Three countries—Israel, the Philippines, and the United Kingdom (U.K.)—have enacted social and economic development policies to inhibit a resurgence of terrorism within their jurisdictions. The efforts of these countries demonstrate the potential benefits and short- comings of using social and economic development as a counterterrorism tool.
In each case, social and economic development initiatives were considered integral parts of wider peace processes:

In Israel, the Paris Protocol of Economic Relations, which provided Palestinians in the West Bank and Gaza Strip (WBGS) with various economic and trade incentives, accompanied the 1993 Oslo Accords for establishing the Palestinian Authority (PA).

In the Philippines, the 1996 Davao Consensus, which created a limited Autonomous Region of Muslim Mindanao (ARMM), was underpinned by a wider Special Zone for Peace and Development (SZOPAD) dedicated to the enactment of social and economic programs.

In the United Kingdom, the 1998 Good Friday Accords for establishing home rule in Northern Ireland included a social and economic commitment from the British government as well as special arrangements for communal “peace money” from the European Union (EU).
Each case offers its own unique lessons that led us to the following six overall conclusions about the role of social and economic development in countering a resurgence of terrorism:

1. Social and Economic Development Policies Can Weaken Local Support for Terrorist Activities.
Social and economic development policies can contribute to the expansion of a new middle class in communities that have traditionally lent support to terrorist groups. In many cases, this section of the population has recognized the economic benefits of peace and, as a result, has worked to inhibit local support for terrorist activities.

In Northern Ireland, for example, a new middle class (and business elite) has emerged that has directly benefited from the development programs. Members of this particular demographic sector have formed important mediation networks to reduce violence between supporters of militant Protestant groups and those sympathetic to the cause of the Real Irish Republican Army (RIRA). Commercial interest groups have also acted as a brake on Republican and Loyalist violence, discouraging the retaliatory riots and attacks that traditionally occur during Northern Ireland’s tense marching season.

2. Social and Economic Development Can Discourage Terrorist Recruits.
Many terrorist organizations attract new members from communities in which terrorism is generally considered a viable response to perceived grievances. Some terrorist groups also offer recruits financial incentives and additional family support. Social and economic development policies can help to reduce the pools of potential recruits by reducing their perceived grievances and providing the members of these communities with viable alternatives to terrorism. For example, two development projects in the southern Philip- pines—asparagus and banana production—have been particularly effective in providing economic alternatives to communities that have traditionally lent a high degree of support to local terrorist groups. In the latter case, private investment has resulted in almost 100 percent employment and transformed an area previously known as “the killing fields of Mindanao” into a largely peaceful community.

Of course, not all terrorist recruits come from poorer communities. Depending on the region and the nature of the conflict, terrorists can just as easily come from the middle or upper classes as from the poorer sections of society. In the countries we examined, extremist groups recruited across the class spectrum, with general support from local communities. In several instances, however, among other motivating factors, inductees were attracted to the financial opportunities that were provided by terrorist organizations.

3. Inadequately Funded Social and Economic Policies Are Likely to Inflate Expectations and Renew Support for Terrorism.
For social and economic policies to be effective, they need to be funded according to the relative size, geography, and needs of targeted communities. If development initiatives lack sufficient financial support, they are likely to act as a double-edged sword, erroneously inflating the hopes and aspirations of local communities. When these expectations are not met, there is a high chance that social and economic policies will backfire, triggering resentment and renewed support for terrorist violence.
Consider the positive example of Northern Ireland, where consider- able public expenditures have been set aside to target social needs. Since 1997, the United Kingdom has spent an average of US$869 mil- lion annually on these efforts. The EU has added another US$48 mil- lion annually, generating a total aid package that has amounted to roughly US$543 per person per year. The main focus for much of this investment has been large-scale projects dealing with education, health, housing, infrastructure, and urban redevelopment. Many of these initiatives have borne significant dividends. For example, there is now virtually no difference between Catholics and Protestants in terms of access to schools, hospitals, and suitable domiciles. Inner cities in Belfast and London- derry have been transformed on the heels of sustained regeneration schemes.

