Counterterrorism and Economic Policy

Lloyd J. Dumas

I.

INTRODUCTION: DEFINING TERRORISM ........................................... 83

II. TERRORISM AND CRIME .................................................................... 85 III. ADDRESSING THE UNDERLYING CAUSES: THE CONNECTION BETWEEN TERRORISM AND ECONOMIC DEVELOPMENT ................... 87 IV. AID VS. TRADE AS MEANS FOR ENCOURAGING DEVELOPMENT .. 89 A. Aid ............................................................................................... 90 1. The Importance of Context ..................................................... 90 2. The Value of Collaboration ..................................................... 91 3. Minimizing Resource Diversion ............................................. 92 B. Trade ........................................................................................... 93 V. ESTABLISHING BALANCED, MUTUALLY BENEFICIAL TRADE RELATIONSHIPS ................................................................................ 94 A. Micro-Lending............................................................................. 94 B. Reducing Trade Barriers............................................................ 95 VI. CONCLUSION..................................................................................... 96 I. INTRODUCTION: DEFINING TERRORISM

In political speech, the word terrorist is often used to refer to someone who uses violence to further a cause with which the speaker disagrees, while freedom fighter is used to refer to someone who uses violence to further a cause that the speaker considers more worthy. This may be effective political rhetoric, but it will not help in understanding the phenomenon of terrorism or, more importantly, developing policies to effectively counter it. For that, we need a more precise and less subjective definition. There are many definitions of terrorism extant. 1 The U.S. State Department, while admitting that [n]o one definition of terrorism has gained universal acceptance, 2 relies on the definition written into U.S. statutory

University of Texas at Dallas. (Prepared for the Transnational Law and Contemporary Problems symposium, Ten Years after 9/11: Rethinking Counter-Terrorism, University of Iowa, Feb. 1011, 2011). See, e.g., MARC MILLER & JASON FILE, TERRORISM FACTBOOK (2001). U.S. DEPT OF STATE, PATTERNS OF GLOBAL TERRORISM, 2001 xvi (2002), available at http://www.state.gov/documents/organization/10286.pdf.

1 2

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law: The term terrorism means premeditated, politically-motivated violence perpetrated against noncombatant targets by sub-national groups or clandestine agents, usually intended to influence an audience. 3 The State Department has expanded the category of noncombatant to include not only innocent civilians, but also, military personnel who . . . are unarmed and/or not on duty. 4 Furthermore, the State Department has incorporated, attacks on military installations or on armed military personnel when a state of military hostilities does not exist at the site into the category of terrorist acts. 5 Terrorism is a tactic, not an end in itself. But while the State Department and many others specify that the objective terrorists are trying to achieve must be political, this Article holds that it is unhelpful and inappropriate to exclude ideological, social, or religious objectives. Furthermore, since it is the nature of the act committed that makes it terrorismnot the type of group that is committing itno definition of terrorism should exclude the activities of governments or their agencies. Governments can also behave as terrorists. 6 To take just one of all too many historical examples, the Gestapo of Nazi Germany was most certainly a terrorist organization. Finally, the nature of the victims targeted is also important. To clearly differentiate acts of terrorism from other forms of violence, it is important to specify that the victims must be innocent bystanders in the sense that they are neither directly involved in the activity the terrorists oppose, nor have the power to meet terrorist demands. Therefore, this Article defines terrorism as violence or the threat of violence carried out against innocent bystanders with the express purpose of creating fear and alarm, in order to accomplish some overriding objective. Not every form of violence worthy of condemnation is terrorism. A member of an armed gang shooting bank guards in order to steal money is committing a violent crime, not an act of terrorism. The violence is committed to stop the guards from interfering with the theft, not to frighten the wider population. Bombing the barracks of an opposing military force is a violent and murderous act of war, but it is not an act of terrorism. It attacks those who are directly involved in the activity the attackers are trying to oppose, not randomly chosen innocent victims. The act of a habitual sex offender in kidnapping, raping, and murdering a more or less randomly chosen innocent victim is a vicious and brutal crime, but it is also not terrorism. Though it may well cause the public to

Id. (noting that this definition of terrorism appears in Title 22 of the United States Code, Section 2656f(d)). The language of this statute has changed since the publication of this document. Id. at xvi n.1. Id.

