Wealth Sharing and Sustainable Postconflict Peace

Natural Resource Management and Postconflict Peace

(December 22, 2006)

Helga Malmin Binningsbø & Siri Aas Rustad

Abstract

A multitude of research shows that natural resources are associated with internal armed conflict. Primary commodities are, among other things, financing rebellion and increasing the incentive for secession. In addition, ‘the resource curse’ is associated with corruption, slow growth and poor economic performance. The direct link between resource wealth and internal armed conflict is often explained through a ‘greed’ mechanism, rebels fight to gain control over resource revenues and use resources to finance their rebellion. However, the link can also be explained by a ‘grievance’ argument. People living in resource rich countries might feel deprived if vast resource income does not benefit equally across class and/or groups, and might resort to violence. Also, lack of resources might lead to competition over scarce resources, a competition that can turn violent. This paper investigates the postconflict resource management following internal armed conflicts. We dig deeper into the ca 200 internal armed conflicts in the Uppsala-PRIO dataset (1946–2003) and record how natural resources management was addressed in the aftermath of conflict, and especially how issues related to management influence the likelihood of sustainable postconflict peace.

Paper prepared for presentation at the 15th Annual National Political Science Conference, Trondheim, Norway, 3-5 January 2007.

DRAFT Comments welcome! Don’t even think about citing…

1 Introduction

“In 1971, Mobil Oil Indonesia discovered massive reserves of natural gas in north Aceh, which led to the creation of the Lhokesemawe Industrial Zone (ZILS.) The development of the oil and gas fields in north Aceh, and the influx of migrant workers into the province annoyed the conservative Muslim rural population. At the same time, not much money filtered back to the Acehnese; in the 1970s only 5% of the revenue from ZILS went to the local government.” (Uppsala Conflict Database)

The discovery of natural resources in Aceh was the starting point for a violent conflict between The Free Aceh Movement (GAM) and the Indonesian government. The conflict only ended when the Acehnese was guaranteed 70% of the revenues from natural resources in Aceh, onshore and offshore. The peace agreement in Aceh illustrates well this paper’s research interest. If natural resources are a driving force behind internal armed conflicts, how do peace termination efforts deal with these resources? A multitude of research shows that resource abundance increases the risk of conflict (Collier & Hoeffler, 2004; Fearon & Laitin, 2003; Fearon, 2005). Primary commodities are, among other things, financing rebellion and increasing the incentive for secession. Oil and diamond revenues provided finance for the civil war between the MPLA government and UNITA in Angola and control over oil was the issue at stake in the Biafran civil war in Nigeria (Le Billion, 2001). Much research has been devoted to explain this ‘resource curse’; why natural resource abundance is associated with violence, corruption, slow growth and poor economic performance. On the other hand there is also an extensive literature on how scarcity of resources affects conflict (Homer-Dixon 1999). Ownership and access to land were central issues for the Zapatista rebellion in Mexico and the civil war in El Salvador (US Institute for Peace) In this paper we will address both of these problems. Our approach is to investigate how natural resource management issues have been addressed in postconflict societies. We argue that if natural resources are relevant regarding outbreak and sustaining of violent rebellion, resources must also be relevant regarding termination of violent rebellion. Surprisingly, little attention has been directed towards the resource issue in relation to ending civil wars. Although there is a large and still growing literature on resources and conflict, less attention has been directed towards resources and solving conflicts. Our paper tries to fill this gap.

2 In the following sections we will discuss how resource abundance and resource scarcity is linked to conflict, and in particular how this negative connection can be hampered. Further, we present our new data on postconflict natural resource management and how these measurements relate to peace. Resource Abundance, Scarcity and Postconflict Management

In the last decade there has been an extensive debate about the relationship between natural resources and conflict. Some of the first authors to look into this were Collier & Hoeffler (2004); they found a strong relationship between civil conflict and primary commodity export to GDP. However, this study has later been critized by several authors (de Soysa, 2002; Fearon, 2005; Fearon & Laitin, 2003) for lumping all types of natural resources together without taking the different qualities that each resource has that can make it more or less attractive for rebels and corrupt government. For example surface diamonds are highly lootable because it is easy to extract and smuggle, while oil is less lootable because it demands skilled workers to extract it. These dissimilarities can make a difference in how resources affect conflict. Studies that have disaggregated Collier & Hoeffler’s primary commodity variable into specific types have found that oil producing countries are more prone to conflict (Fearon & Laitin, 2003). Lujala, Gleditsch & Gilmore (2005) found that diamonds are not as hazardous as one has presumed, but that secondary diamonds (surface diamonds) have some effect on ethnic conflicts. The debate about natural resources and conflict has mainly been centred on two dimensions. Firstly, the abundance of natural resources, arguing that it is the problems arising when a country has vast amounts of natural resources that lead to conflict (Collier & Hoeffler, 2004; Fearon & Laitin, 2003). The other school argues that it is the scarcity of resources that is harming. However, these two approaches are not representing competing views but rather complementary views (Homer-Dixon, 1999). In many cases the same arguments that are used to explain the relationship between conflict and natural resources can also explain why some countries fall back into war in a short time after the violence was terminated. In the following we will therefore look at what are the possible mechanisms claimed by the abundance and scarcity school that relates natural resources to conflict, how these can work in a post-conflict situation, and finally how natural resource management can be used to promote sustainable postconflict peace.

