Political Currency and Liquidity in the Political Marketplace: Case Studies from Northwest Africa

Michael Keen, Research Fellow, African Political Economy Lab¹
mkeen@africacfsp.org

The political marketplace is a framework for studying political contestation that posits political players can be understood as entrepreneurs acting in a marketplace buying and selling the commodity of loyalty. This paper extends current theory by proposing that political budgets are (1) comprised of three currencies – namely money, violence, and social capital – and (2) that these currencies are interconvertible. However, they are not always freely interconvertible thanks to liquidity shortages in the marketplace. This paper conceptualizes the idea of liquidity events that profoundly impact the liquidity and interconvertibility of currencies in that marketplace. It concludes with several lessons for policymakers.

Introduction

In every political system both inside and outside Africa, disagreement is an inevitability. Yet, in a small minority of cases, politics are contested through violent means, and this violence bears a great human cost. As such, understanding the mechanics of when, why, and how political contestation turns violent is of great concern to policymakers at all levels. A useful lens for grappling with precisely these questions is the ‘political marketplace,’ developed by Alex de Waal over the course of his work on conflicts in the Horn of Africa.² The political marketplace, as its name suggests, conceptualizes politics as essentially a marketplace in which various actors, or political entrepreneurs, are engaged in the buying and selling of a single commodity: loyalty. While de Waal focuses on loyalty as a commodity and the actions of the political entrepreneurs, this article proposes an extension to de Waal’s theory: it is also vital to focus on the currencies being used for marketplace transactions and the mutual convertibility and liquidity of these currencies. The first section of this article outlines in greater detail existing theoretical and empirical scholarly work on the political marketplace. The second section then discusses this article’s proposed framework on currency within the political marketplace. Next, three case studies, drawn from conflicts in northwestern Africa since the mid-20^th century, showcase how liquidity events can be inflection points of conflicts. A final section offers ideas on how policymakers can deploy the framework of the political marketplace in formulating policy and working to end violence.

The Political Marketplace

The political marketplace is defined by de Waal as a “system of governance in which politics is conducted as the exchange of political services or loyalty for payment or licence [sic].”³ Political entrepreneurs, actors within the political marketplace, seek to maximize profit based on the laws of supply and demand. Additionally, the political marketplace is fractal, meaning it is reproduced at all levels, from the international to the local.⁴ A given political entrepreneur can and often does operate on multiple levels simultaneously.⁵

Like ordinary marketplaces, political marketplaces operate under rules and regulations. Both the content of these regulations and the extent of their formalization vary immensely from one political marketplace to another. The most tightly regulated political marketplaces are the most institutionalized democracies, such as the Scandinavian countries and New Zealand, while the least regulated political marketplaces are found in places like Somalia, where political elites can and frequently attempt to have each other killed as part of the standard course of politics.⁶ In less regulated political marketplaces, violence is an inherent part of the marketplace because violence serves as “a means of bargaining and signaling value within the marketplace.”⁷ Various political entrepreneurs stake out their determination and negotiate positions by ordering and permitting acts of violence. If no political entrepreneur is willing and able to annihilate opponents through violence, violence ends with a peace agreement involving an exchange of political loyalties for profit, the exact nature of the profit being unique to each case. However, violence also entails risks for political entrepreneurs: it “follows its own escalatory logic and thereby multiplies uncertainty. … Violence is a currency whose exact value is unknown until it is paid.”⁸

For any political entrepreneur, acting within a political marketplace requires a political budget, financial and otherwise, that can be invested unilaterally (i.e., without transparency or oversight) in marketplace transactions.⁹ Again, political budgets are a feature of all political systems, be they institutionalized and peaceful or not. However, in more institutionalized and transparent systems, such as developed democracies, political budgets are relatively smaller compared to public budgets and are less likely to be monetized.

It must be noted that the political marketplace is not an objective descriptor of reality; no situation in any place operates completely according to the principles of the political marketplace, and certainly no individual actor makes a conscious effort to shape their actions according to the political marketplace’s precepts. Instead, the political marketplace is a lens that brings to the fore the connections between seemingly disparate events and the collective logics that underpin them.

