Terrorism is one of the most virulent threats in the 21st century. By aiming to spread panic and fear, it not only threatens the freedom of the individual, but also the freedom of whole societies. For this reason, the selection of adequate means to combat it has a high importance in international politics. In particular, development aid is considered a forceful instrument. While the current academic literature predominantly aims to answer the question of whether development aid is a suitable anti-terrorist instrument, this book examines the question of whether terrorist events affect the allocation of aid assistance. For this purpose, the first part of the book deals with the relevance of the topic, separates individual forms of terrorism from each other and provides an overview of the existing literature. The second part explains the underlying data, the empirical model and presents the results, while the third part discusses the results obtained and presents limitations. The fourth part closes with a conclusion and gives policy recommendations.

Text sample: Chapter 2 The Aid-Terrorism Nexus: While the current academic literature discusses aid and terror through several approaches, the effects of terrorism on development aid have not been studied extensively. Since September 11, 2001, the available literature predominantly aims to answer the question of whether aid is a suitable anti-terrorist instrument rather than whether terror incidents affect aid assistance. The existing literature on development aid as a counterterrorism instrument does not represent consensus thus far as to whether assistance reduces the appearance of terrorism. Particularly questionable is whether the basic wisdom, that terrorism arises in countries where poverty and a lack of education prevail, is true, as intellectuals and donor countries claim. Former U.S. president George W. Bush declared in 2002 on the International Conference on Financing for Development in Mexico, that the United States of America are fight[ing] against poverty because hope is an answer to terror” (Bush 2002, paragraph 3). This argumentation seems to be widely accepted, as confirmed by further statements by many world leaders (Young and Findley 2011). However, the scholarly community is skeptical on the issue of directly connecting poverty and education to terrorism. In their study, Krueger and Meleckova (2003) refute the direct linkage between a reduction in poverty and a decrease in terrorism on a cross-country level. According to their studies, even an increase in education has no conspicuous effect on the occurrence of terrorism. Additionally, current evidences reveal that terrorist leaders favor recruiting more highly educated individuals, especially when it comes to expanding cells within the country or abroad. In a more recent study that distinguishes between primary and university education, Brockhoff et al. (2014) find that higher rates of primary education in states with low human or economic rights actually lead to an increase in terrorism, while higher rates of university education in states with better conditions reduce terrorism. Nevertheless, Young and Findley (2011) find evidence that foreign aid reduces terrorism, especially, if it is targeted at education, civil society, health, and governance. Even if terrorism mostly comes from predominantly poor and undereducated countries, whether development aid is a suitable instrument to combat the eventual original determinants of terrorism should be clarified. Annual Official Development Assistance (ODA) payments have slightly more than quadrupled from 1960 to 2017 to a total of 7.8 trillion U.S. dollars, which shows that the donor countries promise interest by providing foreign payments (Bandyopadhyay and Vermann 2013). The reasons behind development aid are important to understand this increase. Providing aid as a foreign policy instrument is intuitive for developed countries. Giving development aid can be seen as an altruistic redistribution of resources from developed nations to developing countries to fight poverty and promote economic growth, good governance and social development” (Lis 2018: 283). Also, in order to prevent possible military interventions and to assert one’s own interest, the use of financial contributions can be implemented faster and at lower costs (Young and Findley 2014). Bandyopadhyay and Vermann (2013) show that the donors’ motives have changed over the years from development to strategic considerations. Lis (2013) provides evidence that donors tend to look at the size of fuel exports from oil-exporting recipient countries rather than the quality of civil rights or terrorism. Therefore, the question arises as to whether aid can be an effective remedy against terrorism. In this connection, Dube and Naidu (2010) find that aid can raise the instability in a recipient country by rebel capture, while Nunn and Qian (2014) conclude that food aid prolongs ongoing civil conflicts. Boutton (2014) points out that if states are engaged in an ongoing interstate rivalry and receiving U.S. aid tied to decreasing terrorism at the same time, they rather use the aid assistance to hedge against future threats by the state rival. In this case, aid as a counterterrorism instrument has nearly no effect on terror. On the other hand, Savun and Tirone (2017) emphasize the importance of shifting the focus from the mere improvement of economic conditions, adding earmarked aid for civil society and good governance. The authors show that supporting states by enhancing domestic state and political conditions reduces domestic terrorism. As a result, individuals experience civil rights and liberties, which in turn lowers their acceptance of or support for terrorist organizations. Bandyopadhyay et al. (2014) find that bilateral aid mitigates the negative effects of transnational terrorism on FDI. Multilateral aid, however, improves the negative effects of domestic terrorism on FDI. The work of Lee (2017) also supports the findings concerning the effect of foreign aid on terrorism. In the case examined by the author, U.S. aid mitigates the adverse effect of terrorism on FDI. Beyond that, Lis (2018) examines the effects of armed conflict as well as domestic and international terrorism on foreign aid. For aggregated aid, he points out that domestic and international terrorism increases aid, even though this effect is most likely driven by the United States of America. After disaggregating aid flows into the assistance sectors of government, education, social assistance, and health, the positive association for bilateral aid remains. However, these findings imply that the channels that lead to terrorism are complex and country-specific. Consequently, opposing terrorism on a national level is also complex. Only a few papers have covered the topic of whether terror incidents affect aid assistance: Boutton and Carter (2013), Lis (2018) and Dreher and Fuchs (2011). Boutton and Carter (2013) examine the influence of various types of terrorism on the aid allocation of the United States. They find that devoting U.S. economic and military aid to relief is particularly dependent on the U.S. security being directly threatened by countries with terrorist activities and not on whether allies are exposed to terrorist threats. The impact of domestic and international terrorism as well as armed conflict on bilateral and multilateral ODA commitments is examined by Lis (2018). He finds that international and domestic terrorism is positively associated with bilateral disaggregated aid flows. Armed conflict, on the other hand, reduces development aid amounts of all types. Dreher and Fuchs (2011) propose an approach similar to the one used in this work: based on a dyadic panel data regression of 22 donor countries, they show that terrorism-prone developing countries receive more foreign aid during the War on Terror period (2002 to 2008). Moreover, they did not find that perpetrators’ host countries are more likely to receive aid. In order to investigate whether domestic terrorism has an impact on the donations of the donor countries, I orient myself by the paper of Dreher and Fuchs (2011). Nonetheless, my study differs in a number of important aspects, discussed in the following chapter.

• Terrorism

• Development Aid

• Development Assistance Committee

• Political Economics

• Dyadic Data Set

• Donor countries

• Recipient countries

• Counterterrorism efforts

Fabian Rindfleisch was born in 1992 in Bensheim. He successfully completed his studies in economics with a focus on political economy at the Ruprecht-Karls-University Heidelberg in 2019 with the academic degree of Bachelor of Science. During his studies he gained practical experience in political organizations and associations from which he derived his interest for the topic of this book.