Foreign Aid Designed to Diminish Terrorist Atrocities can Increase Them

A domestic power faces an enemy and commits terrorist atrocities to increase the likelihood of victory. A foreign patron can grant aid to the power but prefers fewer or no atrocities. The domestic power responds by acquiescing in the creation of uncontrollable paramilitaries that commit even more atrocities. Once the paramilitaries are set up, aid flows and the atrocity level is high. Now suppose the foreign patron is uncertain whether the domestic power can control the paramilitaries. At a pooling equilibrium the domestic power will commit more atrocities than it would commit in isolation to demonstrate to the foreign patron that the paramilitaries are beyond the domestic power’s control. Case studies of Colombia, Northern Ireland, and Middle East illustrate the models. JEL Numbers: D74, D82, N4