4 5 6

In fact, the term terrorism was apparently first applied to the behavior of a governmentthe infamous Maximilien Robespierres Jacobin government of France, during the Reign of Terror between the summers of 1793 and 1794 following the French Revolution.

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be afraid, it is not done for that purpose and it is not done in order to achieve an overriding objective. On the other hand, suicide bombing a city marketplace in order to precipitate a change in government policy is an act of terrorism, no matter what kind of group commits that act. The more or less randomly chosen victims cannot directly change government behavior, but the indiscriminate slaughter is intended to shock and frighten people into demanding that the government change direction by convincing them that they will be in danger until those policies change. Whether or not the bombing achieves that objective, it is still an act of terrorism. II. TERRORISM AND CRIME All acts of terrorism committed by non-governmental groups are crimes. They involve such acts as the destruction of property, assault and murder, or conspiracies and coercive threats to commit these crimes. Many terrorist groups also engage in other crimes, such as kidnapping, bank robbery, and money laundering, to help support themselves financially. Governmental terrorism, which may involve such acts as prolonged arbitrary detention and torture, may or may not be criminal within the nation in which they are committed, but they are criminal violations of human rights within the arena of international law. Psychologist Anthony Marsella contends that complex psychological, situational and social determinants drive terrorist acts in ways similar to other forms of criminal behavior.7 Nevertheless, there are important differences between terrorism and other types of crime. Terrorists are not just ordinary criminals. There is some sort of underlying political, social, religious, or ideological objective that drives terrorist behavior, an objective that goes beyond the kind of pure financial gain or personal psychological motives that drive most crime. Perhaps the most obvious case is suicide bombers. 8 Marsella argues that the deeper roots of terrorism are located within complex historical and cultural contexts that are often centuries old.9 And, even though the tactic of terrorism is always despicable and indefensible, the objective that any particular terrorist group is trying to achieve may or may not be. Groups have used acts of terrorism in support of goals ranging from starting a race war, to establishing an independent homeland for a long disenfranchised people, to feeding the hungry.10 In any case, the goals of the group, distinct from the means that
Anthony J. Marsella, Reflections on International Terrorism: Issues, Concepts and Directions, in UNDERSTANDING TERRORISM: PSYCHOSOCIAL ROOTS, CONSEQUENCES AND INTERVENTIONS 11, 11 (F. Maghaddam & A. J. Marsella eds., 2004).
7 8

For an unusually penetrating analysis of suicide bombing, see MIA BLOOM, DYING TO KILL: THE ALLURE OF SUICIDE TERROR (2005). Marsella, supra note 7.

For example, the alleged objective of the terrorist acts the so-called Manson Family committed in southern California in the late 1960s was Charles Mansons desire to start a race
10

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group employs, may have more or less support among the general public. The motives behind criminal behavior, on the other hand, rarely have public support. In general, criminals prefer to avoid being connected to the crimes they have committed. Most would be just as happy if no one even knew that the crime had taken place. But terrorists usually try to draw attention to their horrendous acts, often claiming credit for them. In many ways, terrorism is a perverse form of theater in which terrorists play to an audience whose actions and perhaps, opinionsthey are trying to influence. When they hijack an aircraft, they may be playing to an audience of corporate managers who can assemble a ransom, government officials who can order their imprisoned comrades released, or whoever else has the power to meet their demands. But they are also playing to the public, whose mere presence, opinions, and actions can put pressure on those in power to do what the terrorists want done. 11 The similarities between terrorism and ordinary crime imply that the way society reacts to them (and to those who commit them) should, in the short run, be similar. But in the long run, where underlying causes are very important, these differences imply that governments and societies must deal with terrorism and crime very differently. 12 In the short run, police forces play an extremely important role in counter-terrorism through a combination of intelligence, investigation, and action. They have been much more critical to disrupting terrorist activity than has the military. Ordinary police methods put far more terrorists out of action than military force. The reality is that while quick, narrowly-targeted military strikes against isolated terrorist training camps may have some value, the heavy hand of broad, long-term military campaignsespecially in areas heavily populated by innocent civiliansis at least as likely to create new generations of terrorists as to destroy those currently active. In the long run, effectively countering terrorism requires addressing its underlying causes, something that neither the police nor the military have the training or capacity to do. Those causes are societal and psychological, and must be addressed in a fundamentally different way.
war in the United States. From the early 1970s until it formally renounced such acts in the late 1980s, the Palestinian Liberation Organization committed numerous acts of terrorism (including aircraft hijackings) in the service of trying to establish a Palestinian homeland. The Symbionese Liberation Army committed terrorist acts in California from 19731975. The most famous of their stated objectives was to force the provision of free food to the poor.
11

