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USAID Workshop on
Conflict Prevention Management
>> USAID Home >> Conflict Prevention >> June 2000 Workshop
"Approaches to Conflict"
John Strasma, University of Wisconsin Land Tenure Center
June 7, 2000
Click here to hear an audio clip from this speech.
Guatemala experienced a long, drawn-out war, which was primarily over power. However, during the Peace Accord negotiations, discussions turned to land and negotiators promised inexpensive land for ex-combatants and refugees in order to facilitate an agreement. This was to be done through the creation of a land fund; USAID provided a $5 million grant and the World Bank added a $69 million loan to get it started.
The fund was to provide loans to groups instead of individuals (as this was considered less expensive) and the poorest. By December of 1999, 39 groups had purchased farms for 2,938 families. Each family received one loan, with a 'compensatory' subsidy, which together totaled an average of $6,500 per family. No down payment was required for the loan, as it was assumed that the applicants were too poor. Some legitimate groups did apply for loans; however, only 2 of 27 different ethnic groups applied. Many other groups were organized expressly for obtaining loans from the land fund. They lacked norms on entry, exit, and bonding, and planned on dividing and disbanding once the money came in.
The first payments on the first five loans have come due, and each loan recipient has asked for an extension; this could be an augury of what could await the fund with future due dates on first payments. In addition, many other groups believe that they have been promised loans; the possibility exists that this could be a pre-conflict situation. Alleviating this problem and achieving lower costs per family will be extremely difficult, but may be possible. Some options to repair the situation include:
- Create more than one 'window' for loans that could be less generous than the original loan but offer faster service.
- Require a down payment, but allow the poorest to 'rent to own'.
- Finance rentals as well as purchases.
- Invite applicants to waive the legal right to a subsidy in exchange for faster service.
- Finance the productive value of the land, but not the speculative component of prices.
Managing the repayment of loans has implications for conflict prevention. About 511 groups (with an average of 64 people per group) have applied for group land. It is uncertain how these groups will react if and when they find out that they might not be eligible. In addition, over 30,000 families think that they have been promised a loan. It is useful to ask how it will be possible to lower these families' expectations. It is also useful to ask whether any donor or agency was reflecting on what it was doing when it started this land fund program.
Klaus Deininger, World Bank Land Tenure Policy Group
With regards to land, two elements lead to conflict: lack of economic growth and land exploited by the elites. How can this be addressed? It should be acknowledged that there is a role for institutions here to ameliorate potential conflicts. Institutions can help in the redistribution of different types of assets, not just land. Educating people who are given land is important; in the past, parcels of land had been redistributed without teaching how to best use the land, with deleterious results. Land reform has made a big difference; however, it is important to make sure that land and other assets go to the right people, and that property rights are clearly defined (not doing this can create the conditions for pre-conflict situations).
Transcription of audio clip: "There are approximately 511 organized groups that have started the process of applying for a group loan to buy land. The average size of those groups is 64 families per group. And they are all expecting essentially this 6,550 dollar package. Do the multiplication and you find that we have out there approximately 225 million U.S. which people think they are entitled to because they have begun the process. We have as assets the dregs of the first 5 million dollars from USAID and the promised forthcoming loan from the World Bank, 69 million over various years. Now, what about the rest? What happens when they find out that not even over 10 years might they qualify for the full package they have been led to expect? "
[This audio clip requires RealPlayerTM. The RealPlayer software is available for free download from RealNetwork at http://www.real.com/player/index.html.]
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