1. Introduction
The conflicts in Iraq, Libya, Syria and Yemen have killed hundreds of thousands of people and displaced millions. In Iraq, the defeat of Islamic State of Iraq and Syria (ISIS) is unlikely to lead to lasting stability because it does not address fundamental conditions on the ground which allow violent extremist groups to resurge every few years. In Libya’s fragmented political and security environment, a wide range of largely local actors continue to compete violently for influence, as evidenced by the latest major outbreak of fighting around Tripoli. In Syria, ISIS fighters have been forced out of their last enclave in Baghouz, while President Bashar al-Assad consolidates his control over territory in the rest of the country. In Yemen, a precarious ceasefire on the Red Sea coast has led to an intensification of battles between the Houthis and their rivals on other front lines.
Other states within the Middle East and North Africa (MENA) region, along with Western states, have often been active proxy participants in these conflicts, supporting certain groups over others in pursuit of national interests. The impacts have also been felt far beyond MENA borders, as refugees fleeing conflict areas have travelled to Europe and other Western countries, sparking outcry over a supposed ‘migration crisis’ which has in fact been instrumentalized by political actors.
Identity-based discourses
To explain the violence that has struck the region, many scholars, policymakers, journalists and pundits have focused their analysis on ideological and identity-based factors. Developments in Iraq, Syria and Yemen have been viewed predominantly through the lens of ethno-sectarian politics.10 In Libya, significant attention has been paid to the development of Islamist and Salafi-jihadi movements since 2011, particularly in policy circles.11 In Iraq, the conflict since 2003 has been explained as a sectarian battle between Shia and Sunni Arabs, with the assumption that these identities are easily carved out along ethno-sectarian lines.
Exclusively identity-centric explanations of conflict at times miss important realities on the ground
Such exclusively identity-centric explanations of conflict at times miss important realities on the ground. As the knowledge base around MENA political dynamics has expanded, so too has our common understanding of how ethnic and religious divisions in the region have intersected with other critical factors. This has enabled more accurate and layered analyses.12 Chatham House research has sought to broaden policy analysis through its focus on the political economy of the conflicts in question.13
Exploring the political economy of war
Against this backdrop, this report seeks to expand the discourse by analysing economic drivers of conflict in Iraq, Libya, Syria and Yemen. Factors such as rent-seeking, economic coping strategies and local political expediency are key to understanding the civil wars in these countries, yet they tend to be under-emphasized. As the conflicts have progressed, the national and local economies in which they are embedded have likewise evolved.
Over the past several decades, research on the political economy of war has sought to explain the initiation,14 duration15 and character of war.16 Initially, as with the MENA wars of today, the dominant discourse in studies of the 1990s civil wars was identity-centred.17 Following ethnic cleansing in the former Yugoslavia, the Rwandan genocide, the end of apartheid in South Africa, and the violence of clan conflicts in Somalia, civil war was viewed largely as a product of group identity.18 In contrast, the quantitative study of war economies that subsequently developed in the late 1990s and early 2000s contended that economic motivations – especially in resource-rich areas – rather than group identities provided greater explanatory power for the onset of armed conflict. On the qualitative side, case study research focusing largely on sub-Saharan Africa (and, to a lesser extent, on Latin America and Asia) showed that profit-based incentives are co-mingled with narratives of grievance and embedded in a larger global political economy.19 The heart of that debate was about identifying economic self-interest as the main motivation for rebels joining and fighting civil wars.20
More recent work on horizontal inequality has added nuance to these discussions. It has moved beyond a binary ‘greed versus grievance’ distinction to illustrating how group grievances are constructed. Such research seeks to demonstrate empirically how an unequal distribution of power and resources between groups generates conditions for violent mobilization.21 More generally, the incorporation of economic motives into analysis of civil war has revealed that members of rebel organizations, militias and paramilitaries have joined22 and stayed in such groups23 for a variety of reasons, and that the relative weighting of these imperatives can change over time. Individuals may join (or be forced to join) an armed group for one set of reasons, and stay for an entirely different set of reasons.
