Economic Dimensions of Post-Conflict Reconstruction: Overlapping Mandates?

Post-conflict reconstruction strategies today emphasize economic reconstruction measures as a matter of course. Measures have included commercial law reform to attract FDI, natural resource management, and the issuance of new currencies. This emphasis on the economic dimensions of peace maintenance draws from research by Paul Collier and others showing that states with higher levels of economic growth are less prone to large scale internal violence, and that there is a strong correlation between the level of income at the end of a conflict and the likelihood of relapse.



The UN’s Security Council, the IMF and the World Bank demonstrate a shared perception that the economic dimensions of post-conflict reconstruction are relevant to each of their mandates. Since the mid-1990s, the Security Council has increasingly authorized and encouraged economic reconstruction in its Chapter VII resolutions. The IMF formalized a policy for engagement in post-conflict situations in 1995 by expanding its existing program on emergency assistance for natural disasters. The World Bank, for its part, passed Operational Policy 2.30 on Development Cooperation and Conflict and launched an initiative for Low Income Countries Under Stress (LICUS). All three organizations have worked together in the post-conflict reconstruction of Kosovo, East Timor, Afghanistan, Iraq and Liberia, among others.



While increased coordination no doubt improves the efficiency of post-conflict reconstruction, it raises a legal dilemma of some consequence: the emergence of overlapping mandates between the Security Council and the International Financial Institutions. IFIs are specialized agencies governed by their own Articles of Agreement as per Article 57 of the UN Charter. Specialized agencies are “brought into relationship” with the UN via separate Relationship Agreements. But under Art. VI of these Agreements, the IFIs are only required to give “due regard” to decisions of the Security Council under Articles 41 and 42 of the Charter. That is to say that the IFIs are not bound by Security Council enforcement actions. As former IMF General Counsel Joseph Gold wrote: “[T]he IMF has steadfastly avoided any statement or action that might imply that the IMF is bound by decisions of the Security Council.” This legal position is maintained by the IMF today.



The convergence of peace and economics raises the specter of friction. The recent security Council Resolution 1756 (2007) on the Congo for example goes beyond past formulas requesting IFI assistance, and “calls upon the international financial institutions to assist the Government of the DRC in establishing effective and transparent control over the exploitation of natural resources.” Would IFIs follow a Security Council resolution implementing an economic management program with which they disagreed? Or conversely, how would IMF or the Bank view a Security Council resolution that instructed them to provide a financial bailout package that might not meet their usual criteria? Because the voting structure of the IMF and Bank (weighted to the world’s largest economies) is still advantageous to the veto wielding members of the Security Council, political mechanisms have averted inconsistencies to date. Nonetheless, economic globalization and the changing balance of political power suggest that a legal battle between the Council and the IFIs lies ahead.