A Conflict-Sensitive Approach to Public-Private Partnerships

8/14/2019 A Conflict-Sensitive Approach to Public-Private Partnerships

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A Conflict-Sensitive Approach to Public-Private Partnerships

Final paper

MA on Coexistence and ConflictBrandeis University, Waltham, MAProfessor Mari Fitzduff

submitted by Torsten Sewing, 15 December, 2008


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This paper is dedicated to

my wife Salla and our child Toivo both of whom went through a lot

of ups and downs

to make this entire course happen.


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ExecutiveSummary...................................................................................................................... 4Acknowledgements ...................................................................................................................... 5Abbreviations ................................................................................................................................. 6Introduction[Whatisatstake?]............................................................................................... 7StatementoftheCoexistenceProblem[Whyconflictsensitivity?]............................12 Literaturereview ........................................................................................................................15

CSRandconflict..........................................................................................................................................15 DonoHarmandConflictsensitivity..................................................................................................18 PeacethroughCommerce?....................................................................................................................21 Rationale,processes,difficultiesandlegitimacyoftheGermanPPPprogram..............22

Learningobjective ......................................................................................................................26Methods[Howtoproceed?].....................................................................................................27 Presentationoftheevidence...................................................................................................31

(1.) ConflictsensitivityforPPPsdoesitpay?..............................................................................31 (2.)HowtoestablishconflictsensitivePPPs................................................................................35

Conclusion .....................................................................................................................................43Recommendations ......................................................................................................................45Bibliography .................................................................................................................................46Appendix ........................................................................................................................................49


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Executive Summary

This paper introduces some insights of conflict sensitivity into the private and the pub-

lic sectors co-operation in developing countries by aligning the private partners re-

quirement for managing risks with the public partners want for crisis prevention.

Thus, the paper points to the needs and opportunities of the German development pro-

gram for Public-Private Partnership (PPP) in conflict-prone zones. It will show that

the economic impact of these partnerships on conflict prevention significantly diverges

from the impact of traditional private sector development. Subsequently, the layout of

partnerships will be discussed towards questions about corporate responsibility, com-

munity involvement, fairness, and human rights.

However, ensuring the sensitivity of the project-design towards a local context on is-

sues of conflict is currently not part of the agenda of PPP. The paper tries to identify the

reasons for this. I shall then discuss the reluctance of the Public-Private Partnership

program towards conflict-sensitive approaches in conflict-prone countries, and put for-

ward a process that could change this.

The paper suggests that this change will improve the management of partnerships

through some of the insights and methods that conflict-sensitive programming pro-

vides. A first draft of a tool that aims to raise awareness towards the benefits of con-

flict sensitivity is presented here.

As a start of a participatory action research (PAR), this paper opens the dialogue on this

tool and process within the German Development Corporation.


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Acknowledgements

Thanks to

my professor Mari Fitzduff for her inspiration and support all along;

Christina Gradl for valuable suggestions on the first draft of this paper;

Ariane Moser for her friendly support during the time at GTZ;

and to the PPP project managers for being available to a lot of questions

from an outsider.


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Abbreviations

BMZ Bundesministerium fr wirtschaftliche Zusammenarbeit und Entwicklung

C0, C1, C2 Conflict Marker

CDA Collaborative for Development Action

CSR Corporate Social Responsibility

DAC Development Action Committee

DEG Deutsche Entwicklungsgesellschaft

DRC Democratic Republic of Congo

GPPi Global Public Policy InstituteGTE Ghorka Tea Estate

GTZ Gesellschaft fr technische Zusammenarbeit

IA International Alert

IBLF International Business Leaders Forum

ISA Independent Service Authorities

KfW Kreditanstalt fr Wiederaufbau

LICUS Low-Income Countries Under Stress

MNC Multinational Corporation

NGO Non-Governmental Organisation

ODA Official Development Aid

OECD Organisation for Economic Co-operation and Development

PAR Participatory Action Research

PCR Post-Conflict Reconstruction

PPP Public-Private Partnership

PSD Private Sector Development

SAP Systems, Applications, Products - largest European software firm

WBCSD World Business Council on Sustainable Development

WEED World Economy, Ecology and Development


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Introduction [What is at stake?]

In 2006/7, a Public-Private Partnership (PPP12) with a German tea-import company was

in the planning stage. In addition to the tea-import company, which was the private

partner, the PPP consisted of the German Development Corporation (GTZ) and a local

party in Nepal. The GTZ/PPP-department, who managed the partnership, benefited

from the experiences of a Private Sector Development (PSD3) program that had started

in 2004.

In Nepals violent conflict, during which in the course of 10 years (1996-2006) around

12.000 people lost their lives, a PSD program worked to improve the value chain of

growing, fermenting, transporting and eventually exporting tea from Nepal. The pro-

gram focused on strengthening the capacities of the local exporters. However, export

was frequently disrupted. The insurgency in Nepal was class-based, and the Maoist

insurgents attacked businesses, demanded extortions, organised strikes and blocked

roads. As a result, not only did the value chain suffer, but also the program itself had to

be reassessed.

Do no Harm (Anderson: 1999) is an internationally accepted standard that has be-

come a minimum requirement for all organisations operating in regions of (potentially

violent) conflict. Doing no harm means avoiding the negative impacts of an inter-

vention. A set of questions has to be answered. The goal is that the organisation under-

stands the context and how the intervention interacts with this context. The organisation

should also understand what possible actions could be taken to ensure that the interven-

tion minimises any negative impact. In the given context, the core question was: did the

1Please note that this paper does not focus on the details but just on the general framework of PPP. The

expected changes through a relaunch of the program are not part of the study (apart from a comment, seefootnote 13). This relaunch was not finalised and communicated during the time of research.

2The terminology of the German PPP is not consistent with the generally established use of the term:

Public-Private Partnerships is a fixed term, used to contract out public services. Maybe the PPP-program should rather be named Public-Private Development Partnerships?

3PSD is a department in the GTZ. To make the distinction between PSD and PPP visible, it could be said

that the PPP-program implements development programs in a top-down fashion (from companies fromdeveloped countries (North) to companies and settings in developing countries (South). PSD focuseson building economic infrastructure from bottom-up (South to North) as it aims on facilitating local eco-nomic infrastructure which might over time participate in the global economy.


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PSD program make the right decision in its selection of the beneficiaries of the inter-

vention?

The check carried out by the PSD-staff revealed that those most affected by the conflict

had been the tea producers, who are mostly located in rural areas. Violence was exerted

in these areas in particular, and since the tea-producers depended on a value chain that

was now disrupted, they suffered from the conflict both directly and indirectly. After

identifying this hardship, the PSD program balanced the interests of the exporters and

producers, which meant shifting the focus from the tea exporters to the tea producers.

As a result, the value chain improved, because some demands towards better working

conditions had been fulfilled. (See GTZ, 2008: 36)

In trying to improve the tea value chain, the PPP looked at the interests of both the pro-

ducers and exporters. The PPPs aim was to improve the position of the farmers

through implementing a code of conduct for producing organic tea and with this, to

increase the competitive position of the tea exporters. However, a Do no Harm check

never took place.

Nepals business community is controlled by a handful of business houses. Ethnically,

the major economic players are the Marwaris, people of Indian origin. Their presence is

dominant in all key sectors of industry, trade and services ... In the wider population,

there is resentment against the Marwaris as outsiders (International Alert, 2006:

410/11)

The publication Local Business, Local Peace (2006) lists selected wrongdoings:

workers are denied living wages and benefits; the majority of the workforce is working

without contracts, thus leaving no channel for official complaint; there are also hiring

practices that discriminate against ethnic origin, political background and gender. Omi-

nous security groups are at work, hired by businesses and acting in a manner of a pri-

vate army. These wrongdoings are coupled with large structural inequalities in society.

