8.6 Necessary Condition: Stewardship of State Resources
8.6.1 What is stewardship of state resources? Why is it a necessary condition?
Stewardship of state resources refers to a condition in which the government serves as an effective manager and responsible protector of critical state resources. Achieving this condition in the aftermath of violent conflict entails restoring national and subnational institutions of governance; ensuring civilian control, management, and oversight of security services; and protecting state resources. Audit and oversight capabilities, both within the government and civil society, are required for effective stewardship of state resources. Since competition for state resources can motivate violence, effective stewardship of those resources helps prevent renewal of violent conflict. Responsible stewardship of state resources also enhances legitimacy and protects and generates critical revenue to provide essential services. In societies emerging from conflict, state resources will likely include substantial contributions from external sources. Protecting those funds is an essential element of stewardship.
8.6.2 Guidance for the Stewardship of State Resources
8.6.3 Approach: Restoration of Executive Institutions and Public Administration
For the purposes of the manual, executive institutions refer to national and subnational agencies that carry out the main functions of government at the direction of appointed for elected leaders. They often exist in the form of ministries or agencies. Public administration refers to the personnel, systems, and infrastructure in these institutions that are needed to manage budgets, implement government policies, and deliver services. Reform of public administration entails identifying the roles, responsibilities, regulations, and processes involved in providing government services.
8.6.4 Understand the terrain. Needs assessments help to determine how to restore government institutions. If the design of former institutions contributed to the collapse of the state or fueled violent conflict, they may need to be reformed rather than simply rebuilt. Critical questions include the following:
  • Did the government institutionalize discrimination, violate human rights, promote economic inequality, or foster violence prior to or during conflict?
  • Have spoilers captured the institutions of the state?
  • What is the relationship between national and subnational government institutions (formal and informal)?
  • To what degree does corruption exist in government? Is there a nexus between government officials and perpetrators of violent conflict?
  • What resources does the government have (personnel, budgets, infrastructure, facilities)?
  • How are government employees selected, trained, paid, promoted, and managed?
8.6.5 Prepare for transitional governance, but keep a focus on permanent governance. Interim governance institutions led by international staff may temporarily substitute for host nation institutions in the immediate aftermath of violent conflict, either due to a lack of host nation capacity or because the peace agreement or mandate demands a period of transition. Transitional structures are most successful when they have access to substantial resources, maintain coercive enforcement capabilities, incorporate host nation personnel, provide essential services, and focus on training government officials and employees.366 Transitional administrators often have to take quick action on a number of priority issues involving human rights, property rights, and elections.367 Transitional authorities should make provisions for transferring responsibilities to the institutions that should be designed and built largely by the host nation.368 International actors may also help develop the design, mandates, and oversight mechanisms of permanent executive, legislative, and judicial institutions.369
8.6.6 Ensure local participation within transitional governance structures through consultation or co-administration. Engage local leaders, civil society groups, and the general population through consultative or co-administrative mechanisms to ensure legitimacy of transitional governing structures.370 Consider creating a political advisory council comprising host nation leaders who advise on political decisions, a joint military committee composed of senior commanders from different factions who provide input on security matters, or a joint functional committee of civilians to consult on or help oversee domestic governance functions.371 Consultative or co-administrative structures should be given sufficient resources and authority. They should enable host nation leaders to participate in decision-making and implementation, give the population a voice in transitional governance, help develop cooperation among representative groups, and train the country’s future leaders.372
8.6.7 Restore managerial capacity for governance. Managerial capacity for governance involves recruitment, appointment, training, and mentoring of ministers, deputy ministers, and other senior public administration personnel. Merit-based criteria for selection may be ideal, but in an S&R environment, the host nation’s ability to provide this level of talent may be degraded. Warlords and other faction leaders may need to be included in a new administration, and the diaspora may be brought into positions of leadership, whether for political reasons or because they are most qualified for service. If political considerations dictate the need for inclusion of power brokers and potential spoilers, consider time-restricted appointments and strict oversight of these positions.373 Build capacity early through advanced training and mentoring and consider placing advisers with some authorities for direct oversight.374 
8.6.8 Reform national ministries and public administration to ensure accountable use of public resources and use of regulatory power in a nondiscriminatory manner. Executive institutions of governance in societies emerging from conflict may have a history of favoritism, cronyism, lax budget controls, corruption, and the use of government policies and regulations to benefit the powerful. Incentives for conflict abound with these situations and the reform of these institutions is a focus for governance in most S&R missions. Ministry restoration and reform is a time- and resource-intensive undertaking that involves defining clear lines of responsibility and parameters for political engagement of personnel and developing organization charts, job descriptions, procedures and processes, and structures for administrative control and oversight.375 Based on decades of experience, trying to establish and legitimize a range of institutions at once is unrealistic and can result in underperformance in multiple institutions.376 Understand that the host nation must work out its own sequencing of institutional development that is responsive to the needs of its citizens. This should not be imposed by outsiders.
