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Financing armed groups during ceasefires

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While the financing sources of non-state armed groups (NSAGs) both during active hostilities and after peace agreements has received much attention in the academic and peace-practitioner fields, information about the funding of NSAGs during the time between active fighting and the conclusion of a peace agreement is much less available. This study aims to fill that gap by investigating the sources of financial support for armed groups during ceasefires and peace negotiations. Through information gathered from the selected cases of ETA in the Basque Country, the LTTE in Sri Lanka, the KNU in Myanmar, GAM in Aceh, and several armed groups in Mali, the study examines the various internal and external options available for NSAG funding when a unilateral or bilateral ceasefire is in place and analyses whether ceasefires represent a fundraising constraint or an opportunity for non-state belligerents. The study also makes projections for the longer-term prospects of NSAGs’ receiving financial support to sustain their post-war security, political and socio-economic transformations. Lastly, some general lessons are drawn for third parties involved in supporting peace processes with NSAGs.

1. Introduction

The financing sources of non-state armed groups (NSAGs) have received much attention over the last two decades in both the academic and peace-practitioner fields. Specifically within the discussion of the political economy of war and the role of natural resources in conflict, the ways in which armed groups establish and maintain their organisations have come under much scrutiny.

The various sources of funding, the motivations for pursuing them, and the effect that these particular funding sources have on the governance and actions of NSAGs have all been examined in detail. At the same time, a great deal of information is available about the finances of an NSAG after a peace agreement has been concluded between the warring parties. Whether the post-conflict phase entails a disarmament, demobilisation and reintegration (DDR) process, some type of security sector reform process in which the NSAG’s combatants are integrated into the armed forces of a country, or a political reconversion process entailing the transformation of an underground militant structure into a civilian political party, a plethora of funds are generally available for such processes. Potential donors include international organisations such as the United Nations (UN) or World Bank, individual nation states or a consortium of such states, or even non-governmental organisations (NGOs).

However, there is a conspicuous gap in information and knowledge about the funding of NSAGs during the time between active fighting and the conclusion of a peace agreement. For instance, when NSAGs are negotiating the end to an armed conflict or when a (bilateral or unilateral) ceasefire is in place, it may be difficult or even impossible for them to continue with their fundraising activities, specifically if their geographical space for manoeuvre (and thus their ability to access taxable communities or other funding sources) is limited in some way due to the negotiations/ceasefire, or if a halt to fundraising activities is formally part of the negotiation requirements or ceasefire agreement.

Thus, many questions can be raised in this regard. If NSAGs are formally prohibited from using violent or coercive fundraising methods in order to sustain themselves, what other alternative financing mechanisms or sources are available to them during these periods? Do the NSAGs themselves develop these mechanisms, or are national and/or international actors involved in organising and providing the funds? Do NSAGs insist (as part of the negotiations or ceasefire agreement) on a commitment to receive funding for a certain period of time in order to cover the costs of their maintenance during the negotiations and/or ceasefire? If this funding is not forthcoming, how does it affect the negotiation process and/ or ceasefire? To what extent are NSAGs truly willing to renounce their (illicit) sources of funding in order to abide by the ceasefire and/or negotiation conditions? Lastly, if an NSAG is listed as a terrorist organisation, what effect does this have on its potential funding sources during this period?

This study attempts to provide answers to these questions based on a literature review of the topic of the financing of armed groups, and on first-hand information gathered from interviews with individuals who are or were involved with NSAGs in Aceh (Indonesia), Mali, Myanmar, Sri Lanka and the Basque Country (Spain). The choice of cases was based on the availability of data: given the difficulty of conducting desk-based interviews (e.g. via phone or Skype) on such a highly sensitive topic, we had to consult experts or insider informants within our network of known researchers and (former) NSAG members.

The report is organised as follows: section 2 offers a succinct literature review of the various sources of funding that armed groups make use of during ongoing hostilities between conflicting parties. With the help of studies of selected cases, section 3 illustrates the sources of financial support that NSAGs may use during negotiations, especially when a unilateral or bilateral ceasefire is in place. Section 4 contains a projection of the longer-term prospects for NSAGs to receive financial support to sustain their post-war security, political and socio-economic transformations. The conclusion then summarises the main findings and draws some general lessons for third parties supporting peace processes involving NSAGs.