Businesses could do a lot to change all this: they can address these issues, they can im-

prove community services, build safety nets for workers, develop inclusive hiring prac-


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tices and mitigate structural inequalities in society. Could the PPP have worked towards

addressing these issues?

Looking back on the partnership negotiations that took place early 2007, there had been

a strong commercial interest for the third party, Ghorka Tea Estate (GTE), to partake in

this PPP: being the local partner, GTE could secure preferential customer relationships

to one of the worldwide leading tea companies for high quality, organically grown tea;

they could profit from the know-how of growing organic tea and could select the far-

mers according to their earlier relationships (yet another reason for carrying out a Do

no Harm assessment), thus strengthening their own supply chain. And, since the co-

operation with the German company, TeeGschwender, would not be exclusive, they

would have the first-mover advantage that could secure them business with other tea

companies focusing on the segment of organic tea.

It is an assumption that any requirements by GTZ regarding work practices within this

PPP would have been met and implemented by GTE. It is an assumption, because these

issues were not discussed. Following these discussions and possible agreements, a

check-up could have been carried out from time to time through unannounced factory

visits by either independent consultants or by the GTZ-personnel present in Nepal.

With this, a PPP classified as working in conflict but not on conflict could have

contributed to peacebuilding activities a small investment with a high leverage.

In assessing these lost opportunities, it seems timely to find out why conflict sensitivity

is neglected in the programming of PPPs, and how it could be integrated.

Conflict sensitivity takes account of an organisations impact on to a conflict. Under the

caveat that conflict sensitivity would need to be implemented mainly through negotia-

tions and basic desk research as described above, this could nevertheless contribute to

designing PPPs in areas of heightened or acute need for crisis prevention4 - or, as this

paper will refer to them, conflict-prone countries.

According to a German government report (2008: 72), almost one third of PPPs are

located in a conflict-prone setting. Thus, PPPs could be an excellent vehicle with which

4 Country analysis provided by Giga-Research on behalf of the BMZ, see appendix.


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to prove the need and opportunities of conflict sensitive behaviour on a small scale.

After all, the PPP-program has been developed by the German Ministry for Economic

Cooperation and Development (BMZ) and it is implemented by the German develop-

ment corporation (GTZ) and other implementing agencies5. The public partner offers

vast experience in development, including the knowledge that conflict sensitive prac-

tice is needed in all economic activities in development (GTZ 2008: 14). According to

the action plan Civilian Crisis Prevention, Conflict Resolution and Post-Conflict

Peacebuilding (2004, 116)), this is a declared goal of the PPP-program, defined by

BMZ.

In practice, however, a conflict sensitive design is not seen as relevant to the framework

of PPPs. This paper will highlight the reasons for this policy. At the same time, the pa-

per also questions the lack of awareness within the GTZ/PPP-department towards the

needs and opportunities that this sensitivity would provide; in November 2008, only

seven PPPs (of a total of over 700 since 1999) implemented by GTZ mention conflict

risks in their ongoing status reports (See appendix for one of them, the PPP described

here). The needs refer to the PPPs involvement in a conflict-prone area, and what this

involvement entails. The private partner is often a new player in the conflict-pronearea (such as TeeGschwendner), while a third party (such as GTE) is brought in by the

private partner. Most PPPs rely on the activities of this third party.

This study argues that insights gained through conflict sensitivity can be seen as oppor-

tunities in managing the risks of companies. The awareness of a potential conflict will

guide the actions by companies going into communities in which they do business.

Once these actions are guided by conflict-sensitivity and thus the principles of Do no

Harm, they can maximise the positive impact on the community. At the same time,

these actions can become a tangible opportunity to the company.

However, conflict sensitivity has not been a regular element in the PPP-program. The

paper will try to understand the reasons for the lack of conflict sensitivity in GTZ/PPP.

Further, it will ask whether GTZ could introduce elements of it and still arrive at some

5Other implementing agencies include KfW, DEG, Sequa they have a mostly similar set-up of imple-

mentation, differences of which are not in the focus of this paper.


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benefits that conflict sensitivity proper offers. In its reasoning, the studyfirstly dis-

cusses if GTZ should drive conflict sensitivity forward within its PPP-program,sec-

ondly what impact this would have on the business practice of PPPs, andfinally how

the risks in the PPP-delivery can be managed through conflict sensitivity.


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Statement of the Coexistence Problem [Why conflict sensitivity?]

Along with globalisation shifting the roles of business and society, co-operative models

between public and private sector have gained in importance including in how to deal

with fragile states. Three arguments towards the implementation of conflict sensitivity

into PPPs are salient: it could be a comprehensive way to facilitate and further stabilise

a PPP; it could be an exercise in building trust; and finally, it could integrate PPPs more

closely into the overall crisis preventive policies the public sector demands.

Founded as a state-owned company under private law in 1975, GTZ is not entrepreneu-

rially driven and works on a public-benefit basis with the BMZ as its major client. All

surpluses are channelled back into its own international cooperation projects for sus-

tainable development. In 2007, the overall project budget of GTZ exceeded !1 billion

for the first time. The company employs some 12,000 staff in more than 120 countries

in Africa, Asia, Latin America, and the Eastern European countries in transition as well

as the New Independent States (NIS).

The GTZ/PPP-department is an attempt to use more than 30 years of development ex-

pertise in an entrepreneurial fashion. Here, we embrace the companies capabilities tointroduce them into topics of development cooperation, says Jrg Hartmann, executive

director of the PPP-department (22. August 2008). As a constituting element, PPPs

offer a business-enabling environment, targeting issues such as corruption, health or

environmental concerns. Indeed, these issues can often be dealt with more successfully

in a partnership than through activities by either the public or the private sector alone.

The former Secretary General of the United Nations, Kofi Annan, referred to the need

to overcome the limits of international governance through partnership with the private

sector when he stated that

peace and prosperity cannot be achieved without partnerships involving Gov-

ernments, international organisations, the business community and civil society.

In todays world, we depend on each other. (Annan, 31.01.1998).

And, referring explicitly to (post-)conflict situations, Christoph Zrcher remarks:

Consequently, I depart from the notion that statehood is provided solely by the


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state. Instead, I suggest that we think of statehood as a product that is produced

by the state in association with other actors. There are examples abundant when

statesoutsource intentionally or not the provision of basic functions to ex-

ternal actors. It is sufficient to think of who provides security in Afghanistan or

Tajikistan, domestic authority in Kosovo or Bosnia, or public services inMozambique or Burundi.

There are also international institutions and organizations in place to assume

these functions think of the UN transitional administration, the international

forces in Afghanistan, or of the World Banks suggestion to set up so called

ISAs (Independent Service Authorities) in low-income countries under stress

(LICUS). ISAs would provide basic services, being independent from gov-

ernment and acting like wholesale contractors with multiple channels for retail

provision. In essence, ISA is the outsourcing of basic state services to a private,

donor-funded organization. (Zrcher, 2007: 14)

Of course, the PPPs that are the focus of this paper are smaller in volume and impact

than the ones described by Zrcher. However, the functions are comparable: the private

and the public partner work together to identify opportunities for the provision of

basic functions that improve development. In this, development corporations such as

GTZ help the private partner to identify underserved markets. And, since GTZ has

identified conflict sensitivity as a minimum standard for economic interventions (PSD),

it can be argued that the role of GTZ in partnerships with the private sector could in-clude elements of conflict sensitivity with the agreed aim from both sides to stabilise

a PPP.

A major task of the dialogue between the public and the private partner is to under-

stand differences and commonalities, with the goal of aligning or even synthesising

interests. The insights of conflict sensitivity might then be a facilitator for creating

common ground something that has not yet been discussed within the German PPP-

program. Agreeing on the common groundof a partnership can stabilise a PPP. More-

over, it can lead to building trust.