8.6.9 Focus on civil servants. A professional and ideally meritocratic civil service377 promotes effectiveness and accountability. To build trust and credibility, the civil service should be inclusive of marginalized groups and representative of the society as a whole. Build upon existing institutional capacity and start by conducting a census of civil servants.378 Understand the statutory basis for the civil service and the rights and duties of civil servants. Determine how the service is organized, including grades, salaries, benefits, recruitment, promotion, disciplinary, and termination procedures. Appropriate boundaries between the political and administrative spheres should be established.379 Create monitoring mechanisms of civil service personnel to mitigate corruption, inefficiency, and discrimination that might exacerbate conflict.380 Ensuring civil servants are paid in a timely fashion and receive sufficient training and resources contributes to accountability.
See Gap/Challenge: Section 8.10.1, Making peace pay and civil service reform.
8.6.10 Develop the top-down and bottom-up political processes and institutional structures that are required for stable governance. Stable governance is a product of successful interaction between functioning and accountable national and subnational institutions and an empowered civil society. Top-down processes aimed at building national governance must also be matched step-by-step with bottom-up processes that develop subnational governance, political parties, and civic participation. Progress at the national level requires that subnational government institutions gain legitimacy and authority, which in turn depends on the ability of the national government to extend resources and services beyond the capital city.
8.6.11 Strengthen subnational governance capacity. Developing and strengthening the institutional capacity of subnational governance can lead to increased responsiveness to local concerns, create a venue for conflict management of local disputes, and present opportunities for emerging leaders or previously marginalized groups to enter government.381 These aspects of decentralization can enable more effective service delivery and inter-group political discussion that strengthens bonds within and across communities after conflict.382 Subnational institutions typically require real decision-making power and authority, control over budgets and resources, the institutional capacity to deliver services, and adequate and timely pay to be effective.383 Decentralized governance, the degree and forms of which should be a host nation decision, can create rapid and visible results to garner legitimacy within local communities through responsiveness and transparency and emphasize revenue generation as a key priority.384 Mechanisms to coordinate and communicate between national and subnational institutions facilitate success. Oversight mechanisms for subnational institutions help to ensure inclusivity, transparency, and accountability to the rule of law and may mitigate against factional struggles for control of local governance and resources.
8.6.12 Consider the impact of different forms of decentralization on stabilization. Peace agreements and mandates may include provisions for decentralization, regardless of the local conditions. Understand the potential consequences of decentralization, however, particularly when insecurity or threats to the central government persist and emanate from specific regions. In unstable environments, the potential for spoilers to control local governments raises concerns for continued conflict. Plan for the effects of different forms of decentralization, which may include the following:
  • Deconcentration (assigning responsibility to local offices of national ministries);
  • Delegation (involving a contractual relationship for the performance of certain functions that may include national, subnational, and nongovernmental institutions)
  • Devolution (endowing subnational governments with freedom for autonomous action, accomplished typically through subnational elections).385
When possible, align decentralization options to reflect local conditions and increase accountability and stability. Experience in stabilization environments reveals that incremental steps toward decentralization may be most effective. These steps can involve starting with administrative responsibilities for delivering essential services, continuing with fiscal authorities for spending and raising revenue, and concluding with the endowment of political authorities.386
See Gap/Challenge: Section 8.10.2, Subnational governance.
8.6.13 Approach: Security Sector Reform
In a society emerging from conflict, stable governance requires a legitimate state monopoly over the means of violence, which can be developed through security sector reform. SSR seeks to strengthen civilian control, management, and oversight387 of security forces to ensure that the forces are liable for their conduct and held accountable for abuse of power. SSR also involves developing formal security policy that is often absent in governments after violent conflict and may be neglected by S&R actors. Security policies are necessary to govern when and how forces are to be used, how they are managed, and how abuse of authority will be dealt with. These policies should be promulgated by the legislative branch, addressed in a constitution reform process, and implemented by executive institutions. Other aspects of SSR are discussed in Section 6.7.18.