Political Budget Currency and Marketplace Liquidity

De Waal’s initial framework for the political marketplace focuses on the actions of political entrepreneurs and therefore does not go into significant detail on the intricacies of political budgets. De Waal does note that political entrepreneurs are political actors and, as a result, their conceptions of profit extend beyond money or material reward to incorporate “enjoying power and fulfilling ambitions, including realizing aspirations for their communities and countries.”¹⁰ However, de Waal treats political budgets as essentially money, whereas the purpose of violence and other forms of power is simply to adjust the monetary price of loyalty within the marketplace. Other scholars, especially those writing in a 2020 special issue of Conflict, Security & Development dedicated to the political marketplace, offer somewhat more nuance on theories of political budgets and political profits, beginning to move beyond the notion of political budgets being solely composed of money. In their introduction to the issue, Mary Kaldor and de Waal discuss the importance of social power:

A political entrepreneur may make use of identity resources, as a way of packaging material incentives into the offer. In doing so he (and it usually is ‘he’) may expect to buy or mint an identity ‘brand’ that allows him to conduct political business more cheaply and efficiently – for example mobilising an ethnic militia, accessing an ethnic business network, or utilising a compelling narrative that helps his followers make sense of their predicament.¹¹

However, Kaldor and de Waal pull back from the idea of formalizing identity resources as potential components of political budgets, claiming, “But this is more likely to be a one-of-a-kind relational contract than a market transaction subject to a price function.”¹² Other scholars go further. For example, Hoffman et al. (2020) claim ethnicity has been mobilized as a form of capital in conflicts in the Democratic Republic of Congo.¹³ Pendle (2020) notes that market transactions still occur within the broader social environment of norms and expectations present in that society – some sources for political budgets are more acceptable than others, and not all transactions are equally valid.¹⁴

Collectively, these authors edge towards, but do not fully explore, the central notion this paper seeks to drag out into the open: political budgets are best understood as not only being composed of money. Rather, political budgets are most useful when understood as comprising three distinct but interlocking forms of capital that can be deployed to finance transactions within the political marketplace: money, violence, and social power. Each of these categories can be further divided into sub-categories, and each merits discussion in turn.

Money is the most straightforward of the currencies proposed as the basis for political budgets. Money encompasses not just hard cash but also assets that can be leveraged for cash in the future. This includes everything from liquid assets, like suitcases of cash and natural resources that can be easily sold (e.g., oil or diamonds), to less liquid assets like access to natural resources or lucrative criminal opportunities like narcotics trafficking routes or government posts known for providing opportunities for corruption.

Violence, or more properly the capacity for violence, is not a currency in the same way as cash. However, the political marketplace is built around the exchange of the commodity of loyalty, and it is difficult to argue that violence cannot be used to effectively obtain loyalty. Every political system in the world maintains its existence at least partially through violence, and scholars have a long history of discussing state formation in terms of the state’s ability to position itself as a market leader in violence.¹⁵ Using violence to purchase loyalty does not always constitute spending, in that an actor’s deployment of violence does not necessarily deplete that actor’s future capacity for violence. However, in some cases, this is precisely what happens – violence frequently involves the loss of materiel, which carries a replacement cost, and deploying violence can also lead to war weariness, blunting future capacity for violence. In this light, then, violence can function as a currency, albeit one with a highly variable value.

Social power is the most nebulous of the currencies that make up political budgets. Social power encompasses a broad swath of intangible forms of capital, including identity, ethnicity, and religious obligation. The inclusion of social power attempts to remedy the fact that the framework of the political marketplace, as de Waal originally conceptualized it, leaves little room for ideologies, focusing on ruthless pragmatism. However, just because social power is harder to quantify does not make it any less real. As historian Peter Fritzsche wrote on Nazi Germany, “Historians unpack words and actions, examine context, and scrutinize social origins, so they often do not take desire seriously. They have been reluctant to recognize genuine belief or true love.”¹⁶ Nevertheless, genuine belief and true love can have major political consequences, and as several of this paper’s case studies will explore, social power in its various forms can certainly be used for transactions within the political marketplace.