The lack of appreciation for conflict sensitivity within the PPPs relates to the overall

coexistence problem dealt with in this paper: how can the private partner be guided to

the needs and opportunities of conflict sensitivity? And, what is the role of third party

companies that are already located in conflict-prone countries? How can both partners


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behaviour and track record be checked for conflict sensitivity with the (limited) re-

sources available in the GTZ/PPP-department?

Of course, conflict transformation is not a primary objective of PPPs or for that matter

of economic development programs in general. However, a GTZ/FIAS Practitioners

note (2008: 7) states that applying a purely technical approach to economic develop-

ment brings with it the risk of failure. To avoid this or to minimise the risk, a process

can be designed from the onset. The private partner is helped by the public partner to

look at potential risks and opportunities by discussing these in regards to the new

business operation before it is operational. The public partner gains information on the

basic conflict sensitivity of the partnership. This paper argues that such a process can

transform the private partners activities within a PPP towards raising awareness for a

conflict-sensitive practice. This could, in turn, feed back and partly close the gap that is

a major challenge for the PPP-program itself: how to mediate interests between the

public and the private sector.

According to Conflict prevention the Untapped Potential by the Business Sector by

Andreas Wenger and Daniel Mckli (2003: 85 ff), cooperative approaches between

corporations and the public sector are the best option to successfully tap into the crisis

prevention potential of business. In the same vein, PPPs would provide opportunities to

integrate conflict sensitivity as long as all partners agree that this reduces the risks of

an operation. However, it can be an arduous process to introduce conflict sensitivity

and it might be far too expensive for GTZ/PPPs with their restricted budgets and lim-

ited frameworks. On the other hand, IA (2004: Chapter 2, point 2.) states that some

[conflict] analysis, no matter how imperfect, is better than no [conflict] analysis at all.

Similarly, it could be argued that some conflict sensitivity, now matter how imperfect,

is better than no conflict sensitivity at all. Moreover, the result of the process would

not carry regulatory requirements but would be left with the business as it is agreed

between that partners that the process will not be implemented, if the advantages are

not perceived by both. Thus, the purpose of this paper is to introduce some insights of

conflict sensitivity into the management of risks within a PPP and to offer both part-

ners a tool to do so.


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Literature review

Introducing the concept of conflict sensitivity into the corporate environment is in line

with the increased societal responsibility companies perceive through the impact of

globalisation. New partnerships between governments and businesses account for this

changing role. This is acknowledged by the German governments action plan for crisis

prevention as well as through the upsurge of CSR or Corporate Social Responsibility.

CSR and conflict

CSR is anything but stringently defined. Making good business sense6, a publication

by the World Business Council on Sustainable Development (WBCSD) provides inter-

esting examples of different societal needs factoring into the definition of CSR: Ghana

formulates a business case for CSR by stating that it "is about capacity building for

sustainable livelihoods. It respects cultural differences and finds the business oppor-

tunities in building the skills of employees, the community and the government", while

in the Philippines CSR is about giving back to society. Both reflect upon the tradi-

tional differences of CSR in the USA and Europe: whereas the former goes back to

the giving back instigated by the corporate citizenship of a company, the latter inte-

grates social responsibility into the wealth creation process. To the WBCSD, "CSR is

the continuing commitment by business to behave ethically and contribute to economic

development while improving the quality of life of the workforce and their families as

well as of the local community and society at large". In taking this up, the European

Commission decided to explicitly stress the voluntary nature of corporate responsi-

bility: CSR is a concept whereby companies integrate social and environmental con-

cerns in their business operations and in their interaction with their stakeholders on a

voluntary basis

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. The commissions definition has not been accepted without strongopposition. One of the more prominent examples is a resolution by the European Par-

liament in 2007 to revise the voluntary nature towards a more regulative one in regards

to introducing international social and environmental standards8.

6www.wbcsd.org/web/publications/csr2000.pdf

7EU green paper on CSR, 2001, available at http://ec.europa.eu/employment_social/soc-

dial/csr/index.htm8 see e.g. http://www.cleanclothes.org/publications/07-03-15.htmfor a summary.


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However, in looking at the role of business in crisis prevention, the case can easily be

made that CSR is about how companies manage their business processes to produce a

positive impact on society. This can include a call for regulation, for instance in cases

where good governance is needed to build reliable business operations. Still, businesses

frequently do not adhere to the regulatory standards established in developed countries.

It is this governance gap that is heading the heated debate on business and human

rights.

Excursus: Differences in CSR home states and host states.

In the developed world, CSR is seen as companies voluntary exercise delivering

more than is required more often than not in the interest of public relations and

with the aim of increasing the companies brand value. In the developing world,

CSR has an entirely different function: it can establish a framework for business,

and it is often a major proponent in establishing compliance9. A publication by

the Peace Research Institute Frankfurt points to the fact that corporations

seem to be increasingly drawn into playing public roles to compensate for

governance gaps and governance failures at global and national levels ....

But given that private corporations pursue private purposes, the question is:under what circumstances and to what extent, if at all, can they be expected

to provide regulatory governance functions in the public interest? (Wolf et

al., 2005, quoted from Schuppert, 2008).

Virginia Haufler has a more appreciative opinion on the role of business:

When companies establish their own rules and standards in socio-political

areas, these can complement or supplement government regulation, espe-cially in countries with weak capacity to regulate. International standard

setting fills in the gaps where national regulatory systems conflict or remainsilent. Where governments do not govern,the private sector does often inresponse to the demands of public interest groups who find themselves un-

able effectively, political leaders may see private governance as a valuable

tool to achieve public ends. (Haufler, 2001: 29, italics by TS)

In any case, the definition of CSR must take into account different contexts.

Otherwise, there is a danger of misunderstandings such as the belief that the

9This again touches the question of legitimacy posed by Brhl et al. (2001), as the business executives in

charge are of course not being elected and moreover have little understanding of a countrys problemslooked through the lens of their business activities.


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introduction of social standards is voluntary. The report by the UN-General

Secretarys Special Envoy on Human Rights (2008), John Ruggie, points to these

governance gaps and suggests that a process of due diligence be introduced in

corporations. To carry out this process, he recommends the consideration of

three sets of factors. The first is the country contexts in which their business

activities take place, to highlight any specific human rights challenges they

may pose. The second is what human rights impacts their own activities

may have within that context - for example, in their capacity as producers,

service providers, employers, and neighbours. The third is whether they

might contribute to abuse through the relationships connected to their ac-

tivities, such as with business partners, suppliers, State agencies, and other

non-State actors. (Ruggie 2008: 57).

With this, Ruggie paraphrases the three steps towards conflict sensitivity outlined be-

low: understanding of the context, understanding of the interaction between the inter-

vention and the context, and acting upon the understanding of this interaction (see p.

19). Thus, the due diligence process of corporate activities is guided by the demand for

conflict sensitivity providing the environment in which public-private partnerships

and CSR is rooted.

As a result of applying the suggested due diligence, the business behaviour changes.

Ideally, the business progresses from being a mere part of society to acknowledging its

impact on society. In situations of (potentially violent) conflict, this progression equals

the awareness towards conflict sensitivity. And, it leads to an enlightened CSR that is

enabled to use a companys impact strategically.

In order to understand the role of conflict sensitivity within the CSR-policies of com-

panies, it is helpful to look at the concept of the sphere of influence.

The term is used in the United Nations Global Compact first two principles:

"(b)usinesses should support and respect the protection of internationally proclaimed

human rights within their sphere of influence; and make sure that they are not complicit

in human rights abuses."10

Moreover, with the increasing importance of corporations in

10http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html


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the global economy, it can be argued that their challenge extends into guarding human

rights, too. It is this guardianship that can be perceived not only as CSR but also as a

hedging strategy in managing risks. This strategy is enabled through the best and most

important asset of business: its ability to adapt to different contexts.

