H i C N Households in Conflict Network

Transcription

1 H i C N Househols in Conflict Network The Institute of Develoment Stuies - at the University of Sussex - Falmer - Brighton - BN1 9RE The ec Boys an the olitical eomy of smuggling in northern Ugana Els Lecoutere an Kristof Titeca * els.lecoutere@ugent.be kristof.titeca@ugent.be HiCN Working aer 36 November 2007 Abstract: In this article, we unearth the institution for enforcement of the agreement between the ec Boys, fuel smugglers an ex-rebels, an a olitician, who allows them to uct illegal smuggling. Rather than the ec Boys threat of rebellion, their romise of olitical suort an refraining from civil isorer matters to inflict cooeration. A reeate lay mechanism where the layers unish each other for efection but return to cooeration makes u the rules of the game. Uncovering this enogenously emerge institution for tract enforcement exlicitly reveals the imortance of olitical alliances in the se eomy in a fragile state environment. Acknowlegements: We thank Jo Seleslachts, Björn Van Camenhout, Timothy Raeymaekers, Koen Vlassenroot for helful comments an Fons Wetenschaelijk nerzoek-vlaaneren for financial suort. Coyright Els Lecoutere an Kristof Titeca 2007 * Conflict Research Grou, Deartment of Thir Worl Stuies, Ghent University, Belgium 1

2 1. The olitical eomy of smuggling: A theoretical framework The ec Boys, a grou of thuggish youth, many of them ex-rebels, are smuggling fuel from the Democratic Reublic of Congo (DRC to Arua, Ugana, where they sell it. This business is not at all run unercover but ucte with sent from local oliticians who suort the ec Boys in many ways. What is more, the ec Boys are siere strategic olitical layers. This suggests an alliance between the ruler an the ec Boys. In what follows it will be uncovere why this coalition exists. Sely, given the illegal nature of the trae, the state as a thir arty enforcer of their agreements is unlikely. We will exlore how the two arties ensure commitment to their agreement by ientifying what tye of enforcement mechanism is at work an by iscerning what threats are effective to make the agreement selfenforcing. This stuy tributes to unerstaning the comlex reality in a temorary eveloment text, often referre to as a fragile state, characterize by the absence of effective state enforcement an the resence of lingering low-intensity flicts. This research is an eneavor in institutional analysis. It stuies enogenously emerge eomic institutions for roerty right rotection an tract enforcement in the se eomy. An aitional innovation of this work is that it emloys the analytic narratives aroach (Bates et al., 1998; Greif et al., 1994; Greif, 1997; Gambetta, 1993, but rather than using historical ata, the inut is an in-eth ethnograhic case stuy of the fuel smuggle in Arua, northern Ugana 1. In northern Ugana access to roerty an eomic oortunities are interrelate with olitical ower an olitical relations which suggests that the eomic an olitical system are intertwine. Therefore, stuying the olitical eomy of smuggling calls for a framework 1 Fiel research carrie out in Arua by author II from ctober December 2005 an Aril-May

3 for analysis that ermits to look at eomic behavior an olitical behavior as being enogenous. The theoretical framework aote here is recently eveloe by North et al. (2006 builing on other works in comarative olitical eomy that combine the theory of eomic behavior with the theory of olitical behavior (North, 1990, Acemoglu an Robinson, 2005, Barzel, 2001, Levi, 1988, Greif et al. 1994, Greif 1995 in: North et al., 2006; an Acemoglu, Johnson an Robinson, More secifically, North et al. (2006 argue that a limite access orer, is a olitical eomy arrangement that uses the olitical system to limit eomic entry to create rents which serve to stabilize the olitical system an limit violence. nly a relatively limite grou of elite, the ominant coalition, gets rivilege access to resources an rents an therefore have an incentive to suort the current regime, to strive for social stability an to suress violence 2. However, to avoi being overthrown, a coalition suorting the rulers must have a reominance of coercive ower. This imlies that the coalition must also inclue those that have sufficient (coercive ower an resources to challenge the ruling coalition over trol over the state 3. In arguing this, North et al. (2006 further evelo the framework of neo-atrimonial olitics, as analyze by for examle Chabal an Daloz (1999 or Bratton an Van De Walle ( Note that this theory an our stuy focus on agents behaviour in this text an not on the origin of their relative ower. 3 State is to be unerstoo broaly here as it oes not refer to a set of governing institutions that has sovereignty over a secific territory or nation-state. The more general cet olity, referring to any olitical organization of a grou, coul be use here. 4 Cf. also Bayart (1997, Claham (1982, Reno (1998 3

4 Northern Ugana, on the borer with DRC, the text ealt with in this article, is characterize by the near absence of olitical an eomic cometition, by frequent violence an by the imortance of atron client relationshis. This article thus is an emirical stuy of a olity uner limite access orer. ne of the grous stuie, the ec boys, obviously is a grou with otential of coercive ower an otential to overthrow veste ower structures. That is why they are inclue in the ruling coalition, are execte to give olitical suort to the rulers an as a rewar they can exloit the monooly of the fuel smuggle in Arua an the wier region. The olity uner limite access orer can be viewe as an organization, mae u of secific grous of iniviuals that all ursue a mix of common an iniviual goals through artially coorinate behavior. The relationshis of the members of the organization are shae by its institutional structure, or the commonly acknowlege atterns of interaction that govern an strain the interactions of the ifferent actors. Institutions in this sense are unerstoo as the rules of the game an are mae u of both formal rules an informal norms an habits (North et al., More secifically we look at a tye of organization that is characterize by self-enforcing incentive comatible agreements among their members rather than relying on thir arty enforcement (North et al., Given that a state-actor entere a coalition with a grou engaging in illegal fuel smuggle, the state as a thir arty enforcer is highly unlikely. In a situation like this the other otion of a thir arty enforcer woul be an alternative organization roviing rotection of roerty rights an tract enforcement (for examle the mafia (Gambetta, However, it is suggeste that roerty right rotection an tract enforcement in this tye of social orers tyically haens on the basis of ersonal exchange an rivileges for 4

