BATTLEFIELD AND BEYOND: GOVERNANCE AND ECONOMIC RECOVERY IN POST-CONFLICT STATES

Introduction

In the aftermath of conflict, post-conflict states stand at a critical juncture where the echoes of war must give way to the foundations of peace and prosperity. There is an intricate interplay between establishing effective governance and fostering economic revitalization in regions scarred by violence. As communities emerge from the rubble, their recovery hinges on restoring trust in institutions, rebuilding infrastructure, and reigniting local economies. Through resilience and collective effort, these societies begin to thrive again, transforming battlefields into marketplaces and despair into opportunity, offering a testament to human endurance and the power of strategic reconstruction.

The process of writing this article has been both a pleasure and an enlightening one. We have both been admiring and supporting each other’s writing on Substack. One of the benefits of the platform is how easy it makes it to collaborate. And it isn’t immediately obvious that we would be partners. What we feel is impressive is when you are able to find the sweet spot between apparently different perspectives and expertise that doesn’t obviously align, at least until you think a little deeper.

Turns out, post-conflict reconstruction isn’t just about peace treaties and infrastructure - it’s also about two writers realizing they can debate both security strategy and city zoning laws in the same breath.

Jasleen, based in Kenya, writes In the Conflict Zone, a Substack newsletter exploring security, diplomacy, global governance, and the role of intelligence in conflict resolution and geopolitical strategies in Africa and beyond. Eric is a program management professional, living in Britain and working in Saudi Arabia, whose Creating Communities Substack newsletter focuses on urban and rural development and the regeneration of communities.

Finding the intersection between these two skill sets and perspectives led to us writing this paper. We hope it brings fresh perspectives to these critical challenges facing our world.

Rebuilding Political Institutions

Rebuilding political institutions in post-conflict presents many challenges, especially in restoring governance and ensuring long term stability. This process can be complex, involving challenges related to legitimacy, the rule of law, and political stability. Moreover, the roles of local and international actors remains a critical area of debate in reconstruction of post-conflict governance. Hence, making it important to be addressed for sustainable recovery and preventing the resurgence of violence (Zürcher, 2013)

One of the primary challenges is the destruction or weakening of state institutions. Conflicts tend to lead to the breakdown of bureaucratic structures, judicial systems, and law enforcement, creating a power vacuum that can be exploited by non-state actors, including warlords, insurgent groups, and criminal organisations. In many cases, former combatants struggle to reintegrate into civilian life, and these unresolved grievances continue to fuel the instability (Paris & Sisk, 2009). The presence of multiple factions with competing interests complicates the establishment of a unified government, making governance an even more fragile process (Zürcher, 2013).

Also, the lack of human capital poses a significant challenge. Conflict disrupts education, displaces skilled professionals, and erodes institutional knowledge, leading to a governance structure that lacks both experience and technical expertise. This deficiency hampers efforts to design and implement effective policies, leading to inefficiency and corruption, leaving the state in a limbo (Chandler, 2006). Without a competent administrative body, the prospects of delivering public services and maintaining law and order remain uncertain.

That said, a fundamental requirement to rebuild political institutions is the establishment of legitimacy, which is necessary for gaining public trust and ensuring political stability. Legitimacy in post-conflict states is often sabotaged by electoral manipulation, the exclusion of marginalised groups, and unresolved ethnic or sectarian divisions. The challenge, therefore, is to create a government that is seen as representative, accountable, and capable of addressing grievances that contributed to the conflict in the first place (Paris & Sisk, 2009). Elections, while essential for democratic governance, must be carefully managed to prevent further division and conflict. Premature elections in fragile states can escalate already existing tensions if underlying structural issues remain unaddressed (Zürcher, 2013).

Restoring the rule of law is equally critical. The absence of a functioning legal framework often results in impunity, where war crimes and human rights violations go unpunished, creating a culture of lawlessness. Having a credible judicial system is necessary to hold perpetrators accountable and make sure that citizens have access to justice (Chandler, 2006). Judicial independence, professional law enforcement, and legal reforms are key components of this process. Additionally, transitional justice mechanisms such as truth commissions and war tribunals play a role in addressing past atrocities and fostering national reconciliation (Paris & Sisk, 2009).

Political stability hinges on the ability of governing institutions to effectively deliver services, mediate disputes, and provide economic opportunities. However, external influences such as foreign intervention and donor driven reforms can sometimes shake local governance structures, leading to governance models that do not align with the socio-political realities of the affected state (Zürcher, 2013). A delicate balance is much needed to ensure that there is long lasting stability between external support and internal ownership of governance processes.

Whether or not post-conflict governance should be led by local or international actors is an ongoing debate. Local ownership is crucial for sustainable state-building, as externally imposed governance models often lack legitimacy and fail to account for local political dynamics. But, post-conflict states also can lack the resources and expertise needed to rebuild institutions independently, making international assistance necessary (Chandler, 2006).