Thus, companies operating in conflict-prone countries benefit from management sys-

tems that are able to deal with this context. Paraphrasing Ruggie, these management

systems boil down to one central question:How can the interaction between company

investments and (potentially violent) conflict be understood and addressed to the ben-

efit of business and host societies? This question ties together the three steps for con-

flict sensitivity (see p. 19), and the needs of businesses. Moreover, it includes the rela-

tionship of a company to its sphere of influence: when a company interacts in a

situation of (potentially violent) conflict, it must support and respect human rights.

Do no Harm and Conflict sensitivity

In 2001, the Forum of Early Warning and Early Response (FEWER), International

Alert (IA) and Saferworld launched a program called Conflict sensitive approaches to

development, humanitarian assistance and peace building: tools for peace and conflict

impact assessment. The program coined the term conflict sensitivity by extending the

work of Mary Andersons Do no Harm. While Anderson had focused on the impact

of humanitarian organisations in conflict scenarios, the extended definition according to

de la Haye, Moyroud referred to

the need for organisations ... to be sensitive to the (conflict) environments in

which they operate, in order to reduce the negative impacts of their activities

and to increase their positive impacts on the situation and its dynamics. In this

sense, conflict sensitive approaches to development need to be adopted in

situations of violent conflict, as well as of unstable peace (de la Haye, Moyroud2003: 2).

In addition to this, conflict sensitive approaches are comprehensive and integrated

throughout the whole management cycle of a project. They are not limited to interven-

tions specifically working on conflict(Goodhand: 2001) and they require innovative

thinking beyond defined objectives and immediate results.


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In 2004, IA delivered a further structural clarification in their publication Conflict-

sensitive approaches to development, humanitarian assistance and peace building,

listing the three steps towards conflict sensitivity: it needs an understanding of the

context, understanding of the interaction between the intervention and the context, and

acting upon the understanding of this interaction (IA 2004: chapter 2, page 1). From

this angle, Do no Harm is not an approach nor a description of what is at stake or what

should be achieved. Instead, it is a process to achieve conflict sensitive programming.

For the purposes of this study, clarification is needed, as Do no Harm is all over the

place in the CSR-community, but this Do no Harm is quite different from how we

understand it (E-mail to the author from Luc Zandvliet of the Collaborative for Devel-

opment Action). When discussing the concept of Do no Harm in the GTZ/PPP-

department, I frequently encountered the term understood as action slightly beyond

compliance in regards to all general matters a company is involved in. Do no harm is

not enough, I repeatedly heard from the PPP project managers, as companies them-

selves claim Doing well by Doing Good as their corporate responsibility. So, even

though corporations might not walk the talk, see e.g. Grayson/Hodges (2004), of cor-

porate responsibility, business will often insist on being beyond Do no harm with-out referring to conflict sensitivity.

Do no Harm is a tool that is based on the perception that

international assistance can make conflict worse in two ways: it can feed inter-

group tensions and weaken intergroup connections Conversely, aid can help

war to end by lessening intergroup tensions and strengthening intergroup con-

nections. (Anderson: 69)

To analyse tensions and connections, Anderson postulates that all societies are charac-

terised by dividers elements, people, organisations that divide people into sub-

groups. Equally, there are elements, people and organisations that connect people

within societys subgroups. General questions on motivation, location, timing, re-

sources, beneficiaries (and people not benefiting), staff and delivery mechanisms pro-

vide a framework that analyses the mandate of the intervention. The answers that the

framework produces are able to identify dividers and connectors. The entire process is


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not a one-time one-off exercise: rather, it should be carried out regularly and, if neces-

sary, redesigned.

Subsequently, while Zandvliet, CDA and other conflict resolution practitioners per-

ceive the character of Do no Harm as a process and as an analytical framework, the

CSR-community sees it as a content issue.

The behaviour of the private sector in situations of conflict is within the remit of the

policy framework of the German government. The BMZ, however, paints an even lar-

ger picture of how to deal with conflict-prone countries. To them, crisis prevention is

seen as the risk management process of the German government: as the development

corporations work is accountable to the general public (since it is being funded

through taxpayers money), the risks must be managed in a transparent and accountable

way. The guidelines to do so are the Strategic action plan on crisis prevention (BMZ:

2004) and the Sector strategy for crisis prevention, conflict transformation and peace-

building in German development cooperation (BMZ: 2005). The latter introduces

early warning indicators that qualify development cooperations conflict sensitivity in

conflict-prone countries. The visibility of this is provided by the C marker, which is

used to identify the conflict sensitive design of all state development cooperation activi-

ties. According to BMZ, these markers are in line with other signifiers of the Organisa-

tion for Economic Co-operation and Development (OECD): C 2 stands for measures

that are primarily peace building, crisis-preventive or conflict-transformative, C1

sees these goals as secondary objectives and C0 refers to measures that pursue other

objectives but must be conflict-sensitive in design due to the conflict-prone context

they operate in. (GTZ 2008: 16)

There are less than five GTZ/PPP projects that focus on crisis prevention (and thus ful-

fil the C2 or C1 marker). The vast majority of PPPs in conflict-prone areas falls into the

category C0 marker. Still, the German government recognises the opportunities of a

conflict-sensitive PPP in their action plan on civil crisis prevention (2004): The Ger-

man government will promote conflict sensitivity through the program of PPP

(paragraph 116, translation by the author). Thus, it seems appropriate to ask if the ar-


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gument for conflict sensitivity alone (and thus C0) can classify business operations as

contributing to peace.

Peace through Commerce?

The debate on Peace through Commerce emerged in 2001 from a line of business

ethics thinkers in US-American law and business schools, just months after Jane Nel-

sons seminal work Business of Peace (2000). Since Nelson gathered input from the

Prince of Wales International Business Leader Forum (IBLF, an MNC-membership

organisation) and the Council on Foreign Relations, her focus was clearly on the behav-

iour of MNCs and their opportunities for peacebuilding. Tim Fort and Cindy Schipani

from Michigan University took a broader approach in their essay on the role of business

in facilitating peace (2001). To them, business11 is a dormant value in the sense of

DeSotos definition of capital, that requires a process for fixing an assets economic

potential into a form that can initiate additional productivity (DeSoto: 35) and

peace. Adding to this, Fort/Schipani took up Amartya Sens Development as Free-

dom (1999) thesis that not only the market but also other economic, social, and politi-

cal freedoms should be valued in business activities: the authors see values enhanced

through all business that combats the marginalization of the poor, reducing the threat

of violent reaction(Fort/Schipani: 16).

Both the increase of productivity (deSoto) and values (Sen) through business activities

show why conflict-sensitive C0 business operations can contribute to conflict preven-

tion: they combat marginalisation and foster business. The amended design of these C0

business activities would give even small scale operations such as the PPPs by BMZ

leverage far beyond their own operations, influencing local or national markets and

values.

However, while crisis prevention is the general demand by the public and civil sector

towards conflict sensitive behaviour of companies, it is the responsible behaviour of

companies that can integrate existing business activities into crisis prevention. Using

the skills and experiences of companies, a partnership for development can greatly gain

11somewhat imprecisely refering de Sotos definition of capital. Thanks to Christina Gradl for this com-

ment.


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in competence and focus for the public as well as the private sector partner. Those

skills are addressed, when GTZ introduces PPPs into its work practices.

