensitive, so that insisting on their inclu
sion may at worst imply the collapse of a process. If they are part of forward
looking peace processes, addressing natural resources can also mean opting
for informal arrangements in an initial period. This allows the parties to use
the resources to prepare themselves for participating in a new process of pol
itics where problems are resolved through compromise and dialogue rather
than armed violence.

Despite these cautionary remarks, I explored the case for using peace ne
gotiations as an inroad for breaking the conflict trap. Such an approach con
siders peace processes as a first step of a forward-looking transformation that
successively addresses key issues of disputes through dealmaking, compro
mise, and dialogue. The cases described above show that engineering change
is complex and unpredictable. But nevertheless, the elaboration of an inter
nally brokered peace processes is a great opportunity for driving change
within a country.39 Sudan is a case in point: the parties resolved important
technical issues such as a sharing formula or the management of existing con
tracts, and agreed on an income-sharing deal. While the implementation of the
AWS certainly faces challenges, five years after the Comprehensive Peace
Agreement billions of oil dollars now flow southward—an undeniable success
of the Sudanese peace process. Aceh presented a completely different situa
tion: partly because income sharing was conceived without inputs from either
Acehnese civil society or its elites, the efforts may be perceived as an empty
shell. This case emphasized that local ownership of natural resource arrange
ments is a central component to breaking the conflict trap.
The Sudan case highlighted that the high-value, high-quality, and investment
intensive characteristics of its oil as well as its location on the conflict divid

ing line made an ongoing conflict a loss for all. In this case, economic
interests fostered a certain pragmatism within the parties that it was not in
their best interest to continue fighting. Certainly, this mechanism does not
apply to all natural resources. It is much more difficult to structure a unified
economic interest for wealth sharing from alluvial diamonds or forestry prod
ucts because the financial incentives to renege on any deal between and
within armed groups are much higher. In the case of diamonds and the Kim

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 Achim Wennmann

berley process, for example, the response has been strengthening exclusive
state control and regulation over diamond mines as well as vertically inte
grated business models that control all value chains from the mine to the mar
ket.40 In contrast to the sharing approach in Sudan, the Kimberley process
approach is much more about capture and exclusive control by the state and
large commercial players.
There are two elements to strengthen war-to-peace transitions through
natural resource management. The first is the need for ongoing mediation sup
port beyond the peace agreement.41 The Sudan case has highlighted that the
resolution of one problem (the sharing of income from oil) has led to a new
problem (how to allocate and disburse the income). Transforming natural re
sources into income cannot be the only goal of a peace process unless this in
come supports the creation of economic processes that nurture development.
However, it would be unrealistic to assume that such processes develop rap
idly or by themselves. There is an urgent need to strengthen domestic dispute
resolution platforms. These platforms ensure that the new disputes that result
from the implementation of a peace agreement can be addressed without com
promising an entire peace process. The transformation of revenue from natu
ral resources into development is part of these broader processes. The
expertise of the development community is an important input into managing
natural resource-related disputes in war-to-peace transitions, and there is
much scope to structure its assistance to peace processes in a more coherent
and complementary fashion.42
Supporting national dispute resolution mechanisms does not necessarily
only apply in the transition context, but also in countries such as Brazil or
Ghana where recent offshore oil deposits will lead to windfall revenues at
some point in the future.43 In these contexts, decentralized dispute resolution
platforms imply strengthening state-society relations and rooting the owner
ship of oil in the population. In this way, the dispute resolution framework
not only may contribute to reducing armed violence or ending an armed con
flict, but also may be a first building block for local capacities to resolve
local or national conflicts on their own, foster better communication be
tween civil society and the state, and ensure that future natural resource
wealth benefits the people.
The second element to strengthen war-to-peace transitions is defining a
new role for the extractive industries. So far, business is not a natural partner
for most peacemakers or peacebuilders.44 However, placing natural resources
at the heart of peace processes requires technical expertise, and an ongoing
learning process for the parties about the intricacies of the business. The ex
tractive industry's inputs are particularly important in assessing the amount
and location of natural resource wealth and providing reasonable estimations
about what economic returns can be expected after exploration costs and com
mercial profit margins have been deducted.

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276 Breaking the Conflict Trap?

Making the extractive industries partners for peacemaking requires a

change of attitude toward these actors. Companies in general are often per
ceived to be all about profitmaking while externalizing the costs of environ
mental pollution, continuing abusive employment patterns, and exploiting
local populations. They are also held to entrench armed conflicts or insecurity
by striking deals with illegitimate armed groups or authoritarian governments.
While there undoubtedly are companies that behave along these lines, the pri
vate sector is highly diverse, and broad sweeping generalizations antagonize
those businesses that behave responsibly. It therefore is important to differen
tiate perspectives and to open peacemaking to a set of influential actors in
many fragile and conflict settings.
The extractive industries are important actors for peace processes because
they have the power to affect negotiation dynamics. By the nature of their
businesses, many extractive industries need to operate in conflict or postcon
flict areas, and can have a keen interest for a conflict to stop. Extractive indus
tries, for example, can be trapped in a country that slipped into conflict, but
the magnitude of their investments makes it impossible for them to withdraw.
Due to their investments, they also are often the best-informed actor around,
having an existing network with local stakeholders, including those who use
armed violence. This is an opportunity both for the engagement of belligerents
and for the analytical input needed in peace negotiations.
Thus, the breaking of the conflict trap—and creating the conditions so
that income from natural resources translates into development—requires
some elements that go beyond the mere focus on a specific natural resource.
These include a broader political process that addresses the disputes and con
sequences of a past armed conflict and charts new orders for the future; a con
stant mediation support framework that manages the disputes between the
parties related to the implementation of a peace agreement; and new partner
ships with development agencies and extractive industries so that their expert
ise and assistance can be placed in the service of a peace process.

Notes
Achim Wennmann is researcher at the Centre on Conflict, Development and Peace
building of the Graduate Institute of International and Development Studies in Geneva.
Previous versions of this article have been presented at the International Conference on
Economics and Security and the annual meeting of the International Studies Associa
tion in 2010. The article also draws from the author's book, The Political Economy of
Peacemaking (London: Routledge, 2011), and the chapter "Wealth Sharing from Nat
ural Resources in War-To-Peace Transitions," in Paivi Lujala and Siri Aas Rustad, eds.,
High-Value Natural Resources and Post-Conflict Peacebuilding (London: Earthscan,
forthcoming 2011). The author thanks Gilles Carbonnier for his comments and Jana
Krause for her expertise on Indonesia.
1. Ian Bannon and Paul Collier, eds., Natural Resources and Violent Conflict: Op
tions and Actions (Washington, DC: World Bank, 2003); Macartan Humphreys, Jeffrey
D. Sachs, and Joseph E. Stieglitz, eds., Escaping the Resource Curse (New York: Colum