5 secific grous an exchanges are enforce by face to face reeate lay mechanisms (North et al., Various case stuies in new institutional eomics have exlore exchange an tract enforcement in the absence of effective thir arty enforcement (Clay, 1994, Milgrom, North an Weingast, 1990 in: Greif, 2000; an Bates et al. (1998, Greif et al., 1994, Greif, Comaring our case with this literature suggests that this is effectively the tye of enforcement of agreements at work. The crete cetualization of an institution that we will use here is that of a selfenforcing equilibrium of a reeate game in which agents mutually believe an which guies an strains their actions (Aoki, 2001, Greif, Institutionalize social rules rovie retrosective agents with limite rationality with the necessary information an cognitive moel to choose behavior (Greif, As each agent bases his actions an beliefs on these common social rules they are rerouce by behavior an beliefs of all agents. Thus they are self-enforcing an have become institutionalize in this way. It also imlies that the only social rules that can be institutionalize or become common knowlege are the rules that each iniviual fins otimal to follow an thus are an equilibrium of the game. As such this article is an emirical stuy of an enogenous eomic institution for enforcement of agreements that came to exist within the organization being the coalition of the ec Boys an the olitician. This commonly acknowlege attern of interaction that governs an strains these agents relationshi has evolve over time an is accete by both the ec Boys an oliticians as the rules of the game. This stuy can therefore be labele as alie institutional analysis. 5

6 2. The ec Boys: Fuel an olitics The ec Boys starte their activities after most of the oulation of West Nile returne from exile in Suan or DRC in the mi-eighties, with little jobs available, a growing eman for fuel an no filling stations resent. As fuel in the DRC is taxe less than in Ugana, once smuggle to Arua, they manage to sell their fuel at a cheaer rice than the official (Uganan taxe etrol stations. From Arua town, they also rovie fuel to the wier West Nile region through sub-ivisions of the ec Boys. The ec Boys together stitute about 300 men an are ivie into several sub-grous but have an overarching committee - with a chairman, secretary, treasurer - that coorinates their activities 5. The transborer fuel smuggle is situate in the se eomy an is obviously illegal in the sense that taxes are evae at large scale. ne woul exect this business to be run unercover but it is ucte surrisingly oen. Within Arua town, the ec Boys oenly sell their fuel in jerry cans on literally almost every street corner. An what is more, local oliticians sier the ec Boys to be strategic olitical layers an assist the ec Boys in various ways. Two risks seem to be of crucial imortance in informing the attitues of the oliticians towars the ec Boys. First, the ec Boys are the most imortant rovier of fuel in Arua town. Arua only has three official etrol stations which are by far not enough to meet the eman of fuel, as Arua is an imortant traing centre in the wier region (Ugana, DRC, Suan. If they woul sto selling fuel, this woul rovoke a fuel crisis in the whole of the West Nile region an in the cross borer trae between Ugana, Suan an the DRC. 5 For more information on the ec Boys, their history, structure an activities, cf. Titeca (2006, Titeca an Vervisch (forthcoming. 6

7 Sely, there is a general feeling that the ec Boys coul take u arms an turn to rebellion again if ushe out of the fuel business certainly in the light of the relocation an roximity of rebels grous such as the Lor s Resistance Army or Allie Democratic Forces in the nearby DRC 6. As the Mayor of Arua town states: These boys can be though; they are former soliers an rebels. They are angerous an coul go back to the bush if not treate carefully 7. An estimate 40% of the ec Boys are former combatants: most of these former combatants are ex-rebels from the many rebel movements which have been active in the area, while others are efecte government soliers (Gersony 1998; Titeca After receiving amnesty, the ex-rebels, often without eucation, lan or other assets, were easily rawn into the smuggling business. Moreover, many ex-combatants have not hane over their weaons to the authorities (CERFRD 2002, in an area in which ecaes of arme flict alreay resulte in an abunance of available light weaons. What is more striking is that the ec Boys, a grou of thuggish youth, takes u social resonsibilities an are well resecte in the community. In a region which siers itself strongly neglecte, betraye an marginalize uner the current Museveni government, the ec Boys are locally seen as survivors whose activities not only rovie emloyment for themselves but also suort their (extene families. This resect is further enhance by the fact that they act as rotective force for other marginalize grous within society. For examle, when small kiosks ha to be relocate in Arua town in early 2007, they stage a 6 The West Nile region has a long history of rebel grous (Leool 2005; an although the rebel grous have cease to exist, these ex-rebels still have ee-roote feelings of marginalization. A factor which is enhance by the fact that the government is not fulfilling its romises on the amnesty. 7 Interview Mayor Arua This view is firme by various other actors, such as the URA Customs Enforcement Unit officer , sub-county chairersons , local traer an so on (cf. Titeca,

