The recent framework agreement between the government of the Philippines and the country’s largest Islamist rebel group hopefully ended decades of separatist violence in Mindanao. With President Benigno S. Aquino III and the Moro Islamic Liberation Front (MILF) agreeing to the deal, this could be the beginning of the much-anticipated peace, stability, and economic development needed in this Muslim-dominated region in the south.

The agreement also rekindled optimism that other long-running conflicts in Southeast Asia—such as in Myanmar’s ethnic states, Thailand’s southern provinces, and Indonesia’s eastern province of Papua—can come to an end. But even if peace were to break out in Southeast Asia, enormous challenges will remain to eliminate the economic marginalization and social injustices that provoked these conflicts in the first place.

Vikram Nehru
Nehru was a nonresident senior fellow in the Carnegie Asia Program. An expert on development economics, growth, poverty reduction, debt sustainability, governance, and the performance and prospects of East Asia, his research focuses on the economic, political, and strategic issues confronting Asia, particularly Southeast Asia.
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Southeast Asia’s remarkable economic performance over the last three decades has masked long-standing internal conflicts in several countries in the region. But progress has been made.

It took the fall of Suharto for Timor-Leste to gain independence from Indonesia in 1999. And it took a catastrophic tsunami for the separatist Free Aceh Movement, known as GAM, and the Indonesian government to reach a political solution, returning the region to normalcy as an integral part of Indonesia in 2005.

In Myanmar, recent political and economic reforms have been accompanied by ceasefire agreements in ten of the eleven ethnic states, and there are talks ongoing to negotiate a ceasefire in the eleventh, Kachin State. And now, in the past few weeks, the framework agreement in Mindanao has hopefully brought another internal conflict in Southeast Asia to a close.

To be sure, peace in these conflict areas remains fragile. Wherever ceasefire agreements are introduced, it is usually a difficult task to transform them into longer-lasting peace agreements and ultimately into permanent political arrangements that help reconnect the regions to the country’s economic and political mainstream.

And unless the end of violence brings a sustained peace dividend in new economic opportunities and access to justice, these regions could just as easily slip back into fighting. President Aquino’s framework agreement with the MILF is a very welcome first step in the region. Now, together, both sides have the far more difficult task of building the peace.

Breaking the vicious cycle of violence, poverty, and injustice is incredibly complex. The emphasis must lie in building institutions that enjoy the confidence of citizens and provide security, economic opportunities, and access to justice. This can be challenging under any circumstances, but is especially hard to achieve in regions affected by conflict.

Initially, it requires working with local leaders to provide security, make decisionmaking more transparent, repeal discriminatory laws, and allocate public resources consistent with need and absorptive capacity. But subsequently, the emphasis needs to shift to increasing access to justice and creating economic opportunities.

Many of these conflict areas in Southeast Asia were poor before fighting broke out and incessant combat has only exacerbated their plight relative to the rest of the region. For example, Mindanao had a poverty rate of 46 percent in 2009, one of the highest in the Philippines and almost twice the national average.

In Myanmar, the ethnic states with the most fighting are also the poorest—in 2010, Chin, Rakhine, and Shan had the highest poverty rates in the country (73 percent, 44 percent, and 33 percent respectively). Similarly, Thailand’s southern provinces of Yala, Narathiwat, and Pattani have per capita incomes that are only 40–50 percent of the national average.

One way economic opportunities can be increased is by improving infrastructure, especially for transport and power generation and distribution. Not only does this lead to immediate job creation in the construction and energy industries, but better transport allows people to move to jobs (rather than the other way around) and the greater availability of energy often removes a binding constraint to local development.

Virtually all the post-conflict regions in Southeast Asia tend to be disconnected from the rest of the economy and suffer from energy shortages. Restoring connectivity through better infrastructure reconnects these local economies with the mainstream.

Another important way to increase economic opportunities is to simplify regulations and reduce start-up costs for new businesses. The government also needs to encourage private investment by finding ways to mitigate security risks and increase access to finance. Such temporary but special support for private investors is essential because ultimately the private sector needs to drive growth and job creation in post-conflict situations. This creates the economic foundations for a permanent peace.

Finally, the delivery of health and education services is critical in post-conflict societies. Such societies tend to suffer from high infant mortality and illiteracy and displaced populations have little or no access to public services.

With the social service infrastructure in conflict areas—clinics, schools, and community centers—typically destroyed and social service personnel such as teachers and health workers either killed or pushed out of the area, rebuilding is a major challenge. This long-term task requires adequate financial resources and a clear strategy to restore delivery centers, buy equipment, and recruit suitably skilled personnel.

But even with these steps it will inevitably take time to create economic opportunities and generate employment. Governments, therefore, need to consider interim measures that sustain post-conflict economies while longer-term measures take effect.

One proven way is to introduce labor intensive social safety net programs that help build or repair high-priority infrastructure at the local level—rural roads, drainage, or dams for example. Such programs may help inject demand into the local economy and provide gainful—albeit temporary—employment (especially to idle young men), while at the same time restore local infrastructure that will ultimately help the growth process.

While it may be premature to conclude that peace is breaking out in Southeast Asia, the recent announcement of the Mindanao framework agreement and the ceasefire agreements in Myanmar’s ethnic states give grounds for cautious optimism. Transforming these agreements into long-lasting peace arrangements and ultimately into political settlements will take time.

To build a more conducive environment for productive negotiations, ceasefires must yield peace dividends that include better economic opportunities. Governments, therefore, must invest in infrastructure, simplify regulations, and develop social safety nets to give peace a chance.