International actors such as the United Nations (UN), international financial institutions, and foreign governments play an important role in providing financial aid, security assistance, and technical expertise. Programs focusing on disarmament, demobilisation, and reintegration (DDR) have been instrumental in stabilising post-conflict environments. Peacekeeping missions help to prevent the resurgence of violence by monitoring ceasefires and protecting vulnerable populations (Paris & Sisk, 2009).

However, despite these contributions, international involvement can create dependency, overlooking local agencies. External actors may prioritise short term stability over long term governance development, fueled by their own interests, leading to fragile institutions that collapse once international support is withdrawn (Zürcher, 2013). A more effective approach would be to involve capacity-building initiatives that empower local actors to take the lead in governance reconstruction, ensuring that institutions are resilient and respond to local needs.

Good political institutions are those that make it as easy as possible to detect whether a ruler or policy is a mistake, and to remove rulers or policies without violence when they are - David Deutsch

Economic Consequences of War

Wars wreak havoc on economies by obliterating the foundational elements that sustain them: infrastructure, markets, and industries. When conflict erupts, roads, bridges, power plants, and factories, vital arteries of economic activity, are often the first casualties, either because they are deliberately targeted or caught in the crossfire.

The Syrian Civil War, which has been raging since 2011, has demolished an estimated $226 billion worth of physical capital, according to the World Bank (2017). This has effectively erased decades of development. Markets collapse as trade routes are severed, supply chains disintegrate, and consumer confidence plummets. Industries, from agriculture to manufacturing, grind to a halt as labour flees, machinery is destroyed, and investment dries up (various sources). In Ukraine, the ongoing conflict with Russia since 2022 slashed GDP by over 30% in its first year alone, showcasing how swiftly war can unravel economic stability.

In the aftermath, the formal economy often gives way to a shadowy informal sector and thriving black markets. With traditional livelihoods shattered, people turn to unregulated trade to survive, bartering goods, smuggling, or dealing in illicit items like stolen fuel or looted artifacts. During the Balkan Wars of the 1990s, black markets for food, medicine, and weapons became lifelines for civilians and combatants alike, with some estimates suggesting they accounted for up to 50% of economic activity in besieged areas like Sarajevo. While these systems provide short-term resilience, they erode trust in institutions, undermine tax revenues, and complicate efforts to rebuild legitimate economic structures. The informal economy may keep people fed, but it leaves nations struggling to regain fiscal footing once the guns fall silent.

The fueling of war economies by activities such as illegal mining, arms trafficking, and drug production, further entangle post-conflict recovery in a web of corruption and instability. In the Democratic Republic of Congo (DRC), decades of conflict have birthed a multimillion-dollar trade in "conflict minerals" including coltan and gold, with armed groups controlling mines and pocketing profits. This has been estimated at $185 million annually by the UN.

War-driven enterprises don’t vanish with peace agreements; they morph into entrenched criminal networks that resist regulation and sap resources needed for reconstruction. The arms trade, too, leaves a lasting scar, global illicit arms flows, valued at $10 billion yearly, often persist in post-war zones, fueling insurgencies and delaying economic normalization.

Sadly, the ripple effects of these dynamics cripple long-term recovery, locking countries into cycles of poverty and dependence. Post-war nations can face staggering debt as they borrow to rebuild, yet the legacy of war economies diverts funds from schools, hospitals, and roads back into the hands of profiteers. Iraq, after the 2003 invasion, saw its oil sector, accounting for 60% of GDP, plagued by corruption and militia control, stunting broader economic revival despite billions in aid.

Statistics paint a grim picture: the World Bank notes that conflict-affected countries see poverty rates 20% higher than peaceful peers, with recovery taking an average of 10-15 years, if it even happens at all. War doesn’t just destroy economies; it re-wires them into distorted versions that resist peace’s promise. It’s sad but true.

The Role of Governance in Economic Recovery

Governance plays a solid role in economic recovery of post-conflict states. Effective governance makes sure that political stability enhances investor confidence and sets a foundation for sustainable economic growth. Poor governance, characterised by corruption and mismanagement can compromise reconstruction efforts and slow down economic growth (Collier, 2009).

Political stability is one such important factor. Stability reassures investors that their assets and capital were protected, encouraging both domestic and foreign investment. In contrast, political instability marked by recurrent violence, weak institutions, and contested governance stifles economic growth and discourages investors from reinvesting (Addison & Brück, 2009). For markets to function properly and businesses to operate without the constant threat of conflict or policy changes, a stable political environment is necessary. Governments that can implement long term economic policies, maintain fiscal discipline, and establish clear legal frameworks, hence, create the environment for sustainable growth. Thus, facilitating infrastructure building, as functioning roads, power grids, and communication networks attract investment and enable economic activity rely on a stable political environment (Collier & Hoeffler, 2004).