8 (successful rotest against this ecision. n to of this, the ec Boys are imortant actors of flict-resolution within the community. They are referre to the olice for solving issues of isutes an theft, as they are eeme quicker (their resence all over town enables them to raily solve cases of theft, more efficient (through their violent methos of cororal unishment an less corrut than the olice (Titeca, Yet, through this osition of general resect an the services they eliver, the ec Boys are key-layers in the olitical game. Locally, eole are vince they can change the ublic oinion on oliticians - accoring to the mayor of Arua town almost overnight 8. Much of this has to o with their ominant an visible resence in town, their resecte status an their firm nection with numerous other urban grous with eole in the transort sector (motorcycle an vehicle taxis an rivers; loaers an off loaers, with etty traers as well as with owners an customers of small restaurants, ubs, isco s an khat chewing laces they are frequenting. Moreover, as many of the ec Boys are Aringa, a Muslim sub-grou of the Lugbara ethnic community, they have a voice in the mosques in town. These various networks ermit them to quickly rally suort behin oliticians, but also allow them to quickly rovoke isorer to sill over to the community. Because of their lou an rowy nature they also are an imortant force in electoral camaigns. Mobilize as a grou (an given fuel for their motorcycles they raw the attention towars the rally an create the imression that ( the olitician is on the winning sie with a lot of suort! 9. An versely, their actions an mobilization equally allow them to boycott an break 10 oliticians. 8 Interview Mayor Arua Interview local businessman, Arua, Interview ec Boy

9 In return, oliticians are comelle to rovie several services to the ec Boys. Most imortantly, the oliticians make sure certain rules are resecte with regar to harassment an fiscation of the smuggle fuel by the revenue authorities an olice. Firstly, they ensure no fuel is fiscate within town an fiscation out of town remains limite; an sely, they make sure the revenue authorities an local authorities o not use isroortional force against the ec Boys. In aition, they have been linking them with onors or have hele them to write roject roosals through which the ec Boys have accesse aitional funing, for examle to start a savings- an creit association. They also rovie them with material assistance many ec Boys sult oliticians in case of financial roblems such as sickness or roblems with school fees for their chilren. 3. The olitical eomy of fuel smuggling in Northern Ugana: The rules of the game From the above narrative, it is obvious that the ec Boys are a grou with the otential to instigate violence an challenge the veste ower structures; hence the nee to inclue them in the ruling coalition in Arua, as the theory of limite access orers suggests (North et al., This exlains why oliticians tolerate the smuggling business of the ec Boys even if they coul easily crack own on the fuel smuggle, encourage legal fuel trae an tax the fuel business. However, the ec Boys are reware for their social an olitical suort with rents create by limiting entry. They are grante the exclusive right to exloit the borer - the only valuable resource in this region - an to engage in fuel smuggling. This kin of agreements is tyically observe in this tye of social orer. Uner these itions, agreements between coalition members are tyically enforce by reeat-lay mechanisms rather than by a thir arty (North et al. (2006. In what follows, the enogenous institution for tract enforcement that arises in this organization is stuie using the analytic narrative aroach (Bates et al., 1998; Greif et al., Base on case 9

10 stuy observations, we systematically look for the rationale behin the strategic behavior of the layers using game theory. We start by efining the game that is likely to be laye, ientifying the layers, the otential strategies of each layer an ayoff associate with the ifferent outcomes of the game. Next, we sier the tye of enforcement mechanism an whether reeating the game we efine can be the basis for tract enforcement thereby iscerning what threats are effective to make the agreement self-enforcing The layers nly the enforcement of the agreement with regar to the fuel smuggle between the ec Boys an a olitician, is siere here, although the ruling coalition may sist of many layers with various acts an agreements. The institutionalize tract enforcement is moele through a game laye by two layers. ne of the layers in this game is a olitician 11. The ec Boys oerate as a grou an are siere one layer as such. The ec Boys are a membershi organization an a financial tribution is ue 12. The members are motivate relying on a system of beliefs, in this case on a rhetoric of marginalization 13. Together with a 11 The olitician ealt with can change occasionally following elections, but the institutionalise, commonly known rules each time guie interactions between ec Boys an a olitician. bviously, limiting the game to be laye between the ec Boys an only one olitician is a simlification of reality. 12 The association of the ec Boys also rovies informal creit an insurance an business information is share to an extent (on business artners in DRC, transorters, clients, etc.. 13 Skaeras (2001, stuying grous involve in organise crime like mafia an gangs, observes that these evelo an articulate cultures an ieologies, systems of beliefs about the worl that have a certain internal logic that outwarly at least all its members aear to subscribe (Skaeras, 2001, 185. He interrets this as a 10

11 tight hierarchical structure an strong isciline in which social norms, in the form of a secification of esire behavior together with sanction rules, make sure they act as a unity in the game laye with oliticians an that eviators are unishe 14 a form of metaunishment (Kuran, Similarly, if the olice or revenue authorities break the rules of the game on an iniviual ec Boy, for examle by mistreating him, the ec Boys will always react as a grou. A former ec Boy chairman summarize: The moment you touch one of us, you touch the whole grou! This is our strength 15. This tye of internal organization is neee to coorinate their members in cooeration or efection with the olitician an to enforce laying by the internal an external - rules of the game (Greif et al., 1994; Kanori, In essence, the ec Boys rely on a multilateral reutation mechanism an show similarities with the merchant guils stuie by Greif et al. (1994. Although the case stuy rovies several examles of these internal mechanisms for enforcement, commitment an grou reactions, we will not focus on these here but emhasize these are a necessary ition to treat the whole grou of ec Boys as one layer in this game. way to motivate the emloyees, to inuce loyalty an reuce infighting an other transaction costs which is critical for an organisations success. An in many cases gangs or mafia raw on a rhetoric of marginalisation. 14 For examle, ec Boys who o not stick to their cartel rice agreements are sanctione, as well as members who isobey internal rules by stealing their colleague s fuel, or by selling low quality or ilute fuel. Disresecting the olitician who gets suort from the ec Boys for examle by boycotting this olitician or isturbing his rallies is another reason for (cororal unishment an/or exulsion from the association, as it strongly weakens their osition towars that olitician. 15 Interview former chairman ec Boys, Arua