Those who terrorists actually take hostage cannot meet the terrorists demands, any more than can those maimed when a school is bombed or killed by a murderous spray of gunfire in a hotel lobby. Nor are they in any position to apply pressure to the people who have that power. They just happened to be in the wrong place at the wrong time. Innocent victims, they have become unwitting players caught up in a real-life drama, the cannon fodder of terrorism.

12 In the short run, the imminent nature of the destructive acts involved, whether criminal or terrorist, give top priority to interdiction. But in the long run, where there is time for policies aimed at prevention to operate, it is most important that those policies be designed to effectively address the conditions that actually give rise to the socially undesirable behavior in question.

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III. ADDRESSING THE UNDERLYING CAUSES: THE CONNECTION BETWEEN TERRORISM AND ECONOMIC DEVELOPMENT All but the most isolated terrorists are, to some degree, dependent on building support among a broader public, at least for their cause, if not for their tactics. Most sub-national terrorists do not have the benefit of a wealthy patron or the active support of a state, but even those that do must be able to recruit operatives. They also must coordinate activities, move people and supplies where they need them to be, and find secure places to hide operatives and necessary materiel. The terrorists must also have access to locations and facilities where they can do whatever training or preparation is necessary without getting caught, or even detected, by those who are trying to stop them. All this is much easier to do successfully if there is a base of support among a somewhat wider public. Of course, if they can find them, it might not be that difficult for any terrorist group to recruit deranged loners as operatives. But such people are unreliable and uncontrollable, and therefore threaten the viability of the group. If the group wants to recruit operatives with better capacities to support them, it must have a cause that can convince these more capable and talented people to engage in, and actively or tacitly support, terrible acts of violence that they would ordinarily find repulsive. To accomplish operations of any complexity or sophistication the group must have access to sufficient financial means and people of some skill. Therefore, they need a powerful rallying cry to recruit people who are neither desperate nor deranged and motivate them to take extreme, perhaps terminal, risks. Unfortunately, there seem to be a number of causes and circumstances that are sufficient for these purposes. Most, if not all of them, involve calls to the service of some group or force greater than the immediate self-interest of the individuals the group has recruited or solicited for support. It is, at base, an appeal to heroism, as perverted as that may seem. If the group makes the individuals involved feel that by engaging in terrorism they become the avengers of some great wrongthe voice of the voiceless, soldiers for the weak and oppressedthe individuals may feel ready and eager to perpetrate acts of violence against innocent people. It is true that individuals who consider themselves (or their close friends and families) victims of economic and political marginalization and oppression are the easiest to recruit to fight back against those who they are convinced are their victimizerseither by directly engaging in terrorism or by supporting it. But there is little doubt that those who are not particularly oppressed or disadvantaged economically or politically can feel part of a group that is somehow under siege and so behave in a similar way. For example, it seems that those who were integral to acts of terrorism committed by the Irish Republican Army were not necessarily the most disadvantaged of the Catholics in Northern Ireland, and the bulk of their financial supporters in the United States were nowhere near destitute.

