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What effect does external support have on the internal cohesion of rebel groups? While scholars have increasingly recognized that third-party interventions affect civil war duration and recurrence, relatively little work has explored the mechanisms underlying external aid and rebel group fragmentation. This paper puts forward two main arguments. First, since interveners rely on a ‘carrot and stick’ approach to manage rebel groups, when rebel cadres turn defiant, states redirect their support to internal rival leaders who can carry on their project by forming rival rebel factions. Rebel cohesion is therefore impacted by the affinity of interest between the interveners and the rebel group. Second, interveners can shape the internal cohesion of rebel groups through the nature and extent of their aid. Fungible support, such as financial aid, robs rebel leaders of control and encourages internal competition over the influx of foreign resources. Non-fungible support, such as weapons or advisory missions, on the other hand, bolsters the coercive capacity of rebel leaders, which in turn fosters group cohesion. The theory is tested with a quantitative analysis of all civil wars fought between 1975 and 2009 and a qualitative case study of the Pakistan’s support for the rebel groups in Afghanistan.