12 3.2. The games In an initial ste we moel the situation by efining the unerlying one-stage game, in orer to etermine the instruments the ec boys an the olitician recur to for inflicting cooeration an to examine what threats are effective to make their agreement self-enforcing. Base on the case information we ientify the strategies that the ec Boys an the olitician can follow resectively. Next, we infer the ossible outcomes an the associate ayoffs for both layers of that secific game. The Game G is laye between two layers, the ec Boys an a olitician with strategy saces S i (i=,. The strategy sace of each of the two layers, S i, sist of two ossible strategies: either to cooerate with or to efect the other layer. This game thus has four otential outcomes: (cooerate, cooerate, (cooerate, efect, (efect, cooerate an (efect, efect. The resective layers ayoffs u, u associate with each of the ( outcomes, r, r, s, t, t, s an,, are secifie below in table 1. G S u i i S, S ( ; u, u ( r, s, t, ; i, ( ( cooerate, efect ; i, i i i i ( Table 1: Bi-matrix of the game laye amongst the ec Boys an the olitician olitician Cooerate Defect ec Cooerate ( u, u ( r, r (, u s Boys Defect u, u t, s, u ( ( u, t ( ( ( u, 12

13 The ec Boys rebel threat: Is it creible? The anger that the ec Boys challenge those in ower by turning to rebellion exlains why they have to be art of the ruling coalition. What we want to examine here is whether, in the game reeate within this coalition, the ec Boys threat of becoming rebels 16 is also a creible threat effective to inflict cooeration an enforce their right to smuggling fuel? An if not, what threat or romise matters for enforcing the layers agreement? To answer this question, it is instructive to see what woul be the theoretical Nash equilibrium of the one-stage game when efection by the ec Boys means rebellion. Cooeration then sists of refraining from being rebels, which is assume not to involve any cost for the ec Boys. Defecting however brings about the cost of being rebels, more secifically the aggregate of each ec Boy s cost of being a rebel, labelle rebel. First, rebel activities are often ortraye in the light of irect eomic gain, often in the form of looting of natural resource rents (Collier 2000, 2004; Collier et al However, emirical research suggests that rotection, security an social services rovie by the rebel grou might be equally value (Guichaoua, 2007; Vinci, thers (Duffiel 1998, 2001; Keen 1998, 2000; Reno 1998 see a more inirect link to eomic gain an argue that the existence of a flict, an esecially the absence of the rule of law, enables rebel movements 16 Rebellion is seen here as an arme urising against an establishe civil or olitical authority. Rebels tyically engage in regular or guerrilla combat against the arme forces of the establishe regime, or uct sabotage an harassment in orer to unermine the government's osition as leaer. We oose this to civil isorer. This is seen as a isturbance cause by a grou of eole in rotest against certain socio-olitical roblems, which is not characterise by the egree of violence utilise by rebel forces. civil isorer rovoke by the ec Boys sists of emonstrations in town, occasionally setting something ablaze an soraic targeting of government symbols (see further. 13

14 to enrich themselves. In this situation of unlawfulness, illegal activities such as looting, exloitation of natural resources or labour exloitation are ossible, but also activities such as organise black market trae. As no valuable natural resources are available in West Nile (Jackson, 2002, the geograhical an national borers are the most valuable resource in the area, roviing oortunities for illegal cross borer smuggling 17. However the ec Boys o not nee to resort to arme rebellion to exercise their illegal smuggling activities, as the current cooeration in Arua gives them a legal state of excetion to freely erform their cross borer activities. Se, rebellion might also be instigate by a erceive nee to fight marginalization an gain future benefits for a suresse grou (Collier, 2004; Weinstein, 2005 in: Guichaoua, The ec Boys raw on the rhetoric of marginalization an their cause of acting against the suression of the national government to motivate their members an their suorters in the community. They offer the thuggish, unemloye youth they are comose of the oortunity to air feelings of marginalization an suression. An through lobbying oliticians they have foun a legitimate way to make claims an inflict government attention, as their emans are seriously taken into sieration an oliticians rovie them with services of ifferent kins. Also for these uroses, the ec Boys are a comfortable substitute to rebellion. 17 Emirical stuies show that in rebel movements in northern Ugana, gree for natural resource rents i not lay a major role. Although most Uganan rebel movements were being suorte by external forces such as Suan, the majority of the rebels still ha very limite access to resources an foo, which force these rebel movements to loot foo for their ay-to-ay survival. They were therefore rather riven by ure nee than gree (lsen,