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Regardless, they all viewed themselves as fighters against the forces responsible for the economic and political marginalization of their people. Similarly, the perpetrators of the attacks against the United States on September 11, 2001, were far from the most disadvantaged of people. Most of them were middle class and reasonably well-educated. 13 It is likely that they saw themselves as striking a blow for their oppressed people, whom they most likely thought of as their Muslim brothers forced to bear the insult of having the soldiers of foreign infidels (American military forces) in their holiest of lands (Saudi Arabia) by a Saudi government they believed was operating in service to, or at least receiving support from, those same infidels. They may also have seen themselves as striking a blow against America, which they viewed as a supporter of Israel, on behalf of their fellow Muslims in Palestine who are indisputably in dire straits. It is important to understand that none of this should be taken as a justification of terrorism in general or any specific terrorist act. No matter who commits terrorist acts, no matter what their cause, there is no justification for terrorism. But effectively countering terrorism requires understanding of why those who engage in it do what they do, what they might be feeling, and how they might be looking at the situation. Economic development is a key element of effective counter-terrorism. People who find themselves or their people living in desperate economic straits and confronting a future that promises only more of the same are more likely to reach for extreme solutions because they have that much less to lose. They are easier for demagogues and extremists to manipulate. 14 People in a better economic condition, with a broader range of real opportunities for improving their economic well-being, are less likely to take action which may jeopardize that future. They not only have a higher level of material well-being, but they also feel that they and their people are in control of their lives and that the future is theirs to win. This does not guarantee that nothing will ever turn them onto a violent path any more than being very wealthy guarantees that a person will turn away from stealing other peoples moneywitness the Enron, WorldCom, and Madoff scandalsbut it certainly helps. Raising the economic prospects of the larger group with which the terrorists and their supporters identify will certainly not solve all conflicts or resolve all grievances. However, it should make it increasingly difficult for the terrorists to recruit operatives, and it should seriously weaken financial and other forms of support among those who feel connected to that same larger group. It is in that sense that economic development can help to dry up the pool of potential terroristsand the wider support base for terrorist

13 14

See, e.g., ROHAN GUNARATNA, INSIDE AL QAEDA: GLOBAL NETWORK OF TERROR 26 (2002).

The rise of Adolf Hitler and the Nazi Party in the midst of the economic chaos in Germany between World Wars I and II is an historically important case in point.

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groupsin the long run. Thus the question is: what kinds of economic policy are most effective at stimulating development? IV. AID VS. TRADE AS MEANS FOR ENCOURAGING DEVELOPMENT Although the terms are often used interchangeably, it is important to distinguish between economic growth and economic development, because they are in fact very different things. Economic growth is merely expansion in the size of an economy, the increase in its total volume of economic activity. It says nothing about the distribution of the gains of expanding economic activity across a population. The object of development is to improve the economic status of the whole population and the range of economic options available to them. A nations economic development therefore depends on much more than how quickly the overall size of its economy is growing. It also depends on what is produced, how it is produced, and most importantly, the extent to which all this activity has succeeded in raising the material standard of living of the broad mass of the population. A rapidly expanding one-commodity economy in which 5 percent of the population owns nearly all the material wealth may be growing fast, but it is not developing. In short, while growth means only that the economy is getting bigger, development means that it is becoming more structurally sound and improving the material conditions of life of the vast majority, if not all, of the population. It is development and not simply economic growth that is a potentially powerful force for countering terrorism. There has been a long-standing debate among those who specialize in studying development as to whether aid or trade is more effective at stimulating substantial, broad-based improvements in material well-being. It is an important question. Those on the aid side of the argument believe that technological backwardness and lack of financial and physical capital are the most important obstacles to development. If more developed countries (MDCs)rich in capital and technological knowledgewould transfer sufficient quantities of these resources to less developed countries (LDCs) in the form of foreign aid, LDCs could make real progress in closing the gap. Those on the trade side of the argument do not doubt that lack of sufficient capital and technological resources in LDCs interferes with their development. They do, however, believe that increasing trade in a growing world economy is the most effective path to providing LDCs with the wherewithal to acquire the needed resources and the incentives to use them efficiently. They do not believe that simply transferring the resources is effective, no matter how well intentioned it might be. In reality, there is some truth to both sides of this argument. With some modifications in the way they are typically implemented, both aid and trade have the potential to be much more effective in stimulating developmentand thus in countering terrorismthan they have been in the past.

