Since the 1800s, stability operations have played a significant role in U.S. foreign policy. Section IV of the 2006 National Security Strategy (NSS) reiterates the importance of such operations in protecting our global interests. Within a stability operation, economic actions can have an impact that is equal to, or greater than that of military actions. If properly applied, economic planning and execution can have a strong positive impact on the success of the operation. If ignored, the consequences can be dire. Perhaps one of the most dramatic examples of a failure, resulting from not having such an institutional structure and doctrine in place, was that of post-World War I Germany. The renowned economist J. M. Keynes served as the representative of the British Treasury to the Paris Peace Conference in 1919. Unfortunately, his predictions of disaster were prophetic.
If we aim deliberately at the impoverishment of Central Europe, vengeance, I dare predict, will not limp. Nothing can then delay for very long that final civil war between the forces of reaction and the despairing convulsions of revolution, before which the horrors of the late German war will fade into nothing and which will destroy, whoever is victor, the civilization and the progress of our generation.1
There was both concern and warning over the economic measures taken against the Central Powers after World War I that eventually contributed to the destabilization of Europe as it careened toward World War II. As a critical determinant of success, economic considerations should be a deliberate part of the planning and execution for maintaining stability. In spite of numerous historical experiences from which to learn, there is still no political or military structure that facilitates the planning and execution of economic development within such operations. In general, this has resulted in ad hoc arrangements planned and executed by the military.
Time is Crucial
The relevance of the World War I lesson has not faded with time, as even today we rediscover the importance of being ready and able to quickly engage the economic instrument of power into a stability operation. This need for a rapid engagement highlights the urgency of building a robust, institutional, economic capability for such operations that can provide economic development within that first "golden hour." Derived from the medical community's usage, this term refers to a limited time during which the intervention from outside a nation can maintain a sense of popular support as well as international legitimacy.2 Historically, during much of this window of opportunity, the military has been the primary—if not the only—government agency with significant resources in country. It is not enough to act using military resources; we must be ready to move quickly, within a comprehensive institutional structure, to gain the confidence of the population. Without this groundswell of support, the operation is prolonged, and its success is threatened. This phenomenon has been borne out in our experiences in Iraq and Afghanistan.
Rajiv Chandrasekaran, a journalist in residence at the International Reporting Project at the Johns Hopkins School for Advanced International Studies and former Washington Post Baghdad bureau chief, addressed the need to match the authority to enact reconstruction policies with the resources to implement them. He commented that in Iraq it took too long to mobilize the resources required to demonstrate the U.S. commitment to the reconstruction effort. This led to disenchantment and frustration among Iraqis, which has ever since hindered our progress on the ground. Likewise, part and parcel of matching authority with capacity is the need to quickly begin projects. Martin Hoffman, Executive Director of the Afghanistan Reachback Office at the Department of Defense, stressed that his experiences there demonstrated that "the golden hour is a very real phenomenon and the speed of implementation counts."3
Compare Japan . . .
After the failed peace following World War I, the United States went further to establish economic policy during the stabilization of post-World War II Japan and Germany. General Douglas MacArthur's authority was detailed in a State-War-Navy Coordinating Committee document, Politico-Military Problems in the Far East: United States Initial Post-Defeat Policy Relating to Japan. The economic authority given to General MacArthur in this document highlights the significant role the federal governent saw for economics in fostering an environment for a peaceful and stable Japan. Specifically, the committee dictated that:
Those forms of economic activity, organization and leadership shall be favored that are deemed likely to strengthen the peaceful disposition of the Japanese people, and to make it difficult to command or direct economic activity in support of military ends.4
While the general was granted authority through the committee, he realized resources would be needed to fight the desperate economic conditions if his democratic reforms were to succeed. To combat these conditions, he was initially able to provide food by using surplus military rations from troop reductions that were later supplemented with $250 million of subsistence products appropriated by Congress at his urging.5 This economic aid played a major role in establishing an environment whereby General MacArthur's democratization program had the opportunity to succeed.
