Religion, Terrorism and Public Goods

Religion, Terrorism and Public Goods 1

Prime Minister s Office, Algeria 4/11/07 1 Al Qaeda suicide bomber, 12 dead, 112 injured 2

The Global War on Terrorism Fatalities due to Terrorist Attacks Worldwide 1998-2006 Fatalities Fatalities / month Pre 9/11 January 98 August 01 Post 9/11 October 01 September 06 4,800 10,000* 109 167* Source: Memorial Institute for the Prevention of Terrorism, Oklahoma City, www.tkb.org Excluding casualties in Iraq and Afghanistan. Including those fatalities the 10/01 9/06 figure is 447 rather than 167. Note change in organizations threatening civilians and governments. 3

Outline 0. Introduction: The Violent Puzzles 1. Background: Hamas, Hezbollah, Taliban, Insurgency and Suicide Attacks 2. Framework: Terrorist Clubs vs. Hard Targets 3. Testing: Clubs, Hard Targets and Suicide Attacks 4. Policy Implications: Counterterrorism, Economic Development and Nation Building 5. Clubs vs. Rational Peasants, (or Gangs and Community Policing (A&Y)) 6. Street Lights: Some results from Iraq 4

Hamas 5

Hamas 2006 6

Taliban 7

Hezbollah 8

Conclusions Why so few terrorist organizations? Defection constraint. Why are religious radicals effective terrorists? Solve defection constraint in benign activities. Not necessary theology. Why suicide attacks? Hard targets. What to do about it? Compete in providing benign services and competent governance, with muscular protection. Future Work Need research and evaluation Distinguish club model from standard rational peasant approach to winning hearts and minds 9

Jewish Underground 10

Muqtada al-sadr s Mahdi Army 11

A Violent Puzzle Among Religious Sects The Violent Puzzles: Why are radical religious militias and terrorists so efficient at violence? Hamas Hizbullah Taliban Al Sadr Al Qaeda They make the secular terrorist organizations of the 60s-90s look lame Why Suicide Attacks? Our approach: Draw on a) insurgency literature in IR, b) economics/sociology of religion, c) agency and collective action in organizations 12

What Motivates Terrorists? The Afterlife and Other Myths Is the advantage of radical religious terrorists due to the superior motivation that stems from theology and beliefs? - An ideology of hate? - Promises in the afterlife? Israeli psychiatrist Ariel Merari has spent years interviewing suicide attackers, their families and friends. He finds that: - Hamas and Jihad suicide attackers never mention religion or virgins in heaven as their primary motivation Consistent with experience in other countries - many suicide attackers worldwide are not religious radicals, including the Tamil Tigers and the majority of attackers in Lebanon in the 1990s. 13

So what does motivate suicide attackers? Merari finds that there is no specific primary motivation - not economic depravity, - not depressed or suicidal or mentally ill - consistent w/ research on Bader-Meinhoff, Red Brigade, ETA - not ignorant - generally not seeking revenge Might be best thought of as well adjusted altruists, who truly believe that their courageous act will help their communities - combination of altruism and delusions of self-importance - close to profile of rational recruits to sects; triage needed Now that s a frightening thought, because the world is full of self-motivated altruists who are willing to give their lives for some cause - and indeed there seems an ample supply of suicidal terrorists 14

Suicide Attacks as a Rebel Tactic Civil wars 1945-1999 (Fearon-Laitin) 127 in 69 countries directly account for 16m fatalities Rebel tactic is usually rural insurgency Suicide attacks are very rare, but becoming more common 15

Table 1: Suicide Attacks by Country of Perpetrator 16

Table 1: Suicide Attacks by Country of Perpetrator 17

Income, Insurgency and Suicide Terrorism 18

Religious Differences between Insurgents (Suicide Attackers) and Targeted Victims (Table 3) Insurgency Suicide Attack 16.50% 13% Different Religion 83.50% 87.4% Same Religion Unlike civil wars, this is the only consistent predictor. Why? Because coreligionists are soft targets. 19

2. Terrorist Clubs vs. Hard Targets Militia activity - Coordinated rent captured involving violence. e.g. attacking occupying army, providing law and order, organizing and carrying out a clandestine activity (like terrorism). often involves personal risk. Key aspect is sensitivity to defection. 20

Map of Afghanistan 21

A. Securing a Trade Route Convoy Destination 1 2 3 4.....N-1 N $B Checkposts 22

N i= 1 C({ Ri}) = C( Ri) Securing a Trade Route Convoy will choose to set out only if all R i = 1. Payoffs: Club extracts surplus B and shares it equally among members, who buy goods at price P. Benign local public goods provided by govt., G and club, A. Defector s outside option is w i, but no access to C or A. Incentive compatibility: Member loyal iff (ICC) U( B N,1, G %C(1)%A(R)) $ U(B%w i,0,g) 23

