Rebel financing and the commitment problem in civil conflict: An Application to Northern Ireland

Abstract

Why is a peace agreement acceptable at some point in time but not earlier? We argue that the commitment problem combined with the nature of rebel financing can help explain this. Crucial to our argument is that the composition of financing between donations and self-generated funds through organised crime and local governance determine the size of anticipated shifts in the future power of rebel groups. When donations are the main source of funds, shifts in rebel strength will more likely be large and be preempted through conflict by the state. When rebels obtain mainly self-generated funds, shifts in power will more likely be small and allow for peace. We apply this theory to the Northern Ireland conflict and analyse why the 1998 Belfast Agreement was credible, but the very similar failed Sunningdale Agreement in 1973 was not. Our paper contributes to the literature on the boundary between political violence and organised crime.