What are the benefits of seeing money, violence, and social power as distinct forms of currency within the political marketplace? After all, only a subtle difference exists between de Waal’s original theory, in which money is the sole currency but prices can be manipulated through the use of violence and social capital, and this paper’s framework, which sees money, violence, and social capital as distinct forms of currency. The crux of the usefulness of this paper’s approach lies in the convertibility of the three currencies. Each of the three types of currency is convertible into the others, but not only do the available rates of exchange within the political marketplace vary, it is not always possible to exchange one for the others at all. Sometimes, there is simply too little liquidity in the marketplace. With this framework in mind, it becomes possible to identify specific points in the course of political contestation (essentially, the fluctuations of the political marketplace) that can be called liquidity events: sudden changes to the marketplace as a whole that either inject a substantial new source of capital into the marketplace or affect political entrepreneurs’ ability to convert their holdings of one political currency into the others. Liquidity events deserve special attention because, as the following case studies illustrate, liquidity events are often inflection points that drastically change the course of a political conflict.

Case Study I: Western Sahara, 1975

The 1960s saw a wave of decolonization across Africa. However, for Spain’s colonies, the wait was longer. Well into the 1970s, Spain was still ruled by the iron fist of an increasingly decrepit Generalissimo Francisco Franco. By the mid-1970s, though, it was clear that Spain’s time as a colonial power would not outlast Franco himself. Particularly in the sparsely populated territory of what was then known as Spanish Sahara, various political entrepreneurs began to position themselves to jockey for power in the wake of Spain’s departure.¹⁷ Before its withdrawal from Spanish Sahara, Spain had such dominance in financial and military power that it was able to tightly regulate the political marketplace.

As Spain pulled out, two main groups of political entrepreneurs sought to succeed Spain as the dominant power in the area. The first was the Moroccan government and in particular King Hassan II. Morocco advanced a territorial claim on the territory of Spanish Sahara, which became known as Western Sahara after Spain’s withdrawal, because Western Sahara’s tribes had supposedly owed allegiance to the Moroccan sultan in the past. More to the point, King Hassan II used this territorial claim to outmaneuver his domestic rivals, who were pressuring his regime.¹⁸ Although Morocco had little social power within Western Sahara, it had ample reserves of both money and violence capital in its political budget. The second major player in the Western Saharan political marketplace was the Polisario Front, which was founded by a group of Sahrawi nationalists in 1973.¹⁹ The Polisario Front was extremely popular in Western Sahara, giving it considerable social power, and had respectable cash reserves thanks to Algerian support.²⁰ However, the Polisario Front lacked significant capacity for violence, and as long as Spain dominated the Western Saharan political marketplace, the group could not readily convert its reserves of social and monetary power into violence. The political marketplace was simply too illiquid.

That changed in October 1975. Spain had recruited, trained, and equipped several thousand locals to serve as military auxiliaries, augmenting Spanish troops in the territory. As Spain departed, these soldiers, many of whom retained their arms, effectively put their loyalty up for auction in what constituted a major injection of violence capital into the local political marketplace. Both Morocco and the Polisario Front bid for their services, but the Polisario Front, thanks to its genuine popularity on the ground and Algerian cash, won the services of most of the former Spanish auxiliaries.²¹

The liquidity event of the Spanish auxiliaries putting their loyalty up for auction constituted an inflection point in the course of political contestation in Western Sahara. First, it was a unique, non-repeatable event; even if some of the auxiliaries subsequently renegotiated their loyalty, never again would there be a critical mass equal to that of October 1975. Second, the liquidity event allowed the Polisario Front to radically shift the composition of its political portfolio by exchanging its social and monetary currencies for violent capacity; the newly recruited auxiliaries more than doubled the Polisario’s fighters.²² Third, the event dramatically changed the course of the conflict. In the final months of 1975, Moroccan military incursions into Western Sahara expanded into full-scale invasion and occupation as Morocco attempted to secure the loyalty of the territory through violence. However, with the Polisario Front’s capacity for violence newly augmented, the group was able to wage a highly effective guerrilla campaign that succeeded in driving Moroccan forces back into the territory’s main towns.²³ Morocco responded by imposing totalitarian rule on Western Saharans who had not fled to Polisario-run refugee camps in Algeria, inflicting a high degree of violence on the populace.²⁴ With neither side able to decisively win, the political fate of Western Sahara has continued to be contested in various forms to the present day.