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A. Aid It is first important to differentiate between aid as a humanitarian gesture and aid as an adjunct to development. When disaster strikes, whether in the form of earthquake, tsunami, or war, there is no substitute for direct aid to those who are most threatened or damaged. They must live through the crisis before they can do what is necessary to rebuild their lives. However, as critical as it can be, this kind of relatively short-term aid has very little to do with development. Development aid is intended to build the capacity of aid recipients so that they may meet their own needs. In fact, the success of development aid can be measured by how quickly, completely, and permanently it eliminates the need for further development aid. There is considerable evidence that, in general, foreign development aid has not been very successful in the past. 15 While designing and delivering more effective development aid is a complex matter, there are a few key elements of this problem that are particularly critical: 1) paying greater attention to the political, economic, social, historical, and cultural contexts of recipient countries; 2) increasing donorrecipient collaboration; and 3) minimizing resource diversion in aid receiving economies. 1. The Importance of Context Giving assistance that works to stimulate real development requires an understanding of the social, economic, political, religious, and cultural contexts of the aid recipients, and integrating that understanding into the design and implementation of that aid. As I have written elsewhere, We seem to understand well enough that it is fruitless and usually counterproductive for someone who knows nothing about the design and operation of a car to try to repair or modify it to improve how it functions. If you dont really understand how it works, how likely is it that you can . . . make it work better? But we seem not to appreciate the same

15 From the 1970s to the beginning of the 21st Century, empirical studies have shown that there is at best a weak relationship between foreign aid and economic development in less developed countries. See generally Gustav Papankek, The Effect of Aid and Other Resource Transfer on Savings and Growth in LDCs, 82 ECON. J. 934 (1972); Douglas Dacy, Foreign Aid, Government Consumption, Savings and Growth in LDCs, 85 ECON. J. 548 (1975); Kwabena GyimahBrempong, Aid and Economic Growth in LDCs: Evidence from Sub-Saharan Africa, 20 REV. BLACK POL. ECON. 31 (1992); Peter Boone, Politics and the Effectiveness of Foreign Aid, 40 EUR. ECON. REV. 289 (1996); Carol Graham & Michael OHanlon, Making Foreign Aid Work, 76 FOREIGN AFF. 96 (1997); Craig Burnside & David Dollar, Aid, the Incentive Regime and Poverty Reduction, (World Bank Poly Res., Working Paper No. 1937, 1998), available at http://wwwwds.worldbank.org/external/default/WDSContentServer/IW3P/IB/1998/06/01/000009265_398090 1093425/additional/130530322_20041117162108.pdf; Craig Burnside & David Dollar, Aid, Policies and Growth, 90 AM. ECON. REV. 847 (2000); Stephen Everhart & Robert McNab, Rethinking International Aid, 49 BUS. & ECON. REV. 12 (2003); Craig Burnside & David Dollar, Aid, Policies and Growth: Revisiting the Evidence, (World Bank Poly Res., Working Paper No. 3251, 2004), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=610292.

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thing when it comes to human societies, though they are infinitely more complex than an inanimate piece of machinery . . . . All too often we think that if we know what works in one society we know wellour own, for examplewe can directly apply the same approach to another whose history, culture, values, political, and economic system we know little or nothing about. 16 When it comes to development, most assuredly, one size does not fit all. Shaping aid to harmonize with societal context is not just a nice thing to do; it is essential. The social context within which people are embedded shapes attitudes, motivations, and valuesall of which are critical to the success of any development program. 2. The Value of Collaboration There are three main reasons why donor-recipient collaboration is a key element determining the effectiveness of development assistance. First, the issue of societal context makes it critical that people with deep knowledge of the culture, history, and politics of the recipient country be involved in designing any serious development project, and in working out the details of its implementation. In general, it is much more likely that those who live in the recipient country will have greater knowledge of its inner workings. Outsiders, intelligently selected by donors to design and implement the project, have necessary technical expertise and required resources, both of which may be in short supply in the recipient country. Working together with outside experts and recipient country personnel combines the knowledge, experience, and understanding necessary to maximize the likelihood that the project will actually help those it is intended to help. Second, if the goal of development assistance is really to make life materially better for those living in the recipient country, it is wisest for those being helped to voice what they think would be most helpful. They know better than anyone else what they want and needwhat would make them better off in their own eyes. Because different factions in a country will almost certainly have different opinions as to what the nations most pressing needs are, it is a good idea to work out a reasonable inclusive process to decide on project priorities. It is also possible that what those in the recipient country most want may be different from what the donors are willing to help accomplish. It is important to remember that donor priorities and cultural sensitivities also matter. The best way to resolve these problems and work out a solution that everyone can accept is to negotiate within a collaborative donor-recipient project team.

