Can economic development aid to the FATA region be effectively used to undermine terrorism?

Presented by Rachel Lund Sonja Settele Joonas Uotinen Cristina Yoong

No, USAID should stop giving economic USAID development aid to FATA and Pakistan to fight terrorism.
Economic development policy is a weak and potentially counterproductive channel for undermining terrorism, both in FATA and in general.

Key points of our argument
Links between low levels of development and terrorism are weak. Aid money is unlikely to deliver growth. Aid money may fuel terrorist activity and regional violence. Aid money is unlikely to help the immediate military campaign by changing 'hearts and minds'.

Context

Context
US has pledged $750 million to FATA and $7.5 billion to the Pakistani government in development aid (in addition to $10 billion in military aid).
t n nt e B et Y 2010 B on o $ n %
 

e cent e o G 2010
0 30%

$1 4 7%

Pakistan
 

Rest o USAID
$17 5 93%

0 0 8%

Pakistan

Nigeria

Source: CIA Factbook, USAID

Structure
. Economic development and terrorism . Aid and economic development . The dark side of aid . Aid winning hearts and minds

Economic development and Terrorism

I fully believe that the root cause of terrorism does come from situations where there is poverty, where there is ignorance, where people see no hope in their lives - Colin Powell, U.S. Department of State 2002 -

Argument: Poor people are more likely to become terrorists as they are more likely to gain
eports of Taliban providing higher wages and attracting recruits. Message of a better life with the Taliban.

"Their message is there is a lot of injustice and we will give you land, we will look after you." -BBC interviewing a retired senior official from North West Pakistan-

Reply: Terrorists don't generally come from poor countries or poor backgrounds (evidence) 
The only relevant cross-country study done so far doesnvt find a role for poverty to explain countries of origin of terrorists.  Micro-evidence is even clearer: Poverty Rate for Palestinian Suicide ombers and Palestinian Population of Comparable Age

Source: Krueger and Malecková, Education, Poverty and Terrorism: Is there a causal connection? , 2003

Reply: Terrorists don't generally come from poor countries or poor backgrounds (evidence)
Especially the leading forces come from wealthy backgrounds.

Osama Bin Laden

Ayman al Zawahiri (Al-Qaeda s deputy)

Argument: The poor are more ignorant and thus more likely to be convinced by terrorist propaganda

Reply: Terrorists are better educated
Educational Distribution for Palestinian Suicide ombers and Palestinian Population of Comparable Age

Source: Krueger and Malecková, Education, Poverty and Terrorism: Is there a causal connection? , 2003

Reply: People who support terrorism are generally better educated

Source: PSPCR opinion poll from West Bank and Gaza Strip, December 2001

Argument: Panel data tells us that as countries get richer they export fewer terrorists

Pinar Derin-Güre, Does Terrorism have economic roots? (unpublished paper), 2009

Reply: There would have to be a large increase in DP to make a noticeable impact on terrorism
Results are likely to be upward biased due to reverse causality between terrorism and GDP. The most favorable regression results imply billions per year, in order to spendings of US decrease annual international terrorist attacks from Pakistan by 1.

Argument: Underdevelopment causes the dissatisfaction that leads to terrorism
Narratives of the rise of Islamic terrorism point to inequality and poverty as the root of attraction to radical ideologies.
DP/capita Relative to US, -

Middle East

Reply: It is difficult to align this story with the facts
A erage annual growth in G P per capita
6. . . . . . . .

USA pt

1971-1980

1981-1990

1991-2000

2001-2010

Source: World Bank World Development Indicators, International Financial Statistics of the IMF

Structure
. Economic development and terrorism . Aid and economic development . The dark side of aid . Aid winning hearts and minds

Can aid produce growth in FATA?
UNLIKELY:
Both the history of aid and the particular conditions of the FATA region make it UNLIKELY that aid can create growth.

History of aid literature
Economic research on aid and growth: Still no clear results after 40 years.
³Aid is probably not a fundamentally decisive factor for development, not as important as, say, domestic savings, inequality, or governance.´

-Roodman (2007)-

Conditions in FATA against aid delivery
33% under total control of terrorists, 40% heavily influenced by them. Projects Taliban do not like can not be done. Taliban has stepped up violence against aid workers and demands them to leave the whole of Pakistan. Chief of party assassinated. Over 500 schools in the region destroyed. Difficulties of aid policies apparent from recent audits.

Can aid produce growth in FATA?
Economic research suggests that the aid has at best a weak impact on growth. Conditions of FATA make aid deliveries difficult if not impossible. Development aid is unlikely to have an impact on growth in FATA

Structure
. Economic development and terrorism . Aid and economic development . The dark side of aid . Aid winning hearts and minds

Aid may be contributing to terrorism

Aid provides incentives for perpetuation of the problem Taliban requires security fees for letting aid deliveries pass

Aid may fuel tribal conflict

Aid to undermine terrorism?
Feeble link between aid and growth + aid might be counter-productive

Development aid is a poor tool for fighting terror

Structure
. Economic development and terrorism . Aid and economic development . The dark side of aid . Aid winning hearts and minds

Aid is unlikely to help the military effort through winning hearts and minds
y USA may be able to produce short term effects flood response shows that opinions deteriorate quickly. y Security is key to getting the population to work with you (e.g. Malaya). USA cannot provide this in much of FATA.

Aid is unlikely to help the military effort through winning hearts and minds
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Source: Survey by the New America Foundation on FATA - 2010

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y Bombing citizens and expecting people to like you if them material goods is ridiculous (lesson from Vietnam War).

Opini n F r id n n h S ili r dr n ri
Strongl y s upport

Some hat s upport

Aid is unlikely to help the military effort through winning hearts and minds
Op n n A A dW s d nts n th n 
      

y American aid is often seen as a way of conquering Islam. People view USA as biggest threat to security.

To weaken and di vi de the Is l ami c worl d

To ens ure Ameri can domi nati on

To defeat Al Qaeda and i ts al l i es

To defeat terrori s ts i n the worl d 

Source: Survey by the New America Foundation on FATA - 2010

o n't know

Conclusion
Weak links between underdevelopment and poverty Little evidence that aid will create development in FATA and may fuel terrorism.

USAID should stop allocating aid to FATA and Pakistan in order to fight terrorism.