Deadly Gift? The Effect of Foreign Aid on Terrorism

After the attacks of 9/11, many US policymakers encouraged the use of foreign aid as an instrument to decrease terrorism. However, this argument is based on at least two assumptions that are the subject of considerable debate in the scholarly literature. The first is that terrorism is directly caused by problematic social or political conditions, such as poverty, lack of education, or oppressive governments. The second is that foreign aid is effective at alleviating any of those conditions including terrorism directly. We contend that foreign aid is unlikely to have a pacifying effect on terrorism and instead it might actually offer an incentive for the continuation or increase of terrorist activity. Because terrorist groups perceive aid as a threatening form of Western influence that can erode popular support for their activities, terrorist groups have an incentive to continue or increase their behavior in response to foreign aid flows. Seeking to both prevent future aid and maintain favorable public opinion, terrorist groups respond with sustained or increased terrorism. Preliminary results support these theoretical expectations