To date, the ‘political economy of war’ approach has had limited application in analysis of the MENA region.24 Yet we find that the insights of the literature associated with this approach resonate in each of our four case studies. We show how economic motivations at the individual and group level can offer an alternative or complementary explanation for armed group membership and armed group violence. While some people will fight to promote or defend a particular identity, others fight for economic survival or enrichment. For many more, these motivations are tied together, and separating out ‘greed’ and ‘grievance’ is a difficult, if not impossible, task. By focusing on conflict economies in a localized way, we aim to rebalance how the wars in Iraq, Libya, Syria and Yemen are portrayed and analysed. Even if economic motivations did not spark these wars initially, it is now clear that such motivations play a critical role in the persistence of open fighting, localized violence and coercion.
Approaching conflict economies
The objectives of this report are twofold. First, it seeks to develop a framework for comparative analysis of MENA conflict economies at the local level. We anticipate that this framework will also resonate beyond the MENA region. Second, it aims to map the logic of ‘competitive’ violence and ‘embedded’ violence (see Box 1 for definitions) within the region’s conflict economies in order to achieve a reduction in both. We should emphasize that we see conflict economies in the MENA context as the transactional space in which violent competition for rents is currently taking place. We do not define conflict economies in terms of ‘black’ and ‘grey’ markets that somehow need to be ‘cleaned up’ and converted into licit markets, like their peacetime counterparts.25
Traditionally, the conception of a conflict economy (also termed ‘war economy’26) has been of one that is tightly linked to fundraising for arms, ammunition and fighters. In contrast, we see a broader political economy of war at work in the four countries under review, with conflict economies embedded in wider conflict systems.27 Framed differently, a conflict economy is not merely an economy that directly sustains and is fuelled by fighting. It also incorporates a ‘shadow economy’ (the unregulated and often illicit sector that thrives in situations of armed conflict) and what we might term the ‘coping economy’ (involving participation in commerce for survival purposes).28 This report uses the term ‘conflict economy’ to illustrate how economic activity is connected to violence, and ‘coping economy’ to illustrate how such violence affects the coping ability of local populations.
Box 1: Definitions
We have defined a series of terms and approaches as follows:
A conflict economy is ‘a system of producing, mobilizing and allocating resources to sustain competitive and embedded violence, both directly and indirectly’.29
The coping economy comprises the numerous survival-based economic interactions that occur during armed conflict, primarily involving the poor and most vulnerable.30
This report distinguishes between two forms of violence:31
1. Competitive violence, which is ‘deployed by warring elites to contest or defend the existing distribution of power’. An example of this would be a battle for control of physical infrastructure, such as an oil refinery, or territory, as may be the case with an important checkpoint on a trade route
2. Embedded violence, which can underpin ‘how a political settlement works, as the deals agreed between elites may revolve around who has the ‘right’ to use violence’. Examples of this form of violence are more indirect. In the context of this study, the use of armed force to maintain the existing status quo in favour of a limited subset of the ruling elite is one example of embedded violence.
Competitive and embedded violence can co-exist, but should not be conflated with one another. Indeed, the end of competitive violence in a given location does not mean that embedded violence has ended.
Conflict economies are themselves woven into a broader conflict system, which incorporates the social, political and economic institutions and agents that support competitive and embedded violence. We use the term ‘system’ to emphasize both its complexity and interconnectedness.32 The system analogy also underscores the difficulty of predicting with any confidence the full effects of change even of one element, because of the many cascading effects that will follow. In complex systems – such as those associated with armed conflict – elements of a system and sub-systems may have critical components that respond in non-linear ways: some components may move in tandem in specific circumstances; agents may have more or less influence depending on external conditions; in some cases, system components may interact unpredictably.
In using a conflict systems approach, this analysis acknowledges that the boundaries between formal and informal economies are blurred, and that the decision to enforce (or not enforce) a law often relies on personal relationships rather than a factual determination as to whether a ‘crime’ has been committed. These intermeshed imperatives exist not only at the domestic level in Iraq, Libya, Syria and Yemen, but also in relation to the various international actors (such as international organizations, donors, governments and multinational corporations) that actively broker (or deliberately turn a blind eye towards) relationships with armed groups. The conflict economies are, more often than not, integral parts of a broader conflict system that simultaneously supports both violence and local livelihoods. In other words, participants in conflict economies consist both of violent non-state actors and peaceful citizens attempting to eke out a living. On the one hand, members of armed groups can be understood as rational economic agents who manage their use of violence (signalling how much violence is acceptable, when it can be used and who it can be directed towards) so as to maximize rents. On the other hand, they also need to be seen as actors who are embedded in social systems, and who will suffer social consequences if they do not address their constituencies’ welfare when deciding whether and how to redistribute their gains.