Case Study II: Northern Mali, 1994

In June 1990, a group of rebels in what is today the Ménaka region of northern Mali launched an armed uprising against the Malian government.²⁵ The rebels were mostly members of Mali’s Tuareg minority ethnic group, and they broadly sought more autonomy for the country’s geographically vast but sparsely populated northern region. However, over time, the rebel movement, which never completely unified, splintered into several distinct armed groups based on tribe and ethnicity, each seeking their own goals. By late 1991, two of the most important of these splinter groups were the Popular Movement of Azawad (MPA), which was dominated by members of the Ifoghas Tuareg clan federation, and the Revolutionary Army for the Liberation of Azawad (ARLA), which was mostly composed of Imghad Tuaregs.²⁶

However, the leaders of MPA and the ARLA were only two of many political entrepreneurs operating in northern Mali. The economy in the region was dominated by informal trafficking of goods across Mali’s borders, particularly with Algeria, and select individual traffickers and their immediate communities held vast economic power.²⁷ Additionally, Malian state institutions had not successfully penetrated the area (hence the rebellion in the first place), and traditional tribal and clan leaders still held considerable sway thanks to their perceived customary and religious authority even when they were not involved directly with the armed groups.

The most important tribal leader in the region in which both the MPA and the ARLA operated was Intallah Ag Attaher, who had served as aménokal (a traditional leadership role) of the Ifoghas Tuareg community for more than 30 years. Although Intallah Ag Attaher was the leader of the community from which the MPA drew most of its fighters, he was not directly involved with the MPA. Additionally, while Intallah commanded what was effectively a personal entourage of fighters, he saw no reason to risk the position he had established over decades and the concomitant social power it gave him by wading into a short-term political dispute.²⁸

That changed in March 1994, when ARLA fighters, hoping to put pressure on the MPA, abducted Intallah Ag Attaher. The ARLA’s precise reasoning behind this action has never been adequately explained, and Intallah Ag Attaher was released unharmed shortly thereafter.²⁹ Nevertheless, the abduction rapidly proved to be a major liquidity event in the northern Malian political marketplace. The Ifoghas community was outraged at the ARLA’s brazen abduction of Intallah Ag Attaher, and this outrage allowed Intallah to rapidly convert his accumulated social capital into violence. What had been a relatively low-level conflict between the MPA and the ARLA escalated into a war of annihilation as fighters personally loyal to Intallah joined the battle. By the end of 1994, the ARLA’s military strength had been largely destroyed, and it faded as a political force in the area. As a political entrepreneur, the ARLA found itself bankrupt.

The abduction of Intallah Ag Attaher was a unique, unpredictable event; it came as a major shock to the entire constellation of political actors in northern Mali, and it drastically altered the course of political contestation in northern Mali. Without the abduction, it is highly unlikely that Intallah Ag Attaher would have so decisively entered the conflict between the MPA and the ARLA as the conflict had been smoldering for several years prior to the abduction without Intallah committing himself to the battle. More importantly, the mechanism of Intallah’s involvement matters. Before he was kidnapped, Intallah commanded great respect in the community thanks to his leadership of the Ifoghas clan since the 1960s. However, that respect did not necessarily translate into battlefield presence. The moral shock of the abduction both allowed and spurred Intallah to draw upon that respect to unleash his forces against the ARLA.

The abduction of Intallah Ag Attaher continued to impact events in the northern Malian political marketplace for decades. As will be explored in the next case study, a liquidity event in northern Mali in late 2011 spurred another reshuffling of the political marketplace. The former leader of the ARLA was at the heart of these events, as were the sons of Intallah Ag Attaher, and the enmity they bore each other from the events of the 1990s played a major role in their interactions in the 2010s.