15 Moreover, social ressure in West Nile strongly acts against the (re-formation of rebel grous. After ecennia of arme flict, the general ublic in West Nile strongly ooses arme rebellion, which iscourages the ec Boys in this regar because it woul seriously reuce their suort by the community. Lastly, as shown below, given the aily rofits one can gain by smuggling fuel, rebellion has a large oortunity cost for each iniviual ec Boy. For all of the reasons mentione here, it can be argue that rebellion is a costly alternative for the ec Boys as a grou an for its members iniviually. Therefore we can reasonably take on the assumtion that rebel 0 (3.2.1.a. The benefits of the fuel smuggle for the ec Boys sists of the aggregate net return of fuel trae by all ec Boys an is labelle q with q q, q (. c c q being the volume of fuel trae in absence of harassment an fiscation by customs or olice an q the volume of fuel trae when there is fiscation an taxation. It is taken that ( q ( q c (3.2.1.b 18. Given the relatively high an secure income an other benefits the ec Boys offer, this trae is a lucrative alternative to rebellion for most iniviuals 19 ; even more so if the islocation an isrution of community an family life when joining a 18 Although we assume that aggregate rofits in times of efection by the olitician are lower than rofits uner unlimite trae, one coul argue that a reuce suly of fuel on the market can cause rices to rise. However, three regular etrol stations still serve the market which limits scarcity inuce rice increases of smuggle fuel. 19 It is estimate that on average, the aily rofit (nominal of an ec Boy ranges from 24,000 UGX (10.2 from 2000 to 2005, u to 36,500 UGX (15.5 currently. Comare to the average aily househol income in Northern Ugana, which is 6968 UGX (3 in urban areas an 2541 UGX (1 in rural areas, this is a relatively high income (UNHS 2005/2006. Furthermore, the association of the ec Boys rovies rotection, informal creit an insurance to its members. Yet it was imossible to get more informe estimates of the ec Boys average rofit an their returns in times of cooeration an in times of efection. 15

16 rebel grou are taken into sieration. So, in line with the argumentation that the risky rofession of rebel is costly an given that the ec Boy association answers to a large extent otential eomic or grievance inuce motives for rebellion, it is resume that rebel ( c q (3.2.1.c. The other layer in the game, the olitician, also has two strategies. His cooeration sists, firstly, of lobbying olice an customs an sely, of making sure no fuel is fiscate in town an only limite fiscation takes lace on the smuggling routes. Aitionally, he rovies members of the ec Boys with financial an material suort an rotection. For simlicity, these efforts are taken to cost the olitician nil 20. The olitician efects by allowing full-scale fiscation an taxation of smuggle fuel - both in town an on the smuggling routes - an even the arrest of ec Boys. In this case he gains the sum of taxes on fiscate fuel T ( q 0 ( When no fuel is fiscate, i.e. when the olitician cooerates, no taxes are recovere an 0 T 0 0 q (3.2.1.e 21. If 20 Taking a cost into account woul not change the game as T q 0 T q T (0 T q T (0 x therefore t r xan s x. (, 21 Checking the archives a few ragge notebooks - of the Ugana Revenue Authorities (URA rovie very little information on the amount of fuel fiscate by URA. No systematic recors are ket at the URA an there is no recoring of what the mobile olice fiscates (since their fiscation is illegal. The URA manager roughly estimates that 500 to 3000 litres of fuel are fiscate er month (early 2005 u to Aril 2007 (interview ata Confiscate fuel is either store, sent to Kamala or auctione locally as a way to recover lost taxes. It is unclear what haens to the fiscate fuel there are no recors on how much is store, how much is sent an how much is auctione - an what is the amount of taxes recovere. Accurate estimates of T ( q in times of cooeration an in times of efection are therefore imossible. But from interviews an long-term articiant observation it is aarent that uring cooerative stages no fuel is suose 16

17 the ec Boys efect, the olitician faces the cost of the ec Boys transformation into rebels rebel 0 (3.2.1.f. Table 2 summarizes this game an each layer s ayoffs in ifferent situations given the assumtions: rebel 0 (3.2.1.a c ( q ( q (3.2.1.b rebel ( c q ( q 0 (3.2.1.c T ( q 0 T (3.2.1.e rebel 0 (3.2.1.f Table 2: Bi-matrix of the game with the ec Boys rebel threat olitician Cooerate ec Cooerate ( u, u ( r, r Boys c with r ( q 0 Defect with t an r T ( 0 0 ( u, u t, s an s ( ( q rebel c T ( 0 rebel Defect s ( u, u (, t s ( q with 0 an t T ( q 0 ( u, u, ( ( q rebel with 0 an T ( q rebel Having efine this game, we come to the following roosition: roosition 1: Given the assumtions a,, e an f, the Nash equilibrium of the above efine one-stage game, where efection by the ec boys is rebellion, sists of the ec Boys cooerating an the olitician efecting. to be fiscate in Arua town. So by assuming q 0 in times of cooeration this limits to the game in Arua. 17

18 roof: To ientify the Nash equilibrium of the above efine game we look for the ec Boys best resonse in case the olitician efects an in case the olitician cooerates. Corresoningly, we etermine the olitician s best resonse to both of the ec Boys ossible strategies. If the layer s resective best resonses cur this is a Nash equilibrium of this game. First, if the olitician s strategy is to cooerate, the ec Boys best resonse is to cooerate as this gives them the highest ayoff ( r t. When the olitician efects, the ec Boys strategy with the highest gains is to cooerate since s. Defecting by the ec Boys is essentially a ominate strategy in this case. Se, the olitician gains most by efecting if the ec Boys cooerate ( t r. If the ec Boys woul efect, efection will also be the olitician s strategy with the highest ayoff ( s. Hence cooeration is a ominate strategy for the olitician. The best resonses uniquely cur where the olitician efects an the ec Boys cooerate. This thus stitutes the unique Nash equilibrium of this one-stage game. ayoffs for the ec Boys an the olitician are ( u ( q 0 ; u T ( q 0. Q.E.D. The next ste to assess whether the ec Boys rebel threat is effective in enforcing their agreement with the olitician through a reeate lay mechanism is to look if infinitely reeating 22 the above efine one-stage game can lea to cooeration being a sub-game erfect Nash equilibrium 23. We can clue that given our assumtions an given the unerlying one-stage game, the ec Boys threat of efecting an becoming rebels as 22 r laying an inefinite number of rouns. 23 An oerational efinition will be given later. 18

