Funding for peace negotiations is often treated as a purely technical issue. However, on closer inspection, funding is fundamentally political and, as such, has a profound impact on the architecture and the dynamics of peace negotiations.
For a functioning peace negotiation process, the funding requests of the negotiation stakeholders, defined as the negotiating parties and the mediator, need to be matched with a limited pool of external funds made available by donors. This research conceptualizes this resource allocation dynamic as a matching game that consists of a series of interactions (or negotiations) with the intention of matching the existing funding requests with available external funds. The negotiation architecture that is finally applied in a given process thus results, at least to some extent, from a negotiation between the participating negotiation stakeholders and the donors.
When it comes to the overall funding market for peace negotiations, the research team found several features that define it:
- funding is endogenous to the overall negotiation architecture,
- the market became more voluminous and diversified over the years, and
- funding is increasingly “projectized” (made up of project-based funding) and professionalized.
The financing of peace negotiations is beset by a series of market failures that can undermine entire processes. While few, if any, processes have failed due to market failures, these constitute obstacles to well-functioning negotiations, contribute to increased duration of the processes, and increase their costs. To overcome the existing market failures, actors have to deal more adequately with information asymmetries and misaligned incentives, as well as with collective action problems.