Conflict economies are, more often than not, integral parts of a broader conflict system that simultaneously supports both violence and local livelihoods
Even though this is a study of conflict ‘economies’, our primary goal is not to provide estimates of the size of these economies in dollar terms. Nor are we trying to measure the economic impact of war per se.33 Such approaches do not reflect how the structure of an economy adapts to the complexity of the situation on the ground, nor do they capture how localities might adopt very different economic strategies in response to a common threat. They do not account for the evolution of the contours and dynamics of a conflict economy over time, and shed little light on what drives competitive and embedded violence. As a consequence, this report does not treat conflict economies as a technical problem to be ‘fixed’.
Identifying conflict sub-economies
Analysis of MENA conflict economies has mostly focused on national-level systems, with more recent contributions highlighting how conflict economies within particular states are inextricably linked to transnational and/or regional conflict systems.34 However, little attention to date has been paid to analysing the region’s conflict economy at the level of sub-systems – labelled ‘conflict sub-economies’ in this report – or at subnational level, be it on a sectoral or location basis.
Drawing on fieldwork in Iraq, Libya, Syria and Yemen, this study outlines three distinct types of conflict sub-economies in MENA wars:
- Capital cities
- Transit areas and borderlands
- Oil-rich areas
Our analysis highlights how each particular type of conflict sub-economy creates distinct location-based patterns of resource production, mobilization and allocation in order to sustain competitive and embedded violence, both directly and indirectly. A more localized approach also reveals an intertwining of economic and political relationships that can involve cooperation,35 routine negotiation36 or informal non-aggression pacts,37 as well as violent competition between armed groups and their political patrons.
Drawing on the literature on the political economy of war, this study asks two questions:
- How do conflict sub-economies drive violence in Iraq, Libya, Syria and Yemen?
- How do local populations interact with conflict sub-economies?
Overview
This report seeks to make a contribution to analysis of conflict, both in the MENA region and more broadly, in two ways. First, via the implementation of a new comparative framework for examining conflict economies through the lens of sub-economies. And second, by exploring how the economic activities observed in the four states relate to patterns of competitive and embedded violence.
This report consists of three principal chapters, in addition to this introductory chapter. Chapter 2 provides an overview of the conflict economies of Iraq, Libya, Syria and Yemen at the national level, highlighting key players and dynamics. For those less familiar with the MENA region, the chapter provides useful background, but it can also be skipped by those with a strong working knowledge of the country contexts.
Chapter 3 lays out our analytical framework of conflict sub-economies consisting of capital cities, transit areas and borderlands, and oil-rich areas. It reviews the violent competition for rents in each sub-economy, with an analysis of what that contestation means for the types of violence dispensed and the behaviours they incentivize. The analysis is illustrated using case studies from Iraq, Libya, Syria and Yemen.
Finally, drawing upon the analyses of the sub-economies, Chapter 4 examines how Western policy has affected the development of the four conflict economies. The chapter concludes with recommendations for policymakers seeking to assess the implications of and trade-offs associated with their interventions, and to target interventions more effectively.
Methodology
The core analysis for this report is based on fieldwork and analysis conducted over an 18-month period from July 2017 to February 2019. A variety of data-gathering methods were employed, including in-depth interviews with local actors, expert interviews, long-term tracking of local economic activity, and collation of available primary and secondary data. Given the extreme sensitivity of the topic and the challenging operating environment, interview material and data gathered as part of this process are referenced anonymously, in order to minimize public exposure to interviewees, Chatham House researchers and those who have worked closely with us.38 We have endeavoured to provide as much identifying information about sources as possible where this is critical for underscoring the legitimacy of a particular claim, and where sources have been comfortable with being identified in more specific terms.
