An economic theory of war: the Syrian example beyond religion and ethnicity

When we look at the Middle East today, we directly think of inter-religious, inter-ethnic and politically motivated conflicts triggered by some event. Take, for example, the Syrian civil war and the first Arab spring demonstrations there, which took place in the city of Daraa.

This raises the question: can we create a general theory of war that works for every conflict, rather than thinking of war as a series of individual circumstances? On the one hand, journalism has a tendency to present war as a single timeline within a context, implying that there are direct causal relationships between events. On the other hand, historians and political scientists have put forward different unifying theories of war: it could be part of a bargaining process between states or factions within a state (Bargaining model, James D. Fearon); wars could occur simply because no one can stop them (“Anarchy” theory, Kenneth Waltz); other researchers present wars as unique events that cannot really be theorised and depend on the belligerents’ culture (Why Wars Happen, Jeremy Black). This is actually a clear refinement of the journalist approach.

Recently, there has been an interesting trend among war and civil war theorists to use utility functions, increasingly collaborating with economists to create stylised micro models. They use expected utility, information and commitment problems, such as adverse selection, moral hazard and bargaining theory. This approach is very elegant but is also rather difficult to test. How should we, as young economists, theorise war? Can we validate this theory using the Syrian conflict?

A warmonger’s objective

Taking a modern war economics perspective, it must be that the initiator of a war has an economic, political, or social interest in starting it, and that the other protagonist benefits from fighting back. Both must also reward their supporters, or at least spare them a very high loss. In reality, wars are not only extremely costly in terms of human life and liquidity, but also in terms of infrastructure, human capital, trade, and international reputation. Yet wars still happen.

ethnicsyria_izady2000From the 2017 World Bank report The toll of war, the economic and social consequences of the conflict in Syria, World Bank, on the fallout of the Syrian conflict, we know that a third of Syria’s total residential buildings have been destroyed, that half its population has been displaced, and that around 450,000 people have been killed. Most importantly, Syria’s nominal GDP has contracted by 61% since 2011.

Let us assume that the agents or factions partaking in the war are rational. Then, for a war to start, it must be that one of the protagonists expects at least some long-term benefit from it. This rationality assumption is very plausible because starting a war is not a one-man decision, even in the most despotic regimes. Here, the important point is that the agents’ expectations entering the war are positive, but are also based only on the information available to them. This information is obviously not perfect and often too optimistic. This explains why countries and factions start wars they cannot win, or wars that leave them worse off in the long run.

Take, for example, Saddam Hussein’s invasion of Kuwait in August 1990 and its aftermath operation “Desert Storm” in January 1991: after two conflicts with Iran, Iraq’s finances were depleted, so Saddam decided to invade Kuwait in order to claim its vast oil reserves and lift up Iraqis’ spirits to protect his regime. He completely underestimated the probability of a United Nations backed intervention against him. The invasion destroyed Iraq’s reputation and led to tremendous military losses. It is considered as the main reason for Saddam losing his grip on power in the following years, which ultimately led to his disposal in 2003.

The factors behind the conflict: resources, information and grievance

Factions engage in a war because, based on their current information, they can get something out of it in the long run. Army size and firepower are both important factors that come into play in these decisions. If a faction has no way of defeating another, it could either not rebel at all, start an insurgency, or a low intensity conflict. This is the case with Afghanistan’s Taliban, ISIS in Syria, and Iraq, now that its standing army has been more or less defeated. As for the other factors, there are major differences in opinions between war economists. Paul Collier is famous for advocating a greed model in opposition to a grievance model. He argues that, ultimately, any group that engages in war is motivated by two main economic variables, the first being the presence of natural resources in a specific region: these resources are vital and at the same time indivisible, because only one group can control them. The second is economic marginalisation, or more precisely, perceived economic losses and lack of opportunities.

Again, let’s take Syria as an example. Alawites-dominated cities, which are mainly in the western part of the country, have considerably developed in comparison to the east, despite many oil fields and gas deposits being located there. Another big issue is water: the Tigre and the Euphrates have their source in Turkey and are vital for less developed areas in Syria, which are located downstream. This is also true for Iraq, which lies even further downstream. The upstream, however, is controlled by Turkey and Assad’s regime, which have built dams and pumped most of the water for themselves. Last but not least, Syria’s population went from 3 million in 1950 to 22.5 million in 2011, with its youth (age under 25) representing 56% of its total population. A third of working age young Syrians are unemployed, and this figure is even higher for the highly educated. From this point of view, the Syrian conflict does not look so much like it is caused by ideological differences or racial and religious hatred between Kurds and Arabs, or Sunnites and Alawites, but mostly by extreme economic marginalisation and inequality between Alawite dominated regions and the rest, and between the old and the young.

Collier’s theory is very useful and has been tested successfully by using the Taliban insurgency since 2001 or Sri Lanka’s civil war from 1983 to 2009. Nevertheless, this theory can be too simple. David Keen, one of his staunch opponents, believes that to model a conflict, leaders and supporters should have different utilities and that greed and grievances can be combined and feed off each other. He takes the case of the second Sudan civil war (1983-2005) and argues that Northern leaders stirred up the resentment and hatred of Arab militias so that they would commit crimes in the South and, in the end, depopulate it. These exactions took place precisely at the current frontier between North and South Sudan, where all of Sudan’s oil fields are located. Hence, the leaders’ interests were both ideological and practical, demonstrated by attacking the Christian and pagan South, and controlling important natural resources, respectively. As for the militias, they did more than share the ideology of their leaders. That is why they were able to commit atrocities that economic disfranchisement could never excuse. Similarly, the systematic use of rape and torture by Islamist militias (both Sunni and Shia) in the Iraqi-Syrian conflict cannot be driven by greed only.

Despite being a young field, war economics, much like political or identity economics, is proving itself to be very useful because its theories can be tested. It is so useful that other social sciences are copying its methods and models. This is not just a trend: in all kinds of social sciences, economics is playing an increasingly important role. In my opinion, it is becoming the default quantitative social science because it puts as much emphasis on the empirical side as it does on the theory, and because theories are tested. It is no longer accepted in economics to “talk the talk” and design a nice theory without “walking the walk” by either proving or disproving it seriously with the help of data.

 

by Hippolyte Boucher

 

Featured Image: Before (2015) / After (2017) Al-Nuri Mosque Neighbourhood

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