A negative example is the southern Philippines, where social and economic aid totaled only US$6 per person per year over a period of five years (see Table S.1). This meager sum helps to explain the dismal failure of most of the development policies instituted in Mindanao to inhibit support for terrorism. Compounding the situation, most of the money was channeled to Christian-populated areas, merely exacerbating already existing wealth differentials between Christian and Muslim communities. The combined effect has been to nurture and, in certain cases, intensify support for local terrorist and extremist groups.

4. The Ability of Development Policies to Inhibit Terrorism Depends on Their Implementation.
The most successful social and economic development policies are those that are (1) developed in consultation with community leaders, (2) based on needs assessments that address the specific requirements of targeted communities, and (3) accompanied by disbursement mechanisms that ensure proper fiscal management and non- partisanship. For example, the EU has administered its programs in Northern Ire- land in a way that avoids inadvertently reinforcing inter-communal hatred. This has been achieved by involving local residents in the design of specific projects and by including a transparent distribution and oversight system. Many schemes also hold local Catholic and Protestant representatives accountable for implementing the projects jointly with members of the opposing community. As a result, funding and implementation of particular programs are generally not perceived as underhanded or manipulative.

By contrast, most development policies in the Philippines and in Palestinian areas have failed to meet the needs of local communities, have been plagued by poor project choices, or been marred by corruption.
In Mindanao, most of the large-scale development schemes funded by Manila were determined without comprehensive, community- based needs assessments. Programs tended to focus on high-profile initiatives that offered a quick return on investment—not projects that the communities needed most. The central government also failed to establish adequate mechanisms to ensure accountability for the development aid that was transferred to Mindanao, much of which was misappropriated as a result of bribery and kickbacks.
In the WBGS, development money paid for such large-scale infrastructure projects as the Gaza port and airport, as well as for a high-profile housing complex known as the Karameh Towers, which offered 192 apartments for sale in Gaza for US$30,000 each. That price is far above what an average family in Gaza can pay for a home; the average annual income in Gaza fluctuates between US$1,200 and US$600. Thus, these development schemes had little, if any, relevance to the everyday needs of ordinary Palestinians. While other quality-of-life projects were also instituted, most suffered as a result of mismanagement and corruption.

5. Social and Economic Development Policies Can Be Used as a “Stick” to Discourage Terrorism.
Development assistance can be made conditional on the absence of violence, creating a useful “stick” to discourage support for terrorists. For example, Israeli authorities have frequently closed off Israel to Palestinian commuters in response to surges of violence from militant groups. Similarly, as a punitive measure for increases in terror- ism, the Israeli government has withheld tax revenue due to the PA. To a certain extent, these policies have been instrumental in trigger- ing communal pressure against such groups as the Palestinian Islamic Jihad and Hamas to limit their attacks.
Overuse of this tool, however, carries the risk of negating the overall positive effect of development policies. Indeed, Israeli authorities have used the closure tool so often that it has cost the Palestinian economy more than twice the amount of development aid channeled to the area since 1993. This outcome has caused many Palestinians to view the peace process as detrimental, rather than beneficial, to their interests, welfare, and security.

6. Social and Economic Development Policies Do Not Eliminate Terrorism.
Although social and economic development—when properly supported and implemented—can inhibit terrorism, development alone cannot eliminate it. Development is most effective when it is incorporated into a multi-pronged approach that includes wider political, military, and community-relations dimensions. These qualifications aside, there is a noteworthy potential for development policies to reduce the threat of terrorism.

These conclusions have particular relevance to the United States as it embarks on its continuing war on global terrorism. In several regions (e.g., the Philippines, Pakistan, Indonesia, and central Asia), the judicious use of foreign assistance could reduce local support for terrorist groups, including organizations that have been tied to wider transnational Islamic extremism. The lessons derived from Northern Ireland, the Philippines, and the WBGS strongly suggest that development assistance should be framed within a strategic political and military framework that goes beyond simply distributing aid and re- mains acutely sensitive to the risks associated with poor implementation and support.