On the other hand, misallocation of resources, especially for essential development, hampers economic recovery and weakens public trust. In many post-war economies, weak institutions provide opportunities for political elites to engage in rent-seeking behaviours, diverting funds intended for reconstruction into private hands. This kind of corruption and mismanagement often derail post-conflict reconstruction efforts.

Mismanagement in reconstruction efforts is another critical issue. Poorly planned economic policies, lack of transparency in fund allocation, and inefficient use of international aid can lead to wasted resources and stalled progress. In the case of Afghanistan, billions of dollars of international aid allocated for rebuilding efforts, resulted in misused funds and failed projects, due to corruption and lack of oversight. This left the economy heavily dependent on external assistance rather than promoting sustainable growth (Goodhand, 2004).

Rwanda is a successful example. After the 1994 genocide, Rwanda implemented strong governance reforms, prioritising economic diversification and reducing corruption. The Rwandan government focused on private-sector-led growth, infrastructure development and strategic foreign investment, resulting in sustained economic growth and stability (Beswick, 2010).

Iraq serves as a case study of failed post-conflict economic recovery. Following the 2003 U.S invasion, Iraq faced persistent governance challenges, including political instability, sectarian violence, and widespread corruption. The lack of coordinated economic policies, combined with mismanagement of oil revenues and weak institutional structures, led to slow recovery and economic underperformance (Al-Ali, 2014).

We cannot be mere consumers of good governance, we must be participants; we must be co creators - Rohini Nilekani

Foreign Aid vs. Local Economic Solutions

Foreign aid and local economic solutions represent two distinct approaches to fostering development in struggling economies, each with its own merits and challenges. International aid, encompassing grants, loans, and technical assistance, plays a critical role in addressing immediate humanitarian needs and supporting infrastructure development. According to the Organisation for Economic Co-operation and Development (OECD), global official development assistance (ODA) reached $185.9 billion in 2023, with significant portions directed toward health, education, and disaster relief in low-income countries (OECD, 2024). A good example is that post the 2010 earthquake Haiti received over $13 billion in aid, which helped rebuild schools and hospitals (World Bank, 2021). However, critics argue that such aid often fails to address root causes of poverty, instead providing temporary relief that may not translate into long-term growth.

The impact of international loans, a subset of foreign aid, introduces additional complexity. While loans can finance large-scale projects—like the $4.5 billion IMF loan to Ukraine in 2023 for economic stabilization amid conflict—they often come with stringent conditions, such as austerity measures or structural reforms (International Monetary Fund, 2023). These conditions can strain local economies, as seen in Greece during the 2010s Eurozone crisis, where IMF and EU loans led to a 25% GDP contraction and unemployment rates soaring to 27% (Eurostat, 2020).

Conversely, local economic solutions, such as microfinance or community-driven agriculture projects, aim to empower populations directly. In Bangladesh, the Grameen Bank’s microloan program has lifted millions out of poverty since the 1980s, with repayment rates exceeding 95% (Yunus, 2017). Yet, scaling such initiatives to match the capital influx of foreign aid remains a challenge.

A key tension lies in the risk of dependency versus the potential to foster self-sustaining economies. Prolonged reliance on aid can undermine local innovation and governance, as evidenced by Zambia, where foreign aid accounted for 20% of GDP in the early 2000s, yet economic growth stagnated due to weak institutions (World Bank, 2022). Dependency often shifts priorities toward donor preferences rather than local needs—Sub-Saharan Africa, for instance, saw only 10% of aid between 2000 and 2020 allocated to agriculture, despite its role as an economic backbone (FAO, 2021). In contrast, countries like Rwanda have reduced aid dependency from 86% of the national budget in 1994 to 17% by 2020, leveraging local taxation and trade policies to achieve an average GDP growth of 7.5% annually (Rwanda Ministry of Finance, 2021). This suggests that while aid can provide a lifeline, self-reliance hinges on building robust domestic systems.

The private sector offers a compelling alternative or complement to both aid and local solutions by driving investment and job creation. Foreign direct investment (FDI) in developing economies reached $759 billion in 2022, dwarfing ODA and often targeting industries like manufacturing and technology (UNCTAD, 2023). For example, Ethiopia’s textile sector boomed after attracting $4.9 billion in FDI between 2015 and 2020, creating over 100,000 jobs and boosting exports (Ethiopian Investment Commission, 2021). Unlike aid, private investment prioritizes profitability and sustainability, potentially reducing dependency. However, it does carry risks, including profit repatriation or exploitation of lax regulations—as seen in Nigeria’s oil sector, where foreign firms extracted $600 billion since the 1960s while local poverty persisted (OPEC, 2022). Balancing private sector involvement with local ownership remains critical to ensuring equitable growth.