. . . With Germany
In Germany, economic recovery proceeded as well, but was complicated by restrictive policies. In a 1974 interview, General Lucius D. Clay, the military governor of Germany after World War II, describes JCS-1067, Directive to Commander-in-Chief of United States Forces of Occupation Regarding the Military Government of Germany, as "extremely difficult to operate under."6
An additional constraint on Germany's economic recovery was the conflict among the occupying Allies as illustrated by the slow and problematic establishment of a currency.
As early as 1946, U.S. economists had plans for replacing the debased reichsmark with a new currency. The deutschmark was not introduced until 1948, in the context of the Ludwig Erhard's reforms, however, because the Allies and the Soviets had joint control over the currency until then. The Western powers were afraid that the Soviets would print large quantities of a new currency to purchase goods from the Western zones, negating the effects of a currency reform. Only in 1948 were currencies and central banking activities sharply divided between East and West.7
While the post-World War II stabilization operations were successful, they provide significant lessons learned, both positive and negative. General Clay's experience in Germany particularly highlights some of the difficulties. The lack of an established doctrine or standing institutions designed specifically for planning and executing the economic effort created confusion and inefficiencies to the extent that the general was forced to undermine his directive to make the stabilization effort successful.
Lessons from Malaya
Stability operations continued throughout the Cold War, including efforts in El Salvador and those carried out during the Vietnam War. While we can glean lessons from these American-led operations, they are certainly not experiences unique to the United States. One of the most commonly cited British counterinsurgency campaigns is that of Malaya, fought between 1948 and 1960. In detailing the campaign, Sir Robert Thompson laid out some basic principles for counterinsurgency. They begin with the premise that an insurgency needs an issue (such as perceived economic inequality) that can exploit a seam between the people and the government. Combating the insurgency then requires a broad strategy that incorporates the various elements of civilian society—in addition to the military measures—that can be used to influence the population to provide a secure environment.8
This broad strategy that integrates planning for economics, security, and governance is echoed in the lessons learned from current stability operations. In testimony to Congress about the planning for the stability of Iraq, Air Force Chief of Staff General John Jumper said the problem "calls for an interagency, deliberate planning process much like the deliberate planning process we have in the military, where formal assignments are made within the interagency to get up-front commitment to what the post-major combat operations requirements will be."9 In terms of priority of influence, Thompson noted three main forces that will influence the population: nationalism, religion and culture, and economic well-being.10 Of these, he gave primacy to economic well-being, stating: "However powerful nationalist or religious forces may be, that of material well-being is as strong if not stronger."11 Thompson's experience echoes the importance of developing a standing institution for the planning and execution of economic initiatives when there is a reasonable likelihood of involvement in stability operations.
After the Cold War, the intensity of stability operations accelerated, with them occurring in Somalia, from 1992 to 1994; Haiti, 1994 to 1996, and 2004; Bosnia, 1995 to present; Kosovo, 1998 to present; Afghanistan, 2001 to present; and Iraq, 2003 to present. These operations offer a wide range of results and lessons learned, even while many are still active. The 1994 Haiti mission, in particular, was a relatively clean operation in that it was able to achieve at least some of its stated goals, such as the restoration of the Aristide government. Unfortunately, the stability approach there did not sufficiently address long-term economic reforms as well as others that are inextricably linked to economics (such as good governance), which resulted in long-term failure.
This experience again echoes Thompson's philosophy, which underlines the importance of a systems approach. Institutions that are planning and executing economic operations must view the unstable nation as a system, where a failure to reform and rebuild in one area will have an impact in other areas. Governance, security, and economics cannot be reformed independently; they are all interdependent and integrated. To achieve success using this systems approach, there must be an integrated, standing economic capability and doctrine focused on supporting stability operations so the relationships necessary for this integration are established and rehearsed before executing the operation. With this capability, economic development will more easily be assimilated into the larger program.
Where is the Commitment?
To establish and maintain viable institutions focused on economic development that will survive during times of war and peace, decision-makers must provide funding and take substantive action toward developing and integrating economic capability into a stability operation's overall plan. While institutions appear to be developing more economic capability in support of these operations, they do not seem to be building a sufficient, much less robust, and integrated capability. For example, the State Department has recently established the Active Response Corps (ARC) designed to be the first responders who can support a U.S. mission, engage with a host-country government, coordinate with international partners, and conduct assessments in support of stabilization and reconstruction efforts. However, the ARC is expected to maintain only 30 personnel to cover worldwide missions. When considering the number of possible host nations, coalition partners, federal agencies, and international organizations with whom the department will have to coordinate, the personnel requirement is closer to 1,500 than 30. This coordination is required in all stability operations whether the United States has the lead or a supporting role such as in East Timor.