LLOYD J. DUMAS, JANINE WEDEL & GREG CALLMAN, CONFRONTING CORRUPTION, BUILDING ACCOUNTABILITY: LESSONS FROM THE WORLD OF INTERNATIONAL DEVELOPMENT ADVISING 56 (2010).
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Finally, relationships in which decision power is more balanced are stronger because both sides feel greater ownership in the relationship. If donor personnel call all the shots, recipient country participants will have little invested in the project. As a result, recipients will tend to be less willing to do what is necessary to watch for and cope with unexpected problems that inevitably arise. If recipient country personnel also play an important role in designing and implementing the project, they are more likely to see project failures as their own failures and, therefore, do whatever needs to be done to prevent or overcome problems. 3. Minimizing Resource Diversion Both corruption and excessive military spending are responsible for diverting large quantities of economically productive resources that could otherwise be used to stimulate development. They are both difficult problems to solve. Corruption is so entrenched in the fabric of some nations that many of those who exercise public power in these societies do not hesitate to use that power for their own personal benefit. Police and low-level officials often have salaries so low that these individuals have a convenient rationalization for corrupt behavior, even in the absence of extraordinary greed or arrogance. In the case of leaders, raiding the public treasury or accepting large private contributions from those who want favors can come to be viewed as an effective way of maintaining elite political support, if not as an outright prerogative of power. While no single human society is free of corruption, it is possible to defeat this kind of widespread, large-scale corruption that undermines development. 17 There is no easy way to accomplish this, but increasing transparency and accountability within government is an important part of any lasting solution. The kind of anti-corruption program that will work best in any particular society, however, will depend on the nature of that society and its cultural context. High levels of military spending burden any economy, rich or poor. It is critical for poorer countries to carefully husband and direct their limited resources to meet the current needs of their populations and to build the capacity to improve future economic conditions. These countries are especially weakened when they use the resources they do have unproductively. Although progress has been slow, in recent years there has been wider recognition of the importance of reducing the military burden in order to promote development. There has even been some movement toward attaching conditions to development-oriented lending that requires reductions in military budgets. Nevertheless, without serious attention to reducing this drain on national resources, development assistance has little

17 For additional analysis of how to defeat one part of the corruption problemcorruption on the part of those economic advisors providing technical development assistancesee generally id.

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chance of overcoming the economic drag that excessive military spending creates, let alone of propelling the country forward. 18 B. Trade While appropriately targeted, well-designed, and properly implemented foreign aid can help break through critical roadblocks to development, stimulating trade is probably more important in the long run. With the right institutional context, strong export markets can encourage the growth of private sector businesses, and provide a source of profits that can support the investment necessary to sustain that growth. Taxes on export revenues (in the case of private sector production) or export revenues themselves (in the case of government-owned production) can be important sources of finance for government development initiatives. Even if foreign aid is successful in helping to build the capacity of LDC economies to produce more and better goods and services, there has to be a solid market for those products to mobilize their increased capacity. Otherwise, they will not be able to provide a growing standard of living for their people. That market could be domestic as well as foreign, but experience seems to show that it is faster and easier to accelerate development by at least initially aiming at existing well-developed markets abroad. 19 In poorer countries, domestic markets for most products are small. Small markets do not generally provide sufficient incentive for the scale of investment necessary to move the economy forward. Bigger, more profitable markets abroad are inherently more enticing, especially to the private sector. Of course, a country cannot achieve real economic development unless the gains in wages and other incomes created in the process of servicing export markets are sufficiently well distributed among the population. Otherwise, growth may occur, but development will not. The mere expansion of trade by itself is not enough to stimulate real development or to maximize its counter-terrorist potential. The character of trade and the kinds of policies that support it are also important. Trade is more capable of producing the kind of broad economic gains which are most effective at undermining terrorism when it is 1) more balanced and mutually

18 For more on the economic drag of high levels of military spending, along with a demilitarized approach to providing national and international security, see generally LLOYD J. DUMAS, THE PEACEKEEPING ECONOMY: USING ECONOMIC RELATIONSHIPS TO BUILD A MORE PEACEFUL, PROSPEROUS AND SECURE WORLD (2011) [hereinafter THE PEACEKEEPING ECONOMY]. For a more detailed explanation of the mechanism by which military spending interferes with the functioning of an economy, see generally LLOYD J. DUMAS, THE OVERBURDENED ECONOMY: UNCOVERING THE CAUSES OF CHRONIC UNEMPLOYMENT, INFLATION AND NATIONAL DECLINE (1986). 19 For example, South Koreas remarkable rise from a war-torn, poverty-stricken nation in the early 1950s to the status of a major player in the global economy and Chinas even more spectacular rise from relative isolation and poverty in 1980 to the worlds second largest economy today were both driven by export-oriented development strategies.