Securing a Trade Route N i= 1 C({ Ri}) = C( Ri) If ICC fails this is an N player prisoner s dilemma, resulting in an unsafe route, no convoy and no rents. Adverse selection: Imagine two unobserved types (as above), such that ICC holds if w i = w H (> w L ) for all i. A club with a costly sacrifice as an initiation rite which successfully excludes all low wage types can secure the route and extract the rent. E.g., The Taliban (ICC) U( B N,1, G %C(1)%A(R)) $ U(B%w i,0,g) 24

Figure 2: Selecting Low Wage Membership Allows Larger Projects High wage defector Loyal member Low wage defector Incentive compatibility limit with low wage members Project Value (B) B* B** 25

B. Capturing a Hill 1 2 $B 3 N 26

3. Clandestine Violence 1 2 N Target Conspirators Defection The reason so few militias and terrorist organizations survive.. defection is common. How do successful militias and terrorist organizations prevent defection? They have an organizational advantage. 27

An analogous problem: Reducing free riding in Religious Sects Sect a religious group that: imposes extreme prohibitions and requires distinctive sacrifices views secular society as corrupt, dangerous, and threatening economic life: high levels of mutual aid, and local public goods provided through volunteer work, e.g. education, health care, law and order, welfare services, orphanages, day care, soccer clubs How can you trust members to apply full effort? Internal economies of sects rely on trust-based transactions - sacrifices are elicited early in life to signal commitment e.g., education, missionary work, jail time - prohibitions distance members from market culture 28

Rational choice approach to religious sects Iannaccone (1992) Formally.. (1) U i = U (S i, R i, C({R j }) ), where S consumption, R religious activity, J R C local public good. j (2) C({R j }) = R = for j=1 to J. j= 1 J C could be mutual insurance, health care, education. (3) R = T H. Budget constraint for time. (4) wh = S. Budget constraint for money. Figure 1 illustrates optimal religious prohibitions. 30

Analogy: Seminar as a Club A seminar (like this one) is a club, where participants benefit from their own effort R and the average R of colleagues. A good citizen comes prepared, asks questions, provides good answers, all because she studies. Lacking a way to subsidize R, the club would like to tax outside activity of members. In principle, a research club should tax, or tithe, if it can. But it typically lacks tax authority. 31

Optimal Prohibitions for Seminar Participants Efficient proxy taxes on outside options might be: Prohibit alcohol with nonmembers Prohibit beach on Sabbath Dress strangely Limit eating with nonmembers through dietary restrictions Limit communication with outsiders by speaking arcane language With enough prohibitions seminar participants would have nothing better to do with their time than study Enforcement could be through threat of expulsion or through peer pressure If this example doesn t work for you, think of a fraternity (or a team), 32 where R is partying (training) and helping out other members.

Fig 1: Optimal Taxation Through Prohibition Wages Work hours Religious activity 33

Maimonides Rationale for Circumcision Twelfth century philosopher Rav Moses Maimonides explaining circumcision.. It gives to all members of the same faith, i.e., to all believers in the Unity of God, a common bodily sign, so that it is impossible for any one that is a stranger, to say that he belongs to them. For sometimes people say so for the purpose of obtaining some advantage......it is also a fact that there is much mutual love and assistance among people that are united by the same sign when they consider it as [the symbol of] a covenant. [The Guide for the Perplexed, late 12th century, translated 1904. Chapter XLIX. Brackets are those of the translator. Italics are my own.] Signaling theory won a Nobel Prize in Economics, 9 centuries later 34

Rationalizing Sacrifices Imagine heterogeneity in participants outside options, w j, (call them wages). Members would prefer that other members have low wages w j, since that implies higher R and larger externalities. Low R members are free-riders who it would be efficient to exclude, but w j is unobserved. 35

Rational Sacrifice (cont.) Voluntary sacrifices of time might exclude high wage individuals but include low wage for an efficient separating equilibrium. e.g.s Insist on an arcane language that takes years to learn Religious education with no market value 36

Figure 1: Rationalizing Sacrifices High wage, high C, sacrifice B2 A2 High wage, low C B1 Low wage, high C sacrifice Low wage, low C A1 0 0 Work Hours (H) º» R+K H1 κ 37

Iannaconne (92): Sects and Churches in National Data 38

Subsidizing Sacrifice Source: Berman (2000) 39

Evidence: Fertility and Schooling Results Data : extensive search yielded household surveys in Indonesia, India, Bangladesh, Cote D Ivoire, Pakistan (B&S 04) and Israel (B 00) Women in families with Islamic and Ultra-Orthodox religious education have higher fertility in all 6 countries, by 2/3 to one more expected lifetime child. Islamic and Ultra-Orthodox education have significantly lower rates of return than secular education in 3 of 6 countries; insignificant results in other 3 countries Prevalence of radical religious schooling: 2-5% of Muslims in Rural Bangladesh, Pakistan, Cote D Ivoire, 5% of Israeli Jews 14-25% in Indonesia and two Indian States (Uttar Pradesh and Bihar) 40

Fig 1: Optimal Taxation Through Prohibition, and Fertility Wages Work hours Religious activity & Fertility 41