3 Abundance

There are argued to be several mechanisms that can relate abundance of resources to conflicts. In this paper we will look into three: greed, grievance and “the resource curse”.

Natural resources could create personal gain for warlords by exploiting natural resources they would not be able to exploit in peacetime. This gives them an incentive to start a conflict or sustain an already ongoing conflict. It is more likely that greed arises as a motive when the opportunity to exploit resources is already present. Rent-seeking behaviour among corrupt politicians is also related to greed in this context. Further, the greed mechanism can be related to outsiders, such as other states or foreign companies engaged in or fostering civil conflict to get the rights or opportunity to extract resources (Humphreys, 2005). In Angola, the corruption of officials in the oil sector was allegedly encouraged by the behaviour of the parastatal oil company Elf (Le Billon, 2001a: 16). In a post-conflict situation where warlords have been using resource rents as a financial support, it is likely to believe that this exploitation would be carried on even if the violence ends. Unless the problem was dealt with in the termination process or shortly after, the conflict could possibly break out again, due to greedy warlords. Because of the enormous profit gains associated with resource extraction it is important to reduce rebels’ access to international resource markets. This will lower rebel group’s ability to finance violence. Ross (2002) emphasize that the international community have tools that complicates finance for rebel movements. The Kimberley process, demanding certification of diamonds, is one such tool (Collier & Hoeffler, 2005). In addition, sanctioning ‘booty futures’ – selling extraction rights in regions one (yet) does not control – removes an income source for otherwise weak rebels. Lastly, restricting ransom payments will reduce the incentive to kidnap as a way of financing rebellion (Ross, 2002: 28).

Grievance

There could be several types of grievances related to abundance, but we focus on grievance caused by unfair distribution (or what is perceived as unfair distribution) of resource rents. This can for example stimulate separatist conflict. This usually happens when the resources are situated in one region of a country with a population that considers itself different from the rest;

4 this feeling can be stimulated even more if the area is distant from the capital and political power centre. If the common attitude among the population in an area is that they are not getting enough revenue from the resources compared to the cost to the region due to expropriation, environmental damages or labour immigration, they can believe they will be better off in a separate state (Le Billon, 2001b). Ross (2002: 15) argues that conflicts could be avoided, or solved before they turn into large- scale, long-lasting civil wars, by careful diplomacy and transparency. Typically in secession conflicts where the separatist movement won and the conflicting region achieved more autonomy, there will be some kind of wealth sharing. One example is the Bougainville conflict where the 2001 peace agreement stated that ‘The autonomous Bougainville Government will have sufficient revenue-raising powers available to it to become financially self-reliant’ (Bougainville Peace Agreement 2001). Conflict terminations that do not pay any attention to the distribution of resource wealth might run the risk of the conflict reigniting. In Ache, the separatist movement (the Ache region) was rewarded a large part of the resource rent from the region. This seems at the date of writing to be a successful peace- and wealth sharing arrangement (Ache 2005).

Resource Curse

The term ‘resource curse’ has often been used as a general term for the relationship between abundance of resources and civil war. However, the term was originally used to describe the finding that resource rich countries often have a bad economic performance (Sachs & Warner, 1995). Therefore in this paper, when referring to the resource curse we look at the economic dimension that might promote conflict. In the greed section we explained how rebel groups could use resource revenues to support their fight, in this section we focus more on how bad, or the lack of, resource management from the state can harm a country and possibly ignite a conflict. When a corrupt, incompetent or repressive regime or a ruling elite uses the rent from natural resources to repress opposition, and the wealth and power gap between the ruling elite and the ruled increases, this may cause anger among the opposition and a wish to overthrow the regime (Lujala, Gleditsch & Gilmore, 2005: 540). A very predatory regime creating inequality between the elite and the population by exploiting the resources may also stimulate greater willingness to join rebels to overthrow the government. An example of such predatory behaviour is Angola