Case Study III: Northern Mali, 2011

Throughout the 2000s, northern Mali was relatively peaceful on the surface, but the Malian government’s hands-off approach to governance combined with the corrosive effects of an explosion of narcotics trafficking led to the hollowing out of many government and social institutions in the north.³⁰ The influx of money related to narcotics trafficking stretched the political marketplace in new directions, as groups used their newfound wealth to challenge preexisting social orders.³¹ Although the armed groups from the early 1990s had mostly faded away, violence remained a useable currency in the marketplace. One analyst described the situation in northern Mali as one of “demokalashi,” in which local disputes were solved with both democracy and Kalashnikov assault rifles.³² Many citizens were unhappy with the state of affairs in the area, and a new grassroots movement, the National Movement of Azawad (MNA), was formed in late 2010 to agitate by nonviolent means for the region’s independence as a non-ethnic, non-religious nation state. The movement had little power and could not be considered as a political entrepreneur in the traditional sense – it had little money and no interest in violence. Nevertheless, it served as a genuine expression of certain citizens’ frustrations and aspirations.

Before the MNA could do much beyond organizing a few small protests, a liquidity event intervened in mid-2011: Muammar Qaddafi’s regime in neighboring Libya collapsed. Tuareg men from northern Mali had emigrated to Libya in large numbers since a series of devastating droughts in the 1970s. Some were recruited into the Libyan military, especially Qaddafi’s Islamic Legion, which Qaddafi used to fight his battles overseas. Many Tuareg fighters of the 1990 rebellion had served in the Islamic Legion. By 2011, hundreds of Malian Tuaregs were in the Libyan military. However, in the face of a popular uprising and a NATO-led military intervention, they had little loyalty to the Qaddafi regime. Rather than fight and die for Qaddafi, many simply returned home to northern Mali, especially in the wake of the fall of Tripoli to Libyan rebels in August 2011.³³ Crucially, the Tuareg returnees brought with them their weaponry, including heavy armaments such as armored vehicles and anti-aircraft guns.³⁴ Many of the returnees, particularly Imghad Tuaregs, sought and received integration into the Malian military, but many others did not.³⁵ The unintegrated returnees were heavily armed and not as closely tied to the main structures of the Malian political marketplace because they had not been physically present in Mali. They represented an injection of violence capital into the Malian political marketplace, one significant enough to prompt a general shakeup of the marketplace.

Many of the returnees quickly came to share the MNA’s view that the status quo in the region was harmful and unsustainable, but their weaponry meant that armed rebellion, not nonviolent protest, was seen as the best means of affecting change vis-à-vis the Malian state. At a series of meetings near the town of Zakkak in northern Mali, the outlines of a new political marketplace were drawn. In October 2011, a new organization called the National Movement for the Liberation of Azawad (MNLA) was founded with the explicit goal of carving a new nation-state, Azawad, out of northern Mali through armed struggle against the Malian state. The meetings at Zakkak were in no way secret, and the Malian government even sent envoys to the meetings to buy the MNLA’s loyalty or at least quiescence. However, the Malian government underestimated the magnitude of the liquidity event’s impact on the price of loyalty in the local political marketplace, and the government’s bid was rejected.³⁶

In January 2012, MNLA fighters began attacking government installations across northern Mali, touching off a years-long civil war. The MNLA would ultimately seize most of northern Mali, including its four biggest cities, before being defeated by another coalition of political entrepreneurs, jihadist groups with ties to Al Qaeda that emerged out of the same shakeup of the political marketplace as the MNLA. The jihadist takeover prompted an international military intervention in January 2013, followed by a stop-and-start political process that led the MNLA and a host of other groups to sign a peace agreement in 2015. The deal did not fundamentally change the nature of the northern Malian political marketplace, and violence remains a common currency in the region to the present, at great cost to civilians.

The return of Tuareg soldiers from Libya in mid-2011 was unquestionably a liquidity event, in that it was a one-off event driven by events outside the northern Malian political marketplace that had profound impacts on liquidity within the region. However, unlike the two previous liquidity events examined in this paper, the return of Tuareg soldiers only had the impact it did due to a policy failure: the Malian government could and should have been able to do more to keep the soldiers’ return from being so disruptive to the regional political marketplace. The Qaddafi regime in Libya fell over a matter of months, not weeks or days, and the presence of Malian Tuaregs in the Libyan military was common knowledge. Two months passed between the fall of Tripoli and the founding of the MNLA at the Zakkak meetings, and three more months passed before the MNLA launched its rebellion in January 2012. The Malian government had ample time to prepare and execute a response, but the government failed to do so and ultimately paid the price.