Differential Fertility by Sect Membership Six countries Berman and Stepanyan (04) Israel Bangladesh Indonesia UP & Bihar Cote D Ivoire Pakistan Diff. fertility 5.34 (.30) 0.67 (.26) 0.77 (.43) 0.58 (.27) 1.34 (.46) 0.66 (.39) Sect indicator Any Own Any Own Any Any 42

Differential Returns to Education by Sect Membership - Six countries (Berman and Stepanyan 04) Israel Bangladesh Indonesia UP & Bihar Pakistan Cote D Ivoire Secular schooling.094 (.002).116 (.005).122 (.008).097 (.007).132 (.006).175 (.010) Religious schooling -.076 (.006) -.022 (.013) -.051 (.229) -.073 (.034) -.048 (.026) -.029 (.070) 43

Fertility Differential for Ultra-Orthodox Jews (Berman 03) TABLE V TOTAL FERTILITY RATES OF ISRAELI SUBPOPULATIONS A. Source: Labour Force Survey Period Full Population Jews Ultra-0rthodox Jewsc All other Jews 1980-1982 2.99a 2.76 6.49 2.61 (0.04) b (0.04) (0.31) (0.04) obs. 31347 27635 1040 26569 1995/96 2.66 2.53 7.61 2.27 (0.04) (0.05) (0.30) (0.05) obs. 27866 22776 1021 21755 Change -0.33-0.23 1.13-0.34 (0.06) (0.06) (0.44) (0.06) B. Source: Population Registry Period Full Population Jews Christians Muslims 1980 3.14 2.76 2.66 5.98 1995/96 2.90 2.57 2.19 4.65 Change -0.24-0.19-0.47-1.33 44

Analogy: Military unit as a Club Like a sect, a unit is involved in cooperative production, i.e., participants benefit from their own effort and the average effort of other members. A good soldier/member comes prepared, trains, works hard, covers his/her buddies, would never defect.. because they are devoted. Lacking a way to subsidize devotion, the unit would like to a) tax outside activity of members, b) select devoted members. 45

Why are sects effective at violence? Recall that militias and terrorist groups are organizations extremely sensitive to defection Sects have a strong advantage at coordinated violence because their benign service provision activities help them a) select operatives unlikely to defect b) influence operatives through their support of friends and family Testable implication: a sect will be more effective the stronger its social service provision 46

Figure 2: Selecting on Low Wage Membership Allows Larger Projects High wage defector Loyal member Low wage defector Incentive compatibility limit with low wage members Project Value (B) B* B** 47

Figure 3: Benign Activity Increases a Militia s Potential Utility of loyal member - augmented club good Utility of loyal member Utility of defector Incentive Compatibility Limit Incentive Compatibility Limit - augmented club good (ICC) U( Project Value (B) B* B N,1, G %C(1)%A(R)) $ U(B%w i,0,g) B** 48

Resolving the Puzzle Taliban, Hamas, Hizbullah, Sadr s Militia are all examples of remarkably effective violent radical Islamic organizations which started out as classic sects providing social services. Cooperative production of social services has the same free-rider problem, though less extreme e.g., mutual insurance is sensitive to defection An organization designed to limit defection in a benign context will have a huge advantage in the cooperative production of violence (ICC) U( B N,1, G %C(1)%A(R)) $ U(B%w i,0,g) 49

TABLE 4: SOCIAL SERVICE PROVISION AND LETHALITY OF TERRORIST ATTACKS ISRAEL AND LEBANON: 1968-2006 Group name Injuries Fatalities (std. Attacks Injuries Fatalities per attack per attack error) Hamas 70 2202 413 30.2 5.9 0.87 Hezbollah 90 387 449 4.3 5.0 2.82 Palestinian Islamic Jihad 38 722 111 12.7 2.9 0.81 Popular Front for the Liberation of Palestine 38 376 107 9.9 2.8 1.03 Fatah/PLO 131 1465 279 11.20 2.1 0.48 Democratic Front for the Liberation of Palestine 21 240 22 10.4 1.0 0.37 Unknown 427 1055 351 2.2 0.8 0.28 Social Service Providers: Hamas and Hezbollah 160 2589 862 15.8 5.4 1.62 Others: DFLP, Fatah/PLO, PIJ, PFLP 228 2632 519 11.6 2.3 0.35 Difference 3.1 1.67* 50

Who Selects Suicide Attacks? 120 100 Attacks 80 60 40 20 0 Hamas Suicide Suicide Suicide Suicide Suicide Suicide Suicide Tanzim Al Aqsa Martyrs PIJ Fatah Terrorist Organization PFLP Force 17 Suicide attacks are so damaging that only defection proof organizations can succeed at them. Most do not try. 51

Efficiency of Suicide Attacks in Israel and Lebanon 70 63 60 50 40 30 20 10 0 7.2 44 17.3 37 31 4 7 2.9 2.8 2 0.5 1 0 Hamas Hizbullah PIJ PFLP Al Aqsa Martyrs Fatah SSNP Terrorist Organization Suicide Attacks Ave. Fatal./Attack 52