Rationale, processes, difficulties and legitimacy of the German PPP-program

PPP-projects are planned, financed and implemented in cooperation between the public

and the private sector. The development actor and the company identify a number of

joint interests including infrastructure needs and a reliable political and economical

environment. Both partners benefit from this cooperation: the companies benefit from

contacts, local experience and a worldwide network of GTZ-experts; GTZ and the de-

velopment countries benefit from the technical expertise and ownership that only a

private partner can bring. Often, but not always, a partner already present in the devel-

oping country is tied into the partnership. These third parties might then want to extend

their operations in connection with their European business partner.

Originally, the interest in PPPs within development cooperation springs from the

shrinking resources of Official Development Aid (ODA). In a supplement to its 1997

guidelines on conflict, peace, and development, the Development Assistance Commit-

tee (DAC) of the OECD, accounted for this by inserting a short chapter on business and

economic peacebuilding (2001: 69-71).

A major motivator for PPPs is the innovative character of the partnerships. The nature

of this partnership work business meets development is such that the work could

rarely have been implemented by one partner alone. Examples of this are social and

environmental standards, jointly agreed by organisations either along the value chain or

within a sector. Other examples include health provisioning beyond securing corporate

human capital. This provisioning also integrates communities through cooperation with

local businesses, councils and social workers. A further example is the optimisation of

value chains for fair distribution and better profits for farmers through a relocation of

production facilities12.

In 2007, 354 new PPP-projects were initiated - other implementing agencies for PPP

are Deutsche Entwicklungsgesellschaft DEG, Kreditanstalt fr Wiederaufbau KfW, and

12These and many other innovations show that the new PPP (to be launched in 2009) should not only

be business-driven, leading to cherrypicking.


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Sequa. These bring the total number of PPPs realised or launched since 1999 to almost

3,000, with an overall funding volume of over!16.4 billion. A sectoral overview (1999

2007) of PPP measures by the number of projects gives an impression of the width of

the program (please note that C1, C2-marker PPPs are included in other, accounting

for overall 6 projects since 1999)

These projects focus on long-term effects in e.g. establishing health provisioning for a

region in which the business is active. The projects may build on the core business ac-

tivities (such as importing high-quality tea from Nepal13) but they also offer educational

opportunities (such as tea-farmers adapting to a code of conduct for organic tea14), not

only available to suppliers of the company but also as in the example presented in the

introductions to a large number of farmers dealing with various tea exporters (see

status report in appendix). Typically, they extend the existing relationships the Euro-

pean company has with companies in the developing or emerging country.

With the positive contributions towards development in mind, GTZ does not intend to

make things complicated for partner companies (Hartmann, 22 August 2008). This

also applies to projects in all the partner countries of German development cooperation

that require conflict sensitive programming and these are all countries with a height-

13

such as the PPP described in the introduction14 dito


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ened or acute need for crisis prevention as listed in the so-called BMZ-matrix (see

appendix, countries listed in the yellow and red part of the table).

Organisational and operational, the PPP-program sits between two approaches towards

conflict sensitivity: on the one hand, crisis prevention focuses primarily on the com-

panies capacities for preventing conflict, with the public sector being the driver of an

involvement. On the other hand, the private sector actor looks at the opportunities and

risks within a conflict-prone environment. Thus, while crisis prevention can be the

main reason for establishing corporate activities within the C1 or C2 marker according

to the sector strategy paper (2005: 32), companies will engage in conflict-prone count-

ries because of an existing business proposition (C0). However, according to Hartmann,

most of the private partners in PPP are not even aware that the country in which they

do or want to do business is within this classification (22 August 2008).

***

This brief paper can only mention the criticism within the civil society on the concept

of PPP: whereas the BMZ had established this approach to development cooperation in

1999, even today a majority of German NGOs15 are critical of introducing the private

sector into development cooperation. One string of arguments questions the legitimacy

of private actors in development (e.g. Brhl et al: 2001). A German NGO, World, Ec-

onomy, Ecology and Development (WEED) accuses the development corporations that

decades of taxpayers funded development cooperation experience would be sold-out

for little money to help companies business development activities. Moreover, accord-

ing to WEEDs Uwe Hring (2003), the overall impact for developing countries wouldbe very limited as investments happen mostly in emerging economies.

Adding the awareness on conflict sensitivity to the rationale of PPPs, the popularity of

the program itself within the NGO-community might increase. Following-up on the

connection between poverty one of the prime areas of activity for the majority of

NGOs and the cross-sector topic of conflict, it can be argued that to heighten the

15Klaus Krting, director with VENRO, the German association of NGO, estimates that around 60% of

our member organisations are critical towards PPP as defined by BMZ.


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awareness of conflict sensitivity within PPPs provide better acceptance by the civil

society in home states. Adding to this, the GTZs facilitation of dialogue on the

ground enable it to identify the prompt enhancement or readjustment of PPPs in situa-

tion of crisis16.

Finally, the nature of the partnership between a public and a private sector partner

points to the need for developing a tool to facilitate a common groundfor a business

case that includes aspects of conflict sensitivity. I will discuss this common ground

later in the paper in Presenting the evidence.

It seems plausible to assume that all stakeholders in a PPP in a conflict-prone country

could benefit from the common ground. And, it is when those stakeholders perceive the

risks and opportunities tied to conflict sensitivity that the tool presented in this paper

will be successful.

16Quick needs assessment and adequate product and service delivery might be key in alleviating situa-

tions of escalating conflict


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Learning objective

My objective was to understand how conflict sensitivity could be included in business

operations and to see how this inclusion would inform the overall debate on the role of

business in society.

In selecting my research topic, I came across the German Governments goal to pro-

mote conflict sensitivity through the program of PPP (Aktionsplan Krisenprvention,

116, translation by the author). I was already familiar with the PPP-program of GTZ

through my work as journalist and consultant in the field of CSR. And, in my studies at

Brandeis, I had learned about the concept of conflict sensitivity.

I decided to assess the program to understand the opportunities PPPs could offer in re-

gards to activities in conflict-prone countries. Thus, I tried to find out to which extent

the practice and insights of conflict-sensitive programming could inform the PPPs initi-

ated by GTZ.

During the research, my understanding of the situation changed: I needed to account for

the problems the project managers had their workload, the high overhead cost in-

cluded in every PPP, the high rate of companies that are not willing to continue with

negotiations due to bureaucratic behaviour of GTZ.

However, my objective remained. I readjusted the task towards developing a tool that

would be easy enough to be applied and that would still carry some insights of a con-

flict sensitive behaviour within the management of risks for PPPs in conflict-prone

countries.


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Methods [How to proceed?]

This paper describes the process and results of a three-month field project I conducted

at the GTZ-headquarter in Eschborn, Germany. The process started with desk research

on PPP-projects in general and with a selection of projects in countries classified as

being in a heightened or acute need for crisis prevention (Nepal, Bosnia-Herzegovina)

according to the BMZ-matrix (see appendix). I also researched the role of CSR at GTZ.

Facilitating dialogues between civil society, business, and public sector is one of the

major tasks of GTZ. These multi-Stakeholder Dialogues are a valuable concept in mo-

tivating private partners towards PPP. And, they might open opportunities for joint

strategies in conflict prevention.

Public-Private-Partnerships was the topic of an article I co-wrote with a PPP-consultant

and a former project manager of the GTZ/PPP-department in September 2008 for the

annual publication of the German Sustainability Council (Hildebrandt/Rieth/Sewing:

46-58). We looked at the layout of PPPs and its potential for development cooperation

as it is perceived by GTZ: in introducing the private sector into development, GTZ ac-

knowledges the benefits the business community can bring to development; in turn, the

business community increasingly perceives the experience of GTZ as enabling a busi-

ness environment.

Following this, I arranged a conference panel17. The participants included the Head of

BMZ responsible for the PPP-program, a Senior Executive of the global IT-company

SAP, a Senior Member of the NGO Germanwatch and an Associate Director of the

research organisation Global Public Policy Institute (GPPi). Sunil Geness, Head of

Corporate Affairs SAP South Africa, presented the Responsible Business Initiative.