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beneficial; 2) made more inclusive by practices such as micro-lending; and 3) widened by reducing key trade barriers. V. ESTABLISHING BALANCED, MUTUALLY BENEFICIAL TRADE RELATIONSHIPS A trade relationship is balanced and mutually beneficial 20 if its benefits flow to every participant and there is a rough equality between everyones contribution to the relationship and the benefits they receive. 21 Such balance implies that those who participate receive benefits in a way that truly reflects the value of their contribution rather than differences in their bargaining power. Unbalanced, exploitative relationships are thus those in which the flow of benefit is overwhelmingly in one direction, and does not correspond to relative contribution. Even if every party in an unbalanced trade relationship is gaining something, the fact that the vast majority of benefit flows elsewhere is aggravating to those who receive less value than they contribute. The inherent economic unfairness of the relationshipand, just as important, the sense of being treated as a disrespected subordinate rather than a partner provokes resentment and hostility. There is little or no incentive for those being exploited to work at resolving whatever conflicts, economic or otherwise, might occur between the trading parties. In fact, they may look for ways of raising the intensity of those conflicts to strike back at those who are exploiting them with whatever means they have available. Balanced economic trade has the opposite effect. Since everyones benefits are at least equal to their contribution, everyone has a self-interested incentive to avoid any actions that are likely to disrupt the relationship. Everyone in the relationship feels more like a valued partner than a subordinate. When conflicts do occur, they will try hard to settle them amicably. Such relationships are far more likely to stimulate development, and far less likely to give rise to the kind of antagonisms that can ultimately motivate and strengthen support for terrorist activities. A. Micro-Lending To the extent that the underlying driver of terrorism lies in the marginalization, frustration, and humiliation of the group to which the terrorists and their supporters feel connected, long run success in undermining support for terrorism depends on improving the wellbeing and
20 Establishing balanced mutually beneficial, rather than exploitative, economic relationships is a key principle of economic peacekeeping in general as well as counter-terrorism. See generally THE PEACEKEEPING ECONOMY, supra note 18.

This concept of balance and benefit is consistent with Aristotles dictum that the well-being of every polis depends on each of its elements rendering to others an amount equivalent to what it received from them, though in a very different context. See ARISTOTLE, POLITICS 41 (Earnest Barker trans., Oxford Univ. Press 1958) (c.350 B.C.E.).
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raising the status of that group. It then follows that the approach to development likely to prove most effective against terrorism is one that not only reaches out directly to the most marginalized, disaffected, and disadvantaged of those people, but does so in ways that allow individuals a sense of empowerment, self-worth, dignity, and respect. Micro-lending, properly implemented, can be an important part of just such an approach. Putting a little capitaland the responsibility to repay the lending of that capitalin many different impoverished hands can go a long way toward overcoming the barriers created by lack of access to the means of selfinvestment, lack of self-confidence, and lack of hope. One of the most interesting and encouraging examples of the ability of micro-lending to succeed in bringing real economic improvement and a degree of social empowerment to the poor is the Grameen Bank of Bangladesh. Founded in 1976 by economist Muhammad Yunus, the Grameen Bank has enabled millions of poor Bangladeshis to start or upgrade their own small businesses by making very small loans, often less than a few hundred dollars, to five-person borrower groups. 22 The vast majority of these loans were made to womena particularly disadvantaged, economically (and politically) marginalized part of that nations population. Not only has this approach been impressive in terms of its outreach and effectiveness, it has also achieved an astonishing loan repayment rate of well over 90 percent, in large part because it has been designed and operated in ways that address the broadly construed needs of the borrowers, while at the same time taking advantage of a deep knowledge of the surrounding culture. The success of the Grameen approach has made it clear that it is both possible and necessary to harmonize the rules of the micro-lending game to the surrounding cultural environment. This is especially true of the procedures chosen to assure responsible use of the funds and ultimate repayment, which are likely to be particularly sensitive to culture. Consequently, in any particular application of micro-lending, those with a thoroughgoing personal knowledge of the cultural environment should play a key role in designing the system. B. Reducing Trade Barriers One of the most effective ways of stimulating LDC exports is by eliminating trade barriers against them, particularly in the MDCs. While the various rounds of trade negotiations under the auspices of the World Trade Organization (WTO) and its pre-1995 predecessor (the General Agreement on Tariffs and Trade, or GATT), have been quite successful in reducing trade barriers against the kinds of goods and services companies in the MDCs produce, they have been much less successful at reducing restrictions