5 where one billion US dollars per year of the oil revenues have been reported by the IMF to end up in off-shore banks (Collier et al., 2003: 62). Secondly when a country is heavily dependent on a single resource it becomes more vulnerable to trade shocks and can experience ‘Dutch Disease’. This can make the government less stable and increase the risk of conflict. Resource-dependent governments are often more susceptible to conflict, due to corruption, state weakness and low accountability (Ross, 2004). Thirdly governments dependent on revenues from natural resources seem to have a harder time solving social problems and providing public goods such as health care and education. One of the reasons for this might be that government funding is based on revenues from resources instead of taxes. If a state’s strength is determined by its ability to collect taxes, resource revenues may weaken it. A country that gets its revenues from resources is not as dependent on the population and can also become less democratic. Furthermore, a country with major resource revenues spends more of its income on the military to quell opposition. A country that is not fully democratic will increase the risk of creating grievance among the population, and is also less likely to resolve grievances and therefore more prone to conflict. If the resources the government relies on need to be extracted in remote places far from the political power centre, the state may experience problems with law and order in the extraction region, due to rebel groups and warlords. This may further weaken the government (Ross, 2004). To turn the negative impact on economies positive Ross (2002) stresses the international community’s responsibility to increase market access for primary commodity exporters, easing the chances of diversifying industry through trade liberalization and reduce tariffs on ‘downstream’ products. Bigombe et al. (2000) also emphasize the benefits of a diversified economy on postconflict countries in Africa. In addition, Ross argues that one should promote solutions to reduce vulnerability in resource dependent countries because of revenue volatility. Cushioning shocks through for example stabilization funds is one way of lowering the vulnerability to primary commodity prices (Collier & Hoeffler, 2005). Whereas research finds that resource abundance has negative effect on governance through corruption, state weakness and reduced accountability, Ross (2002: 9) argues that these effects can be dampened through more transparency, both regarding companies in the extractive industry’s payments and domestic regarding the resource rich countries’ revenues and expenditures. The Extractive Industry Transparency Initiative is a novel attempt to secure openness and accountability in the natural

6 resource extractive sector, focusing both on the company and the government side (Collier & Hoeffler, 2005) In relation to the ‘resource curse’ it might not only be a question about wealth sharing to avoid resumed conflict, but probably better wealth management is more relevant. If this is not dealt with in the conflict termination process, one of the underlying problems of the conflict might still be present. Weinthal and Luong (2006), for example, criticize the solutions put forward by other researchers and policy makers as solutions to escape the ‘resource curse’. In particular they argue that the solutions are based upon assumptions that, by definition, contradict the concept of a resource curse, namely a strong and well-functioning state. In addition, the solutions rely on IFIs and NGOs to put pressure on states to implement policies which leaders in weak states are not able to, or willing to, adhere to.1 Instead, Weinthal and Luong (2006) argue that private domestic ownership in the extractive industry is the ‘curse’s cure’. They introduce the difference between the successful private Russian oil sector and the failed public Russian Gazprom as evidence of their argument. However, in this paper we are not arguing in favour of one or the other solution to the ‘resource curse’. Our sole interest at the moment is to provide and overview of the situation as it is, and as it has been the last fifty years, regarding the types of postconflict natural resource management and how these affect postconflict peace duration.

Scarcity

Resource scarcity is the other side of the resource-conflict coin. While the abundance debate often discusses resources such as oil and diamonds, the scarcity approach is more concerned with agricultural resources, land, water, ect. The scarcity approach builds on Robert Malthus’ theories who as early as 1798, suggested that hunger was inevitable because the human population grows exponentially, while food production grows in a linear fashion. Later two competing camps have developed. One, called the Neomalthusians, has a rather negative approach. As the name suggests they represent a newer interpretation of Robert Malthus. They argue that population growth causes a drop in per capita food production (and increase in poverty) because of diminishing returns to labor. It has also been argued the population growth causes poverty by diverting capital from savings and investments to consumption, which lowers the long-term productivity of the

1 The bad policies which are criticized by Weinthal and Luong are: sound fiscal and monetary policies, economic diversification, natural resource funds, transparency, accountability and public involvements, and direct distribution to the population.