This PPP between SAP, the GTZ and the IBLF gains support from MNC present in

South Africa in extending their activities into the Democratic Republic of Congo

(DRC). To create a business-enabling environment, the PPP aims to introduce CSR-

practices to local businesses using corporate citizenship and responsible behaviour as

a means to conduct business in a way to reduce tensions. This is an ambitious project in

17see: Presentation of the Evidence Panel held at CSR-conference 2008, Humboldt-University, Berlin;

Title: The Role of CR in Implementing Strategies of Development Cooperation, see: http://system.cr08-berlin.de/index.php5?action=panelinfo&id=76&mode=time


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a challenging environment, but according to Sunil the local business community seems

to buy-in and perceive the opportunities of Corporate Citizenship and CSR. And, it

shows the lever that a small PPP (the majority of PPPs are capped at an overall invest

of 400k Euro) can have.

Prior to the panel, an action learning group I facilitated for the PPP-staff provided

input to the research topic. This allowed for a broad overview of the pressing questions

in regards to the current and potential role of a conflict sensitive programming. The

group was an opportunity to identify the constraints of the program managers, to ask

how they steered their projects and why they had not yet considered introducing aspects

of conflict sensitivity. Other questions included the general need for assessments, how

projects are monitored, if monitoring includes procedures of how to manage risks, if

any early termination of a project had occurred connected to conflict, and if they would

feel comfortable in taking on the task of introducing aspects of conflict sensitivity into

PPPs.

This was followed by interviews with experts from the unit of private sector develop-

ment (PSD), who deal specifically with post-conflict reconstruction issues. I also dis-

cussed the research topic with a member of the department for crisis prevention, with

GTZ-employees representing the UN Global Compact (GTZ is its German focal point),

and of course in one-to-one interviews with a number of project managers at the

GTZ/PPP-department. The expert interviews and interviews of a few company manag-

ers18

responsible for operations in conflict-prone countries provided input for develop-

ing the rationale for this paper. Moreover, there is a body of research within GTZ on

different angles of what seems to be an ongoing field of debate: crisis prevention in

business.

This process can be seen as the beginning of a participative action research (PAR)19.

Document analysis, expert interviews, a (very rudimentary) focus group and an expert

workshop during a public conference delivered the first round of research data to start

this process.

18The paper would have benefited from further interviews, but these were difficult to schedule and to

conduct.19 an excellent introduction into PAR: http://www.scu.edu.au/schools/gcm/ar/ari/p-ywadsworth98.html


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It is within the decisions of the GTZ/PPP department to take up this research process, to

co-research, change, re-research in other words, to see the necessity to start and run

an open process of learning by doing. The discussion and further development of this

data and their connected assumptions could then be an opportunity to implement a risk

management tool that is informed by conflict sensitivity.

Introducing conflict sensitivity into a corporate context through a tool that manages

risks may be nothing new20. However, doing this within the context of PPPs can open

new insights. As we have seen, PPPs offer opportunities that are different from those of

PSD as well as those of MNC activities. It is the partnership construction that produces

answers to the challenging questions about fairness, power and responsibility. Adding

to this, the debate on the responsibilities of a corporation is still ongoing, and the an-swers provided are still not agreed upon: Friedmans dictum that the social respon-

sibility of a company is to increase its profits (1970) still stands against Freemans

claim (1984) that companies need to be accountable to all their stakeholders. This paper

tries to find an answer to this discussion as far as activities of PPPs in conflict-prone

countries are concerned.

20 According to a senior manager of the sector project innovative approaches of PSD


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A goal of the ongoing research could be to establish a platform for a common ground

between the partners of a PPP. The platform would seek solutions to the question of

how to operate in situations that demand conflict-sensitive behaviour. The feasibility of

this should be discussed by GTZ/PPP project managers. The gap between the German

governments stipulation and the PPP-realities show that the PPP-program could ben-

efit from a joint platform.


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Presentation of the evidence

In the following, I will first describe some of the usages of conflict sensitivity and its

benefits. As the second part of the evidence, I will propose a tool to raise awareness for

conflict sensitivity in the German PPP-program.

Preliminary questions resulting from the research include: if conflict sensitivity within

a PPP was viable, what would be needed in establishing this sensitivity? And, if the

private sector partners managing of risks through a tool (for raising awareness towards

conflict sensitivity) enhanced the role of PPPs in crisis prevention, how could it

strengthen the public sector that is part of a PPP.

(1.) Conflict sensitivity for PPPs - does it pay?

In situations that demand crisis prevention, all companies gain from security measures.

They hedge their risks through knowledge of the local setting and they act in ways

that enable them to do business.

MNCs, divesting from a conflict-ridden area, have to accept an enormous loss of capi-

tal. Corporate infrastructure that was needed to do business (mines, oil refineries, har-

bours etc.) has to be given up mostly without compensation. Thus, some MNCs manage

their risks, establish stakeholder-dialogues and community investment programs, hire

consultants, anthropologists or an NGO to provide short-term and long-term risk as-

sessments and aim for conflict sensitivity in their operations, with the guiding focus of

security for operations and workforce.

PPP-operations, as defined by the BMZ-PPP-programs development partnerships, are

generally much more flexible in their approach. Their investment is low, their business

depends on the existing infrastructure, local partners, locally produced goods and local

employees in short: it mostly is local business, with the precondition or aim to be

rooted in community structures. Thus, to PPPs it is not only security that counts21

.

Risks are as varied as their business operations and they could be as relevant to the

companies as their individual CSR-policies. With growing awareness of the opportuni-

21

Of course, other issues do count for MNCs, too, and their risk assessments are more complex than theones that can be done for SME. But for the sake of investment (and thus their shareholders), security stillremains the major.


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ties that CSR provides for a companys marketing, business development, communica-

tion and so forth, companies increasingly seize local opportunities of making a differ-

ence. And, they are likely to do so in new markets and through new forms of co-

operation, too: the success of the PPP-program is a strong indicator of this.

In connecting with local businesses (as with third parties in PPPs), companies from

developed countries bring support, knowledge, incentives, entrepreneurship and capital

into the developing country. Thus, understanding the context as well as the interaction

between the business operations and the context form the basic principles of doing

business in the community. This would increase the likelihood that diversity and fair-

ness prevails.

Moreover, as the Corporate Engagement Project by the Collaborative for Development

Action (CDA, the NGO led by Mary Anderson) puts it in Getting it Right! (forth-

coming)

conflict is usually predictable. People around the world have similar needs and

expectations and they become disappointed over similar issues. Local communi-

ties across the world react in similar ways when they perceive that a company

does not respect them or benefit their lives. Because local community happinessis a companys best buffer from conflict, whether because the community pro-

tects company assets from rebel attack or because the community finds it advan-

tageous to work with rather than against a company, it is always important to

keep close to and aware of community reactions to company operations. (p. 54)

Although this has been formulated with large operations in mind, the focus on com-

munity impact is shared by PPP.

An argument that I often heard during the interviews with PPP project managers re-

ferred to the do-ability of such mechanisms especially since the mechanisms would

need constant or at least regular monitoring, evaluation and, if necessary, redesign. It

was felt that it is inappropriate to deliver a proper mechanism towards community-

sensitivity for business operations with an overall invest of a few hundred thousand

Euro (A GTZ/PPP-project manager, 16.10.2008). However, it must be asked if the

scale of investment decides? Is it related to the scale of a potential conflict involved?


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Many examples, such as the conflict in Ambon/Moluccas22

, show that the factors trig-

gering a proximate or structural conflict are indeed not related to the investment made.

