Shining a light on the shadows

Peace will only be sustainable in Mindanao if policy-makers and NGOs start paying greater attention to the role that shadow economies play in the conflict, we argue in our latest policy briefs from the Philippines.

Mindanao is the second largest island in the Philippines and the centre of a nearly five-decade-long separatist struggle. Last year we published a study on the role that shadow economies play in the conflict and any prospective peace process.

Informal or ‘shadow’ economies are those operating outside of the official economy, involving both licit and illicit activities. In Mindanao these include the trade in illegal firearms, informal land markets, cross-border trade, kidnap for ransom, and the production and trafficking of illicit drugs.

Building on our previous research, we have published five policy briefs which look at the role that different shadow economies play in the conflict and why shadow economies matter for peace in the region. For example:

  • they provide huge economic and political benefits for local powerbrokers, who could become ‘peace spoilers’ if the peace process disrupts these benefits;
  • they are a major driver of community-level conflict, which if left unchecked could result in a ‘violent peace’; and
  • they provide an economic lifeline for some marginalised communities, so safeguarding particular shadow economies (e.g. cross-border trade) could generate the necessary ‘peace dividends’ to consolidate peace in the region.

Yet despite being an important feature of Mindanao’s economy, shadow economies tend to be overlooked by policy-makers and peacebuilding and development organisations.

The recent signing of the Comprehensive Agreement on the Bangsamoro between the government and the Moro Islamic Liberation Front (MILF) has raised hopes that nearly half a century of violent conflict is finally coming to an end in the Philippines. The challenge now is to build the right kind of peace – one that is durable, inclusive and free from violence.

An effective peacebuilding approach should seek to minimise the conflict risks and maximise the peace dividends posed by shadow economies. A failure to curb criminal shadow economies – and in a similar vein, a failure to utilise their economic potential – could have major implications for violent conflict, development and, ultimately, the transition towards a lasting peace in Mindanao.

Our new policy briefs provide a succinct analysis of the various problems associated with shadow economies and present concrete proposals for addressing them. Over the coming months, we will be working with key organisations involved in the peace process to develop and implement conflict-sensitive responses to the challenges posed by shadow economies.

You can read the policy briefs here: