I. Introduction
Peace is both a human right1 and a public good. In Article 4 of the Charter of the United Nations, it says that membership in the Organization is open to “peace-loving states”. In Article 26 of the Charter, it states that the Security Council shall be responsible for formulating, with the assistance of the Military Staff Committee, plans for the establishment of a system for the regulation of armaments. The present report will address war and conflict as traditionally understood, as well as the fiscal and economic tools used for conflict and war that are not necessarily considered under international law as being within the scope of the Council but that can and do cause death without the use of traditional weaponry.
- General Assembly resolution 71/189. ↩
In exercising its mandate, the Security Council can resort to either peaceful means or the use of force where the former is deemed by the Council to be insufficient. Nonetheless, this principle is applied unequally due to the existence of the veto power, which is used for individual State priorities and not the global priority of a peaceful world.2 Even when the Council decides that the use of force is necessary, it relies on its member States to contribute their armed forces, because the Council lacks a standing force. Once the Council adopts a resolution authorizing the deployment of a peacekeeping mission and specifying its mandate and size, the General Assembly is responsible for approving the budget and resources.3 Nevertheless, the global governance of the Security Council, the Peacebuilding Commission and the human rights system, in the context of an international financial system that is skewed towards some States and individuals, has undermined, if not crippled, the world’s ability to achieve the right to peace, which is a human right.
- See www.ohchr.org/en/press-releases/2025/04/amid-escalating-horror-un-experts-urge-states-take-concrete-action-end. ↩
- Evelyne Asaala and Dire Tladi, “Assessing the respective mandates of the United Nations and the African Union in the maintenance of international peace and security: partnership and cooperative division of labour or competition?”, Kazan Journal of International Law and International Relations, No. 13 (2022). ↩
The Security Council and the General Assembly have, in numerous resolutions, pushed for peace.4 However, those actions are openly challenged by vetoes and unilateral actions taken by States and entities to start conflict, some of which disclaim responsibility for human well-being. Financial actors and the fiscal decisions made by various stakeholders directly affect global peace. Nevertheless, financial, trade, economic and fiscal institutions continue to operate in denial of their influence on peace and well-being. In its Global Economic Prospects report, the World Bank projects 2.3 per cent global growth and 3.8 per cent growth in developing countries in 2025. Active wars include those between the Russian Federation and Ukraine, between Israel and the State of Palestine, between the United States of America, Israel and the Islamic Republic of Iran, and between China and the United States. There are also ongoing civil conflicts in Haiti, Myanmar, Somalia and the Sudan. This excludes drug wars, terrorist insurgencies, ethnic conflicts and the absence of peace caused by sanctions and unilateral coercive measures such as those instituted by the United States against Cuba, the Islamic Republic of Iran and the Bolivarian Republic of Venezuela, as well as the use by Canada, the United States and States members of the European Union of the Financial Action Task Force regulations, the European Union list of non-cooperative jurisdictions for tax purposes and the tax haven list prepared by the Organisation of Economic Co-operation and Development (OECD).5
The actual cost of physical conflict and war is difficult to assess. The toll includes death, damage to infrastructure and to economic institutions, and the cost of regional instability. Estimates, however, indicate that intense violence can cost a country approximately 3.5 per cent of gross domestic product (GDP) growth. The economy of the Syrian Arab Republic had lost 19 to 36 per cent of its productive capacity by 2016 due to conflict.6 In absolute terms, this means that the country produces between $20 billion and $38 billion less in value added each year. In a study on the cost of piracy, researchers found that insecurity caused by Somali pirates in the Gulf of Aden and the Indian Ocean led to an increase in shipping costs of about 10 per cent.7 During a civil war, 600,000 people leave their country on average. About 80 per cent of refugees return within a year after the conflict ends, but 10 per cent still have not yet returned even a decade after peace.8 Exposure to conflict during childhood or adolescence can have lasting effects on health, education and labour productivity. In Burundi, each additional month of exposure to conflict significantly reduced child growth.9 In a study in Uganda, researchers found that former child soldiers completed nearly a year less of schooling than their peers.10 Data from the conflict between Israel and the State of Palestine show that major escalations in violence led to significant declines in asset prices in both Israel and the State of Palestine.11 In addition, the military and arms sector contributes an estimated 6 per cent of global greenhouse gas emissions.12 Nevertheless, proposed solutions to the effects of conflict and war often focus narrowly on domestic tools like anticorruption, public spending and monetary policy measures that are difficult to implement and monitor.13 There are similar effects on populations under sanctions in Cuba and the Islamic Republic of Iran,14 yet those do not attract the same attention globally despite some sanctions having been in place for decades. Those data do not include the efforts of recovery a State needs to make once these measures are lifted for economic recovery, and in some cases recovery is invisible up to and beyond five years later
- Hannes Mueller and Julia Tobias, “The cost of violence: estimating the economic impact of conflict,” Growth Brief No. 7 (International Growth Centre, London, December 2016). ↩
- See https://bw.bse.eu/wp-content/uploads/2015/09/626-file.pdf. ↩
- Mueller and Tobias, “The cost of violence”. ↩
- Tom Bundervoet, Philip Verwimp and Richard Akresh, “Health and civil war in rural Burundi,” Journal of Human Resources, vol. 44, No. 2 (Spring 2009). ↩
- Christopher Blattman and Jeannie Annan, “The consequences of child soldiering,” The Review of Economics and Statistics, vol. 92, No. 4 (November 2010). ↩
- Yael Elster, Asaf Zussman and Noam Zussman, “Rockets: the housing market effects of a credible terrorist threat,” Journal of Urban Economics, vol. 99 (May 2017). ↩
- See www.tni.org/en/publication/climate-collateral. ↩
- See www.imf.org/external/pubs/ft/fandd/2017/12/imus.htm. ↩
- A/HRC/42/46. ↩
In 2024, data showed that there were over 56 ongoing conflicts, the most since the Second World War, with 92 countries involved in conflicts beyond their borders. The global economic impact of violence in 2023 amounted to $19.1 trillion, or $2,380 per person, in a world where some people still live on $1 per day, which would be $365 per person per year.15 Nevertheless, data do not show how much more revenue arms companies and their resident States make during periods of increased conflict and war, nor is there clear data available on how much economies and populations suffer from unilateral coercive measures and sanctions. In The Bahamas, two years 5 Attiya Waris, International financial obligations in the context of sanctions and unilateral coercive measures, 2025. 6 Hannes Mueller and Julia Tobias, “The cost of violence: estimating the economic impact of conflict,” Growth Brief No. 7 (International Growth Centre, London, December 2016). 7 See https://bw.bse.eu/wp-content/uploads/2015/09/626-file.pdf. 8 Mueller and Tobias, “The cost of violence”. 9 Tom Bundervoet, Philip Verwimp and Richard Akresh, “Health and civil war in rural Burundi,” Journal of Human Resources, vol. 44, No. 2 (Spring 2009). 10 Christopher Blattman and Jeannie Annan, “The consequences of child soldiering,” The Review of Economics and Statistics, vol. 92, No. 4 (November 2010). 11 Yael Elster, Asaf Zussman and Noam Zussman, “Rockets: the housing market effects of a credible terrorist threat,” Journal of Urban Economics, vol. 99 (May 2017). 12 See www.tni.org/en/publication/climate-collateral. 13 See www.imf.org/external/pubs/ft/fandd/2017/12/imus.htm. 14 A/HRC/42/46. 15 See www.visionofhumanity.org/highest-number-of-countries-engaged-in-conflict-since-worldwar-ii/. after the country’s removal from the Financial Action Task Force grey list, there have not been signs of economic recovery in the industries that lost traction owing to the country’s inclusion on the list, such as insurance and reinsurance.
- See www.visionofhumanity.org/highest-number-of-countries-engaged-in-conflict-since-world-war-ii/. ↩
The present report was made possible through extensive in-person consultations with Member States, researchers and civil society, both through bilateral and other discussions, as well as a call for submissions. The Independent Expert thanks all interlocutors for their open engagement on the issue and their sharing of deep insights in the preparation of the report.
A. Physical war and conflict
In the Pact for the Future, under action 39, Member States recognized the need to make the Security Council “accountable”. In the Pact, under action 18, Member States call for adequate, predictable and sustained “financing for peacebuilding”, including through stronger alignment with financial institutions. The review of the United Nations peacebuilding architecture is being conducted in 2025. In preparatory documents for the review, the phrase “financing for peacebuilding” is mentioned.16 The process of the Conference on Disarmament has stalled and is not mentioned in either the Pact or the preparatory documents for the review.17
Global finance for peacekeeping and peacebuilding stood at just $49.6 billion in 2023, less than 0.6 per cent of global military expenditure that year.18 United Nations peacekeeping operations have traditionally been funded through a system of assessed contributions from Member States, as established in Article 17 of the Charter. Issues such as delayed payments, donor fatigue and political interference have persisted, partly due to the limitations of relying heavily on voluntary contributions and assessed quotas that are vulnerable to geopolitical manoeuvring and economic cycles.19 The channelling of vast financial resources towards military expenditure leaves peacebuilding tasks underfunded, fragmented and politically constrained. In 2024, the Independent Expert on foreign debt wrote to Member States asking them to ensure they met their membership dues.20
- See www.oecd.org/en/publications/global-outlook-on-financing-for-sustainable-development-2025_753d5368-en.html. ↩
- See https://www.un.org/peacebuilding/sites/www.un.org.peacebuilding/files/documents/financing_for_peacebuilding.primer.211108.rev_.for_web.pdf. ↩
- Open letter from the Independent Expert on timely payment of membership dues, 23 July 2024. ↩
According to the Global Humanitarian Overview,21 at the end of April 2025 an estimated $46.08 billion was needed to assist 188 million people in 72 countries, yet only $4.19 billion in funding (just 9 per cent of appeals) had been received. Donor contributions under OECD classification also fell short amid rising demand.22 Gaps in humanitarian funding could be narrowed through progressive taxation: a 2 per cent global wealth tax on billionaires could generate $200 billion in resources to be redistributed globally.23 Tackling cross-border corporate tax abuse could raise an estimated $492 billion per year.24 Although international humanitarian assistance amounted to $43 billion in 2024, a funding gap of $32 billion remained.25 The Grand Bargain initiative26 includes calls for more domestic actors in humanitarian financing, which will require greater domestic resource mobilization. The High-level Panel on Humanitarian Financing recommended creating fiscal space and generating local and national capacity for crisis prevention and response.27 This recommendation builds the role of fiscal systems in addressing financing for peace and security.28 Research and analysis on peace seems to be focused around the site of war and conflict and neighbouring areas. It is necessary, however, to look at where financing for war and conflict comes from, not just in terms of monetary support but also political support and the provision of arms and services. Some of the most peaceful countries in the world, including the United States and several member States of the European Union, are also some of the largest sources of arms. In 2023, global military expenditure reached an unprecedented $2.443 trillion, posting the steepest annual increase since 2009. The top military spenders (the United States, China, the Russian Federation, India and France) together accounted for 63 per cent of global defence budgets. Between 2019 and 2023, the United States accounted for 42 per cent of global arms exports.29 With 750 military bases in over 80 countries,30 the United States invested over $916 billion in military infrastructure around the world, accounting for 39 per cent of global military expenditure.31 In the Asia and the Pacific region, military expenditure rose to $595 billion in 2023, marking an increase of 4.4 per cent since 2022 and 46 per cent since 2014.32 China alone accounted for half of the region’s military spending, having steadily been increasing its defence budget.33 The defence budget of Japan rose by 119 per cent in 2023, marking the country’s most significant military expansion since the Second World War.34 India also ramped up its military budget between 2021 and 2022 and is now the world’s fourth-largest military spender.35 The primary beneficiaries of soaring military budgets seem to be war profiteering corporations, companies registered predominantly in France, the United Kingdom of Great Britain and Northern Ireland, including its overseas territories, and the United States, which amassed $632 billion in revenues in 2023.36 The amount collected as taxes from the manufacture of arms, however, is not clear, and there seem to be subsidies given to arms industries, which indicate that these Member States and their taxpayers are subsidizing the manufacture of weapons.
- See https://humanitarianaction.info/document/global-humanitarian-overview-2025-monthly-updates/article/april-update. ↩
- See https://devinit.org/resources/falling-short-humanitarian-funding-reform/executive-summary/. ↩
- See https://gabriel-zucman.eu/files/report-g20.pdf. ↩
- See https://taxjustice.net/wp-content/uploads/2024/11/State-of-Tax-Justice-2024-English-Tax-Justice-Network.pdf. ↩
- See https://knowledge4policy.ec.europa.eu/publication/global-humanitarian-assistance-report-2024_en. ↩
- See https://interagencystandingcommittee.org/grand-bargain. ↩
- See https://interagencystandingcommittee.org/sites/default/files/migrated/2017-02/hlp_report_too_important_to_failgcoaddressing_the_humanitarian_financing_gap.pdf. ↩
- Submission from the Financial Transparency Coalition. ↩
- Xiao Liang and others, “Trends in world military expenditure, 2024”, SIPRI Fact Sheet, Stockholm International Peace Research Institute, April 2025. ↩
- Base Nation, “Bases maps”. ↩
- Xiao Liang and others, “Trends in world military expenditure, 2024”. ↩
- Mathew George and others, “Trends in international arms transfers, 2024”, SIPRI Fact Sheet, Stockholm International Peace Research Institute, March 2025. ↩
- Stockholm International Peace Research Institute, “Global military spending surges amid war, rising tensions and insecurity”, 22 April 2024. ↩
- Xiao Liang and others, “Trends in world military expenditure, 2024”. ↩
- See https://www.sipri.org/sites/default/files/2023-04/2304_fs_milex_2022.pdf. ↩
- See https://responsiblestatecraft.org/war-profiteering/. ↩
Since 2008, the cost of armed domestic or internal conflict has increased by 184 per cent. In 2023, the global cost of violence, including military spending, reached $19.1 trillion, the equivalent of 13.5 per cent of global GDP.37 37 An analysis of 197 countries from 2000 to 2013 found that a 1 per cent increase in military spending results in a reduction in health expenditure per capita of 0.62 per cent, on average, 25 See https://knowledge4policy.ec.europa.eu/publication/global-humanitarian-assistance-report2024_en. 26 See https://interagencystandingcommittee.org/grand-bargain. 27 See https://interagencystandingcommittee.org/sites/default/files/migrated/201702/hlp_report_too_important_to_failgcoaddressing_the_humanitarian_financing_gap.pdf. 28 Submission from the Financial Transparency Coalition. 29 Xiao Liang and others, “Trends in world military expenditure, 2024”, SIPRI Fact Sheet, Stockholm International Peace Research Institute, April 2025. 30 Base Nation, “Bases maps”. 31 Xiao Liang and others, “Trends in world military expenditure, 2024”. 32 Mathew George and others, “Trends in international arms transfers, 2024”, SIPRI Fact Sheet, Stockholm International Peace Research Institute, March 2025. 33 Stockholm International Peace Research Institute, “Global military spending surges amid war, rising tensions and insecurity”, 22 April 2024. 34 Xiao Liang and others, “Trends in world military expenditure, 2024”. 35 See https://www.sipri.org/sites/default/files/2023-04/2304_fs_milex_2022.pdf. 36 See https://responsiblestatecraft.org/war-profiteering/. 37 Institute for Economics and Peace, Global Peace Index 2024 (Sydney, June 2024). and, in low-income countries, the reduction can be as high as 0.96 per cent.38 38 From 2008 to 2024, the average country score for overall peacefulness has declined by 4.5 per cent.39 An unfortunate trend in military spending is that even after independence is achieved or wars or conflict end, military spending tends to increase, according to official records, rather than remain stable or decrease. For example, in Sri Lanka, even when debt repayments have ballooned and the State has faced an economic crash, the military budget has never been reduced, although potentially due to military pensions.40
Procurement of military equipment is based on the use and expiry of unused ordinance. The biggest producers and users, the States that have attacked militarily more than any other country in the world, are the States members of the North Atlantic Treaty Organization. The role played by finance, manufacturing, business, trade, professional services, investments, international treaties and agreements, including a fiscal component either through formal or informal approaches, is thus crucial to the funding of the manufacturing value chain that enables war and conflict.
B. Tax, trade, digital and tariff wars
Sanctions are set by the Security Council. The absence of a financial framework for sanctions, however, has opened up an avenue for compliant and non-compliant States to implement not only official sanctions but also unilateral coercive measures not authorized by the Council. In fiscal spaces and financial transactions, sanctions and unilateral coercive measures are frequently implemented. Nevertheless, the financial system has not kept pace in developing global rules and regulations, and audit, monitoring and evaluation measures. States unilaterally impose so-called sanctions not authorized by the Council against individuals, organizations and nations, which is against international law. These actions, when applied to profit-making entities or citizens of a country, are rolled out in such a way that interlocutors have no choice but to implement them to avoid fines and penalties, imprisonment, expulsion from a country, or the collapse of their businesses. As more and more companies grow as multinationals, the effect of these unilateral coercive measures also increases.
States that implement unilateral coercive measures and sanctions often integrate such measures into their economic relations, foreign policy and cooperation with a targeted State. Several States and regional blocs have a series of rules and regulations that allows them to use the listing of States to guide economic relations with third countries. These measures extend to domestic stakeholders such as bankers, lawyers, accountants and real estate brokers, who help to enforce asset freezes on States, individuals, corporations, trusts, charities and non-governmental organizations.41 Unilateral coercive measures include withholding transactions, restricting market access and currency exchanges, blocking debt transactions and imposing controls on travel, trade and remittances. Specific restrictions target government officials, students, scholars and artists, and often include bans on equipment and technology, spending limits for travellers and restrictions on debt investment and collateral, including implementation of high interest rates.42 Notably, even the Special Rapporteur on the situation of human rights in the Palestinian territories occupied since 1967 was recently placed under unilateral coercive measures by the Government of the United States,43 while, on the other hand, companies that provide luxury goods and services are excluded from such lists. The rationale behind the implementation of sanctions and unilateral coercive measures, namely that the State subject to such measures is undermining democracy or the rule of law or that such measures can coerce States to hand over individuals who are responsible for serious human rights violations, becomes shaky. The effect of the lack of minimum safeguards for these types of interventions is that human rights are undermined further.
- Michael Malloy, “Economic sanctions and human rights: a delicate balance” Human Rights Brief, vol. 3, No. 1 (1995). ↩
- United States, Department of the Treasury, Office of Foreign Assets Control website. ↩
- Office of the High Commissioner of Human Rights, “‘Silence is not an option’: UN Special Procedures’ Coordination Committee Condemns US sanctions on Francesca Albanese,” press release, 10 July 2025. ↩
Indirect effects of unilateral coercive measures include the collapse of certain industries that rely on risk or imported raw material, as well as those that have patents, including insurance and reinsurance, syringes and saline bags,44 further increasing the risk analysis for investment. The failure to access a Government also blocks access to national data of affected countries, which are subsequently excluded from data sets, leading to a failure to adequately measure data. Private investors tend to avoid the States subject to such measures, while mobile populations, particularly those with globally marketable skills, are the first to leave. Businesses also change their investment and operational profiles due to the increased risk of audits and heightened transaction monitoring. Other legislative measures associated with unilateral coercive measures include non-deductibility of costs incurred in a listed jurisdiction; controlled foreign company rules, to limit artificial deferral of tax to offshore, low-taxed entities; tax withholding measures in response to improper exemptions or refunds; and limitation of the participation exemption on shareholder dividends.45
- Vahid Yazdi-Feyzabadi and others, “Direct and indirect effects of economic sanctions on health: a systematic narrative literature review”, BMC Public Health, vol. 24 (2024). ↩
- Attiya Waris and Laila Abdul Latif, “Towards establishing fiscal legitimacy through settled fiscal principles in global health financing,” Health Care Analysis, vol. 23, No. 4 (December 2015). ↩
The international financial system allows for the secrecy of financial transactions, and the principle of secrecy embedded within banking institutions allows unilateral coercive measures to be applied more widely, with no control and limited oversight.46 Consequences can include uncontrolled economic contraction, hyperinflation, de facto dollarization and the collapse of local currencies, unemployment, increased illicit financial flows, growth of black markets and a shift to digital trade. In addition, funds cannot be channelled through entities in listed States.47 Illicit financial flows are not accidental or a by-product of the market, rather they often appear to be the result of State-sanctioned practices and high levels of impunity, insufficient regulations and the misuse of complex financial vehicles to avoid accountability and traceability. International cooperation and assistance remain crucial to combating illicit financial flows between States and to developing multilateral responses and equitable solutions.48
- Lyla Latif, “Breaking the cycle of domination in global tax governance: Africans defying asymmetries and seizing opportunities”, in Redefining Global Governance: A Tax, Trade and Investment Perspective in the EU and Beyond, Irma Mosquera Valderrama and others, eds. (Cham, Switzerland, Springer 2024). ↩
- Financial Action Task Force, “High-risk jurisdictions subject to a call for action,” October 2023. ↩
- A/HRC/55/54. ↩
The Financial Action Task Force grey list signals to global financial system entities to exercise caution in dealings with a listed country. The heightened financial risk profile has far-reaching economic implications, including reduced attractiveness of the country as a destination for foreign direct investment (FDI), increased cost of doing business for entities domiciled in the country due to the enhanced due diligence applied by counter-parties, restrictions on cross-jurisdictional transactions, in particular to and from countries that have stringent measures against grey listed countries, potential de-risking by correspondent banks and other key partners, and an increased cost of public international debt from finance and development partners. An analysis of 89 emerging and developing countries grey-listed between 2000 and 2017 found that capital inflows decline on average by 7.6 per cent of GDP, while FDI inflows decline on average by 3.0 percent and other investment inflows by 3.6 per cent.49 These effects underscore the economic vulnerability of countries included on grey lists, yet there is no clear evidence that the practice of grey-listing curbs money-laundering or terrorism financing. There has also been criticism around the concern that only States with predominant black and brown populations seem to be listed.
- Mizuho Kida and Simon Paetzold, “The impact of FATF gray-listing on capital flows: an analysis using machine learning”. Working Paper No. 21/153 (International Monetary Fund, 2021). ↩
At present, there are 14 ongoing sanctions regimes focused on supporting the political settlement of conflicts, nuclear non-proliferation and counter-terrorism. Each regime is administered by a sanctions committee chaired by a non-permanent member of the Security Council.50 They include committees concerning the Central African Republic, the Democratic People’s Republic of Korea, the Democratic Republic of the Congo, Guinea-Bissau, Haiti, Iraq, Lebanon, Libya, South Sudan, the Sudan, Yemen, Al-Shabaab, and Islamic State in Iraq and the Levant (Da’esh), Al-Qaida and associated individuals, groups, undertakings and entities.51 Unilateral coercive measures currently in force include those imposed on Cuba, the Islamic Republic of Iran, the Russian Federation and the Bolivarian Republic of Venezuela.52 However, the definition of unilateral coercive measures is usually focused on actions by States and does not include guidance issued by financial and regulatory institutions and entities that create lists of States on which financial restrictions are placed to coerce them to implement certain rules and regulations, such as the Financial Action Task Force grey list and the European Union list of non-cooperative jurisdictions for tax purposes. From the perspective of international financial obligations, it is clear that the effect of financial interventions associated with unilateral coercive measures or sanctions on the economy of a State is similar to the impact of a physical war, and thus the phrases “war”, “unilateral coercive measure” or a “sanction” will be used interchangeably going forward to refer to the absence of the right to peace.
II. Peace- and war-related fiscal interventions and their enablers
There are two kinds of war economies. The first is the traditional understanding of the term: the mechanism through which economic resources are allocated to the preparation for and the conduct of war for purposes of defence. The second consists of the informal markets that coexist with the armed violence of war, usually through the resale of arms.53 All forms of violence are a breach of human rights, but the rules of war provide some guidance for protecting those rights. Nonetheless, the politicization of narratives creates a deliberate obfuscation of legal terms, and the legal fraternity needs to assert the legal position, not the political one, which leads to disinformation and misinformation, not only in political circles but also in the media. While there are laws on war, there are no laws on peace, which is clearly a global oversight. Still, this categorization of types of economies fails to clarify that certain States seem to have a policy of being a war-based economy while others are focused on trade. The embedding of this historical policy is made more visible through the types of industries one finds in a country’s profile.
- World Bank, Conflict, Security and Development: World Development Report 2011 (Washington, D.C., 2011); Patricia Justino, Tilman Brück and Philip Verwimp, editors, A Micro-Level Perspective on the Dynamics of Conflict, Violence and Development (Oxford, Oxford University Press, 2013), cited in Mark Taylor, “Conflict financing: what’s wrong with war economies?”, Norwegian Peacebuilding Resource Centre, May 2013. ↩
A. Investment
Investors are often difficult to trace, as ownership trails end with investment firms. The top three shareholders in the arms industry (BlackRock, Vanguard and State Street)54 together hold an average of 16 per cent of shares of major arms companies operating in the United Kingdom. While that level of investment mirrors their stakes in companies in other sectors in the country, arms investments yield stable returns, driven by the Ministry of Defence and arms export clients. Between 2013 and 2020, the arms industry in the United Kingdom averaged a return on capital of 12.5 per cent, slightly above the median return of 11.7 per cent for the Financial Times Stock Exchange 100. The returns of major suppliers like QinetiQ, BAE Systems55 and Babcock International, which earn over 20 per cent of their global revenue from the Ministry of Defence of the United Kingdom, follow similar trends. Exporter customers represent an additional revenue stream for the industry, with private companies’ export contracts backed by financial and institutional support from the Government of the United Kingdom to safeguard geopolitical interests. Given the increasing concentration of the arms export base of the United Kingdom, in 2022, 45 per cent of the value of standard individual export licenses for the export of arms were guaranteed. Further research shows that BlackRock, Wellington Management, the Government of France, Government of Norway, Invesco, T. Rowe Price, Fidelity, Capital Group, State Street and Vanguard are the largest shareholders.56 War is clearly profitable.
- See https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=29105, https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=29091 and https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=29103. ↩
- See https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=28891. ↩
- See https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=29107, https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=29073, https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=29096, https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=29095 and https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=29092. ↩
Asset managers held $98 trillion in assets worldwide in 2022, even after the second-largest single-year drop in global assets under management since 2005.57 Some shareholders of military companies such as QinetiQ have been identified; individual shareholders include John Chisholm, Graham Love and Hal Kruth, and institutional shareholders include Klear Kite (which has one shareholder, Christopher Harborne), Prudential, Jupiter, Norges Bank, Vanguard, Schroders, Franklin Templeton, Liontrust and BlackRock. The actual shareholders of companies that are involved in the different aspects of arms manufacture and related activities remain unclear. Lifting the corporate veil and obtaining the names of individual shareholders continues to be a challenge.
- Chris McIntyre and others, “The tide has turned: global asset management 2023”, Boston Consulting Group, 15 May 2023. ↩
There is a global push to establish a declaration on the rights of older persons, the content of which is still under development. Pension funds are among the world’s largest investors, and the Government Pension Fund Global of Norway, for example, invests in over 50 arms companies. Though Norway acts as a mediator between the authorities of Israel and the State of Palestine58 and recognized the State of Palestine in 2024,59 it continues to invest in arms, which underscores a disconnect between political positions and financial interests. Funds invested for retirement are supporting companies that profit from the death of others, in breach of ethical rules.60 In pursuing this type of investment, the Government Pension Fund Global and similar pension and investment funds face the dilemma of whether to finance war or finance peace.61
B. Business
Private finance is increasingly promoted as a solution for peacebuilding. Advisory firms profit from peacebuilding efforts, arms companies profit from ongoing conflict, and other frontier businesses operate across the contexts of war, peace and transition, which reflects a commodification of peace. The increasing involvement of private finance in peacebuilding reveals a financialization of peace, in which financial markets, institutions and elites shape funding priorities, often prioritizing profit over gender equality and over an intersectional conflict analysis responsive to human and planetary needs.62 An example of the financialization of peace is the signing of a memorandum of understanding between Ukraine and BlackRock in 2022.63 Under the agreement, BlackRock provides consultative assistance to Ukraine in attracting private capital to support the recovery of the country’s economy.64 BlackRock, however, invests in arms companies. Peace should not be privatized as it siloes the issue into one group of stakeholders. Financing for peacebuilding must be grounded in public accountability, equity and justice. Opportunities for engagement must be strictly regulated, and businesses must be held accountable and communities empowered to lead. Sustainable peace is only possible when sovereignty, collective care and state accountability are centred, not private interests, and when conflicts of interest are acknowledged.
- Ray Acheson and others, “Environmental peacebuilding through degrowth, demilitarization and feminism: rethinking environmental peacebuilding to stay within planetary boundaries and champion social justice”, Ecosystem for Peace. ↩
- Feminist groups have urged the United Nations Entity for Gender Equality and the Empowerment of Women (UN-Women) to cut ties with BlackRock, citing the company’s record of prioritizing profit over human rights and environmental integrity. The Corporate Accountability campaign has listed BlackRock in its “Corporate hall of shame” for contributing to the climate crisis, militarization and weapons production. Code Pink: Women for Peace has also criticized BlackRock for its links to arms manufacturing. ↩
- Through its online investment platform, Advantage Ukraine, Ukraine offers investors incentives to invest in the country, including corporate income tax exemption and access to permits for public business services. In addition, the country is pursuing deregulation of certain sectors to further encourage investment. Investment opportunities include projects related to the military, natural resources, energy, logistics and infrastructure, and the agro-industrial complex. ↩
Arms companies are sustained by the procurement decisions of a few Governments.65 For example, given the nature of many arms companies that operate in the United Kingdom, these decisions create instability for workers while large firms remain secure. Production moving overseas reshapes the lives of workers and local communities, but multinational firms can readily adapt.
- Arms companies include Sturm, Ruger and Company, Smith and Wesson, Colt’s Manufacturing LLC, Browning Arms Company, Springfield Armory, FMK Firearms, Klashnikov Group (the Russian Federation), Glock (Austria), Heckler and Koch (Germany), Mauser (Germany), Walther (Germany), SIG SAUER, Fabrique Nationale Herstal, Česká zbrojovka Uherský Brod and its subsidiary Dan Wesson Firearms (United States), Ed Brown Products (United States), Wilson Combat, Les Baer Custom Inc., Remington Arms Company, Winchester Repeating Arms Company, Savage Arms, O. F. Mossberg and Sons, Beretta (Italy), Benelli Armi SpA (Italy), Weatherby, Inc., John Rigby and Company (United Kingdom), Taurus Armas S.A. (Brazil), Amadeo Rossi S.A. (which is owned by Taurus), Daniel Defense, Knight’s Armament, and Valmet (Finland). Manufacturers of larger weapons and weapons systems (excluding aircraft) include AB Bofors, OC Oerlikon, General Dynamics Corporation, General Electric (which manufactures Gatling guns), Rheinmetall AG, BAE Systems, and the Defence Systems Division of Leonardo SpA. ↩
C. Sovereign wealth funds and bond instruments
Governments can use financial institutions to fund military aggression or build peace. State-controlled banks and sovereign wealth funds may secretly finance military actions. An analysis of International Monetary Fund (IMF) lending in the Middle East and North Africa region during the 1980s shows that loans were potentially politically, not economically, motivated. Peace deals with Israel and domestic liberalization were stronger predictors than macroeconomic distress. For example, IMF loans to Egypt (1976) and Jordan (1989), backed by the United States, preceded formal peace treaties between those countries and Israel. Similarly, countries such as Algeria, Egypt, Jordan, Morocco and Tunisia received IMF funds after pro-Western policy shifts or repression of Islamist opposition. A proposal leaked in October 2023 revealed a plan developed by Israel under which 164.7 billion in external debt held by Egypt would have been cancelled in exchange for accepting the forced displacement of people from Gaza into Sinai, which echoed past debt-relief-for-compliance strategies, such as when the United States forgave debt owed by Egypt in 1991 in exchange for Egypt joining the Gulf War coalition.66
- Submission from the Asia Pacific Forum on Women, Law and Development. ↩
Bond offerings are particularly problematic, especially during times of war. The states and municipalities of the United States have invested more than $1.7 billion in Israel Bonds, which is based in New York, since October 2023.67 When an elected official tasked with investing taxpayers’ money buys government bonds, there is little interaction between the seller and buyer. Government officials are generally discouraged from actions that could be construed as creating a conflict of interest, which could cause them to favour certain assets for any reason other than selecting the best investments available. Ethics experts say that some state officials may have crossed an ethical line in their dealings with Israel Bonds.68
D. Debt-driven economic policies
International financial institutions such as IMF, World Bank, and regional development banks have faced criticism for indirectly enabling conflict by promoting economic policies that lead to instability. Though aimed at fostering development, the policies of international financial institutions can worsen inequality, misallocate resources and fuel political unrest. According to Michel Chossudovsky,69 IMF-backed structural adjustment programmes, which involve currency devaluation, austerity measures and cuts to public spending, have been linked to social unrest and political violence. Countries under such programmes often face increased risk of external conflict or internal rebellions as worsening conditions drive disenfranchised populations towards violence.
- Michel Chossudovsky, The Globalisation of Poverty: Impacts of IMF and World Bank Reforms (London, Zed Books, 2003). ↩
The austerity measures prescribed by IMF (wage freezes, subsidy cuts, value added tax hikes and drastic cuts to public expenditure) have provoked mass protests in such places as Bangladesh,70 Kenya,71 Indonesia and Kashmir,72 which were often met with violent suppression by military and police forces. At present, 85 per cent of the global population lives under austerity measures, and that figure is expected to rise in 2025.73 Women in particular bear the brunt of such measures. IMF-backed measures reduce public employment opportunities, shrink access to healthcare, raise the cost of living and exacerbate unpaid care burdens on women and girls. These structural adjustment policies do not just undermine economies, they unravel the social fabric and perpetuate gender inequality. Despite widespread evidence of harm, IMF continues to resist calls for incorporating binding human rights impact assessments into its programmes.74
- See www.ohchr.org/sites/default/files/documents/countries/bangladesh/ohchr-fftb-hr-violations-bd.pdf. ↩
- See https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile? gId=29360. ↩
- Peoples Dispatch, “Three killed in Pakistan protesting rise in the prices of essential commodities”, 17 May 2024. ↩
- Isabel Ortiz and Matthew Cummins, End Austerity: A Global Report on Budget Cuts and Harmful Social Reforms in 2022–2025 (Initiative for Policy Dialogue and others, 2022). ↩
- Submission from the Asia Pacific Forum on Women, Law and Development. ↩
At the domestic level, more countries are changing their approach to debt and military financing. Most recently, Germany has begun to retool car manufacturing plants into arms companies after a recent constitutional change allowing the country to take on more debt for the first time in over 40 years.
E. Taxation
Historically, income taxes were developed to fund war, pay war reparations or restart an economy after a war or conflict. In many countries under colonial rule, income tax was used to finance wars against independence movements. In India, an income tax was introduced in 1860 under the British Empire to finance the costs of a rebellion against British rule in 1857. Similarly, in 1940, Hong Kong, a British colony at the time, introduced an income tax to cover the costs of supporting the war efforts of the British Empire in the Second World War. Despite being introduced as a temporary tax, it was made permanent in 1947.75
- Submission from the Financial Transparency Coalition. ↩
Recent evidence shows that revenue from regressive taxes is increasingly directed to military budgets and debt repayment instead of social investment. In authoritarian and resource-constrained regimes, indirect taxes serve as a politically expedient tool to fund military expansion, often lacking transparency or accountability. This trend reinforces militarized governance and diverts spending from peace-oriented services, especially those that benefit women and marginalized 69 Michel Chossudovsky, The Globalisation of Poverty: Impacts of IMF and World Bank Reforms (London, Zed Books, 2003). 70 See www.ohchr.org/sites/default/files/documents/countries/bangladesh/ohchr-fftb-hr-violationsbd.pdf. 71 See https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile? gId=29360. 72 Peoples Dispatch, “Three killed in Pakistan protesting rise in the prices of essential commodities”, 17 May 2024. 73 Isabel Ortiz and Matthew Cummins, End Austerity: A Global Report on Budget Cuts and Harmful Social Reforms in 2022–2025 (Initiative for Policy Dialogue and others, 2022). 74 Submission from the Asia Pacific Forum on Women, Law and Development. 75 Submission from the Financial Transparency Coalition. 14/20 groups. 76 The financing structures for arms companies mirror those of many companies, involving tax exemptions, enforcement gaps, incentives, corruption and the strategic use of tax havens and secrecy jurisdictions.
The decision of the European Commission of Human rights in C. v. the United Kingdom upheld the sacrosanct nature of tax systems.77 In 1991, the Human Rights Committee deemed a communication submitted by a citizen of Canada to be inadmissible under the International Covenant on Civil and Political Rights, stating that, although article 18 protects the right to hold, express and disseminate opinions and convictions, the refusal to pay taxes on grounds of conscientious objection to military expenditures falls outside the scope of protection of that article.78 That precedent was upheld in J. v. K. and C. M. G. v. K.-S. v. the Netherlands79 and K. V. and C. V. v. Germany.80 Despite evolving jurisprudence on conscientious objection to military service, repeated rejections suggest obstacles to addressing the issue substantively. The European Union adopted a windfall tax in 2022 on energy companies profiting from the war in Ukraine, which is expected to raise up to €140 billion. Nevertheless, such taxes remain rare globally, despite IMF recommendations for broader use to ensure fairer revenue mobilization.
F. Aid
Many States are cutting or reconsidering their overseas development assistance (ODA) while increasing their military spending. In 1970, the General Assembly, through its resolution 2626 (XXV), adopted the International Development Strategy for the Decade, in which advanced economies were called upon to raise ODA to 0.7 per cent of their gross national product by mid-decade. OECD data show that ODA from member countries of the Development Assistance Committee reached a record $223.3 billion in 2023. Nevertheless, only five countries (Norway, Luxembourg, Sweden, Germany and Denmark) met the 0.7 per cent target.81 The United Kingdom is unlikely to meet its 0.7 per cent commitment before 2030, citing the impacts of the coronavirus (COVID-19) pandemic. Other countries that have reduced ODA include Belgium (by 25 per cent), Finland (by €1.2 billion), France (which proposed its third cut in two years), the Kingdom of the Netherlands (by €2.4 billion), Sweden (by $300 million) and Switzerland (by 282 million Swiss francs).82 While some argue ODA has become customary international law, no binding rule exists, only non-binding instruments. A case may need to be brought before the International Court of Justice to clarify the matter.
As humanitarian needs continue to grow, Governments face increasingly difficult choices related to their wider aid budgets. These challenges were exacerbated in 2022 by the conflict in Ukraine. There are clear risks, including the de-prioritization of humanitarian spending in other crisis contexts, the reallocation of development funding to in-country refugee expenditure and the overall reduction of aid budgets, as demand for other expenditure, including military assistance, grows. 76 Nan Tian, Diego Lopes da Silva and Xiao Liang, “Using taxation to fund military spending” SIPRI Insights on Peace and Security, No. 2023/01 (January 2023). 77 Submission from Conscience and Peace Tax International. 78 J.P. v. Canada, CCPR/C/43/D/446/1991, available at https://juris.ohchr.org/casedetails/723/enUS. 79 CCPR/C/45/D/483/1991, available at https://hrlibrary.umn.edu/undocs/dec48345.pdf. 80 CCPR/C/50/D/568/1993. 81 See https://focus2030.org/Slight-increase-in-Official-Development-Assistance-in-2023. 82 See www.globalcitizen.org/en/content/the-global-safety-net-frays-european-countries-cut/.