8.6.14 Prioritize good governance of the security sector. An effective and accountable security sector relies on good governance. Good governance includes policies and laws that ensure security forces are accountable to legitimate civilian authority, including executive, legislative, judicial, and civil society structures and processes with the necessary checks and balances to prevent abuse. Peace agreements often mandate the reform of security bodies without a concomitant mandate for civilian governance of those bodies. Focus on developing accountable and capable civilian government authorities and nurturing specific civil society involvement in oversight.388 Monitoring the development and implementation of security policy may be effectively accomplished with the help of community advisory, review, and oversight boards. A functioning judicial system should provide legal recourse when abuses occur.389
See Gap/Challenge: Section 8.10.3, Security sector governance.
8.6.15 Establish accountable civilian authority over the security sector to protect human rights and prevent the renewal of conflict. Placing security forces under effective and legitimate civilian authority can provide accountability to the population for the conduct of the security forces, based on the rule of law and protection of human rights. Civilian authorities should exercise oversight and transparency in appointment, budget, and administrative processes through such mechanisms as internal financial controls; disciplinary procedures; performance reviews; and legitimate selection, retention, and promotion policies. Authority and oversight should be multilayered and involve internal controls within security forces, parliamentary and civil society monitoring, review and reporting mechanisms, and review by the judiciary. Independent oversight bodies may include human rights commissions, audit and inspector general offices, ombudsmen, and public complaint commissions that offer specific mechanisms for oversight and accountability.390
8.6.16 Strengthen legislative, judicial and civil society participation and oversight to prevent abuse of power. Accumulation of excessive power by the executive branch is often a factor in conflict and may not be resolved in its aftermath. A largely discredited government may also remain in conflict’s wake. Oversight that is external to the executive branch can offer an immediate path for accountability and a check on official abuse of power, while lengthy reform processes within executive ministries unfold. Legislative approaches include holding hearings and using subpoena powers to compel testimony from ministry officials, commanders, and others; exercising budget review and approval authorities; and creating new laws for governance of the security sector. Inspections of facilities and investigations of alleged abuse are additional parliamentary tools for oversight. The judiciary also plays an important role by adjudicating cases involving members of security forces, performing judicial review of policies and special powers, and providing remedies in accordance with human rights.391 Civil society organizations (CSO) may have official mandates to help oversee the security sector. CSOs with expertise in security issues are also sources for training new or reformed forces and providing policy advice and/or staff for new or reformed ministries or parliamentary oversight committees.392 For more on oversight mechanisms, see Section 7.7.6.
8.6.17 Ensure that the host nation population drives governance reform of the security sector, as it is an inherently political process. Reform of the security sector begins with a comprehensive assessment of the specific context of security needs and what the population expects and will accept. Understand that since the control of security forces likely enabled conflict, the reform of those forces is among the most sensitive and dangerous issues that will confront society. Resistance to change from those who stand to lose control in a reform process may become violent. Significant and lasting reform can only result from a process of active dialogue with key stakeholders in government, security bodies, and civil and political society, led by legitimate host nation actors. If significant change is to occur, these local stakeholders need to support reforms. International actors can help facilitate this politically sensitive process with the understanding that reform is a long-term effort.393
8.6.18 Approach: Protection of State Resources
The resources of the state belong to the population. It is the responsibility of the government to protect those resources and ensure they are collected, managed, and spent in a manner that meets the social and economic needs of the population. Protecting state resources requires sound public financial management based on transparency in revenue collection, taxation, and budgetary processes. It also means preventing corrupt government officials from abusing their positions of power for personal gain, thereby impeding efforts for good governance and economic development. If they are mismanaged, these resources can serve as a source of instability for societies emerging from conflict.394
8.6.19 Promote good economic governance to enable recovery and generate confidence in the government’s ability to manage public finances. After violent conflict, the need to reform political governance often overshadows the need for good economic governance. But the latter is vital to strengthen public trust in the government and enable long-term development.395 Good economic governance relies on a system of laws and regulations, policies and practices, and institutions and individuals that provide the framework for economic recovery.396 The system should enable the government to perform its financial responsibilities—including licensing, tax collection, central banking, concessions, and trade and investment policies—with accountability and transparency to ensure those resources benefit the general population and do not end up in the pockets of corrupt government officials. Fiscal management is further discussed in Section 9.5.12.
8.6.20 Address low-level corruption that deprives the government of badly needed resources. The government is frequently the largest single employer in societies emerging from conflict. During and after conflict, many employees will have engaged in various degrees of corruption, from extortion to nepotism, to accepting bribes in exchange for ignoring traffic, tax, or customs violations.397 While this level of corruption may seem minimal, it can have detrimental consequences. Low-level corruption deprives the population of their tax money and hinders critical investments in electricity, education, roads, and other infrastructure. It can also reinforce inequities, alienate parts of the population, and undermine public trust in the government’s ability to manage finances. Addressing these activities requires developing anticorruption laws and regulations and enforcing them by consistently investigating complaints about corruption, punishing convicted officials, and denying government contracts to companies that fail to demonstrate tax compliance.398 It should also involve streamlining government processes and limiting discretion. To protect customs and import revenue, pay close attention to improving border management by reforming customs procedures and equipment.399 Also ensure that tax policies and systems are perceived as equitable and nondiscriminatory, as perceptions of inequities can also encourage tax evasion.