PPPs can build local partnerships to prevent crisis. Partners (trade chambers, business

associations, supplier etc.) can provide information towards short- to mid-term moni-

toring done along the business operations. Already, companies must provide regular

status reports. Indicators for risk management (as they are described further below)

could be added. It is assumed, that the local GTZ-personnels long established contacts

to NGOs, local and regional governments could be approached with relevant issues and

questions23

.

Finally, here is an argument inherent in the nature of PPP: successful partnerships re-

quire that companies as well as development objectives profit from them. Since 1999,

there has been a remarkable upsurge in responsible business practices as well as in the

number of PPPs facilitated. It would, therefore, seem appropriate for GTZ to meet this

upsurge with a change in its supporting role, to balance the increased corporate en-

gagements. And what would be better for this than focusing on the one make it or

break it (Luc Zandvliet of CDA in a phone conversation with the author) issue that

mostly determines the success of a business operation in developing countries: is there

a risk of conflict and what is the need for my company to act upon this?

The action learning group (23.9.2008) showed the reservations of the project manag-

ers towards introducing any conflict-related elements into the negotiation process of the

PPP. They could not see the benefit and warned against the overhead costs. Moreover,

they felt that they could not responsibly carry out the job. One project manager formu-

lated it is not our task, to consult on conflict sensitivity. We simply cannot performthis task. And we will certainly not be able to carry any responsibility in this context.

Moreover, we always have options to cancel a contract, so if a situation arises that we

cannot control (such as an unforeseeable conflict) we will find a way out. Another

point refers to how the overall responsibilities are distributed: From 1999 until now, it

was the companies that had to approach the GTZ. The project planning was done

22http://news.bbc.co.uk/2/hi/asia-pacific/3657101.stm- see video on this page It only takes one small

spark...23 According to a GTZ-field worker in Uganda


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through the project managers, but the responsibility for the implementation is with the

companies.

It turned out that to the PPP project managers any implementation of conflict sensitivity

is seen as a cost to business, and not as a need to avoid the negative impact of busi-

ness operations on conflict and vice versa. The impact of conflict-sensitive pro-

gramming on large-scale MNC operations is recognised (Nelson: 2000), but the ac-

tions, opportunities and risks of small-scale PPPs are not. The business rationale of

PPPs demands that the majority of them, whenever they are set in conflict-prone count-

ries will be working in conflict (C0). However, it is not mainstreamed within GTZ

that these PPPs can already be crisis-preventive. Instead, it seems that the business

case for conflict sensitivity can indeed be argued for by approaching companies on

how to manage risks and even more so, by including the risk assessment of a co-

operation with the local partner.

All in all, the above indicates that PPP can play a role in promoting economic devel-

opment and have a local leverage in doing so. PPPs are certainly not appropriate during

the conflict itself, but they can play a supporting role in conflict prevention and post-

conflict reconstruction (GTZ: 2007). And, because these settings differ in their com-

plexity from normal development environments, they need to take into account the

conflict environment. Otherwise, they might fail or become harmful themselves.

Within GTZ, there are a number of approaches towards the use of conflict sensitivity in

a business context.

The post-conflict reconstruction (PCR) unit within PSD aims to raise awareness

towards conflict sensitivity. It focuses on economic recovery as one of the most

important fields to contribute to peacebuilding. Building support for peace ac-

tivities often depends on income and employment opportunities. The aim of

creating a market economy that is social and ecological enables a large potential

to reduce tensions. Thus, PSD offers opportunities to address root causes of vio-

lent conflict. In my interviews, the members of the department indicated that

they would like to go further by showing that their work could and should ex-

tend Do no Harm. For instance, they pointed to actively de-escalating projects.


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However, since GTZ is only starting to focus on this, there are not enough ex-

amples available yet.

The crisis prevention department perceives themselves as open towards an inte-

gration of business into crisis prevention, but lacks capacity to do so. And in-

deed, there seems to be little if any communication between the GTZ/PPP-

department and the crisis prevention unit. Although I was frequently told that a

person (albeit always a different one) would be accountable to facilitate this

contact from crisis prevention departments side, I never met these persons nor

received any qualitative input on their role. I did meet with one member of the

team, though, who very much supported the aim of this study.

As outlined, the GTZ/PPP-department largely ignores the opportunities that a

CSR-approach towards conflict sensitivity offers.

The last point is surprising, since the development of CSR-policies and a convincing

CSR business case is at the heart of the PPP-program itself.

With the GTZ/PPP-department dealing with conflict sensitivity in an ad hoc way, this

paper tries to introduce aspects of conflict sensitivity through the private partners

CSR-activities. Could an improvement of risk management strategies by the main cor-

porate partner in the PPP provide more information?

(2.) How to establish conflict-sensitive PPPs

This part of the evidence shows the costs and benefits for business in conflict-prone

regions (Box 1). I then suggest that this can be emphasised through a simple tool,

which constructs a basic but functional conflict sensitivity awareness.

A caveat: this paper formulates the needs and opportunities of raising awareness on

conflict sensitivity for projects inplanning stage only.

As mentioned earlier, the two ways of integrating the private sector into conflict sensi-

tivity should be combined: crisis prevention gives a view of all sectors in conflict, theo-

retically encompassing but often excluding the private sector. Elements of CSR, how-


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ever, are the motivating factor of corporate contribution towards preventing a (violent)

conflict.

This paper argues that there is a feasible and inexpensive way of improving the under-

standing and actions of companies towards conflict sensitivity. This will be reached

through changing the workflow of PPP-planning without considerably increasing the

workload of GTZ/PPP project managers.

The management of social and environmental risks is an essential part of CSR. The

company is an integral part of the structure in which it does business its actions and

values have an impact on its environment. The responsibility for this is guided by

values of the home state24, while the host state might be in a critical phase with

turmoil approaching. The divergence of the home values and the host reality needs to

be managed25. Relevant questions of this management are: how can decisions that

negatively impact the situation be avoided or at least reduced? What information is

needed to Do no Harm? How can functions within a given situation be analysed to

provide security to the operations? The introduction of CSR provides an overview to-

wards immediate, and yet benchmarkable actions. In the long run, these actions enable

the development of standards for reporting and for measuring impacts.

Costs Risks Benefits

Higher payments to state/private securityfirms; staff time spent on security manage-ment

Security Profit from strengthening government toestablish good governance e.g. throughintegrated hiring practices

Insurance, loss of coverage, specialist train-ing for staff, reduced mobility and highertransport costs

OperationalRisks

Extend and profit from local knowledgeand better information on local stakehold-ers

Destruction of property or infrastructure Material Source material from within the country;

improve supply chain

Disruption of production, delays on import Opportunity Increase production through better localacceptance; again: improve supply chain

Increased cost of raising capital Capital Improved access to finance in homecountries improved through complianceand CSR-performance (e.g. Equator prin-ciples)

Kidnapping, killing and injury; stress; re-cruitment difficulties; higher wages to offset

Personnel Investment in co-education, larger pool of

24

for a comprehensive definition of these terms see Ruggie (2008), available at http://www.business-humanrights.org/Documents/RuggieHRC200825 See also the excursus on CSR in this paper, p. 16 f.


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risk; cost of management time spent pro-tecting staff

human capital, workforce diversity

Consumer campaign, risk-rating, shareprice, competitive loss

Reputation In host State: first-mover advantage,social licence to operate, both relevant for

other host StatesIn home State: differentiation, marketadvantage (certification, image etc.)