To illustrate the dynamics of each sub-economy type, the report compares sub-economy case studies from each of the four states. In addition to the capital cities of Baghdad, Tripoli, Damascus and Sanaa, reference is made to Aden (as the government of Yemen has sought to move the capital there). Tuz Khurmatu (Iraq), Sebha (Libya), Morek (Syria) and Bayhan (Yemen) are examined as key transit areas. The Ras Jdir area on the Libyan–Tunisian border, al-Qaim on the Iraqi–Syrian border, the Euphrates Shield Area on the Syrian–Turkish border and al-Mahra on the Yemeni–Omani border are examined as borderlands. The oil-rich areas selected for comparison are Basra in Iraq; the ‘oil crescent’ in eastern Libya; northeastern Syria; and Mareb in Yemen.
Limitations and areas for further research
The nature of the subject matter means that this report cannot present a truly comprehensive or representative picture of conflict economy dynamics in the states in question. It is also not possible for us to determine with certainty how important the economic motivations of different actors are: we can only report on observable behaviours. We cannot fully untangle ethnic/economic/social status/social pressure incentives and motivations.
This report has sought to assess how local populations have been impacted by conflict economy dynamics. However, it should be noted that more targeted research is required to better understand these social dynamics, particularly in terms of how revenues are distributed. Similarly, the authors recognize that the sub-state and state-level focus of this paper does not address important regional and international conflict economy dynamics: this is something that future Chatham House research will seek to explore.
10 A number of studies have examined conflict in the MENA region through the lens of sectarianism, such as Daniel Byman’s ‘Sectarianism Afflicts the New Middle East’. In Iraq, conflict has been analysed through the lens of sectarianism by scholars such as Fanar Haddad in his Sectarianism in Iraq and by former policymaker Emma Sky in The Unravelling. In Syria, works such as Charles Lister’s The Syrian Jihad have explored the role of Salafi-jihadist forces in the conflict. In Yemen, analysts have generally pushed back against the idea that the conflict is a sectarian one, but media outlets have come to present it in terms of a regional conflict linked to identity politics: ‘Iran-backed’ ‘Shia’ Houthis versus ‘Saudi-backed’ ‘Sunnis’. See Saul, Hafezi and Georgy (2017), ‘Exclusive – Iran steps up support for Houthis in Yemen’s war: sources’. See also Byman (2014), ‘Sectarianism Afflicts the New Middle East’; Haddad (2011), Sectarianism in Iraq; Sky (2015), The Unravelling; and Lister (2015), The Syrian Jihad.
11 Khalifa Haftar has presented his military operations as a campaign against ‘terrorists’, a category which he defines broadly, and in which he places Islamist movements such as the Muslim Brotherhood. Policy literature has explored the development of Islamist movements since 2011. See, for example, Ashour, O. (2015), Between ISIS and a failed state: The saga of Libyan Islamist, Brookings Working Paper, Washington, DC: Brookings Institution, https://www.brookings.edu/wp-content/uploads/2016/07/Libya_Ashour_FINALv.pdf; and in academic literature, see Sawani, Y. M. (2018), ‘Islamist and Non-Islamist Currents and the Struggle for Post-Gaddafi Libya’, Contemporary Arab Affairs, 11(1–2), pp. 87–106, doi:10.1525/caa.2018.00001A (accessed 15 May 2019).
12 See, for example, Leenders, R. (2012), Spoils of Truce: Corruption and State-Building in Postwar Lebanon, Ithaca: Cornell University Press; and Lacher, W. (2013), Fault lines of the revolution: political actors, camps and conflicts in the new Libya, SWP Research Paper, Berlin: SWP, https://www.ssoar.info/ssoar/handle/document/38566.
13 On Iraq, see Mansour, R. (2017), Iraq After the Fall of ISIS: The Struggle for the State, Chatham House Research Paper, London: Royal Institute of International Affairs, https://www.chathamhouse.org/sites/default/files/publications/research/2017-07-04-iraq-after-isis-mansour-final2.pdf. (accessed 14 Jan. 2019). On Libya, see Eaton, T. (2018), Libya’s War Economy: Predation, Profiteering and State Weakness, Chatham House Research Paper, London: Royal Institute of International Affairs, https://www.chathamhouse.org/publication/libyas-war-economy-predation-profiteering-and-state-weakness (accessed 1 Jan. 2019). On Syria, see Butter, D. (2016), Salvaging Syria’s Economy, Chatham House Research Paper, London: Royal Institute of International Affairs, https://www.chathamhouse.org/publication/salvaging-syrias-economy (accessed 15 May 2019). On Yemen, see Salisbury, P. (2017), Yemen: National Chaos, Local Order, Chatham House Research Paper, London: Royal Institute of International Affairs, https://www.chathamhouse.org/publication/yemen-national-chaos-local-order (accessed 16 May 2019).
