“It Wasn't about Money”: Rebel Groups' Wartime Entrepreneurism as Costly Signals

• In Event: Poster Session: International Security 2

Abstract

Why do some rebel groups invest in large, capital-intensive businesses in the formal market whilst fighting the state during civil wars, while others do not? While existing research has recently begun to zone in on the relationship between revenues sources held by rebel groups and their decisions, the curious case of rebel groups operating capital-intensive formal businesses, such as large business groups or hydroelectric plants, has not been well examined. This analytical gap is especially puzzling since large financial investments during civil war pose substantial financial risk to rebel groups: They can be shut down by the state before rebel groups an turn profit from them.

To explain this puzzle, I argue that capital-intensive formal businesses owned by rebel groups are a key feature of armed orders that arise from long-running civil wars; they are not established for financial gains, but to generate a symbiotic armed order with the state in a hostile co-existence. Unlike conventional costly signals to credibly commit to a ceasefire such as vacating from a strategic hill, capital-intensive formal businesses produce a constant costly signal that demonstrate the rebel group’s credible commitment to armed orders, of which remain effective as long as rebel group businesses remain active. Whether a rebel group decides to establish such businesses depend on their level of risk tolerance: risk tolerant groups that are willing to pursue contradicting minor objectives simultaneously to achieve their greater group-level objective will be more likely to invest in capital-intensive formal businesses, while risk averse groups will not.

To make this argument, I draw from qualitative data co-generated with members of ethnic armed organisations active in the Myanmar Civil War, mainly the KNU, KNPP, and the RCSS, collected on the Myanmar-Thai border in between March 2022 – March 2023.

Author

• Jae Park, University of Toronto