22 For further information on the operations of the Grameen Bank, see MUHAMMAD YUNUS, BANKER TO THE POOR: MICRO-LENDING AND THE BATTLE AGAINST WORLD POVERTY (1999).

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on trade in agricultural products, which constitute a key part of LDC output. 23 Reducing or eliminating MDC trade barriers against LDC products may be enough to stimulate a greater trade flow, but it is not enough to assure that that trade will be balanced and mutually beneficial. If huge multinational agricultural production, processing, and distribution firms control the MDC side of this trade, it is unlikely that the distribution of benefits will be balanced in any meaningful sense of the word. If large landholders and monopolistic private marketing organizations control the LDC side of this trade, it is unlikely that the gains will be distributed broadly enough within the LDCs to generate any meaningful progress in real development. A serious amount of anti-trust activity (coupled with a degree of regulation) might be required to keep the game honest. If growing international trade stimulates the growth of a wide range of economic activities that involve the bulk of the population, it will be very important in generating real economic development. But there is a danger (though by no means a certainty) that export-oriented development strategies will stimulate production that is not really integrated with the rest of the domestic economy, and consequently enriches only a small portion of the population. It is therefore critical for the LDCs to adopt economic policies to ensure that the bulk of export activity is well integrated with the economy as a whole. Otherwise, there will be growth, but not development, and the full potential of expanding trade as a mechanism for countering terrorism will not be realized. VI. CONCLUSION We live in a culture that seems to believe punishment is ultimately the most just and effective way to deal with bad behavior. For example, society is more ready to bear the heavy expense of building and operating prisons than to find the funds necessary to support programs aimed at reducing crime, such as those that increase educational opportunity for the disadvantaged, ameliorate social injustice, or reduce economic inequality. It sometimes seems we are more interested in revenge than finding solutions to counter the anti-social pathologies that afflict us. Because terrorism is such a brutal tactic and because it inflicts so much pain on the innocent, it fills us with anger and the urge to strike back even more violently against terrorists and even those we think might have encouraged and supported their acts. That is easy to understand. But nothing lies on that path but more pain, more destruction, and more taking of innocent lives. It is not only profoundly immoral, it is profoundly ineffective.

23 The Doha Round of trade barrier reduction negotiations at the World Trade Organization labeled the development round for its focus on products key to developing countriescollapsed completely on July 24, 2006. See THE PEACEKEEPING ECONOMY, supra note 18, at 226.

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If anyone needs proof of the futility of this kind of response as a counterterrorist strategy, consider the IsraeliPalestinian conflict. For decades, Israel has doggedly followed a policy of responding to any act of terrorism with violent retaliation. A lot of people have died as a result, but terrorism continues to be a palpable ongoing daily threat against the lives of everyone in Israel. What has been accomplished? The Israelis live in fear; the Palestinians live in misery. That is no way for anyone to live. There are much more effective ways to respond to terrorism and, even more importantly, to prevent it. In the short runand in dealing with the terrorism that arises purely from mental illnesshigh quality intelligence gathering and police work are the most critical elements of a successful strategy. But in the long run it is the marginalization, frustration, and humiliation of peoples that breeds terrorism as well as many other forms of violence and inhumanity. Because real economic development directly addresses the underlying motivation of so many of those who support or engage in terrorist acts, it can be a much more effective means of countering terrorism than can the purely punitive approaches that have received far more attention and resources.

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