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 Achim Wennmann

bia University Press, 2007); Karen Ballentine and Heiko Nitzschke, eds., Profiting from
Peace: Managing the Resource Dimensions of Civil War (Boulder: Lynne Rienner, 2005).
2. Paul Collier, Lani Elliott, Havard Hegre, Anke Hoeffler, Marta Reynal-Querol,
and Nicholas Sambanis, Breaking the Conflict Trap: Civil War and Development Pol
icy (Washington, DC: World Bank, 2003), p. 1.
3. Ian Smillie, Lansana Gberie, and Ralph Hazleton, The Heart of the Matter:
Sierra Leone, Diamonds and Human Security (Ottawa: Partnership Africa Canada,
2000); Jessica Banfield, Virginia Haufler, and Damian Lilly, Transnational Corpora
tions in Conflict-prone Zones: Public Policy Responses and a Framework for Action
(London: International Alert, 2003).
4. For a review of this literature, see Cynthia Arnson, "The Political Economy of
War: Situating the Debate," in Cynthia Arnson and I. William Zartman, eds.. Rethink
ing the Economics of War: The Intersection of Need, Creed and Greed (Washington,
DC: Johns Hopkins University Press, 2005), pp. 1-22; and Achim Wennmann, "Con
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5. James Fairhead, "The Conflict over Natural and Environmental Resources," in
E. Wayne Nafziger, Frances Stewart, and Raimo Vayrynen, eds., The Origins of Hu
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6. Paul Collier and Anke Hoeffler, "Greed and Grievance in Civil War," Oxford Eco
nomic Papers 56, no. 4 (2004): 563-595; James D. Fearon, "Primary Commodity Exports
and Civil War," Journal of Conflict Resolution 49, no. 4 (2005): 483-507.
7. Philippe Le Billon, "The Political Ecology of War: Natural Resources and
Armed Conflict," Political Geography 20, no. 5 (2001): 561-584; Michael Ross,
"What Do We Know About Natural Resources and Civil War?" Journal of Peace Re
search 41, no. 3 (2004): 337-356.
8. Halvard Buhaug, Scott Gates, and Paivi Lujala, "Geography, Rebel Capability,
and the Duration of Civil War," Journal of Conflict Resolution 53, no. 4 (2009):
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Theory," in I. William Zartman and Viktor Kremenyuk, eds., Peace Versus Justice: Ne
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11. Timothy D. Sisk, Power Sharing and International Mediation in Ethnic Con
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12. Nicholas Haysom and Sean Kane, Negotiating Natural Resources for Peace:
Ownership, Control and Wealth Sharing (Geneva: Centre for Humanitarian Dialogue,
2009), p. 25.
13. Sean Kane, Iraq's Oil Politics: Where Agreement Might Be Found (Washing
ton, DC: United States Institute of Peace, 2010), pp. 3, 11-12.
14. Christopher M. Blanchard, Iraq: Oil and Gas Legislation, Revenue Sharing,
and US Policy (Washington, DC: Congressional Research Service, 2009), p. 6.
15. Geneva Declaration Secretariat, Global Burden of Armed Violence (Geneva:
Geneva Declaration Secretariat, 2008), pp. 50-57.
16. William Reno, "War, Markets, and the Reconfiguration of West Africa's Weak
States," Comparative Politics 29, no. 4 (1997): 493-510, at 496.

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278 Breaking the Conflict Trap?

17. Christine Batruch, "Oil and Conflict: Lundin Petroleum's Experience in Sudan,"
in Alyson J. K. Bailes and Isabel Frommelt, eds., Business and Security: Public-Private
Sector Relationships in a New Security Environment (Oxford: Oxford University Press,
2004), pp. 148-160, at 159-160.
18. Jostein Tellness, "The Unexpected Deal: Oil and the IGAD Process," in Mark
Simmons and Peter Dixon, eds., Peace by Pieces: Addressing Sudan's Conflict (Lon
don: Conciliation Resources, 2006), pp. 38-41, at 38.
19. See Jorge E. Vinuales, "The Resource Curse: A Legal Perspective," in this spe
cial issue.
20. Jostein Tellness, "Dealing with Petroleum Issues in Civil War Negotiations:
The Case of Sudan," paper presented at the National Political Science Conference,
Hurdalssj0en, Norway, 5-7 January 2005, pp. 13-14.
21. Achim Wennmann, Wealth Sharing Beyond 2011: Economic Issues in Sudan's
North-South Peace Process, Centre on Conflict, Development and Peacebuilding
Working Paper No. 1 (Geneva: CCDP, 2009), p. 18.
22. International Crisis Group, Sudan: Breaking the Abvei Deadlock (Nairobi: ICG,
2007), p. 8.
23. UN Security Council, "Report of the Secretary-General on Sudan," UN Doc.
S/2008/662 (2008), p. 5.
24. Sudan Ministry of Finance, "Template for Publication of Sudan Oil Sector Data
2007," www.ecosonline.org/back/pdf_reports/2008/Sudan%20production%20and%
20exports%20by%20blend_2007_MOF.pdf (accessed 1 November 2008); Global Wit
ness, Fuelling Mistrust: The Need for Transparency in Sudan's Oil Industry (London:
Global Witness, 2009), p. 6; "Oil Revenue in Sudan Slashed by 60% in 2009: GoSS,"
Sudan Tribune, 2 March 2010, www.sudantribune.com/spip.php7article34298 (accessed
28 May 2010).
25. Michelle A. Miller, "What's Special About Special Autonomy in Aceh?" in An
thony Reid, ed.. Varandah of Violence: The Background to the Aceh Problem (Singa
pore: Singapore University Press, 2006), pp. 292-314, at 297.
26. Ibid., p. 301.
27. International Crisis Group, Aceh: Can Autonomy Stem the Conflict? (Jakarta:
ICG, 2001), pp. 6-10.
28. Ibid., p. 8.
29. Harriet Martin, Kings of Peace, Pawns of War: The Untold Story of Peace-making
(London: Continuum, 2006), p. 82.
30. International Crisis Group, Aceh, p. 8.
31. Edward Aspinall and Harald Crouch, The Aceh Peace Process: Why It Failed
(Washington, DC: East-West Center Washington, 2003), p. 25.
32. Miller, "What's Special About Special Autonomy in Aceh?" p. 304.
33. Damien Kingsbury, Peace in Aceh: A Personal Account of the Helsinki Peace
Process (Jakarta: Equinox Indonesia, 2006), p. 104.
34. World Bank, Aceh Conflict Monitoring Update, 1st May-30th June 2008
(Jakarta: World Bank, 2008).
35. Katri Merikallio, Making Peace: Ahtisaari and Aceh (Juva: WS Bookwell Oy,
2006), pp. 94-95.
36. Alex Vines, "Angola: Forty Years of War," in Peter Batchelor and Kees
Klingma, eds., Demilitarization and Peacebuilding in Southern Africa, vol. 2 (Alder
shot: Ashgate, 2004), pp. 74-104, at 89-90.
37. Rananta Dwan and Laura Bailey, Liberia's Governance and Economic Man
agement Assistance Programme (GEMAP): A Joint Review by the Department of

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 Achim Wennmann

Peacekeeping Operations' Peacekeeping Best Practices Section and the World Bank's
Fragile States Group (New York: UN; World Bank, 2006), p. 23.
38. Francois Grignon, "Economic Agendas in the Congolese Peace Process," in
Michael Nest, ed., The Democratic Republic of Congo: Economic Dimensions of War
and Peace (Boulder: Lynne Rienner, 2006), pp. 62-98, at 65, 69, 72-77, 92; Michael
Nest, "The Political Economy of the Congo War," in Michael Nest, ed., The Democra
tic Republic of Congo: Economic Dimensions of War and Peace (Boulder: Lynne Ri
enner, 2006), pp. 31-62, at 55.
39. Dwan and Bailey, Liberia's Governance and Economic Management Assis
tance Programme, p. 23.
40. Ian Smillie, Dirty Diamonds: Armed Conflict and the Trade in Rough Diamonds
(Oslo: Institute for Applied Social Science, Programme for International Co-operation
and Conflict Resolution, 2002), p. 58.
41. UN Secretary-General, "Report of the Secretary-General on Enhancing Medi
ation and Its Support Activities," UN Doc. S/2009/189 (2009).
42. See Achim Wennmann, Supporting the Economic Dimensions of Peace
Processes, Practice Note 5 (London: International Alert, 2010).
43. For Ghana, see Ministry of Interior of Ghana, National Architecture for Peace
in Ghana (Accra: Ministry of Interior of Ghana, 2006).
44. For a review of the role of the private sector in peace processes and peacebuild
ing, see Salil Tripathi and Cannan Gundiiz, A Role for the Private Sector in Peace
Processes? Examples and Implications for Third-party Mediation (Geneva: Centre for
Humanitarian Dialogue, 2008); Mats Berdal and Nader Mousavizadeh, "Investing for
Peace: The Private Sector and the Challenge of Peacebuilding," Survival 52, no. 2
(2010): 37-58; and Derek Sweetman, Business, Conflict Resolution and Peacebuilding
(London: Routledge, 2009).

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