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Abstract

Increasing attention to post-conflict peacebuilding (PCPB) has led to the investment of millions of dollars into countries that are emerging from conflict. Despite the enthusiasm when fighting stops, postconflict situations bear a risk of renewed conflict. This article focuses on the role of parallel economies in the recurrence of conflict and elaborates their implications for PCPB. In a post-conflict setting, parallel economies are a legacy of conflict economies and provide a space for illicit and illegal economic activities that are not captured by the state, thus complicating the creation of welfare entitlements that bind citizens to the state. It will be argued that parallel economies contribute to the undermining of PCPB by diverting resources away from reconstruction and state-building and by empowering actors with little interest in peace. Moreover, it will be argued that the profits from parallel economies tend to be higher than the funds available to donors for PCPB and reconstruction. This affects the power balance between profiteers and donors in a post-conflict setting. Concerning policy, the article explores engaging parallel economies from a sector-specific perspective and questions the usefulness of criminalizing the parallel economy.

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