Expensive and damaging law suits Litigation Understand conflict issues through work-ing with human rights groups

Indirectrisks

Loss of life, health, intellectual and physicalcapacity

Human Providing sustainable livelihood

Weakening of social capital Social Connecting across the divides

Damage to financial and physical infra-

structure, loss of markets

Economic Rebuilding infrastructure, gaining market

access

Pollution, resource dpltion Environment Using stakeholder input to understandenvironmental impact

Weakening of institutions, rule of law,governance

Political Improving governance, property rights

(Box 1 - The cost side issues of this table are taken from the graph Cost of Conflict to Companies by

International Alert, 2004b)

The impact of corporate behaviour on above could be guided along assessing both

ends of the spectrum from delineating a median that is guided by the status at the

time of assessment, as success is always relative to the changing environment26.

The other beneficiaries of a relatively successful business practice are of course the

communities in which the business operates: conflict or latent conflict undermines the

development of the communities, including decades of development aid, and it is a

threat to livelihood, security and prosperity.

***

So while the public and civic sectors approach a latent violent conflict through the need

for crisis prevention, companies approach conflict through CSR-related policies. The

conflict itself generates different answers: whereas the public and civic sector will for-

mulate a need towards Human Rights, the private sector will mostly be concerned with

26In a further PAR-cycle, the leading (or median) indicators would have a high priority in discussion. E.g. it

is hard to identify the median, as it would tend to be a do nothing state it might therefore be better todecide for a compromised leading indicator, with support by community and no support by communityon each sides of the spectrum. (Thanks to Luc Zandvliet from CDA for pointing this out, see p. 173 of theforthcoming publication Getting it right)


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issues that hedge the risks and protect their investment. In working towards common

ground, in discussing the details of a co-operation agreement within a PPP, there is an

unprecedented opportunity to introduce conflict-relevant issues in a flexible, adaptable

way and to turn them into a business case.

This common groundcould be provided through the insights of conflict-sensitive ques-

tions, leading to a set of jointly agreed answers. This tool, too, grows into a trust-

building exercise. Once trust is an objective, the connecting functions may open a

business case: between the public and private partners, as well as between the PPP and

the community. This puts the suggested process at the core of what both the public and

the private partner aim for: a long-term, growing business operation guided by princi-

ples of sustainability regarding social and environmental standards.

In a conflict-prone environment, the most important aspect to agree on is how to deal

with situations of violent conflict before they emerge and how to avoid having a

negative impact on the environment. With security and material issues pressing, it is

nave to believe that an engagement would be worthwhile due to short-term profit rea-

sons alone. The involvement of a company promises to be successful only when the

involvement is combined with a strong case of understanding its impact. A tool dealing

with the long-term issues of engagement could give companies a rationale why they

should engage, how they could tap into and extend community resources, and how this

could hedge their risks.Such a tool might enable businesses in a conflict-prone envi-

ronment to be more profitable. As a result, the business case would be more successful

than the activities in an environment that does not appreciate the businesss operations

due to the fact that the business does not appreciate its environment27

.

The tool would be a flexible approach towards a set of questions related mostly to hu-

man rights. The questions could be posed to company managers in charge of negotiat-

ing the details of a PPP with GTZ. In preparation to the meeting, the GTZ project man-

ager would have to determine the questions and adjust them to the project context as far

as possible given the information already provided. In addition, the local partner within

27This argument is made by Transparency International in regards the cost of corruption and the ignor-

ance of companies regarding the potential economic benefits in avoiding corruption


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the PPP brings experiences to the table that would need to be verified and analysed in

regards to how they relate to crisis prevention.

For business ventures classified as C0, PSD suggests a reduced Do no Harm assess-

ment28

of the context. The PPP-tool follows this and asks:

Where do we work? (What is the community impact of the PPP?)

What do we do? (What do we provide? Who profits from it? Do we export/import?)

With whom do we work? (Who are our suppliers? What are their issues?)

How do we act? (Who are our stakeholders? What is our impact on them?)

The PPP-tool follows up with some more concrete questions, such as:

What are the operational options you see that might have a positive impact on

relationships among groups and that promote social and political stability?

How can you develop a better perspective on operational decisions with the

aim ofminimising a negative and maximising a positive impact on conflict?

How can operational tools be developedthat lower the costs of security, insur-

ance and reputational damage to your company?

How can other players such as humanitarian organisations be integratedinto

decision-making of your company?

By now, these questions open different perspectives (or strings of thought) towards the

tool. These perspectives will need to be extended and deepened by adding questions

through looking at each PPP-proposal, at least at the beginning of the learning process

involved with the tool29

. Examples of questions relating to various perspectives (taken

from a variety of existing tools30):

Community impact

Do you have a thorough knowledge on how your business is being perceived by the

community in which you operate?

28cf. PSD in (post-)conflict situations, p. 19

29Within the new PPP, this will need to be done for every single request.

30Doing business in divided societies (Northern Ireland), Danish Human Rights and Business Project,

GTZ/PSD in (Post-) Conflict Situations


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Will you consult with the local community on business operations that directly affect

their ownership?

Do you ensure that local know-how is protected by standards established by your home

state, if you use this know-how?Do you have emergency procedures to prevent and address industrial accidents affect-

ing the surrounding community?

Do you have mechanisms to deal with grievances of the local community?

Do you ensure that a balance appropriate to different sides of the community is repre-

sented in your workforce?

Are your security guards trained to intervene with minimal force only?

WorkplaceDo you consider how latent or acute conflict could affect performance?

Do you provide a living wage that enables your employees to meet the needs of them-

selves and their dependents?

Do you take all measures necessary to avoid from benefitting from forced labour?

Do you have neutral mechanisms for grievances of your employees?

Do you recognise the freedom association right of your employees?

Do you ensure that compensation and all employment-related decisions are based on

objective criteria (fair employment)?

Do you provide a work environment that is culturally respectful?

Do you provide education programs to your worker regardless of their cultural, ethnic,

or religious heritage?

Do you comply with minimum age standards?

Suppliers

Do you source the majority of your products needed for production from within the

country?

Are cultural, ethical, religious, political, and socio-economic issues relevant for your

local sourcing and do you try to balance them across divides?

Do you have visible non-discriminatory supplier practices?

Customers

For Import: Has your company

assessed whether sectarianism is an issue to your customers?

established non-discriminatory practices visible to your customers?


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effective ways of monitoring its practices?

For Export:

Do you offer products that are certified (SA8000, organic, fair trade etc.)?

Capital

Do you report on your host country policies in your home countries within the require-

ments of a creditable framework (Principles of Responsible Investment, Global Report-

ing Initiative, Equator Principles)?

Litigation

Do you engage in dialogue with civil society in home and host states to help identify

wrongdoings?

As much as the tool is a work-in-progress, so are the mechanisms for decision-making.

However, the groundwork for this is already visible:

In furthering the approach and collating experiences, it was argued by the German gov-

ernment that PPP can deliver aspects of a civilian conflict management31

, and create

consensus among public, private and civic sectors of society. For this to be the case,

there are a number of preconditions that must be fulfilled in a conflict sensitive frame-

work. They include perceiving the management of risks and opportunities of com-

munity-sensitive behaviour (proximate causes) or attitude (triggering causes), accord-

ing to Galtung: 74.

In the context of risks, rewards and penalties it must be noted that only substantial in-

centives drive corporations into these partnerships not brand or reputational issues,

nor the aim of doing good when facing (potentially violent) conflict (Witte: 2).

However, the negative impacts a companys action might have on conflict often equal

the negative impact on the balance sheet of a PPPs success which might provide en-

31

Zivile Konfliktbearbeitung describes the non-militarian, non-violent conflict, mainly addressing struc-tural roots of violence, i.e. non-military sources of conflict such as poverty, hunger, and underdevelop-ment.


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ough incentive for the company to consider conflict sensitive practices32

. Once a com-

pany that is already active in the community has been identified as a conflict trigger, it

might be too late for the (capacity-restricted) conflict-sensitive measures of a PPP to

have a positiv