14 Collier, P. and Hoeffler, A. (1998), ‘On economic causes of civil war’, Oxford Economic Papers—New Series, 50(4), pp. 563–73; Berdal, M. and Malone, D. (eds) (2000), Greed & Grievance: Economic Agendas in Civil Wars, Boulder: Lynne Rienner Publishers; Fearon, J. and Laitin, D. (2003), ‘Ethnicity, insurgency, and civil war’, American Political Science Review, 97(1), pp. 75–90; and Ross, M. (2004), ‘What Do We Know About Natural Resources and Civil War?’, Journal of Peace Research, 41(3), pp. 337–56.
15 Keen, D. (1998), The Economic Functions of Violence in Civil Wars, Adelphi Paper 320, London: International Institute of Strategic Studies; and Collier, P., Hoeffler, A. and Soderbom, M. (2004), ‘On the duration of civil war’, Journal of Peace Research, 41(3), pp. 253–73.
16 See Kaldor, M. (1999), New and Old Wars: Organized Violence in a Global Era, Stanford: Stanford University Press; Ballentine, K. and Sherman, J. (eds) (2003), Political Economy of Armed Conflict: Beyond Greed and Grievance, Boulder and London: Lynne Rienner Publishers; Mampilly, Z. (2011), Rebel Rulers: Insurgent Governance and Civilian Life During War, Ithaca, NY: Cornell University Press; and Autesserre, S. (2012), The Trouble with the Congo, Cambridge: Cambridge University Press.
17 See Huntington, S. P. (1993), ‘The Clash of Civilizations?’, Foreign Affairs, 72 (3), pp. 22–49; Kaplan, R. D. (1993), Balkan Ghosts: A Journey Through History, New York: St. Martin’s Press; and Lake, D. and Rothchild, D. (1996), ‘Containing Fear: The Origins and Management of Ethnic Conflict’, International Security, 21(2), pp. 41–75.
18 Kaplan, R. (2000), The Coming Anarchy: Shattering the Dreams of the Post Cold War, New York: Random House.
19 Reno, W. (1997), ‘War, markets, and the reconfiguration of West Africa’s weak states’, Comparative Politics, 29(4); Nordstrom, C. (2004), Shadows of War: Violence, Power, and International Profiteering in the Twenty-First Century, Berkeley, CA: University of California Press; Le Billon, P. (2001), ‘Angola’s political economy of war: The role of oil and diamonds, 1975–2000’, African Affairs, 100(398), pp. 55–80; and Jackson, S. (2002), ‘Making a Killing: criminality and coping in the Kivu war economy’, Review of African Political Economy, 29(93/94), pp. 517–36.
20 See footnote 15.
21 Stewart, F. (2008), Horizontal Inequalities and Conflict: Understanding Group Violence in Multiethnic Societies, London: Palgrave.
22 Richard, R. (1996), Fighting for the Rainforest: War, Youth and Resources in Sierra Leone, London: International African Institute; Rettberg, A. (2010), ‘Global Markets, Local Conflict: Violence in the Colombian Coffee Region after the Breakdown of the International Coffee Agreement’, Latin American Perspectives, 37(2), pp. 111–32; and Weinstein, J. (2007), Inside Rebellion: The Politics of Insurgent Violence, Cambridge: Cambridge University Press.
23 Keen, D. (2012), ‘Greed and Grievance in Civil War’, International Affairs, 88(4): pp. 757–77; and Ellis, S. (1999), The Mask of Anarchy, London: Hurst and Co.