Lethality of Suicide Attacks in Israel and Lebanon 70 60 63 50 40 30 44 37 31 20 17.3 10 0 7.2 7 4 2.9 2.8 2 0.5 1 0 Hamas Hizbullah PIJ PFLP Al Aqsa Martyrs Fatah SSNP Terrorist Organization Suicide Attacks Ave. Fatal./Attack 53

Recap: Sects and Violence Why so few terrorist organizations? Defection constraint. Why are religious radicals effective terrorists? Solve defection constraint in benign activities. Not theology. Why suicide attacks? Hard targets. What to do about it? Compete in providing benign services and competent governance, with muscular protection. How can we be sure it will work? Need research and evaluation, just like any weapon. 54

Sect Characteristics Local public goods Militia activity Increased stringency Sacrifice Hamas schools, hospitals welfare, militias assassination of informants, attacks on Israeli civilians and Israeli military dress codes, personal piety, worship, risking arrest, injury or death Taliban law and order, militias guarded smuggling routes, law & order, conquered Afghanistan personal piety madrassa attendance These benign activities are the norm among religious sects for Christians (Iannaccone 92), Muslims and Jews (Berman 00, 03) 55

Constructive Efficiency : [Figure 7] If ICC does not hold it may be efficient for a club to make it hold by 1) raising C(1), through some other investment that augments local public goods (e.g. welfare, hospitals, etc.), 2) making cash payments to members (e.g. families of martyrs), 56

Figure 8: Govt. Provision of Public Goods Reduces Militia s Potential Defector - high govt services Loyal member - high govt. services Loyal member -low govt. services Defector - low govt. services (ICC) B** B* Project Value (B) U( B N,1, G %C(1)%A(R)) $ U(B%w i,0,g) E.g., Malaya, Phillipines, Egypt Incentive compatibility limit - high govt services 57

Destructive Efficiency: [Figure 8] 3) reducing G, the public good available to members and nonmembers, (assassination of public officials), 4) limiting B (ban on heroin cultivation), 5) raising P (general strikes, access to goods markets), 6) lowering w i, the outside options of members, (Madrassah, jail time, secluding women, harassing nonmembers, destroying or banning access to Israeli labor markets). 58

Implications Violent radical religious groups thrive where.. a) govt. provision of local public goods is weak - Somalia, Nigeria, Pakistan, Algeria, Lebanon, Afghanistan, Palestine, Iraq b) local militias are popular.. - Chechnya, Afghanistan during war, Kashmir, Palestine, Jordan ( Black September ), Palestine, Iraq c) wages are low.. - all of the above, d) where outside subsidies are available, - Kashmir, Lebanon, Palestine, Afghanistan, Iraq 59

Suicide Attacks, Terrorism and Insurgency Why suicide attacks? Deadliest method of delivering explosives to a target - precise - leaves no operative to interrogate Method of choice vs. hard targets i.e., targets whose destruction implies a high probability of death or capture 60

Hard Targets p(h) probability of apprehension increases in govt. investment in hardening target Expected utility, loyal operative, suicide attack.. where D is damage, benefit B is proportional to D Utility from defection: Utility from conventional attack: Choose suicide attack if (7a) > (7b), (7a) > (7c) 61

Figure 4: Strong Governments Harden Targets, Insurgents respond with Suicide Attacks Utility of Loyal Member - Conventional Attack, low p Utility of Loyal Member - Conventional Attack, high p D Utility of Loyal Member - Suicide Attack, C E Utility of Defector - Notes: a) Global decline in insurgency; b) Coreligionists are usually soft targets; c) Foreign allies of govt. are hard targets switch to suicide attacks puts them at risk. O D D D C D E 62 Damage to Target (D)

TABLE 5: ATTACKS ON ISRAELI RESIDENTS BY LOCATION AND TACTIC Sept 2000 through July 2003 63

Attacks on Israelis by Location and Tactic Attacks on Israeli Residents Attacks on Israel Residents 20000 18000 17405 600 511 16000 14000 12000 500 400 341 401 10000 300 8000 6000 200 4000 2000 0 Palestine Attacks 730 Israel 100 0 8 Palestine Fatalities Israel Suicide Attack Fatalities Why? Because targets in Palestine are soft, whereas targets in Israel 64 are hard.

Religious Differences between Insurgents (Suicide Attackers) and Targeted Victims (Table 3) Insurgency Suicide Attack 16.50% 13% Different Religion 83.50% 87.4% Same Religion What about this? Coreligionists are soft targets. 65

Coreligionists are soft targets Insurgents and terrorists often target coreligionists: political rivals, members of rival militias, collaborators, targets of extortion. They seldom use the suicide tactic to do so.... probably because it s not necessary. A coreligionist assailant can defeat profiling. Exception are target well defended by means beyond profiling: e.g., Sadat, Massoud, Rajiv Ghandi. When members of other religions have similar appearance suicide attacks are not used: N. Ireland. 66

Figure 5: Strong clubs choose more suicide attacks and do more damage Utility of Defector - weak club Utility of Loyal Member - Conventional Attack, high p D Utility of Loyal Member - Suicide Attack, F C E Utility of Defector - strong club Note: Most benign policies vs. insurgents will affect the high damage margin, so they will reduce suicide attacks. O D D D F Damage to Target (D) D E 67

