The (internal) war economy

Technically, war economic activity is criminal activity.  However, since war-related activity is associated with entities with political or ideological programs and identities (whether real or purported is not yet of consequence to us at this point), it is useful to set it apart as a distinct conceptual category.  The war economy covers all exchange and gainful activities carried out in pursuit of a war effort or under the guise of waging a war as well as those activities made possible by an on-going internal war.  Some might object to the use of the adjective ‘gainful’ to describe the activities of revolutionary political movements since they do not have a commercial intent.  Nonetheless, it is argued that the logic of revolutionary economic activity is akin to normal business activity in that the objective is to realize a gain over the cost of the same activity.  To do so is to claim that the same rationality is shared by normal for-profit entrepreneurs and non-profit oriented political entrepreneurs.  As much as possible, political actors will want to make sure that a gain is earned when engaged in internal war economic activity.  Only political considerations will over-ride this economic logic and allow political revolutionaries to sustain an economic loss.

Under the above-mentioned definition, the ‘revolutionary taxation’ of local communist insurgents, which could be defined legally as criminal extortion, is a war-related economic activity.  Similarly, the sale of war materiel by rogue elements of the Armed Forces of the Philippines (AFP) and the Philippine National Police (PNP) is war-related.[1] This activity is treasonous as the buyer could be the opposing armed insurgent force or criminal elements.  The inflation of military budgets through exaggeration of the armed strength of insurgencies is a traditional stratagem adopted by military and defense officials in the Philippines during annual budget hearings since the 1950s.  Skimming off portions of the military budget by higher echelon officers resulting in under-equipped troops on the fronts is a related usual practice.[2] These activities are made possible by an existing armed conflict.  The absence of armed combat makes it difficult for military entrepreneurs to engage in these activities but peace does not close possibilities for illicit gain.  The over-price of military equipment is rather usual the world over.  However, on-going conflict can help cover up wrong-doing especially if the over-priced materials (such as ammunition, fuel, food rations, etc.) are used up in battle.

If the point of reference is a state, the actors involved in the internal war economy are usually but not limited to the armed combatants.  This point is important because even civilians can get involved in various ways such as gun-running and the provision of non-lethal equipment such as radios, uniforms, footwear, knapsacks, etc.  The relative breakdown of order in war-torn areas also affords entrepreneurs unique ways to profit.  Anecdotal information from Mindanao reveal how local officials, criminals, and military officers acquired lands and other immobile assets at low or almost no cost as these were abandoned by non-combatants because of the violence.   In this sense, war booty accrues to non-combatants as well.

Most of the ‘commodities’ that figure in war-related transactions are intrinsically legal goods since they are produced or manufactured within the formal economy.  It is not entirely impossible that some ‘war goods’ such as land mines are fabricated within the insurgent organizations.  Nonetheless, the needed inputs (such as inorganic chemicals) are most likely sourced from the formal economy.  Some transactions in the war economy may be voluntary or straightforward commercial exchanges.  The transfer of funds from domestic and foreign supporters and financiers to armed insurgencies is a voluntary transaction.  However like criminal activity, most of internal war ‘transactions’ are involuntary and are mediated through violence or threats of violence.  A clear example is NPA revolutionary taxation: businesses must pay or suffer adverse consequences such as the destruction of assets and equipment.  In recent years, communications towers of mobile phone companies are the favorite targets for retaliation and punishment for those who refuse to pay the insurgents.[3] Another example is the permit-to-campaign fees collected by the NPA from politicians allowed to campaign within NPA-controlled or –influenced areas during electoral campaign periods.  The insurgents even issue receipts to politicians so their travel within the rebel-influenced zone could be facilitated.

Apart from environmental destruction and population growth, the internal war has caused migration from the rural areas into the country’s urban centers and swell the latter’s urban poor and informal economic spheres.  Some of these internal migrants became victims of human traffickers serving domestic and international markets.  For instance, the celebrated Sarah Balabagan who almost got executed in Saudi Arabia for killing her employer, was an internal war refugee from Cotabato province in Mindanao and got hired abroad through the efforts of an illegal recruiter.[4] Nameless others end up as prostitutes in the country’s cities and bigger towns.  The sizeable Filipino population in Sabah and nearby Indonesian islands of Sulawesi, Celebes, and Maluku is also composed of war refugees from Mindanao.

[1] The argument that these rogue activities are fundamentally criminal activities is a compelling one since rogue soldiers are motivated principally by profit rather than ideology or political aims.  This does not rule out the possibility that some of these soldiers have been won over or influenced by the insurgents.  Strictly speaking, the war economy is indeed a subset of the criminal economy given that criminal entrepreneurs are empowered or encouraged by the on-going internal war to engage in lucrative criminal activity.

[2] These criminal activities constitute a major grievance of lower echelon officers and enlisted personnel and had induced many to join coup attempts in the Philippines since the ouster of the Marcos dictatorship in February 1986.

[3] Industry gossip reveals how a latecomer mobile phone company managed to overtake the pioneer and market leader through the payment of revolutionary taxes to the NPA.  In addition, the latecomer reportedly gave tax-in-kind—mobile phones and SIM cards—to the insurgents.  This is a clever arrangement since the insurgents got locked into a credible commitment.  Since they are using the latecomer’s mobile phone for their own communications, they could reasonably be trusted not to betray the latecomer and destroy its towers.   Meanwhile, the pioneering company refused to pay (on the say-so of its foreign partners) and sustained losses of many communications towers through bombings and arson.  The latecomer as a result had better coverage of the archipelago and now commands almost 60% while the pioneer controls just a fourth of the market.

[4] Balabagan escaped execution and returned to the Philippines when the murdered victim’s family agreed to accept an undisclosed amount of so-called ‘blood money’.

  1. bongmendoza says:

    Reblogged this on bong mendoza's blog.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s