24 Notable exceptions include Vesna Bojicic-Dzelilovic and Rim Turkmani’s study of Syria’s war economy, and Steven Heydemann’s comparative study of the war economies of Syria, Yemen and Libya. Previous Chatham House analyses on Libya, Syria and Yemen have also adopted a political economy lens. This report represents Chatham House’s first attempt to bring these analyses of conflict economies together using a comparative framework. See Turkmani, R., Ali, A. K. A., Kaldor, M. and Bojicic-Dzelilovic, V. (2015), ‘Countering the logic of the war economy in Syria’, openDemocracy, 19 November 2015, https://www.opendemocracy.net/en/north-africa-west-asia/countering-logic-of-war-economy-in-syria/ (accessed 16 May 2019); Bojicic-Dzelilovic and Turkmani (2018), ‘War Economy, Governance and Security in Syria’s Opposition-Controlled areas’; and Heydemann, S. (2018), ‘Civil War, Economic Governance & State Reconstruction in the Arab Middle East’, Daedalus, 147(1): pp. 48–63, doi:10.1162/DAED_a_00473 (accessed 16 May 2019).
25 There is a tendency to overemphasize the ‘criminal’ elements of the Syrian war economy in the literature, according to Bojicic-Dzelilovic and Turkmani. See Bojicic-Dzelilovic and Turkmani (2018), ‘War Economy, Governance and Security in Syria’s Opposition-Controlled Areas’. Like Bojicic-Dzelilovic and Turkmani, we seek to avoid this approach.
26 The term ‘conflict economy’ is preferred to the term ‘war economy’ as it better reflects the wide array of actors, objectives and armed struggle within the four countries in question.
27 Wils, O., Hopp, U., Ropers, N., Vimalarajah, L. and Zunzer, W. (2006), The Systemic Approach to Conflict Transformation, Berlin: Berghof Foundation for Peace Support, https://www.berghof-foundation.org/fileadmin/redaktion/Publications/Other_Resources/SCT_Systemic_Conflict_Transformation_Complete.pdf (accessed 16 Apr. 2019).
28 Pugh, Cooper and Goodhand (eds) (2004), War Economies in a Regional Context.
29 Building on Philippe Le Billon’s definition in Le Billon (2005), Geopolitics of Resource Wars, p. 288.
30 This definition is adapted from the one used by Karen Ballentine and Heiko Nitzschke. See Ballentine, K. and Nitzschke, H. (2005), The Political Economy of Civil War and Conflict Transformation, Berghof Foundation, https://www.berghof-foundation.org/fileadmin/redaktion/Publications/Handbook/Dialogue_Chapters/dialogue3_ballentine_nitzschke.pdf (accessed 5 Jun. 2019).
31 This distinction draws upon the UK Stabilisation Unit’s Elite Bargains project. Cheng, Goodhand and Meehan (2018), Synthesis Paper: Securing and Sustaining Elite Bargains that Reduce Violent Conflict.
32 In contrast to studies that rely on regression analysis, there is no underlying assumption that changing the value of the independent variable still allows for all else within the model to be held constant. This approach assumes linear causality, which does not sufficiently reflect the complex interactions that take place. See Gillman, M. and Hails, R. (1997), An Introduction to Ecological Modelling: Putting Practice into Theory, Oxford and Malden, MA: Blackwell Science, p. 4.
33 World Bank (2017), The Toll of War: The Economic and Social Consequences of the Conflict in Syria, World Bank Group Research Paper, https://www.worldbank.org/en/country/syria/publication/the-toll-of-war-the-economic-and-social-consequences-of-the-conflict-in-syria (accessed 16 May 2019).
34 Pugh, Cooper and Goodhand (2004), War Economies in a Regional Context.
35 An example of this may be the cooperation between Syrian rebel forces in the Euphrates Shield Area and the Turkish state over border management (particularly pertaining to the collection of checkpoint fees).
36 In Libya, many of the goods that stock the eastern market have continued to enter the country through the western port of Misrata, despite significant political differences between Misrata and the authorities in the east and the elements of the Libyan Arab Armed Forces (still commonly known as the Libyan National Army, or LNA) under the control of Khalifa Haftar.
37 In the Iraqi town of Tuz Khurmatu, rival armed groups accept each other’s presence in return for a share of the proceeds from taxing formal and informal trade through the area.
38 For a discussion, see Arjona, A. M., Mampilly, Z. C. and Pearlman, W. (2018), ‘Research in Violent or Post-Conflict Political Settings’, American Political Science Association Organized Section for Qualitative and Multi-Method Research, Qualitative Transparency Deliberations, Working Group Final Reports, Report IV.2, doi:10.2139/ssrn.3333503 (accessed 16 May 2019).