Evidence on Benign Activity and a Militia s Potential 68

Who Selects Suicide Attacks? 120 100 Attacks 80 60 40 20 Suicide 0 Hamas Tanzim Suicide Suicide Suicide Suicide Suicide Suicide Al Aqsa Martyrs PIJ Fatah Terrorist Organization PFLP Force 17 Suicide attacks are so damaging that only defection proof organizations can succeed at them. Most do not try. Nonsystematic evidence from Iraq, Afghanistan, Sri Lanka and Chechnya is consistent with suicide attacks being reserved for hard targets. Religious radicals specialize in s. attacks in Iraq, Afghanistan, Chechnya, but evidence on soc. service provision is weak. 70

Application: Jewish Underground Violent militia which drew members from Gush Emumin, a messianic settler movement but a weak sect, (weak prohibitions and sacrifices). Began settling illegally in West Bank in mid 1970s. - vigilante activity had local public good aspect After Camp David (I) agreements frustrated settlers organized conspiracy to destroy Muslim holy sites on Temple Mount / Haram A-Sharif. - project aborted for lack of rabbinical authorization. 71

Testable Implications: Other countries Richer countries are less likely to have insurgencies and civil wars (Fearon-Laitin) 72

Why the Increase in Suicide Attacks?.. Because of the decrease in viable options for insurgents Insurgents attempt conventional tactics first, including against coreligionists. When these fail they turn to suicide attacks, generally reserving them for hard targets. As governments improve at counterinsurgency we will see more terrorism and suicide attacks - directed against both local targets and allies of govt. 73

4. Mosque and State Implications for Counterinsurgency Activity can be rationalized, so incentives matter, which implies that subtle instruments could work. Subtle Policies: Governments, Economic Rents and Markets A. Improve Provision of Local Public Goods by Secular Governments - the Kilcullen / Petraeus / SOC approach B. Fiscally Separate Church and State if that Government is Radical Religious - so that it cannot lock itself into power C. Reduce Rents Available to Militias and Smugglers - e.g., demand for Heroin, Cocaine and Oil D. Improve Market provision of substitutes. 74

Once suicide attacks are being used, constructive intervention operates at that margin 75

The Kilcullen Approach 23. Practise armed civil affairs. Counterinsurgency is armed social work; an attempt to redress basic social and political problems while being shot at. This makes civil affairs a central counterinsurgency activity, not an afterthought. You need intimate cooperation with inter-agency partners here, national, international and local. You will not be able to control these partners. Many NGOs, for example, do not want to be too closely associated with you because they need to preserve their perceived neutrality. Thus, there is no such thing as impartial humanitarian assistance or civil affairs in counterinsurgency. Every time you help someone, you hurt someone else. not least the insurgents. So civil and humanitarian assistance personnel will be targeted. Source: Twenty-Eight Articles: Fundamentals of Company-level Counterinsurgency (2006) Lt. Col. David Kilcullen, Ph.d. in Political Anthropology, Australian advising the Pentagon 76

DoD Policy Shifts Towards Social Science Irregular warfare is about people, not platforms. IW depends not just on our military prowess, but also our understanding of such social dynamics as tribal politics, social networks, religious influences, and cultural mores. People, not platforms, and advanced technologies will be the key to IW success. Department of Defence, Irregular Warfare Joint Operating Concept, September 2007. 77

Nonstandard Development Economics Not designed to maximize growth or social welfare, but to undermine rebels Targeted at likely defectors and likely sources of intelligence Focus on programs that compete with services offered by clubs Benign programs will be targeted by rebels Standard development programs can be captured by rebels e.g., - heros village, LTTE controlled Sri Lanka - Sadr city garbage cleanup Increased welfare, but reinforced rebels Includes political development 78

5. Conclusion A rational choice economic model can explain the behavior of violent religious radicals - it succeeds on testable implications where the conventional wisdom about theological motivation fails That s a relief: it provides benign options for dealing with violent religious radicals Those options are practical but are poorly understood and current implementation is awful 79

Is it Ideology? Well.. Ideological Shifts: Taliban: from personal piety, local Islamic govt. to international Jihad Hamas: from personal piety, local Islamic govt. to nationalist territorial struggle Jewish Underground: from glorifying the state to undermining it s authority 81

Rational Choice Matters Can this fit in a rational choice model? - is that model helpful in predicting behavior? Policy implication: - can the shift to militia activity be reversed? - does behavior respond to incentives? - what could we recommend if it did not? 82

References Berman, Eli Sect, Subsidy and Sacrifice: An Economist s View of Ultra-Orthodox Jews, Quarterly Journal of Economics, 115(3) (August, 2000). Hamas, Taliban and the Jewish Underground: An Economist s View of Radical Religious Militias, NBER WP 10004, (October 2003). and David Laitin, Rational Martyrs: International Evidence on Suicide Attacks, UC San Diego mimeo, (October 2003). and Ara Stepanyan, How Many Radical Islamists? Evidence from Asia and Africa. UCSD mimeo, 2003. Iannaccone, Laurence R. Sacrifice and Stigma: Reducing Free-riding in Cults, Communes, and Other Collectives, Journal of Political Economy, C(1992), 271-291. 83