Reconstruction

Reconstruction after the destruction of war is a complex process that involves restoring both physical assets and the social fabric of affected communities. The physical toll of war is staggering: during World War II, an estimated 27,000 buildings were destroyed in Cologne, Germany alone, with 85% of the city’s infrastructure reduced to rubble (Overy, 2013).

Typically, rebuilding begins with clearing debris and prioritizing critical infrastructure, roads, bridges, and utilities. The Marshall Plan, enacted in 1948, exemplifies organized reconstruction, injecting $13 billion (over $135 billion in today’s dollars) into Western Europe to rebuild factories, railways, and housing (DeLong & Eichengreen, 1993).

This effort was meticulously coordinated by the U.S. and recipient nations, with funds allocated based on detailed economic assessments. Surprisingly, communities often show remarkable resilience; in Cologne, citizens began clearing rubble with their bare hands even before aid arrived, a testament to their determination to reclaim their lives.

The social impact of war is equally profound, with communities facing displacement and trauma. After the Rwandan Genocide in 1994, over 2 million people fled, fracturing social networks (United Nations, 1996). Reconstruction here went beyond physical rebuilding to include social healing, organized through the Gacaca courts, which were a community-led justice system that processed over 1.2 million cases to foster reconciliation (Clark, 2010).

This grassroots approach highlights resilience: despite losing 800,000 lives, Rwandans rebuilt trust through local initiative, with 92% of surveyed participants in 2006 reporting improved community cohesion (Pham et al., 2004). Schools and healthcare facilities were also rebuilt, often with international aid funneled through local leaders, showing how organization blends external support with community agency.

Economically, war devastates livelihoods, but recovery efforts reveal surprising adaptability. Returning to the conflict in Syria which is ongoing, an estimated 35% of the country’s GDP ahs been destroyed, with damages estimated at $226 billion (World Bank, 2017). Yet, in rebel-held areas like Idlib, small markets sprang up amidst ruins, with locals trading salvaged goods, a resilience born of necessity.

Reconstruction is often organized by a mixture of partners, with the World Bank often prominent. They coordinated $4 billion in loans for Syria’s neighbours to manage refugee impacts for example, while local NGOs prioritized agricultural revival to produce food (World Bank, 2017).

In post-WWII Japan, the government led reconstruction, building 2.3 million homes by 1955, supported by U.S. aid but driven by local labour and planning (Dower, 1999). There is no one formula, but approaches that are both top down and bottom up can gain traction where others fail. At the end of the day, people are resilient and find a way to survive and recover in the most difficult of circumstances. It says something about the human spirit, the will to survive, and the quest for a better life.

To express this in more formal terms, interplay of physical and social reconstruction reveals a deeper truth: resilience thrives when organization aligns with local will. In Ukraine, since Russia’s 2022 invasion, 10 million people have been displaced, yet over 70% of damaged power grids were repaired within a year, thanks to coordinated efforts between the government and international donors like the EU, which pledged €25 billion (European Commission, 2023). Communities organized volunteer brigades to rebuild homes, with one village, Yahidne, reconstructing 80% of its housing by 2024 despite ongoing threats (UNHCR, 2024).

This resilience, which seems surprising in both its speed and scale, shows how reconstruction transforms devastation into renewal when there is alignment and common purpose.

Conclusion

The journey from war-torn devastation to sustainable peace and prosperity is neither linear nor guaranteed. Post-conflict states face immense challenges in rebuilding political institutions, restoring governance legitimacy, and revitalising shattered economies. However, as history has shown, with the right policies, leadership, and international and national support, these nations can transition from crisis to stability.

Governance plays a foundational role in economic recovery, shaping investor confidence, institutional trust, and long term sustainable development. Political stability creates an environment where businesses can thrive, infrastructure can be rebuilt, and citizens can regain a sense of normalcy. Yet, the risks of corruption, mismanagement, and external dependency loom large. Successful recovery efforts require a delicate balance between external assistance and local ownership, ensuring that reconstruction efforts are sustainable and aligned with the socio-political realities of affected communities.

Economic recovery, in turn, is indispensable for lasting peace. War-ravaged economies must overcome structural damage, reliance on informal markets, and illicit war economies that persist beyond the conflict itself. International aid does provide crucial lifelines but true recovery depends on governance that prioritises inclusive economic policies, transparent institutions, and equitable resource distribution.

Finally, transforming battlefields into thriving communities demands a multifaceted approach - one that integrates governance reforms, economic revitalisation, and social reconciliation. The success stories of Rwanda and other nations demonstrate that resilience, strategic planning, and commitment to long term stability can lead to remarkable recoveries. As post-conflict states embark on this burdensome path, their ability to rebuild strong institutions and inclusive economies will determine whether peace is fleeting or enduring.

The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis - Ben Bernanke

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