Economic Sanctions and the Escalation of Terrorism

Abstract A common belief is that sanctions will deprive targets of the resources they need to engage in offensive behaviors. This suggests that sanctions on active and passive supporters of terrorism should reduce violence. This study examines the argument that sanctions can weaken state support for terrorism and reduce terrorist violence. We argue that while sanctions may deprive active or passive supporters of resources, these market imperfections may create commitment problems by weakening these states’ ability to maintain the balance of power with their rivals. As a result, state supporters and their terrorists may escalate violence to solidify gains against their rivals. We test this hypothesis quantitatively using the Threat and Imposition of Economic Sanctions and the Global Terrorism datasets, and qualitatively using an examination of Pakistani support for the Haqqani Network.