G. Debt
It is argued that IMF, the World Bank, and the Asian Development Bank have repeatedly partnered with Governments that commit grave human rights abuses, as long as those Governments are willing to implement neoliberal policies, including deregulation, privatization, austerity measures and trade liberalization. Through such support, international financial institutions have not only potentially legitimized those regimes but have also provided them with the financial resources necessary to maintain their hold on power and repress dissent. During the Marcos dictatorship in the Philippines (1965–1986), IMF and the World Bank loaned the regime over $5.5 billion83 despite widespread corruption84 and human rights violations. Their support provided not only financial legitimacy but also moral endorsement, catalysing further aid and credit from private banks.85
- Debt Justice, “Life and debt: Global studies of debt and resistance”, October 2013. ↩
- IBON Foundation, “Golden years?: the real long-lasting economic damage wrought by Marcos”, 21 September 2021. ↩
- See www.rappler.com/voices/thought-leaders/227198-analysis-how-marcos-world-bank-partnership-brought-philippine-economy-to-knees/. ↩
By funding repressive regimes and harmful initiatives, international financial institutions risk actively contributing to the erosion of democratic space and human rights. While case studies offer strong qualitative evidence, there is a lack of systematic research mapping the causal links between financial support from international financial institutions, militarization and the long-term decline of rights, peace and equality, and the associated impact on lives, livelihoods and futures. Infrastructure and land reforms backed by international financial institutions have sparked displacement and conflict, while the austerity policies promoted by IMF have fuelled protests across the global South. These uprisings, often violently repressed, implicate international financial institutions in state violence. In 2024, IMF-driven subsidy cuts in Pakistan-administered Jammu and Kashmir triggered fatal unrest over food and energy prices.86 In Bangladesh, budget cuts imposed under an IMF programme worsened unemployment and inflation, catalysing student-led protests that left over 200 dead and thousands injured or arrested, including women and children.87
H. Illicit financial flows, tax havens and the international banking system
Illicit financial flows fuel conflict by depriving States of revenue needed for governance, reconstruction and development. Originating from money-laundering, corruption, illegal logging and mining, and the arms trade, illicit financial flows erode State authority, sustain violence and prolong wars. During the civil war in Liberia, Charles Taylor’s regime relied on blood diamonds, illegal logging and mineral smuggling to fund conflict and entrench corruption. Similarly, in Sierra Leone, the Revolutionary United Front (RUF) financed its insurgency through the diamond trade, using illicit financial flows to acquire weapons, bypass sanctions and extend the war, undermining peacebuilding efforts.88 83 Debt Justice, “Life and debt: Global studies of debt and resistance”, October 2013. 84 IBON Foundation, “Golden years?: the real long-lasting economic damage wrought by Marcos”, 21 September 2021. 85 See www.rappler.com/voices/thought-leaders/227198-analysis-how-marcos-world-bankpartnership-brought-philippine-economy-to-knees/. 86 See https://peoplesdispatch.org/2024/05/17/three-killed-in-pakistan-protesting-rise-in-theprices-of-essential-commodities/. 87 Harindrini Corea and Nazia Erum, “What is happening at the quota-reform protests in Bangladesh?”, Amnesty International, 29 July 2024. 88 Laura Forest, “Sierra Leone and conflict diamonds: establishing a legal diamond trade and ending rebel control over the country’s diamond resources,” Indiana International and Comparative Law Review, vol. 11, No. 3 (2001). 16/20
In Ghana, the concern over exploitation of natural resources, including fisheries and forestry, has been highlighted as a reason to make the beneficial ownership registry accessible to the public. In Ecuador, one of the reasons why the beneficial ownership registry is going to be made accessible to the public was concerns surrounding the offshore funds of politicians, while in Panama, the Panama Papers and other whistle-blower cases have raised public awareness to create momentum to make elements of the beneficial ownership registry publicly available, beginning with a public registry of all vessels under the Panama flag, with a view to combating illicit fishing and forced labour at sea.89
- Submission from the Financial Transparency Coalition. ↩
On 11 June 2025, the Minister of Finance of Israel announced that the banking waiver used by banks in the State of Palestine would be lifted, ceasing all financial operations between Israel and the State of Palestine.90 The continuing siege on the State of Palestine has resulted in the blocking of electricity91 and deaths during loss of service, because the electric company in Israel has switched off services with the full support of the State of Israel, despite awareness that such actions are in breach of the Oslo and Paris peace accords, thus fuelling the conflict and continually breaking the peace.
I. Digitalization, artificial intelligence, cryptocurrencies and fiscal transactions and systems
In 2015, the High-level Panel on Illicit Financial Flows from Africa said that a solution to the challenge of illicit financial flows should include the ability to access transactions housed at the Bank for International Settlements, a private company registered in Zurich, Switzerland. The Bank collects bilateral banking statistics on transactions from each member country to multiple partner countries. This type of data is vital for estimating the distribution of offshore wealth on a country-by-country basis. The data have been used for academic purposes92 but is not disclosed publicly or to researchers based in the global South. In 2016, most jurisdictions allowed the Bank to disseminate the data, including retrospective data, but only on a request basis and only through central banks that are members of the Bank. In addition, the Bank’s statistics only cover bank deposits, not equity, bond and mutual fund portfolios entrusted by households to offshore banks. Blockchain is a solution to make all these transactions visible and could be used by financial intelligence units as a matter of urgency to locate beneficial owners and identify those who continue to invest in war rather than peace.
- Annette Alstadsæter, Niels Johannesen and Gabriel Zucman, “Who owns the wealth in tax havens?: macro evidence and implications for global inequality” Journal of Public Economics, No. 162 (2018). ↩
III. Conclusions and recommendations
The present report explores how sustainable peace can be promoted through financial interventions rather than perpetuating conflict through fiscal policy. In the wake of the COVID-19 pandemic, there has been a shift in the popularity of measures to tax wealth and the windfall profits that companies have made from the energy and food crises that resulted from pandemic disruptions or from inflationary pressures arising from wars and conflicts on the trade, taxation, military and digital fronts.
This time of crisis has not resulted in a significant shift in fiscal policies towards progressive taxation, the institutionalization of wealth and windfall taxes, the repeal of the excessive tax exemptions granted to corporations and the wealthy, or even the control of illicit financial flows. This is due to a lack of institutional support within the global financial framework for such measures, as well as a lack of policy and technical advice accompanying norm-setting bodies on tax and financial transparency policies.
Redirecting military spending towards peacebuilding and development is a complex and challenging process, but also a necessary one for all States. By implementing effective strategies for budget restructuring, balancing security with socioeconomic development and engaging all stakeholders, including civil society and non-State actors, post-conflict States can lay the foundation for sustainable peace. However, a long-term commitment, continuous learning and adaptation to changing circumstances are required. Countries that have developed or are developing war economies, such as France, Germany, Italy, the United Kingdom and the United States, need to reconsider the privatization of the military and arms industry for profit and redirect national economies towards models guided by peace financing.
