Eclectic Business Trends in a Conflict Zone: Jammu and Kashmir (J&K) – a Case Study
Almost by definition, conflict involves the diversion of resources from production to destruction. The conflict’s economic legacy further includes capital flight, destruction of existing assets and a corresponding reduction in economic production. Furthermore, the distorted system of asset acquisition and resource use in conflict situations bequeaths to the post conflict period a pathological system of incentives and a highly disabling environment for legitimate private sector investment. Capital flight can be particularly difficult to reverse when hostilities end. Furthermore, markets are severely compromised; from village produce exchanges to national commodity and financial exchanges. Consequently, capital mobilization is an uphill task. Moreover, whatever is left of entrepreneurial talent tends to become engaged in catering to the service economy.
Faced with ineffective governance; political interference; pervasive corruption; supply chain disruptions; diminishing markets; uncertain tribal divisions; legal and regulatory inconsistencies and the threat of attack , doing business in conflict zone like “Jammu & Kashmir” is not a cake walk. But for businesses that take a risk (and survive), the long-term rewards in this rapidly expanding market can be high. Being flexible, innovative and having local camaraderie on the ground is the key to survival.
People who know the region, the environment, the networks and the culture have more chance of avoiding trouble and are able to navigate through bureaucratic minefields – knowing which government regulations require immediate action and which tacit formalities must be followed. It’s a matter of arming yourself with as much knowledge about the situation as possible, to be able to determine when underlying tensions and conflicts might escalate to violent confrontations between groups or communities; and ensure that their corporations and decisions do not exacerbate them. There is real need to be aware of what is coming, how to avoid risky quarters and at the same time maintain a presence.
State-of-the-Art to Sustain:
Businesses have to become creative in finding new ways to deliver goods and services to market and to manage a business in extreme and changing conditions. It’s very frustrating to be innovative in survival conditions – to innovate to maintain standards instead of innovating to improve quality and servicing, since there is considerable cost and effort in trying to figure out what will happen next and making sure we’re not going to lose out business because of political whims. How you deal with this is to make sure you are flexible and nimble enough to change your long-term plans in an instant or better to maintain short term strategies which may align to your long term business vision.
Another challenge is the diversity in a relatively secular environment. The region’s commonality of language creates opportunities. But diversity of culture and thought, while creating a dynamic workplace, is fraught with danger. Here, diversity is not just a matter of who you put on the board; it’s at the very core of how every single person operates. We have people from all sides of the conflict and if an individual is over aggressive, I don’t think they’ll work very well in this region.
Vision/Acumen/Long Term Plans:
Companies local or from outside prepared to take the risk of moving to conflict zones should carefully assess their goals. You need a definite vision of where you want to go. Such a vision should definitely be orientated to long-term return because often, in the short-term, it’s not a good place to be. Looking at the future as potential business development and potential profit is a good way of assessing risk.
Working in Partnership:
Successful businesses are a key to putting countries back together after war and contributing to socio-political stability. Both sides of any conflict know this and while there is always the risk of contracts being torn up when a new regime takes over, staying apolitical is relatively easy and the question of ‘taking sides’ is rarely an issue. But government behavior can be unpredictable and quite possibly the monkey wrench in your carefully articulated business plans. The business trends and looking to operate in zones which have unstable regimes back up their risk management with statements of values, regular monitoring and reporting and initiatives that demonstrate commitment. Companies can act most effectively through partnerships and establishing accountability or in coalition with NGOs and consortia of like-minded businesses to create a level playing field within the private sector, so companies that fight corruption are not displaced by less ethical competitors.
Transparency is also an important tool for making corruption less effective or silo to a business. “Transparency is not a choice; it really is a precondition to being active in the field and creating sustainable markets” ~ Armand Phares .While markets expected to grow in certain sectors is an exciting and potentially profitable place to be; businesses operating in areas of conflict need to tread carefully. Mismanagement in conflict environments can threaten a company’s investment, damage its reputation and place its personnel and facilities at risk. The important thing for companies is to endure circumstances for as long as possible with the same level of professionalism used in times of peace. “It’s very frustrating and highly exciting”, notes Phares.
Rigorous oversight of the management of public finances and national resources and the establishment of robust systems of public control and oversight of the economy are necessary prerequisites for post-conflict economic recovery. These help to reduce the risk of imprudent or corrupt decisions. Thus, for example, financial intermediation needs supervision to avoid bad lending practices. Where large portfolios of non-performing credit are accumulated, costly public bailouts often follow. Similarly, governments need to guard against the risk of monopolies emerging, particularly because conflict may have reduced the ability of citizens to organize as a possible countervailing force. Strong public control of revenues from natural resources is particularly critical especially where there is significant dependence on them. Some have argued that the most effective public control in these situations is to generate broad citizen participation in the management of these resources.
Need For National Dialogue Processes:
Irrespective of the genesis of a conflict, an immediate post-conflict task is creating the space for, and facilitating national dialogue. The challenge is to build consensus on the parameters of a new system of governance essential for ensuring both stability and economic recovery, either through a new constitution or through a broader agreement than an initial pact or a truce among the warring parties. Such a process can take many forms, both modern and traditional. Same applies to ‘Jammu & Kashmir’ as it has parties to the conflict and considering the enormity of the situation the “dialogue process” must be initiated at the earliest so that both economic stability and entrepreneurship thrives in otherwise a diminishing market.
As a Software engineer, an aspiring politician and an entrepreneur to get things going for me with all the deep insight into the society and political environment I live in day after day, I believe that already weak pre-conflict matrices of authority, accountability and transparency are frequently further eroded by conflict and replaced by a culture of impunity and corruption. The period immediately preceding a conflict frequently gives rise to the most destructive dynamics. As national cohesion and consensus break down and tensions increase, public officials begin to ignore the governance norms and structures which previously provided, at least to some degree, the “rules of the game” necessary for the effective functioning of the institutions of the state. They focus instead on their personal or parochial interests. Their ability to do so is facilitated by the degeneration of social control that expands incentives for opportunism and corruption.
Unfortunately, this behavioural switch tends to be enduring, with serious implications for the legitimacy of the state. Social and political actors, seeing such pervasive corruption and parochial favouritism, further lose trust in the ability of the state to deliver just policies. According to me, the collapse or de-legitimization of governance structures contributes directly to widespread institutional breakdown—both a precipitating cause of conflict and one of its most onerous outcomes. A functioning rule of law system is essential for the creation of a viable economy. Investors are reluctant to go where commerce is not regulated by transparent predictable rules and undergirded by effective law enforcement. Reasonable security is of strategic concern not only to large companies and investors, but also to the small holders. They are unlikely to fully engage in productive activities if they fear that their rights to land and resources cannot be safeguarded against predatory behaviour.