Feeding the Tigers: Remittances and Conflict in Sri Lanka

This paper estimates and quantifies the impact of the diaspora remittance flows on the conflict intensity and outcomes in the Sri Lankan Civil War during the period 1996-2009. We develop an approach to infer which remittance inflows were likely to benefit the Tamil Tiger rebels relative to the central government based on Facebook connections data at the subnational level. Using shocks to source country remittance outflows, we show that exogenous increases in remittances accessible to the Tamil Tigers significantly increased their fighting strength. We then set up a quantitative model of two-sided armed conflict over many contested geographic locations, augmented with remittance flows that affect the fighting strengths of the two sides. We structurally estimate the key parameters using remittance and conflict data, and calibrate the model to the Sri Lankan subdistricts over the period of the conflict. Our main quantitative finding is that remittances had a significant impact on the timing of the central government victory, and were a substantially more important component of the military strength of the Tamil Tigers than of the government. Remittances that favored the Tamil Tiger rebels may have prolonged the war by as much as 14 years.