Foreign debt, international financial obligations and the financing process can be and are a cause, a tool and a symptom of conflict. The assumption that democracy brings peace is no longer reliable. Once conflict subsides, the policy focus should shift towards rebuilding and economic recovery. This has proved difficult, however, because countries are still fragile even when the worst of the violence ends. Often, Governments do not have full control of all the territories within their borders, and security remains elusive. At such a time, economic policies should aim to solidify the peace. Rebuilding and modernizing institutions, mobilizing resources for reconstruction and fostering stronger and more inclusive growth should be the top priorities.
Debt, aid, taxes and other financial measures should not be used as a method to control which human rights can and cannot be financed; rather, international obligations in human rights treaties must be honoured and included in all fiscal interventions.
The Independent Expert makes the following recommendations: (a) Reform the international financial architecture and establish an international financial institution using the principles of fiscal legitimacy. To transform the global financial framework, it is essential to advance the United Nations Tax Convention process, the United Nations Financing for Development process and a global debt treaty. These efforts must be implemented by the Bretton Woods institutions, acting as executing bodies for agreements reached under the United Nations framework, where universal values such as peace, human rights, sustainable development, gender equality, climate action and environmental integrity are upheld;93 (b) Establish a coherent and coordinated financial and fiscal architecture to ensure that States do not engage in or implement unilateral coercive measures;94 93 Submission from the Financial Transparency Coalition. 94 A/HRC/55/54. 18/20 (c) Apply a principles-based approach to decision-making, as that is crucial to ensuring that issues are managed in a fiscally legitimate manner, and keep human rights and planetary health at the centre of decisions; (d) In the absence of a global dispute resolution body, States and corporations that have suffered under unilateral coercive measures should be able to litigate, individually or through class action suits, against implementing States;95 (e) Develop data to calculate the cumulative cost of unilateral coercive measures and conflicts and wars and ascribe it to individual citizens in the implementing Member State; (f) Ensure that business transactions are not allowed to fall under the right to privacy but instead are subject to the right to access to information, putting in place measures through a fiscally legitimate process, and maintaining a clear separation between the State and businesses;96 (g) Release data on financial transactions and assets registries; (h) Retool military corporations for peacebuilding purposes; (i) Place all privatized arms companies under public ownership and eliminate profiteering; (j) Implement centralized blockchain control of all digital transactions under the scrutiny of financial intelligence units; (k) Establish beneficial ownership and assets registries of all companies globally, in particular those in the arms industry. Governments should disclose to the public the actual shareholders of defence companies, and share ownership should be disaggregated across all companies and investments that individuals directly and indirectly control. (l) Eliminate the veto power within IMF and the Security Council, and, as a priority, work towards establishing a rotating leadership model and redistributing quotas based on current economic contributions and population size;97 (m) Adopt a “one country, one vote” system as the default for all funds and trusts and for all fiscal decision-making-processes; (n) Strengthen trust-building efforts, in particular on fiscal issues, such as public spending and revenue collection, through local networks in alignment with peacebuilding priorities; (o) Assign higher strategic priority to peacebuilding and development activities, including through greater funding and recognition; (p) Provide former combatants access to income-generating opportunities and integration into the economic system, as such inclusion supports social integration and reduces the risk of relapse into conflict; (q) Institutionalize assessed contributions for peacebuilding to ensure stable funding for long-term initiatives, such as infrastructure rebuilding and community reconciliation; 95 A/HRC/49/47. 96 Ibid. 97 Submission from China. (r) In sectors such as food, health and education, and other human rightsbased fields, divest from militarism and related industries and redirect those funds towards public care systems and the promotion of human rights; (s) Revise conditionality frameworks to exclude austerity measures that compromise peace and development, and ensure that programmes supported by the United Nations incorporate indicators for social cohesion, conflict prevention and institutional resilience, assessed through peace impact evaluations; (t) Establish peace finance coordination bodies at the national level that include local governments, civil society organizations, private sector actors and donors, allowing stakeholders to oversee the planning, implementation and evaluation of peacebuilding funding and promoting participatory budgeting and decentralized funding mechanisms that empower local communities to determine peacebuilding priorities while also developing laws of peace; (u) Strengthen coordination between the United Nations and the World Bank in the security and justice sectors, which remains fragmented, by establishing joint task forces for conflict-affected states, in order to reduce fragmentation, streamline mandates and enhance strategic alignment; (v) Reform the IMF structure by updating quota systems to reflect the economic weight of low-income countries, ending the dominance of the “gentlemen’s agreement” that privileges the United States and Europe, and align all IMF loan conditions and approvals with peacebuilding objectives, avoiding austerity measures that increase inequality and heighten conflict risks; (w) Ensure the efficient functioning of peace negotiations98 by promoting the equitable distribution of resources, swift responsiveness, strong coordination and avoidance of donor-driven conflict or undue leverage; implementing legal, institutional and administrative safeguards; ensuring that funding resources are transparent and legitimate; and applying financial incentives carefully, with trust-building and fiscal legitimacy as guiding principles; (x) Establish suitable communication and coordination mechanisms by diversifying funding sources, ensuring a clear division of roles, planning ahead, designing tailor-made funding modalities, using dedicated administrative capacities, setting the right incentives and establishing adequate funding instruments and strategic partnerships;99 (y) Establish robust policy and legal frameworks, which is the cornerstone of redirecting military spending towards peacebuilding and development priorities.
In relation to the transition from conflict to peace, the Independent Expert makes the following structured recommendations for phased fiscal reallocation:
(a) In the short term, maintain essential security expenditures while launching pilot projects in education, healthcare and infrastructure to establish immediate stability, and prioritize the use of emergency funds for rebuilding critical infrastructure in conflict-affected regions as a foundation for long-term development;
(b) In the medium term, institutionalize peace budgets through legal frameworks that mandate progressive reductions in military spending, redirecting savings to development sectors, and pursue regional security partnerships, under which security arrangements can be made to complement national defence arrangements, thereby reducing the fiscal burdens of individual States and fostering a collaborative security environment;
(c) In the long term, promote systemic changes that embed peace-oriented economics into fiscal policies, which may include levying taxes on defence industries to fund peacebuilding or repurposing military assets for civilian use, such as converting former bases into renewable energy facilities, with a view to transforming militarized economies into development-oriented systems.
The Independent Expert makes the following recommendations for balancing security and socioeconomic development:
(a) Reform the security sector by transforming security paradigms;
(b) Empower women through gender-inclusive approaches;
(c) Cancel debt;
(d) Promote service provision and community engagement;
(e) Build long-term sustainability and capacity;
(f) Build domestic peacebuilding capacity;
(g) Integrate peacebuilding into development strategies.