19 unishment for efection by the olitician is not creible. However, in the game as it is efine here, mutual cooeration woul benefit the ec Boys as their smuggling rofits c woul be higher ( ( q ( q (3.2.1.b But this is not a areto-imrovement comare to the one-stage game Nash equilibrium because, if the ec Boys cooerate, the olitician is worse off by cooerating than by efecting as there are no recovere taxes ( t r. Therefore, infinitely reeating this game coul never lea to mutual cooeration between the two layers because of the lack of a creible unishment by the ec Boys an because mutual cooeration is areto inferior 24. Since cooeration is clearly observe in Arua, this is unlikely to be the game laye. Besies, if this woul be the game laye, there woul be no obvious reason why the ec Boys offer olitical suort an why they take u resonsibilities in the community olitical mobilization an maintaining orer: Creible romises? bserving the efforts the ec Boys unertake for the community an the enormous imact of their social an olitical suort for the olitician s success, calls for a closer look at a game where these elements stitute the ayoffs. Hence we will sier a one-stage game where abanoning all olitical an social suort for the olitician an rovoking chaos in the community is the ec boys efection an etermine the theoretical Nash equilibrium of this 24 Likewise, the ec Boys threat of closing the tas when they feel the olitician oes not suort or rotect their business well enough, is not eeme creible (efinitely not in the long run, as it on a long term translates the net rofit mae in the fuel business into net losses as caital investments an working caital (like bicycles, jerry cans, avance ayments are acquire but sales are stoe. The ec Boys efection woul be a ominate strategy an the game woul take the same form as the above efine rebel threat game. Nevertheless, short term fuel sale embargos by the ec Boys in Arua town are observe in the light of causing civil isorer. But in line with the above reasoning, these embargos are always of short uration. 19

20 game. Next, we will assess whether reeating this game can be the mechanism ensuring enforcement of the agreement between the ec Boys an the olitician. In this game, cooeration by the ec Boys sists of ensuring olitical suort an community aroval for the olitician an avoiing civil isorer. When the ec Boys cooerate they face the cost Soc which stans for the aggregate net costs to the grou of ec Boys of avoiing chaos, engenering community areciation for the olitician an for active olitical mobilization an suort (with Soc 0 (3.2.2.a. When they efect, the cost of not organising olitical mobilisation an social suort is eviently nil. Furthermore, it is assume that when the ec Boys invoke civil isorer it oes not imly a high cost, for simlicity this cost is set at zero here 25. As efine in the revious game, the fuel smuggle gives the ec Boys an aggregate net return q with q q, q ( c an ( q ( q (3.2.1.b. Since the cost of the c ec Boys efforts for society an the olitician are siere negligible comare to the rofits they make out of the fuel trae - but they are not zero either - it is taken that c ( q 0 Soc 0 (3.2.2.b. ne of the strategies of the olitician is cooeration which sists of suort an rotection of the fuel smugglers. These efforts are assume to cost the olitician nothing. When the olitician efects there is fiscation an the olitician gains taxes on the fiscate fuel ( ( q 0 T (3.2.2.c. This is zero when the olitician cooerates ( q 0 T 0 0 ( The game woul be similar to the rebel threat game if rovoking civil isorer woul cost the ec Boys more than Soc 20

21 In case the ec Boys efect, the olitician suffers an imortant cost because of the loss of community stability an the loss of olitical suort. Therefore NoSu stans for the sum of the cost of urban chaos, the cost for the olitician of ecisions isarove by society, the cost of boycotts of election camaigns by the ec Boys an the oortunity cost of their olitical suort (with NoSu 0 (3.2.2.e. When the ec Boys cooerate, the olitician enjoys eace an orer in the community an olitical suort. These benefits are reresente by Su which stans for the sum of the benefits of the olitician s oularity an aroval by the community, the benefits of active olitical an electoral suort by the ec Boys an the inirect gain of eace in the community (with Su >0 (3.2.2.f. The game efine here is summarize in table 3 secifying each layer s ayoffs in ifferent situations, given the following assumtions: Soc 0 (3.2.2.a c ( 0 Soc 0 q (3.2.2.b T ( q 0 (3.2.2.c 0 0 q 0 T ( NoSu 0 (3.2.2.e Su 0 (3.2.2.f Table 3: Bi-matrix of the game with the ec Boys social an olitical suort romise olitician Cooerate Defect ec Cooerate ( u, u ( r, r (, u s Boys c with r ( q Soc with Defect an r ( T ( 0 Su u, u t, s ( c with t ( q 0 an s T ( 0 NoSu an an u, t s t ( ( q Soc T ( q ( Su u, u, ( with ( q 0 T ( q NoSu Having efine the game leas to the following roosition: 21

22 roosition 2: Given the ec boys efect by rovoking civil isorer an abanoning social an olitical suort to the olitician an given the assumtions a, c,, e an f, the unique Nash equilibrium of the above efine one-stage game is efection by both the ec Boys an the olitician. roof: We look for the Nash equilibrium in this game by assessing if the layers best resonses to each others strategies are in accor. Firstly, both in case the olitician cooerates an in case he efects, the best strategy for the ec Boys is to efect as they avoi the cost of social an olitical suort ( t r an s. In this game, cooeration is a ominate strategy for the ec Boys. Sely, whether the ec Boys efect or cooerate, the olitician s best resonse is to efect each time because this generates tax revenues ( r t an s. Also for the olitician cooeration is therefore a ominate strategy. By sequence, the Nash equilibrium of this game is unique an sists of both the olitician an the ec Boys efecting. The resective ayoffs are then ( u ( q 0 ; u T ( q NoSu. Q.E.D. Mutual efection is thus the outcome of the one-stage game where the ec Boys efect by causing community isorer an ening their social an olitical suort for the olitician. However, mutual cooeration is a areto imrovement to mutual efection on two itions. First, the ec Boys net gain from unlimite trae minus the cost for suort has to be larger c than the rofits uner fiscation, or ( q Soc ( q (3.2.2.g. Se, the olitician s benefit from social an olitical suort has to be larger than the net gain from taxes minus the costs associate with olitical boycotts an civil isorer, or Su T q ( NoSu (3.2.2.h. In this case, the game takes the form of a risoners ilemma game. 22

