Concealing Conflict Markets: How Rebels and Firms Use State Institutions to Launder Wartime Trade

Abstract Although rebel groups are players on the international stage, little is known about their financial strategies at this scale. Existing research suggests that rebels succeed in cross-border trade by using informal networks that evade state authority. Yet rebels face a critical challenge: they operate in a normative environment that values state recognition and penalizes their illegitimate status. New evidence reveals that rebels can overcome this barrier and better connect to global economies not by evading the state but by infiltrating its institutions. Drawing on unprecedented data—the internal records of armed groups and their trading partners—I examine how rebels use state agencies in conflict zones to manufacture a legal cover for wartime trade. By using state agencies to provide false certification, rebels can place the stamp of state on their trade deals. This strategy of legal appropriation is a fundamentally different model of how conflict markets skirt sanctions and connect to global buyers. I develop a framework for how this strategy works that traces how international sovereignty norms and sanctions regimes create incentives for rebels, firms, and bureaucrats to coordinate around this legal veneer across the supply chain. The framework and evidence contribute theoretical and policy understandings for rebel governance, state building and fragmentation, and illicit global markets.