Moreover, the return of the Tuareg soldiers demonstrates that a liquidity event’s impact can be out of proportion to its absolute size. By the time the MNLA actually began attacking Malian state installations in the north, most of the movement’s fighters were not Libyan returnees. Instead, deserters from the Malian military almost certainly constituted the biggest segment of the MNLA’s military power.³⁷ Nevertheless, without the presence of the Libyan returnees, the political entrepreneurs who formed the MNLA would not have had a critical mass of violent capital with which to make a major play in northern Mali. The political marketplace was already in flux; the return of Tuareg fighters from Libya was simply the triggering event.

Lessons for Policymakers

The greatest utility of the political marketplace framework lies in its potential utility to policymakers. Thinking about liquidity events in particular offers numerous lessons for policymakers to keep in mind. First, it is vital for policymakers at all levels, from the local to the supranational, to understand the dynamics of that level’s political marketplace. Which political entrepreneurs have the biggest political budgets? What currencies represent the bulk of their budgets? Whose budgets are expanding, and whose are shrinking? What are the rules and institutions of the political marketplace? In what currencies are transactions taking place? Policymakers must continually seek the answers to these questions.

Second, policymakers must work to anticipate approaching liquidity events. Liquidity events are by their nature unique and unpredictable, but they can be anticipated. Most importantly, policymakers must work to identify where liquidity is constrained in the marketplace and where new liquidity could be injected. Interventions can then be tailored to either encourage or discourage potential liquidity events before they trigger a crisis – something the Malian government patently failed to do in 2011.

Third, policymakers should understand how the political marketplace and its currencies impact peace processes. In an ideal world, transactions in the political marketplace are handled almost entirely in social capital rather than through money or violence.³⁸ Peace processes are fundamentally about channeling transactions in the political marketplace away from violence and into the other two currencies. However, a rule of the political marketplace is that money and violence are the two forms of capital that can be the most smoothly and directly exchanged. Any political marketplace that has moved from being conducted primarily through violence to being conducted primarily through money risks moving easily back the other way. A marketplace that functions primarily through social power, even if not necessarily through democratic elections, will be more durably peaceful. All too often, as in the case of Mali since 2015, stakeholders in a negotiated peace process manage to move the primary currency of the marketplace from violence to money, but they fail to move the marketplace from money to social capital. Violence often breaks out again, and any gains made over the course of the peace process are eroded.

Fourth, policymakers should understand that through proper engagement with political entrepreneurs, it is possible to create a consensus around rules for the political marketplace, especially surrounding the use of violence. The most basic such rule would be one proscribing the direct killing of other political entrepreneurs, even ones that lose out in power struggles.³⁹ An excellent example of this rule being successfully installed in a political marketplace is the Soviet Union, where losers of high-level power struggles within the Communist Party were usually killed through the Lenin and Stalin eras but rarely were after the execution of Lavrentiy Beria in 1953. One step further would be to work to create a consensus against the deliberate targeting of civilians. Of course, exactly how to build these types of rules will vary tremendously from place to place. But it is achievable, and policymakers can and should work to bring down the level of suffering in even the most violent political marketplace.

Conclusion

This paper has argued that the framework of the political marketplace, as first articulated by Alex de Waal, is highly useful to policymakers. However, the framework attains maximum utility when de Waal’s conception of political budgets is extended to recognize that money, violence, and social power are three distinct but interrelated forms of capital together comprising political budgets. Furthermore, while these three forms of political currency are interconvertible, the price of exchange varies considerably due to local marketplace conditions, and in some cases, the market is illiquid, and the political currencies cannot be viably converted at all. Case studies of conflict in Western Sahara and northern Mali demonstrate the impact of liquidity events – unpredictable, non-repeatable occurrences that significantly alter the liquidity available in a given political marketplace. For policymakers at all levels, a keen understanding of the political marketplace, with a focus on anticipating liquidity events, is key to making good policy.

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