Moral Hazard or State Capacity? U.S. Military Assistance and Political Violence in Pakistan

Abstract

Does U.S. military assistance affect domestic patterns of political violence? Military aid can improve the recipient country’s military capacity, but also create an incentive for prolonging conflict to secure future assistance. This moral hazard can manifest by geographically displacing conflict away from military strongholds while demonstrating an aggregate country-wide decrease in levels of violence. I analyze U.S. military assistance to Pakistan and find that aid can decrease the aggregate level of political violence in the short run. However, this short-run decrease is accompanied by a displacement of violence away from military headquarters. The discontinuity created by the sudden withdrawal of U.S. military assistance after Pakistan’s nuclear program, followed by its resumption post-9/11, lends causal purchase to my results, as does the historical location of military headquarters that were established by colonizers and have persisted in post-independence Pakistan.