Global Facilitation Network for Security Sector Reform (GFN-SSR)

Who's Minding the Store: The case of Private, Public and Civil Actors in Zones of Conflict

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Private businesses in conflict zones now operate both as objects of scrutiny and political actors in their own right. This brief, by Volker Böge, Christopher Fitzpatrick, Willem Jaspers and Wolf-Christian Paes, presents findings of a multi-year project that researched the role of external economic actors in conflict zones. It recommends adoption of a co-regulatory approach that combines both voluntary and mandatory business compliance and creates the opportunity for private and public sectors to work together to prevent and/or mitigate conflicts.

Multinational enterprises (MNEs) contribute to conflict through environmental degradation, exclusive hiring policies, inadequate compensation for use and destruction of land, flawed security arrangements, and close relationships with states that are parties to conflicts. MNEs also provide conflicting parties with revenues with which to wage war.

The following are roles that MNEs can play in different phases of conflict:

• Post-conflict actions by MNEs are the easiest for MNEs to achieve: they can create more business investment. Only the private sector can develop new investment opportunities fundamental to building stable, economically strong countries.
• Pre- and in-conflict actions by MNEs are harder to assess. Whether MNEs should continue to operate when conflict threatens or has ensued depends on case-by-case analyses of the costs and benefits of leaving or remaining. Withdrawal of a business may remove an important external actor from the scene of conflict. Given the interplay of MNEs with the state, remaining within the conflict zone may exacerbate conflict.

International non-governmental organisations have recently used the global media to hold MNEs accountable for activities that contribute to conflict. Confronted with “naming and shaming” strategies, MNEs have become more willing to discuss corporate social responsibility.

Several codes of conduct and principles guiding corporations towards embracing human rights and security norms have been adopted recently, namely through United Nations statements on norms and standards of corporations with regard to human rights. However, new instruments are needed that are directly relevant to conflict-sensitive business practices.

A co-regulation approach that combines both voluntary, self-regulation by MNEs and mandatory regulation by international entities would contribute to clarifying the role of MNEs in conflict zones. It is necessary to continue to use “hard” sanctions aimed at rogue companies that try to profit from violent conflict, and “soft” sanctions by means of NGO activism exposing questionable corporate practices in conflict zones. But a co-regulatory approach would encourage businesses to move beyond discussion of corporate social responsibility and engage in behaviour that actively avoids involvement in conflict situations.

To achieve the objective of conflict-sensitive MNEs, the following actions are recommended:

• MNEs should engage in consent processes with local communities, pursue inclusive hiring and compensation practices and join in efforts to develop codes of conduct on conflict-sensitive behaviour.
• International organisations should establish an institutional focus for business and conflict issues, extend targeted sanctions to the full range of conflict entrepreneurs and war profiteers and be more consistent with regard to circumstances under which sanctions are imposed.
• The German Government should elaborate clear norms and criteria for conflict-sensitive business behaviour and direct German development assistance towards capacity-building for governmental agencies relevant to business in conflict, including employers’ associations, chambers of commerce and trade unions.

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