This resource deficit is further driven home with a quick examination of government budgets where priorities are quantifiably reflected in dollars. The President's Fiscal Year 2005 emergency supplemental funding request included $17 million for the State Department Office of the Coordinator for Reconstruction and Stabilization (S/CRS), of which Congress approved $7 million. Unfortunately, the coordinator office fared no better in the FY 2006 appropriations passed by Congress. The President requested $24 million for the coordinator's operating expenses and $100 million for a conflict response fund. In the end, there was no specific earmark for the operating costs, and the response fund was not appropriated.12 In 2007 the President requested $75 million for S/CRS operating expenses and $100 million for conflict response. The results were the same with no specific earmarks for either request.13 Further, government agencies outside the DOD and State Department have historically assumed little, if any, role in advanced planning or executing stability operations.
If history is any indication, the United States will be faced with stability operations in the future and must plan for the economic aspects of these operations. Future stability efforts must be supported with integrated economic institutions that are adequately staffed and funded, and act in accordance with the objectives of the overall operation. Without this integration, execution of economic activity within such operations will remain ad hoc. While there will be some positive outcomes in these arrangements, they will likely be short-lived without a consistent institutional pressure to develop security, economics, and good governance in concert. As a result, integrated economic institutions need to be established and matured so they are ready to meet the needs of a stability operation, beginning at its most critical time—during the golden hour—thus setting the stage for long-term peaceful independence.
1. John Maynard Keynes. The Economic Consequences of Peace. (New York: Harcourt, Brace and Howe, 1920.) p. 268.
2. Seth G. Jones, Jeremy M. Wilson, Andrew Rathmell, and K. Jack Riley. Establishing Law and Order After Conflict. (Santa Monica, CA: RAND Publishing, 2005.) p. xii.
3. United States Institute of Peace. "Post-Conflict Stabilization and Reconstruction: What Have We learned from Iraq and Afghanistan." USIPeace Briefing, 22 April 2005. Washington, DC.
4. State, War and Navy Coordinating Committee. 1945. United States initial post-surrender policy relating to Japan. Available at www.ndl.go.jp/constitution/shiryo/01/022/022tx.html. pp. 48-59.
5. James Dobbins, John G. McGinn, Keith Crane, Seth G. Jones, Rollie Lal, Andrew Rathmell, Rachel Swanger, and Anga Timilsina. America's Role in Nation Building from Germany to Iraq. (Santa Monica, CA: RAND Publishing, 2003.) p. 37.
6. Richard D. McKinzie. Oral history interview with Lucius D. Clay, 1974. Available at www.trumanlibrary.org/oralhist/clayl.htm. p. 5.
7. Dobbins. America's Role. p. 17.
8. Robert Thompson. Defeating the Communist Insurgency: The Lessons of Malaya and Vietnam. (New York: Frederick A. Praeger, Inc, 1966.) p. 55.
9. Pamela Hess. "Military Chiefs: Post-War Plan Lacking." Washington Times, 2004. Available at washingtontimes.com/upi-breaking/20041117-055105-9009r.htm.
10. Thompson. Defeating the Communist Insurgency. p. 63.
11. Thompson. Defeating the Communist Insurgency. p. 65.
12. Partnership for Effective Peacekeeping. "Funding for the Office of the Coordinator for Reconstruction & Stabilization." 2005. Available at www.effectivepeacekeeping.org. 3.
13. Friends Committee On National Legislation. "FY 2008 Budget Memo: Office of the Coordinator for Reconstruction and Stabilization and the Conflict Response Fund." April 2007. Available at www.fcnl.org/pdfs/ppdc/SCRS_FY08BudgetMemo.pdf.
Dr. Anderson is an associate professor, Department of Joint, Interagency, and Multinational Operations, U.S. Army Command and General Staff College, Leavenworth, Kansas, where he teaches economics and strategic/operational studies.