7 economy (Homer-Dixon 1999:29-30). This resource scarcity will further lead to resource competition, which can result in violent conflict (Gleditsch 2003). The second approach is the Cornucopian (also called technological optimists). They represent an almost opposite view. They do not see population growth as a threat to resources. They argue that local scarcity may develop but that can generally be overcome by proper pricing, trade, substitution or by new technology (Gleditsch 2003: 480). Since the Cornucopians claim that resource scarcity is not a problem, it will not lead to conflict either. In his book Homer-Dixon (1999) describes three types of scarcity: supply-induced scarcity, demand-induced scarcity and structural scarcity. The first is related to the shrinking of the resource, the second to the increase of the population, while the third refers to unequal sharing of the resource (Homer-Dixon 1999: 48). This division gives us a better tool to work with when we study environmental scarcity. By using this approach we can distinguish between the different types of mechanisms that could cause conflict. Homer-Dixon (1999:137–148) also presents three different types of conflict that could be related to scarcity. All of these types of scarcity are potential sources of conflict. Especially in societies that are already divided by for example ethnic or religious cleavages. These cleavages often become more distinct when there is competition over resources, or one group is using a share of the resource that seems unfair in accordance to the size of the groups. In Rwanda one of the causes of the conflict was lack of land resources. In these types of situations land reforms are very important to be able to implement. In cases where large groups of refugees will return after the war it is necessary to create room for them, so that the conflict does not reignite. This is especially important in ethnic conflicts. Presenting resource abundance and resource scarcity as dichotomies seems too simplistic. We know that resource wealth seldom is equally distributed across a country’s territory. Therefore natural resource management solutions such as wealth sharing might be a necessary postconflict institution not only to the resource rich region, but also to the people living in regions with lesser resources. The Bougainville peace agreement also stresses the importance of Bougainville resource revenues for the whole of Papua New Guinea: ‘When the autonomous Bougainville Government achieves fiscal self- reliance, revenues from these sources (in excess of the costs of recurrent activities calculated in accordance with the recurrent grant formula) will be shared between the National Government and the autonomous Bougainville Government so as

8 contribute to both National and Bougainville development’ (Bougainville Peace Agreement 2001). The next section introduces the data on what types of natural resource management has been addressed in postconflict societies between 1946 and 2003. Postconflict Natural Resource Management in the Universe of Internal Armed Conflicts

What have been done following armed conflict regarding natural resource management? Our preliminary analyses provide some justification of a categorization into the below types: a) decentralization of NRM, b) wealth sharing, c) topic addressed and discussed (not necessarily solved), d) land reform, and e) nationalization. Table 1 below shows frequencies for these categories of postconflict natural resource management (NRM). Table 1. Frequencies for Postconflict Natural Resource Management* NRM categories Frequencies No NRM found 210 Wealth sharing 12 Decentralization of NRM 8 NRM discussed 6 Land reform 3 Nationalization 7 Total 246 * Without conflicts terminated by independence for side B or conflicts ongoing as of 31 December 2003.

The most striking thing from table 1 is that most conflicts are not followed by any specific type of NRM. Of the 246 postconflict settings analyzed,2 only 36 experienced some form of NRM. In six of these settings NRM was only ‘discussed’, that is, no policy change was suggested or implemented. The most frequent NRM is wealth sharing, combining this with decentralization of NRM 20 countries emerging from internal armed conflict decided upon sharing of wealth. Although few postconflict societies consider NRM change, there is still a chance that this occurs more often in some particular contexts than others. Tables 2-5 investigate the different categories of NRM in relation to certain conflict characteristics. In Table 1 we question whether NRM differs regarding the incompatibility over which the conflict was fought. The literature on

2 Conflicts that ended with independence for side B (the original opposition side in the Uppsala-PRIO armed conflict dataset) are excluded from the universe of cases. By definition, these postconflict settings have substantial political change. In addition, conflicts that were ongoing the 31 December 2006 are excluded.

9 ‘resource curse’ emphasis the correlation between natural resources and conflicts over territory/autonomy. Table 2. Crosstabulation Postconflict Natural Resource Management and Incompatibility* Incompatibility NRM categories Governmental Territorial Total No NRM found 123 87 210 Wealth sharing 9 3 12 Decentralization of NRM 1 7 8 NRM discussed 3 3 6 Land reform 3 0 3 Nationalization 6 1 7 Total 145 101 246 * Without conflicts terminated by independence for side B or conflicts ongoing as of 31 December 2003.

Surprisingly, table 1 shows the opposite. A larger fraction of governmental conflicts are followed by NRM than territorial conflicts. Nonetheless, for territorial conflicts the most common NRM solution is decentralizing decision making on NRM, somewhat supporting expectations derived from the ‘resource curse’ literature. More comprehensive wealth sharing is associated with conflicts over government control. Land reform and nationalization is mostly related to governmental conflicts, which is not surprising considering these NRM being more linked to ideological positions than territory. The Uppsala-PRIO armed conflict data only separates between governmental and territorial conflicts, however, Cunningham et al. (2006) present a more fine-tuned differentiation of conflict types.3 Table 3 shows NRM categories tabulated against these conflict types. The table clearly shows that among the anti-colonial, communist and terrorism conflicts, none are associated with NRM. Interestingly, communist rebellions are not linked to nationalization, which might have been expected. Table 3. Crosstabulation Postconflict Natural Resource Management and Type of Conflict (Cunningham et al. 2006)* Type of Conflict NRM categories anti- civil war communist coup secession terrorism Total colonial d'etat No NRM found 6 61 16 42 66 4 195 Wealth sharing 0 9 0 0 3 0 12 Decentralization of NRM 0 2 0 0 5 0 7

3 We are grateful to Kristian Skrede Gleditsch for allowing us to use these data before they are published.

10 NRM discussed 0 3 0 2 1 0 6 Land reform 0 3 0 0 0 0 3 Nationalization 0 4 0 2 1 0 7 Total 6 82 16 46 76 4 230 * Without conflicts terminated by independence for side B or conflicts ongoing as of 31 December 2003.

Most NRM occur in civil and secessionist wars, the most common conflict types. Decentralization is most prevalent in secessionist conflict, as could be expected, while wealth sharing is more closely associated with civil wars. Theory relating resources to conflict has recently focused on disaggregating the resources, instead of the vague ‘primary commodity exporter’, more detailed variables such as diamonds and oil have been included in the equation. Perhaps looking at armed conflict in all kinds of societies obscure interesting findings. The next table separates postconflict NRM between countries with different types of resources. First of all, table 4 shows that most of the armed conflicts occur in countries with natural resources. Most conflicts occur in countries with onshore petroleum (oil and gas), which is also the postconflict situations where most of the NRM takes place. Table 4. Crosstabulation Postconflict Natural Resource Management and Type of Natural Resources* Type of Natural Resources NRM categories No NR Diamonds Petro onshore Diamonds and Tota petro onshore l No NRM found 34 12 84 80 210 Wealth sharing 2 5 3 2 12 Decentralization of NRM 1 1 4 2 8 NRM discussed 0 1 5 0 6 Land reform 2 0 1 0 3 Nationalization 3 0 2 2 7 Total 42 19 99 86 246 * Without conflicts terminated by independence for side B or conflicts ongoing as of 31 December 2003.

86 of the postconflict settings are situated in countries with both diamonds and onshore petroleum, but this combination of resource wealth does not seem to increase the chances of NRM changes taking place following armed conflict. Our focus is on natural resource management in the aftermath of armed conflict. Given that both theoretical and empirical research argues a strong relationship between natural resources and violence, we investigate the logical implication this has on resource management in postconflict

11 settings. Included in the Uppsala-PRIO armed conflict database are a huge variety of conflict types, durations and issues. These conflicts are terminated in different ways as well. The last crosstabulation shows how postconflict NRM differ relative to how conflicts have been ended. Not surprisingly, most internal armed conflicts are terminated by victory for the government. Table 5 shows that when the government crushes the opposition, any change in NRM seems unnecessary. The governing of natural resources almost always continues as before. The same is more or less true for armed conflicts won by the opposition. It is the cases where settlement and termination is reached through some kind of negotiation (either comprehensive peace agreements or lesser cease-fire agreement) that a change in NRM occurs. And in particular antagonists agree on sharing the wealth. Table 5. Crosstabulation Postconflict Natural Resource Management and Type of Termination* Type of Termination NRM categories Government Opposition Negotiated Unclea Ttota victory victory settlement r l No NRM found 92 21 36 61 210 Wealth sharing 0 1 10 1 12 Decentralization of 1 3 2 2 8 NRM NRM discussed 3 0 3 0 6 Land reform 0 0 2 1 3 Nationalization 2 4 1 0 7 Total 98 29 54 65 246 * Without conflicts terminated by independence for side B or conflicts ongoing as of 31 December 2003.

Although only fifteen percent of the postconflict societies in our dataset are followed by change in natural resource management, our crosstabulations indicate that NRM differs according to other indicators. Further, our main interest is how NRM influence the chances for lasting peace in postconflict societies. If natural resources are such a driving force of conflict, a sound management of them seems necessary to end violence. In the next section we will investigate the relationship between natural resource management and duration of postconflict peace. Multivariate Analyses of Natural Resource Management and Sustainable Peace

Before we present the results of the multivariate analyses, some description of the research methods are needed.