8.6.21 Sever the nexus between government officials and illicit sources of revenue. During violent conflict, many government officials will have engaged in high-level corruption to entrench their power at the expense of the public good. One of the biggest threats to stable governance arises from this political-economic nexus, in which political actors maintain power by receiving royalties from extractive industries or by taxing organized crime syndicates or actors who control, exploit, and capture trade networks, remittances, and other assets.400 Pay close attention to this reality and resist pressures from these groups to simply restore long-standing political structures that facilitate corruption. An important means of preempting the entrenchment of vested interests is to address corruption early on when the government is being designed.401 This can include specifically addressing corruption in the peace agreement. Whenever possible, keep out officials who have been well-known for corrupt behavior to avoid setting the wrong standard for the future. Permitting the impunity of political-criminal actors can seriously hamper prospects for good political and economic governance and undermine government legitimacy. Confronting vested interests requires strong political will. Severing the criminal-political nexus is further discussed in Section 9.6.
8.6.22 Establish oversight mechanisms in government processes to ensure accountability. Robust systems of oversight will most likely be needed to ensure that public funds are collected and spent with integrity. Oversight mechanisms may include internal controllers and auditors who reside within executive institutions or exist in the form of parliamentary commissions, civil society commissions, and external auditors.402 These bodies should be independent of executive branch authorities and fully staffed and resourced to do their jobs effectively, even if they are part of the executive branch (e.g., inspector generals). Oversight units should monitor government institutions and employees to ensure that all financial conduct adheres to laws, regulations, instructions, and directives related to the management of public funds. Activities subject to monitoring should include meeting reporting requirements, observing budget limits, and determining recipients of government contracts. Enforcement mechanisms are also critical to give teeth to oversight units and ensure their effectiveness in keeping public officials accountable for their actions. In extreme cases, colocating international finance experts in host nation financial institutions may be useful to provide training and build capacity for transparent financial management systems. Giving these international actors co-signing authorities also ensures that all major transactions are reviewed by both a host nation manager and an international adviser.403 Ultimately, the success of any oversight mechanism depends on strong political will for government reform. Fiscal management is discussed further in Section 9.5.12.
See Gap/Challenge: Section 8.10.4, Oversight and accountability.
8.6.23 Make government financial data and activities as clear and open as possible for the population. Publishing government financial information and giving the population to access to it helps build the trust in the government’s ability to manage resources well.404 Keep the budgetary process open and widely publicized, including its preparation, execution, and expenditure reporting processes. The legislature should hold public hearings to force ministers to justify budget requests. Information on all domestic and international debt should also be made publicly available. Ensure that all information published is consistent with actual activities in government.
8.6.24 Keep budget deficits under control by mobilizing revenue and increasing the efficiency of the tax system. Shortfalls in revenue are often a major cause of budget deficits, so pay attention to generating sufficient funds to finance critical social and economic development programs.405 In societies emerging from conflict, key sources for revenue will likely be indirect taxes, rents from nonrenewable resources, and external grants, so focus on protecting those revenue streams. Keep tax regulations and procedures open and accessible and educate the public about the system to increase efficiency and make it easier for taxpayers to comply. Other aspects of the tax system are discussed in Sections 9.5.14 to 9.5.16.
8.6.25 Protect natural resources as fundamental state assets that are integral to economic recovery and political stability. Lucrative nonrenewable natural resources such as oil, diamonds, and timber are a common endowment in societies emerging from conflict. Depending on how they are managed, these resources can serve as either a major source of wealth or a destabilizing force that engenders corruption, economic instability, and conflict over control and distribution of assets.406 Ensuring that wealth generated from profits or rents fully benefits the population requires protecting natural resource extraction sites and related infrastructure, managing the revenue generated, and establishing transparent and accountable processes for letting resources concessions. Clear rules and procedures for public procurement should ensure that government contracts are awarded based on merit rather than parochial or personal interests. Protect the integrity of the revenue stream through the aforementioned mechanisms for prevention through good public financial management and enforcement through prosecutions and the judiciary. Additionally, natural resource wealth management issues should be addressed in peace agreements, constitutions, and other aspects of the political settlement process.407 Natural resource wealth management is also discussed in Section 9.6.11.