The Political Economy of State-building in Situations of Fragility and Conflict

Based on over of two years of CRU research, this paper brings together the findings of five studies of states that show clear signs of illegitimacy or of a weak capacity to govern. Studies of Afghanistan, the Democratic Republic of Congo, Guatemala, Kosovo and Pakistan, each grounded in extensive fieldwork involving numerous political and social actors, aim to shed light on the roots and dynamics of fragility by placing the spotlight on the waypolitical power works. The paper highlights the issues of political economy that give rise to weak or fragile stateinstitutions, freeze or reverse attempted reforms, create public insecurity and paralyseeconomic development.

Evidence from the case studies indicates that the political marketplace is playing an ever more crucial role in determining the destiny of fragile states. Greater electoral competition, institutional complexity and the entry of new players and sources of ready cash – including foreign donors, natural resource exports and organized crime – are driving new conflicts, and alienating the public from their rulers. Where great progress appears to have been made, whether in the loya jirga of post-Taliban Afghanistan, the transition to independence in Kosovo, or the end of conflict and the inclusion of Mayan communities in Guatemalan political life, it has also brought with it alarming new quandaries. In each case, the new character of political life has empowered armed groups and criminals, or fostered clandestine practices in government.

The paper concludes with suggestions that may help guide a pragmatic and realistic approach.Above all, donors must be constantly sensitive to the structures of power, interests and incentives that may capture and subvert new formal governance arrangements, and strive wherever possible tosupport a shared political strategy aimed at building a state in the common interest.