12 Method To analyze the duration of post-conflict peace we use a Cox proportional hazards model. The data for this analysis are structured as multiple-record data with multiple events with censoring. Given that civil wars frequently occur in the same country at different points in time, and indeed with the Uppsala-PRIO data, more than one armed civil conflict can occur contemporaneously, we must also account for a separate peace period after the resolution of conflict between belligerents.4 We have transformed our variables so as to eliminate any time varying parameters. To account for the obvious non-independence of peace events we calculate robust standard errors. A number of wars and post-conflict peace periods were still on-going in 2003 (the last year of our data); we censored to account for this. In order to define a ‘post-conflict society’ we rely on the Uppsala-PRIO armed conflict dataset (Gleditsch et al., 2002), which defines a conflict as ‘a contested incompatibility that concerns government and/or territory where the use of armed force between two parties, of which at least one is the government of a state, results in at least 25 battle-related deaths’ (Strand, Wilhelmsen & Gleditsch, 2004: 3). The version used is number 3.0 (December 2004). 5 The units of analysis in the dataset are individual postconflict peace periods and their accompanying conflict periods. Explanatory variables relate to both periods. Begin and end dates of the postconflict peace and conflict periods are based on Gates & Strand’s (2004) event dataset. Following Gates & Strand (2004: 10), ‘Our initial coding criteria only includes the periods from when a conflict reaches 25 fatalities to the last fatality in the last year of recorded conflict.’ The postconflict peace period begins the day of the last fatality in the last year of conflict, and ends the day when the conflict resumed, or the last day of observation in the dataset (31 December 2003). However, a conflict period must have been followed by at least two years without observation of violence in order to be defined as terminated. A conflict period in the dataset is not reported to have terminated if there is only one year without observation of violence between two years of violence – this is reported as one continuous conflict period. If a conflict resumes after two years, this is a new observation of conflict in the dataset, and consequently, a (potential) new peace transition period.

4 The dataset has 293 unique observations of violence, of these 21 ends with independence for the opposition and are not included in the analyses, while 29 are ongoing as of December 31, 2003. 105 of the conflicts reoccur, indicating a relatively high risk of peace failure. 5 The PRIO-Uppsala armed conflict database separates between four types of conflict: extra-state, interstate, internal and internationalized internal. Since our concern is intrastate wars, the interstate conflicts are included in the dataset.

13 The paper analyses 243 postconflict peace periods between 1946 and 2003, with 1358750 days at risk of resumed violence, and 105 peace periods that fail.

Variables

Dependent variable:

To be able to investigate postconflict peace duration, two conflict-related variables were added to the existing dataset: A duration variable measuring the length of the postconflict peace period. This variable is measured in days, and represents the number of days from the last reported day of violence to the first day where the conflict again crosses the 25 battle related deaths threshold.

If the conflict does not reoccur, the end date is set to December 31st 2003, which is the last date in the dataset. An additional event variable indicates whether or not the peace duration period ends in another conflict. The event variable is coded 1 if the peace period ends in another conflict (failure) and zero if it marks the end date of the dataset.

Independent variables

The paper’s main independent variable is postconflict natural resource management. To collect information on this topic for the Uppsala-PRIO armed conflicts we relied on the United States Institute of Peace online archive of peace agreements.6 However, to our surprise, not many peace agreements directly address resource issues. Therefore we had to rely on other sources as well. In particular the Keesings Record of World Events, the Uppsala-PRIO database and the US Library of Congress Country Studies were used extensively. Other sources were: Global Security and Armed Conflicts National Military History Index. Based on thorough reading and using a wide range of search words in these online databases we found that 36 of the 246 internal armed conflicts in our analyses were followed by some kind of postconflict resource management. Either decided as part of a peace agreement or as a (perhaps indirect) consequence of the conflict (issues). The various types of management arrangements were categorized into different types: a) decentralization of NRM, b) wealth sharing, c) topic addressed and discussed (not necessarily solved), d) land reform, and e) nationalization.

Control variables

6 Recently, the authors were granted access to the United Nations’ more comprehensive collection of peace agreements. In a later update information on these agreements will be added to the dataset.

14 Having vast reserves of natural resources increases the risk of civil war in the first place, therefore it stands to reason that resource wealth increases the risk of peace failure as well. We include dummies for whether the countries were the conflicts are located have diamonds and petroleum reserves. Another important control variable is the length of the conflict prior to the post-conflict peace period. Since we have the start date and end date of conflict, measuring conflict length is straight forward. This variable counts the number of days the conflict lasted, from the first day it reached the 25 annual battle-deaths threshold to the last day of violence. The intensity of conflict might also be important regarding post-conflict peace duration. The battle- deaths data are from Lacina & Gleditsch (2005), the variable is a natural logtransformed to reduce skewness. We believe type of conflict matters too. Therefore we include a variable controlling for the incompatibility over which the conflict was fought. This is a dummy where the value 1 corresponds to conflicts over territory; the reference category is governmental conflicts. To measure post-conflict regime type we rely on information from the Polity Project’s Dataset (Marshall 2003). We use the Polity2 variable, a democracy-autocracy scale where a county’s autocracy score is subtracted from its democracy score. It ranges from -10, perfectly autocratic, to +10, fully democratic. When controlling for regime type, the variable reports the 5-year postconflict mean of the polity2 score. In the second part of the analysis, we seek to distinguish between democratic and non-democratic post-conflict societies. In doing so, we set the threshold for being democratic at 5. All post-conflict states with an average polity score above 4.9, for the five years following the conflict, are considered to be democratic. To control for the importance of economic factors in pursuing justice and rebuilding the society we rely on GDP data from Fearon & Latin (2003). The average GDP for the first 5 years after the end of conflict is calculated and included as a variable in the analysis. This variable was further natural logtransformed to avoid outliers. Results

We have already argued that a logical consequence of the natural resource-conflict nexus is an emphasis on resource management in order to terminate civil war and obtain lasting postconflict peace. Given the low number of NRM in our data we are however a bit skeptical to the chances of reliable finding. Nonetheless, figure 1 shows the survival estimates for postconflict societies with and without NRM.

