The Rebel Economy in Civil War: Informality, Civil Networks, and Regulation Strategies

In civil war, rebel groups play a central role as a regulator in the management of civilian economic activities in their territory of control. While previous studies have intensively researched the impact of economic conditions on the war process and dynamics, little attention has been paid to the variation in economic policies adopted by the rebels. This paper conceptualizes the types of regulation policies imposed by the rebels against civilian economic activities and theorizes patterns and particular measures of (non)regulation taken by the rebel groups: formal regulation, deliberate connivance, and laissez-faire. The degree of economic intervention by the rebels is contingent on the extent of economic informalization within the territory and the relative capability of the economic sector. When the sector involves a large portion of the population and is densely networked, its economic potential comes to be perceived by the rebels as a threat to their incumbency. Such a threat compels them to undertake measures of regulation. In contrast, if the level of informalization is low or civilian activities are poorly backed by their network, the threat perceived by the rebels is less, in addition to which, formal regulation against such a loosely organized sector to effectively control civilian activities would be too costly. This paper proposes a number of research agendas on wartime rebel economies and their broader relevance to international relations and political science: mechanisms of rebel economies, rent and the resource curse, the process of civil-rebel relations, and rebel governance. It concludes by advancing implications for policy development; policymakers need to be scrupulous about the effectiveness of (neo)liberal economic policies in conflict-affected societies and to design postwar reconstruction by taking into consideration the legacy of rebel economies.