One of Australia’s leading business figures, Steve Killelea is the founder and Executive Chairman of the Institute for Economics and Peace (IEP). Mr. Killelea is also the driving force behind the Global Peace Index (GPI), the world’s first and leading measure of global peacefulness. GPI measures ongoing domestic and international conflicts, safety and security in society and militarisation in 153 countries by taking into account 23 separate indicators.
Mr. Killelea sat down with Reza Akhlaghi
, senior writer at FPA, to discuss how peace and conflict can impact quality of life and economic development.
You have asserted that the IEP has a key emphasis on the need for greater understanding of the inter-relationships between business, peace and economics, which can bring economic benefits. Can you elaborate on this interdependence?
The interdependence is brought about by the relationship that exists between improvements in peace and improving market fundamentals. A survey that IEP did in conjunction with the UN Global Compact found that 80 percent of senior executives believed that the size of their markets grew with improvements in Peace and 79 percent believed that their costs reduced when peace improved. This has also been borne out by statistical analysis where researchers found that annual per capita increases by a little over $3,000 for every 10 places a country rises up the Global Peace Index.
If one thinks about peace then it is easy to see that when violence is reduced then all sorts of efficiencies enter into the system. Stable environments allow for better long term planning thereby reducing risk, reductions in the cost of insurance and security, freer movement of people and an environment more likely to attract capital.
It is almost mind-boggling to be able to grasp the extent of change the world is undergoing on multiple fronts. These changes range from technology, biomedicine and communications, to geopolitics and energy consumption patterns. Given the past record of humanity, how do you think we can manage such overwhelming change without conflict?
The velocity of change is only increasing and to be on top of change humanity will need institutions that are flexible and adaptive to cope with these changes. The world today is facing challenges unlike any in our history. These changes are global in nature, such as many environmental issues, economic issues or over-population. Unless we have a world that is basically peaceful we will never get the levels of cooperation, trust or inclusiveness to solve these problems let alone empower the international institutions to create the governance and policies. Therefore, I would argue that peace is a prerequisite for the survival of society as we know it in the 21st century.
At IEP we have done a lot of work through statistical analysis to identify the types of environments that create peace and have come up with an eight part taxonomy called the Structures of Peace that describes the conditions that create a peaceful environment. But what was most profound was that this same environment is also conducive for many other forms of human potential to flourish, such as business. Additionally, peace and resilience is also closely related, societies that are more peaceful seem to be more resilient. Look at the response of the Japanese to the Tsunami compared to other nations, Japan ranks 3rd on the Global Peace Index. Societies that will best be able to adapt to external shocks are those with social cohesion, participative social structures in decision making and an equitable distribution of resources. Through focusing on building societies that are peaceful we can create the optimal environment for human potential to flourish as well as building societies that are better structured to adapt to negative shocks.
There are nations that are certainly considered peaceful and wealthy, but suffer from wealth distribution disparities. Countries in this space happen to have weak democratic and civil institutions such as Saudi Arabia and Venezuela. Should there be democratic values and civil institutions for businesses to thrive? Do democratic values count as ingredients of peace industries?
It’s interesting to note that the Global Peace Index uses the “absence of violence” as the definition of peace and measures the internal as well as the external levels of peacefulness using 23 different indicators. Using these measures, there are no countries that you would consider repressive at the top of the index. I think that it is because weak governments can’t keep control of law and order whereas governments with a poor distribution of resources need strong security apparatuses to maintain order. Two of the structures associated with peace are well-functioning governance and equitable distribution of resources.
What is your assessment of the current crisis in global markets and how do you think this economic crisis could impact peacefulness of countries or regions?
There is definitely a strong connection between the economy and peace. What is most fascinating is that in this case causality runs in both directions, therefore a decent downturn in long term GDP growth will play out with some increased forms of violence and will probably manifest themselves with an increase in violent demonstrations or political instability. The best way of mitigating these outcomes is to focus on the structures that will build a peaceful society.
IEP emphasises the impact of improved peacefulness on a company’s market, costs structure or profit. What about those organizations whose livelihoods and profits largely depend on human conflicts and civil unrest?
There are two types of actors, state and non-state actors and the two operate very differently.
State actors can been seen as the military industrial complex or policing or prison systems. These actors provide worthwhile services, nobody wants to live in a community with violent criminals on the loose and all nations have the need to defend themselves, however it does come at a cost but what is not well understood is the best policies for pursuing incremental improvements in peace, how they will affect business and the advantages to the economy as a whole from these incremental improvements.
Non-state actors can be organised criminal operations or terrorist groups. These types of organisations thrive in chaos. There is definitely a need to deal with these groups through security measures but what is less understood is how environments can be created where it is difficult for these types of organisations to develop in the first place. This comes back to the Structures of Peace and creating holistic approaches aimed at building a self-sustaining peace.
This year’s report by Global Peace Index had a particular emphasis on the Arab Spring. What is your view on the current turmoil in the Arab world, and going forward, do you expect more significant changes in this part of the world?
It is always difficult to predict the future but I am sure that more groups will agitate for rights that they do not have. This may be heightened by slow-downs in economic growth over the next few years but if all nations looked at what they could implement to create a more peaceful society this may mitigate future unrest. The research can also form a basis for guiding the newly forming governments in the Middle East on how to build a socially sustainable and peaceful society.
In the Middle East, we have witnessed long-entrenched rulers with their governance system running out of steam. In my opinion, the Arab Spring is the confluence of different factors; some of the key factors include growth in education and connectedness with little or no growth in job creation and a serious imbalance in distribution of wealth.
We don’t believe it was Facebook and other social media behind the eruption of democratic movements in the Middle East. Social media networks have had some role in organizing some of the demonstrations, but their role were certainly not a causal factor.
At Global Peace Index we have observed that countries with lowest growth GDP have high tendencies for social chaos followed by high-growth GDP countries, which tend to have great potential for social change. A high growth GDP country can have growth in economy with high corruption and, consequently, little growth in job and social security. However, medium-growth GDP countries tend to be more stable compared to the other two.
You run a number of charity foundations. Does your charity work also involve educating organizations, private and public, on peace dividends?
I also have a family foundation, The Charitable Foundation (TCF) founded in 2000. I have been actively involved in developmental for about 20 years. Generally I like to operate the developmental aid and peace research separately, that way there is more of an intense point of focus, however TCF does do some peace related projects. The Institute for Economics and Peace is responsible for education and defining the peace dividend.
How much faith do you have in the United Nation’s ability to bring about peace and act effectively as a force against the eruption and spread of violence?
I think, on balance, the UN plays a constructive role in helping maintain and create peace; however its systems were built out of the Second World War and entrenched during the cold war. The world has become vastly more pluralistic since then and structures such as the Security Council need to be updated to express the modern pluralistic nature of global power.
The UN has done a very good job in some areas in such as in famine control and peace keeping. Governance is one area that the UN is in serious need of reform. Today major challenges facing humanity are global in nature and they require a better governance and management by the UN. It is essentially dominated by a nuclear armed club. This is not democratic.
Do you think of yourself as an optimist?
I am neither an optimist nor a pessimist. I can see many challenges for humanity in the next thirty years, I believe that some of these may be heavy hitting, but I do believe that humanity has the capacities to solve its problems but to do so we will need co-operation on a scale unparalleled in human history.