This study was conducted to answer the question: Does payment to rebels insure against future welfare loss and does the nature of payment matter? It tests the relationship between payments, the nature of extraction by the rebels, and welfare outcomes, by using a panel dataset from Burundi where information on protection payments during the 10 year civil war were collected. It found that no less than 30% of the interviewees made at least one payment. Rebels extract these taxes through one of two routes: an ‘institutionalised’ and regular cash-with-receipt method or an ad hoc and unpredictable labour extraction. Using matching methods, the study found that payment through the institutionalised route increases household welfare between 16 and 25%. Ad hoc extraction has no effect. Findings are situated in the empirical literatures on contributions to mafia-type organisations and rebel governance.
Key findings:
- A person’s socio-economic profile determines his/her likelihood to fall victim to one or another type of rebel taxation. Additionally, payments in the form of cash increase household welfare by between 16 and 25%. Extortion in the form of labour (a proxy for ad hoc payments and ‘roving rebels’) does not have a welfare enhancing effect. These findings tell a story about rebel governance in times of conflict, suggesting that where rebels have some legitimacy and rebel taxation is institutionalised within the governance structures, civilian populations may be provided with extra-legal security that can ultimately enhance their welfare. The study could however not test whether their welfare would have improved in the absence of conflict, since conflict is not an RCT.
- It is clear that relationships between extra-legal actors and civilians in times of war may actually be mutually beneficial. Results suggest that the extent of institutionalisation of the extortion appears to be critical in obtaining a positive result. Regular and predictable extortion are more likely to insure positive outcomes than unpredictable extortion, which, on average, has a welfare reducing outcome.
- The multiple strategies that armed groups can opt in establishing social order during and after civil war include coercion (corresponding the exclusive use of violence and lack of rule), minimal (regulates violence and secure basic resources but stays out of civilian affairs), indirect (rules civilian affairs by proxy) and comprehensive (overtly regulates civilian affairs, such as public goods, religion). The cash-and-receipt security payment system used in Burundi corresponds largely to the minimal rebel strategy to promote social order, whereas the labour extraction corresponds to that of coercion. Within the Burundi civil war context, due to the fragmented and geographically dislocated nature of war, disparate rebel movements found it difficult to use indirect and comprehensive strategies to establish order. The study illustrates the co-dependence of the civilian population and the rebel movement, but fundamentally it shows how institutionalized forms of criminality have better outcomes for victims of extortion in terms of security and welfare than simple punitive, ad hoc, strategies.