VI. Where Research can Help Lessons from Pacific Special Operations Command 1. Development and counterinsurgency in poorly governed spaces - now a Nat. Security concern - directly + indirectly through allies 2. USAID alone spending at ~$4B annually on this development effort, DOD spending more 3. USAID and DOD lack capability to do economic and political development in dangerous spaces. World Bank and NGOs not much better. Specifically, they lack a) basic research on counterinsurgency & development b) a way to evaluate their development efforts 4. Need: research and evaluation to guide development, governance and political violence - what DOD calls soc. sci research is mostly purchased validation of what they think is true already. - like Great Society project, which Moynihan fixed - solution is intellectually independent research: own core funding, university based 84

Nuclear Terrorism Defection constraints indicate that nuclear terrorism is very unlikely to come from most of the terrorists we see today Look for combination of state-backed expertise and terrorism: - Iran & Hezbollah, Pakistan (ISI) & Islamists 85

5. Streetlights and Violence Eli Berman UCSD (joint research with Jacob Shapiro Princeton Joe Felter CTC West Point) Results are Preliminary Not for circulation

Outline A. Two models that link public goods to violence Clubs Rational Peasants, Counterinsurgency & Community Policing B. Street Lights: Public goods and violence in Iraq 87

5.1 Clubs and Terrorism 1 2 N Target Conspirators Defection The reason so few rebel and terrorist organizations survive.. defection is common. How do successful rebel and terrorist organizations prevent defection? They have an organizational advantage. 88

N i= 1 C({ Ri}) = C( Ri) Operation initiated only if all R i = 1. Clubs and Terrorism Payoffs: Club extracts surplus B and shares it equally among members, who buy goods at price P. Benign local public goods provided by govt., G and club, A. Defector s outside option is w i, but no access to C or A. Incentive compatibility: Member loyal iff (ICC) U( B N,1, G %C(1)%A(R)) $ U(B%w i,0,g) 89

Clubs: Selecting Low Wage Membership Allows Larger Projects High wage defector Loyal member Low wage defector Incentive compatibility limit with low wage members Project Value (B) B* B** 90

Clubs and Terrorism N i= 1 C({ Ri}) = C( Ri) If ICC fails this is an N player prisoner s dilemma, resulting in an unsafe route, no convoy and no rents. Adverse selection: Imagine two unobserved types (as above), such that ICC holds if w i = w H (> w L ) for all i. A club with a costly sacrifice as an initiation rite which successfully excludes all low wage types can keep members loyal in larger projects. So religious radicals who operate mutual aid clubs have an advantage. (ICC) U( B N,1, G %C(1)%A(R)) $ U(B%w i,0,g) 91

Govt. Provision of Public Goods Reduces Militia s Potential Defector - high govt services Loyal member - high govt. services Loyal member -low govt. services Defector - low govt. services (ICC) Incentive compatibility limit - high govt services B** B* Project Value (B) U( B N,1, G %C(1)%A(R)) $ U(B%w i,0,g) E.g., Malaya, Phillipines, Egypt 92

5.2 Rational Peasant Model Motivation Hearts and Minds Operating procedure of US and Allied Special Forces includes providing local public goods: 1. Control some territory 2. Ask population what services they want 3. Provide them 4. Ask population for information about insurgents 5. Use information to ambush or capture insurgents, allowing control of more territory 6. Repeat (1)-(5) until entire country is controlled Note: a) This is less prosaic than hearts and minds b) Even the most disenfranchised population gets services c) Rational Peasant is due to Popkin 94

Akerloff-Yellen (94) Gang Model Motivation Gangs are limited by community norms of behavior e.g., if the parents complain that a member is selling drugs in a primary school, the member is disciplined by the gang now I understand that if you ain t got the community with you it s just a matter of time before you got to close up shop. - Duck (the gang member who learned his lesson) 95

A-Y model with public goods (and otherwise stripped down) Community: representative agent chooses whether to snitch to police: 0 = c = 1 Gang: chooses level of crime: s = 0 Police: monitor criminals, m, and provide public goods, g Police move first, then gangs, then community 96

Community Utility from cooperating with police U c = (B c sg - a c R) c where g = 0 is the level of govt. provided public goods, which complement public safety, and R is the expected value of gang retaliation, a constant. It s linear, so at the corner solution, c=0 iff a c R = B c sg noncooperation constraint ; otherwise c=1 97

Gang Maximizes U g = (B g A g mc) s where B g and A g are positive constants, m is enforcement effort set by police, s is crime. If B g A g mc = 0 when c=1, then gang will choose s so that the noncooperation constraint just binds, at s * = a c R / B c g, so s > 0 and s decreases in g. If B g A g mc > 0 when c=1, then gang chooses infinite s..police will set m high enough to avoid that. 98