23 The first ition g can be taken as vali since the ec Boys rofits from unlimite fuel trae q are very high an the efforts for society an the olitician Soc are ( c insignificant comare to those rofits. Case stuy information suggests that the aggregate rofits q are seriously reuce when massive fiscation takes lace. Some ec ( Boys lose so much they go bankrut an leave the business. The valiity of the se ition h can be inferre from the following qualitative inications: The recovere T are merely an inirect benefit to the olitician (although there are rumors they taxes q also rofit irectly. Also the cost of chaos, camaign boycotts an losing the ec Boys olitical suort NoSu can be sierable, esecially because these can cause electoral efeat. The irect an iniviual benefits to the olitician in terms of social an olitical suort (or non-boycott an orer in the community, Su, are value high an also stitutes a reinforcement of his osition in ower (which gives access to various other sources of income. Theoretically, given the itions g an h, cooerative behavior can be sustaine as a subgame-erfect Nash equilibrium if this risoners Dilemma game is infinitely reeate 26, rovie that the future is not iscounte too heavily, i.e. the iscount factor is close enough to one, an a creible an suitable unishment strategy is believe to be in lace (Gibbons, As cooeration is clearly observe in Arua, it is robable that this is the reeate lay mechanism aote to enforce their agreements. An in this game refraining from causing 26 Uner the assumtion of stationarity, meaning the same game is reeate over an over which is firme by the fiel information. 23

24 turmoil an offering olitical an social suort are the ec Boys romises that matter 27. In return, the olitician in question romises tolerance of the smuggling business an rotection. These romises make mutual cooeration a otential subgame erfect Nash equilibrium. The Ugana Revenue Authority vice manager seems to suort this hyothesis. Answering why the ec Boys are selling their fuel so oenly, he argues: We look at risk management! How much can we recover from lost taxes, an how much chaos can we cause in town through chasing them 28. In orer to make out whether inee the layers have aote a creible an suitable unishment strategy we first return to case evience of instances of cooeration an efection after which we interret this in a game theoretical framework The ec Boys an oliticians in goo times an in ba times: Reeate lay mechanisms Next with case evience will be shown that the layers inee reeat a version of the above efine game. They both have aote trigger strategies with subsequent hases of cooeration an unishment to inflict mutual cooeration. Later we formally efine the reeate lay mechanism. 27 This also exlains why the ec Boys take u resonsibilities in the community an lobby for the rights of marginalize grous in society. This way they gain resect by the community an the ability to mobilize eole. Their societal an internal legitimacy however also raws on the rhetoric of marginalization an in rincile they mobilize eole to suort oliticians critical towars the national government, which is claime to marginalize eole from northern Ugana in general an the West Nile region in articular. Therefore, the cooeration with oliticians alongsie the government sists of refraining from boycotting olitical camaigns instea of active suort which woul not be accete by the ec Boys followers. 28 Interview, Arua,

25 An eye for an eye an a tooth for a tooth an back to business : Case evience The olitical an social ower of the ec Boys was at its eak uring the first half of the nineties uner the charismatic leaershi of Kaku, who was the initiator of the ec Boys. During this erio, transit trucks woul simly offloa their fuel in town, an fuel was sol oenly in two hunre liter rums. Moreover, the ec Boys were offering many jobs to local unemloye men, not only in the fuel business, but also in other comanies which they ha starte (such as a struction comany. Also their community services were at their eak uring this erio, as uner the strict comman of Kaku the ec Boys woul clean the town or offer free transortation for funerals. Things starte changing from the 1994 Constituent Assembly elections onwars. During these elections, the ec Boys strongly suorte raical government critic Zubairi Atamvaku Nasser. As these were the first national general elections uner the Museveni regime (an uner the existence of the ec Boys, it was the first time uring which the ec Boys emonstrate their olitical ower. Yet they were uner strong governmental ressure to suort the ro-government caniate which they refuse. As oosition caniate Atamvaku easily won the elections, the government interrete this as efection of the ec Boys an starte being harer on the ec Boys by fiscating more fuel an temorarily arresting some of them. The efection tinue after 1994 an the ec Boys tinue being frontational against the government authorities by isturbing their meetings, tearing own their osters an so on. Furthermore, esite strong government ressure, the ec Boys again strongly backe the oosition caniate, aul Ssemogerere, uring the 1996 resiential elections. Although efeate on a national level, Ssemogerere ha a lanslie victory in Arua istrict. Directly after this victory, the tension escalate an Kaku an other to leaers of the ec Boys were arreste an imrisone on accusations of being a rebel 25

