“such simple analysis can be worse than ineffective, it can actually be counter-productive…”

During my senior year at Penn State, I attended a seminar on Terrorism (PL SC 439), which promised to analyze “political terrorism as a violent alternative for peaceful change and traditional warfare in the nuclear age.” Rooted in a rational framework, the course material drew from philosophers (Primoratz, Rodin) and political scientists (Pape, Byman) alike. Over the course of the semester, the group debated definitions for terrorism, explored individual and organizational motivations, and examined state sponsorship as a foreign policy tool. Ultimately, the course challenged many prevailing assumptions regarding terrorism. My own analysis, shared below and presented to a group of my peers, suggests that these seemingly innocuous assumptions, when guiding foreign policy, can be counter-productive to US interests.

Perverse Incentives

December 13, 2011

A decade after the 2001 terrorist attacks, policy makers in the United State continue to grapple with the issue of effective counter-terrorism measures. As part of this struggle, the US government has provided billions in military and economic aid to foreign governments deemed allies in this War on Terror. With American soldiers still deployed abroad and with politicians and taxpayers clamoring for reduced federal spending, such aid has come under increased scrutiny, most recently during a GOP presidential primary debate on national security. When pressed on US-Pakistan relations, Gov. Rick Perry responded that “to write a check to countries that are clearly not representing American interest is nonsensical.” While it is tempting to dismiss this statement as political pandering preceding a heavily contested election, the Governor’s words reveal a common and faulty assumption that drives much American foreign policy: that foreign aid forges a charitable relationship with other states.

Upon closer examination, such simple analysis can be worse than ineffective, it can actually be counter-productive, generating second- and third-order unintended consequences that undermine US interests abroad. In the context of the War on Terror, aid specifically designated for combating terrorist organizations within their borders may not provide sufficient incentive for host states to actively pursue US interests. To the contrary, if counter-terror aid is linked to the presence of terrorist organizations, then this creates the potential for perverse incentives, rewarding host states for pursuing goals contrary to the target state’s interests. Additionally, such a scenario implies that, once the imminent threat to the target state has dissipated, the aid to the host state will dry up, depriving the host state of those previously unavailable funds…

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The Perverse Incentives visual addendum can be viewed as