Police Minimize A p s + B p m + C p g.. which yields a corner solution for m = B g / (A g (avoiding infinite crime at c=1), and an interior solution for g 2 = (A p a c R)/(B c C m ). Note: reducing cost of public goods C m raises g & reduces s That could include reducing corruption in public good provision, or increasing the efficiency of taxation. 99

Back to Rational Peasant Analogy to Rational Peasant model of insurgency, where even the disenfranchised noncombatants are favored with public goods by Special Forces. Extensions s and g need not be complements Enrich g so it differs from a transfer? If gangs can provide public goods can there be a race to the top in public good provision? If government can retaliate can there be a race to the bottom in extortion? 100

Clubs or Rational Peasants? The two models share defection or snitching (cooperation with authorities) In the club model a combatant defects, while in the rational peasant model a noncombatant snitches Who cares which model is relevant? - predicting tactic choice by rebels: - conventional tactics are cheaper, but share information with noncombatants (ambush, IED) while modern (club) tactics do not (suicide attack) - most organizations are not capable of club tactics because of defection constraints - targeting of police efforts - only club model relevant for domestic terrorism 101

Contents 1. Street Lights: Public services and violence 2. What can we learn from CERP? 3. Operational Initiative in the Philippines 4. Other potential projects 5. Research on Conflict: Building institutions 6. Training: building in house analytical capability 7. Theory and Doctrine development upcoming conferences 8. Joint implementation plan 102

6. SIGACTS (Significant Actions) in Iraq Why Statistics Can Help 103

6.1 Street Lights a public good Street lights 04 1 1.5 2 2.5 Amara Qal'at Saleh Al-Mejar Dahuk Al-Kabi Resafa Al Sadr Kerbala Basrah Fao Suq Nassriya Erbil Al-Shoyokh Kut Adhamiya Khadamiya Al-Samawa Falluja Amedi Zakho Mada'in Al-Ka'im Najaf Tarmia Al-Rifa'i Al-Kahla Sumel Al-Hamdaniya HadithaKarkh Al-Zubair Tooz Ali Tilkaif Al-Gharbi Mosul Al-Musayab Mahmoudiya Hamza Al-Maimouna Al-KhalisAl-Muqdadiya Al-Rumaitha Al-Salman Al-Daur Al-Suwaira Kirkuk Al-Shatra Baiji Badra Al-Khidhir Ramadi Al-Hai Al-Qurna Abu Al-Khaseeb Shatt Hashimiya Hilla Al-Midaina Shaqlawa Al-Hindiya Ba'quba Soran Baladrooz Heet Al-Mahawil Kufa DiwaniyaTikrit Halabja Darbandihkan Al-Manathera Akre Sulaymaniya Penjwin Al-Arab Choman Al-Shamiya Telafar Khanaqin Makhmur Kifri Mergasur Koisnjaq Al-Shikhan Kalar Rania Al-Hawiga Samarra Afaq Chamchamal Sinjar Dokan Daquq Al-Shirqat Al-Na'maniya Sharbazher Pshdar Abu Ghraib Ain Al-Tamur Al-Chibayish Ana 1 1.5 2 2.5 3 Street lights 02 Street lights 04 Street lights 04 Street lights are pretty durable, but some places improved and some got worse 104 - These are measured on a scale of 1-bad to 3-good in a 2004 survey.

2 Who improved? Amara Qal'at S Al-Mejar Dahuk Al Resaf street light 04 1.5 1 Kerbala Basrah Kut Suq Fao Al-S Nassriya Erbil Al Sadr Adhamiya Khadamiy Falluja Al-Samaw Al-Ka'im Amedi ZakhoMada'in Tarmia Najaf Al-Rifa' Al-Hamda Sumel Karkh Al-Kahla Haditha Al-Zubai Tooz Ali Al-G Tilkaif Al-Suwai Mosul Al-Musay Mahmoudi Kirkuk Al-Maimo Al-Daur Al-Shatr Hamza Al-Khali Al-Salma Baiji Al-Rumai Al-Muqda Al-Khidh Ramadi Al-Hai Al-Qurna Tikrit DarbandiDiwaniya Al-Hindi Halabja Shaqlawa Kufa Abu Al-K Al-Midai Shekhan Ba'quba Akre Sulayman Soran Hashimiy Al-Mahaw Al-Manat Balad Penjwin Shatt Al-Hawig Hilla Baladroo Daquq Telafar Kalar Al-Shami Al-Na'ma Choman Khanaqin Afaq Al-Shirq Dokan Koisnjaq Heet Makhmur Sharbazh Samarra Chamcham Rania Mergasur Pshdar Kifri Sinjar Al-Shikh Abu Ghra Ain Al-T Badra 1 1.5 2 street light in Dec 2002 105