15 Figure 1 Kaplan-Meier Survival Estimates by Natural Resource Management.

0 0 . 1 5 7 . 0 0 5 . 0 5 2 . 0 0 0 . 0 0 5000 10000 15000 20000 analysis time

No NRM NRM

Surprisingly, the graph shows the exact opposite of what we expected: the survivor estimate is higher for societies without specific postconflict natural resource management than those with! This might be because we have lumped together all kinds of NRM, equaling nationalization with wealth sharing. In the next figure we separate between the different categories of NRM to see whether it makes a difference in the survival estimates. Figure 2 Kaplan-Meier Survival Estimates by Natural Resource Management Categories.

0 0 . 1 5 7 . 0 0 5 . 0 5 2 . 0 0 0 . 0 0 5000 10000 15000 20000 analysis time

No NRM Decentralization of NRM NRM discussed Land reform Nationalization Wealth sharing

16 Of course, we don’t have too many observations of each category, making it difficult to conclude solidly. However, it seems like different types of NRM have different outcomes regarding postconflict peace duration. In the following, we present the multivariate analyses. Table 6 shows the Cox proportional hazard models with only the NRM variables.

17 Table 6 Cox Proportional Hazard Estimates with Natural Resource Management, 1946-2003. (1) (2) (3) (4) (5) Conflict Without duration coup > 365 days d’etat _t _t _t _t _t NR management (dummy) 0.411 (0.134) NRM categories: Decentralization 0.718 0.685 0.722 (0.140) (0.182) (0.190) Wealth sharing 0.522 0.539 0.553 (0.301) (0.293) (0.267) NRM sharing 0.616 (0.097)* NR discussed -0.649 -0.649 -33.479 -0.110 (0.582) (0.582) (0.000)*** (0.933) Land reform -35.528 -33.528 -33.480 -33.614 (0.000)** (0.000)** (0.000)*** (0.000)** * * * Nationalization 1.897 1.898 1.815 2.190 (0.000)** (0.000)** (0.001)*** (0.000)** * * * Time at risk 131930 1319304 1319304 642323 1020188 4 Subjects 241 241 241 127 180 Failures 105 105 105 53 71 Country clusters 97 97 97 65 80

18 Robust p values in parentheses * significant at 10%; ** significant at 5%; *** significant at 1%

Model 1 in table 6 presents the bivariate relationship between postconflict natural resource management in general, and sustainable peace (same as figure 1). We see that, although not significant, NRM seems to increase the likelihood of peace failure, that is, shorten the postconflict peace duration. In model 2 we have separated between the different types of postconflict NRM, to see whether they differ in their influence on peace survival. Only land reform (negative) and nationalization (positive) is significant, but still the differences in signs indicate that what type of NRM measures are decided upon in postconflict societies have an impact on the risk of reignited violence. Both decentralization of NRM and wealth sharing increases the risk of peace failure. Even though we have separated them into two different management types, we might argue that they represent the same management ‘idea’. Therefore we in model 3 merge them together, as a wider measurement of ‘NRM sharing’. This combination turns significant at a 0.1 level, showing that postconflict societies which decide to share the decision making related to natural resources have shorter peace duration than societies that do not. This seems to contradict our expectation that NRM is important. However, we should note that this type of NRM change often takes place following the toughest armed conflicts, like the civil wars in Angola and Liberia. In addition, this sharing of decision making has been decided upon between the government and a rebel group in countries where a fraction of the opposition disagrees and resumes violence. For example ‘NRM sharing’ was part of the peace agreements in Mali and Djibouti, where violence continued with fractions or new rebel groups. The sharing of natural resource management was successful between the government and the majority of the opposition, but failed to provide lasting peace on the whole. In models 4 and 5 we want to see if NRM is only relevant for long lasting armed conflicts. In model 4 we exclude all conflicts that lasted less than a year. In the longer conflicts discussing NRM challenges in a postconflict setting increases peace duration. Although no solutions regarding NRM have been taken, it seems like acknowledging the issue is reassuring for the parties to the conflict. In table 5 we removed the coup d’etats from the sample, but this didn’t change the results. In table 7 we have added the control variables. The models are otherwise the same as in table 6. The NR management dummy is no longer significant, although the p-value is not at all far

