Paying Them to Hate US: The Effect of U.S. Military Aid on Anti-American Terrorism, 1968-2018

Abstract

How does anti-American terrorism in recipient countries respond to U.S. military aid? Does aid protect U.S. interests abroad or does it have unintended consequences for U.S. security? To answer these questions, we estimate the effect of U.S. military aid on anti-American terrorism in recipient countries for a sample of 174 countries between 1968 and 2018. We find that higher levels of aid especially for military financing and education are associated with a higher likelihood of anti-American terrorism in aid-receiving countries. Examining potential transmission channels, we show that more U.S. military aid correlates with lower military capacity and increases in corruption and exclusionary policies in recipient countries. Our findings are consistent with the argument that military aid aggravates local grievances, creating anti-American resentment and leading to anti-American terrorism. Indeed, we also provide tentative evidence that U.S. military aid is associated with lower public opinion about the United States in recipient countries.

Keywords: U.S. Military Aid; Anti-American Terrorism; Transnational Terrorism; Instrumental Variable Estimation

JEL Classification: D74, F35