26 collaborator. Accoring to local analysts, this was a urely olitical arrest after guns were ut in Kaku s garen 29. In short, the ec Boys ha become too owerful an in this situation, oliticians (an government eeme cooeration unattainable. Because of these arrests, an articularly because of the arrest of resient ec Kaku, the ec Boys lost sierable olitical ower an imact on society. Also their other ec businesses were close. The ec Boys therefore never ha the same imact an ower as in the first half of the nineties. After the 1996 event, they ket siing with the oosition, but they no longer have a violent antigovernment attitue: they no longer isturb meetings or harass suorters, something that ha become ractice uner the leaershi of Kaku. Nevertheless, through their loss of ower, cooeration uner ifferent terms an itions was accetable again for oliticians an coul be restore. After that, sequent erios of tinue cooeration between the ec Boys an a olitician are observe in Arua. An examle: uring the 2001 national elections M Naser kuti got electe as the reresentative of Arua municiality. As he is a strong ro-government avocate, he i not get the ec Boys active suort. They were however not boycotting him either, as he ha always been cooerating with the ec Boys. He was negotiating with the olice whenever the ec Boys were arreste (an he ene u bailing out ec Boys; an was lobbying the local government, revenue authorities an national authorities if the revenue authorities were becoming too harsh on the ec Boys. In this sense, a gentlemen s agreement existe between both sies. During the 2006 elections, the ec Boys rovie 29 A fact firme even by local government security oeratives. 26

27 strong suort for vigorous oosition olitician Akbar Goi 30. The ec Boys even rovie Goi with fuel an money, an acte as his camaigning agents. nce electe, he has been looking for other emloyment oortunities for the ec Boys an has been efening their case at the revenue authorities, making sure they are able to tinue their activities. But there are still instances of mutual unishment following efection of one of the layers. For examle in 2001, trary to the agreements, two ec Boys selling fuel in town were arreste, their fuel fiscate an their jerry cans taken by the mobile olice. This event was a violation of the tract on two levels: Firstly, fuel is not suose to be taken within town; an sely, the boys were strongly mistreate (allegely torture in orer to extract a bribe. The other ec Boys rovoke a massive rotest in town, in which the mobile olice officers were almost lynche, an the ec Boys starte taking revenge on all symbols of governmental ower: local council offices, osters of resient Museveni an so on. As a result, the government fought back, bringing in the army an arresting several ec members. Severe fighting broke out in Arua town in which 15 eole were severely injure, among which several ec Boys. Immeiately after fighting broke out, national an local oliticians were looking for ways to solve the tensions. Through their efforts, assistance came irectly from the highest national level: when amitte to the hosital, the injure ec Boys were visite by the resient, who was camaigning in the area; an were even given financial comensation by him for their injuries 31. This visit can be seen as an effort to cool own the 30 Again, Naser kuti, who was staning another time, faile to win their active suort because he was still siere too ro-government. He was however not boycotte either, so the cooeration laste. 31 Information ineenently given by several first-han witnesses (Interview ata

28 situation an recognition of the olitical an social ower of the ec Boys. Moreover, the visit symbolize the renewe cooeration between both sies. These examles are tyical for the interactions between the ec Boys an a olitician: on several occasions, the terms an itions of their agreement were breache through fiscating fuel within town, or by using isroortional force on the ec Boys where after the ec Boys retaliate by attacking the revenue authorities an rovoking chaos in town. After meiation by the olitician things went back to normal an they tinue to cooerate. In other cases, the ec Boys violate the tract by not offering olitical suort when they were execte to an there is retaliation by the olitician for that Contract enforcement in the fuel smuggle business: the reeate lay mechanism From the sequence of events in the above narrative, it is inferre that the ec Boys an the olitician reeately lay the risoners Dilemma game efine before. In this game, the ec Boys efect by ening all olitical suort an causing turmoil an the olitician unishes by allowing fiscation of fuel an arrests of the ec Boys. The layers aear to unish each other for efection but they forgive an return to cooeration. They have essentially aote a trigger strategy to inflict sticking to the agreement. We first look more closely at the fiscation of fuel within town incient followe by rotests by the ec Boys (table 4 resents the resective ayoffs in the ifferent rouns. Before the incient (1 t, both the olitician an the ec Boys enjoy the benefits of their mutual cooeration. The ec Boys uct their rofitable fuel trae an the olitician gets community areciation instigate by the ec Boys. There is also eace an orer in the community. But, when fuel is fiscate in town, the olitician has not hel the mobile olice to resect the rules of the game an the tract is breache (t+1. Being unable to sell fuel within 28

29 town is a serious reuction of the aggregate ayoff for the grou of ec Boys. The net rofit of the fuel trae is reuce to q but they still face the cost Soc as they invest in ( society, avoi turmoil an boost the oularity of the olitician. So, their ayoff is now s ( q Soc. This instance of efection of the olitician however triggers the ec Boys an the olitician to lay a roun of mutual unishment. The ec Boys start violent rotests an oenly isagree with the olitician. In this unishment hase (t+2, the ec Boys only get reuce rofits ( q but they o not face the cost Soc. In the unishment hase, the olitician gains by recovering taxes on the fuel T ( q but faces the huge cost of loosing their suort, social isaroval an riots, namely NoSu. After the unishment hase the layers go back to cooeration an restore their agreement (t+3: There is no more fiscation of fuel within town an orer is restore. When the resient visits an ec Boy who ene u in hosital because of the riots, this can be interrete as an affirmation of the imortance of a return to cooeration an suggests that the suort by the ec Boys Su is highly value. Table 4: The fiscation of fuel within town incient: Sequence of cooeration an unishment hases an associate ayoffs T ( S, S ( u, u 1 t (cooerate, cooerate c ( u ( q Soc ; u T ( 0 Su t+1 (cooerate, efect ( u ( q Soc ; u T ( q Su t+2 (efect, efect ( u ( q 0 ; u T ( q NoSu t+3,.t+n (cooerate, cooerate c ( u ( q Soc ; u T ( 0 Su 29