19 from the 0.1 threshold (0.101). This strengthens the indications from model 6, that all types of NRM are relevant regarding postconflict peace. Separating between different types of NRM turns land reform (negative) and nationalization (positive) significant, as in table 6, but sharing of NRM decision making does no longer have a significant influence on peace duration. Most of the controls are non-significant. Conflict duration and battle deaths are significant in all models, with opposite signs. The longer the conflict lasted, the longer is the peace, while the more people killed in battle, the shorter is the postconflict peace. These results are similar to other findings regarding intensity of conflict and sustainable peace. Type of resource is only significant in model 5, but for the other models they show opposite effects. In models 1-3 diamonds have a small negative influence, thus indicating longer peace duration, while petroleum increases the risk of postconflict peace failure. When we have excluded the coup d’etats in model 5, diamonds turn positive and significant at a 0.1 level. For other types of conflicts, that is, mostly civil and secessionist wars, having diamond resources shortens the postconflict peace and increases the likelihood of peace failure.

20 Table 7 Cox Proportional Hazard Estimates with Natural Resource Management and Control Variables, 1946-2003. (1) (2) (3) (4)# (5) Conflict Without duration coup > 365 d’etat days _t _t _t _t _t NR management (dummy) 0.445 (0.101) NRM categories: Decentralization 0.547 0.651 0.486 (0.319) (0.278) (0.432) Wealth sharing 0.357 0.431 0.190 (0.619) (0.558) (0.808) NRM sharing 0.472 (0.288) NR discussed 0.171 0.162 3.321 (0.898) (0.903) (0.000)** * Land reform -35.094 -32.077 -35.224 -43.778 (0.000)** (0.000)** (0.000)** (.) * * * Nationalization 1.920 1.918 2.055 2.308 (0.000)** (0.000)** (0.008)** (0.001)** * * * * Controls: Diamonds -0.019 -0.005 -0.011 0.120 0.434 (0.927) (0.982) (0.957) (0.702) (0.082)* Petroleum 0.306 0.178 0.194 0.382 0.044 (0.220) (0.511) (0.447) (0.388) (0.912) Territorial conflict -0.161 -0.231 -0.230 -0.353 -0.188 (0.471) (0.346) (0.349) (0.331) (0.484) Conflict duration (ln) 0.076 0.084 0.084 0.569 0.181 (0.059) (0.026)** (0.025)** (0.001)** (0.001)** * * * Battle deaths (ln) -0.065 -0.084 -0.086 -0.152 -0.099 (0.160) (0.081)* (0.077)* (0.055)* (0.042)** Postconflict GDP per capita (ln) -0.131 -0.124 -0.131 0.012 -0.188 (0.332) (0.427) (0.381) (0.961) (0.365) Postconflict political regime -0.026 -0.020 -0.020 -0.016 -0.017 (0.222) (0.367) (0.353) (0.575) (0.483) Time at risk 107699 1076990 1076990 504262 809186 0 Subjects 186 186 186 95 137 Failures 94 94 94 46 64

21 Country clusters 83 83 83 52 65 # ‘NR discussed’ dropped due to collinearity Robust p values in parentheses * significant at 10%; ** significant at 5%; *** significant at 1%

Conclusion

The devastating war in Sudan between the SPLA in the south and the government located in the north only ended when the parties could agree to a comprehensive wealth sharing agreement (Sudan, 2004). This agreement assures the southern part of the country a significant control over their natural resources. In addition, it secures that the country as a whole will benefit from its unequally distributed wealth. There is a large and growing literature on the relationship between natural resources and armed conflict. On one hand is a school arguing the harmful consequences of resource wealth. Being rich in natural resources, in particular petroleum and minerals, leads to looting, bad economic and governmental performance, slow development and civil war. On the other hand is a school arguing the devastating consequences of not having resource wealth. Where there is scarcity of resources people will fight over the limited amount of resources present. Regardless of what school one adheres to, it seems evident that there is a connection between resource and violence. In this paper we argue that if there is such a relationship, these issues need to be addressed in order to terminate armed conflict. If exploitation of resources or lack of resources to exploit fosters conflict, it seems necessary to implement sound natural resource management to secure postconflict peace. However, after thorough reading of peace agreements and other relevant sources we found little mentioning of natural resources in postconflict settings. Although control over resources and the revenues they generate might be important for belligerents, other things seem to matter more to stop the violence. Nonetheless, we found some evidence that sharing the decision making on natural resource management has been decided upon in postconflict societies. Surprisingly, this has had the opposite effect on sustainable peace as would be expected. Sharing of wealth increases the risk of peace failure. [more research needed]

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