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War Economy
Jochen Hippler
Rheinischer Merkur, 5 October 2001
Original German version: Ökonomie des Krieges
Wars are the most radical form of violence between states or within a state. Therefore it's hardly astonishing when, in times of war, one mainly thinks about bloodshed and military operations. Only when political, social en economical aspects are understood, can one comprehend war. Even regional wars in the Third World have considerable impact on the local economies, conversely they are often caused by economic circumstances. Afghanistan is a case in point.
Already during the Russian occupation a huge portion of Afghanistan's infrastructure was destroyed or heavily damaged by air raids and ground combats. Agricultural irrigation systems, roads and highways, the already small industrial companies, communications utilities and power supply were badly hit. Many regions of the country were mutilated. All this ended in substantial limitations to any kind of economical activities. Agriculture was also hardly possible in large areas because in they depended on irrigation. The marketing possibilities (i.e. roads) for agricultural products were disturbed to such an extent that they broke down completely, resulting in a massive decrease of effective demand, although people's need for food off course stayed the same. Huge streams of refugees - nearly one third of the population fled to Pakistan and Iran - caused economic collapse in many parts of the country. Production often dropped to mere sustenance levels and the supplies for the cities were very precarious - a fact that at the time was partly compensated for by Soviet food supplies. Such processes of standard economic structural collapse are typical for most local conflicts, although they might adopt different forms depending on local circumstances and the special character of the war concerned.
These economically destructive effects of war could only be compensated for by two countermeasures. Firstly, there can be a turn over from agricultural production areas to the manufacturing of poppy cultivation and its further processing into heroin. Poppy is a very easy plant and needs very little water. Besides, considering the amounts, one only has to produce a tiny little bit to make up for the fall out of the annual production of -let's say- tomatoes or onions. Marketing this product is easier as well; whereas greater amounts of vegetables have to reach the market relatively fresh and therefore quickly, a farmer family can smuggle its complete poppy production on the back of a few mules or camels without any problems -even along the broken roads to the border or to the heroin laboratories in the provinces of Nangahar or Helmand. With small, easy transportable amounts of crude poppy, farmers can earn far more than with their traditional agricultural products, manufacturing of which had already become more and more difficult or even impossible. Additionally criminal gangs and the Mujahadeen parties - the parties of today's "Northern Alliance" - recognized drug traffic as an attractive source of income
The second compensation is the war economy factor that replaced the defunct economical structures, i.e., arms trade. The war, and especially its generous financing from outside by the Soviet Union and the USA, brought huge amounts of military equipment into the country. Nearly a third of it never reached the intended receivers but were illicitly re-sold by party leaders and commanders. In this way Iran, for example, received the latest US anti-aircraft missiles (Stinger) that were used partly in the Persian Gulf against US warships. But arms were not only traded by top political and military personnel: peasant families who were confronted with the destruction of their old livelihoods sent their sons into war to gather weapons lying around on battlefields, or, seized them by means of robbery so that they could sell them on the black market. For obvious reasons, these forms of arms trade were commonly featured in the economy of many wars.
In this way drug traffic and war increasingly became the most important sources of income for the people. Work could mainly be found within the militia and with the warlords, and, because of the collapse of civil economy one can - besides smuggling - in fact only do good business with opium, heroin and arms trade. All this started a dynamics which reinforced itself: first labour forces and resources were pushed out of the non-functioning civil economy into the war economy, then the flourishing war economy extracted civil resources because it was far more dynamic, and caused a strain on the civil sector.
In sum this restructuring may have clearly increased the profitability of the Afghani economy. Its disadvantage - not considering the damaging consequences of drug traffic and arms trade - lies in the fact that the war economy started to fall short of meeting the basic needs of the people, not to mention other needs (health care, schooling/education, etc.). These increasingly became dependent from resources found abroad, like the UNO or humanitarian help organizations. Though the war economy might flourish, its considerable profits could be reinvested into Pakistan (transport, car trade, carpets) or Europe and the USA, the people increasingly had to live on the edge of an open famine catastrophe. Only with foreign relief funds and NGO's could the misery of the poor be stabilized.
Some of these developments are typical for Afghanistan, others hold for many hotbeds of conflict and local wars. The aspect of narcotic production or drug traffic, for example, will not be seen in many other wars because circumstances make it difficult or don't allow for the same. In the Balkans for example, (transit)-trade was a part of the conflict but poppy and opium production were lacking. In yet another case, the Colombian civil war-narcotic business is a key element -in this instance, it's about coca or cocaine, not about poppy and heroin. In many wars arms trade and the misuse of international help play an important in the war economy, in some cases help organizations even if they have to pay militia for "protecting" them, as could be seen in Somalia.
A key problem of war economies is found in nearly all cases. That is, the fact that they start to separate themselves, lead a life of their own and impede or exclude an ending of the war. When the only notable source of national income becomes war, where the people or its elite -directly or indirectly- have their ways of making a living destroyed - then turning back to peace becomes very difficult.
Copyright 2001 Rheinsicher Merkur
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