Street lights by themselves don t predict much 0 5 10 15 Al-Daur Balad Mosul Al-Hamdaniya Abu Ghraib Al-Muqdadiya Mahmoudiya Tikrit Tarmia Ramadi Al-Ka'im Falluja Heet Al-Mahawil BaladroozBaiji Al-Maimouna Haditha Karkh Khanaqin Al-Musayab Mada'in Kifri Samarra Al-Hawiga Telafar Khadamiya Abu Al-Khaseeb Adhamiya Al Sadr Amara Shatt Hilla Hashimiya Al-Midaina Ba'quba Al-Qurna Al-Arab Al-Khalis Makhmur Mergasur Ain Choman Koisnjaq Al-Tamur Soran Shaqlawa Al-Hindiya Al-Salman Afaq Sinjar Al-Shirqat Daquq Al-Shamiya Al-Shikhan Al-Manathera Akre Kufa Diwaniya Kirkuk Al-Suwaira Al-Khidhir Al-Rumaitha Tooz Pshdar Sharbazher Chamchamal Rania DokanHalabja Al-Na'maniya Penjwin Kalar Sulaymaniya Darbandihkan Al-Hai Al-Shatra Hamza BadraAli Tilkaif Al-Zubair Al-Kahla Al-Gharbi Al-Rifa'i SumelZakho Najaf Amedi Al-Samawa Nassriya Erbil Suq Fao Kerbala Kut Basrah Al-Shoyokh Al-Mejar Dahuk Resafa Qal'at Al-Kabi Saleh Al-Chibayish Ana 1 1.5 2 2.5 Street lights 04 Incident per 1000 persons Fitted values Mean of Sig. Acts in 04 is 0.60 per 1000 per year Regression slope is - 0.19 (not stat. significant) 106

Multivariate regression: 2004 e( p_inc X ) 0 5 10 15 Incidents 04 vs Street lights 04 (conditioning on street lights 02) e( p_inc X ) 0 5 10 15 Incidents 04 vs Street lights 02 (conditioning on street lights 04) -.5 0.5 e( street_light X ) coef = -2.2283984, (robust) se =.715622, t = -3.11 -.5 0.5 e( street_light_02 X ) coef = 1.95034, (robust) se =.6454984, t = 3.02 All statistically significant, F= - conditional on service provision after invasion, good services under Saddam predict violence vs. coalition forces - conditional on service provision under Saddam, post-invasion service provision predicts less violence vs. coalition forces 107

Could it be reverse causality? Violence could be bad for street lights. so look at the timing: Street Lights and Violence: 2004, 05, 06, 07 e( p_inc X ) 0 10 20 30 40 Incidents vs Street Lights 04 Incidents 2004 (conditioning on street lights 02) e( p_inc X ) 0 10 20 30 40 Incidents 2005 -.6 -.4 -.2 0.2.4 e( street_light X ) coef = -2.2283984, (robust) se =.715622, t = -3.11 -.6 -.4 -.2 0.2.4 e( street_light X ) coef = -4.8966916, (robust) se = 1.1795619, t = -4.15 Interpretation: -.6 -.4 -.2 0.2.4 e( street_light X ) Granger causality runs from lights in 02 and 04 to subsequent violence? coef = -9.4834806, (robust) se = 2.3861742, t = -3.97 Tactical implication: Location of escalation was predictable based on 02 and 04 data. e( p_inc X ) 0 10 20 30 40 Incidents 2006 e( p_inc X ) 0 10 20 30 40 Incidents 2007 -.6 -.4 -.2 0.2.4 e( street_light X ) coef = -10.599431, (robust) se = 2.8844079, t = -3.67 108

Street Lights and Violence: 2004, 05, 06, 07 OLS results for Incidents per 1000 persons, 2004-2007 Dependent variable: Incident per 1000 persons 2004 2005 2006 2007 Street lights -2.23-4.90-9.48-10.6 (0.72) (1.18) (2.39) (2.88) Street lights 02 1.95 3.56 7.56 8.70 (0.64) (1.08) (2.24) (2.81) Constant 0.98 2.89 4.89 5.07 (0.55) (1.12) (2.28) (2.14) R squared 0.05 0.05 0.06 0.06 Sample size 100 100 100 100 Average incident per 1000 persons 0.63 1.13 2.38 2.60 109

Is it literally Street lights? Total Number of Incidents Mar 2006 - Dec 2007 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Hour of the day 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 Total Number of Incidents 110

Is it literally Street lights? OLS results for Day vs Night Incidents per 1000 persons, 2006-2007 Dependent variable: Incident per 1000 persons Log of incident per 1000 persons 2006 2007 2006 2007 Street lights -6.00-7.71-6.43-6.50 (1.44) (2.07) (2.33) (2.68) Street lights X night 3.43 4.96-0.09 0.23 (1.64) (2.24) (3.71) (4.13) Street lights 02 5.00 6.54 6.55 7.08 (1.42) (2.06) (1.81) (2.08) Street lights 02 X night -3.05-4.49-0.58-1.14 (1.57) (2.20) (2.89) (3.17) Night (= 1) -1.24-1.64 0.29 0.59 (1.52) (1.62) (1.88) (2.25) Constant 2.75 3.32-1.43-1.97 (1.36) (1.48) (1.30) (1.53) R squared 0.09 0.10 0.19 0.19 Sample size 200 200 170 176 Average day-time incident per 1000 persons 1.46 1.81 Average night-time incident per 1000 persons 0.68 0.76 111

Is it literally Street lights? e( p_inc X ) 0 5 10 15 Incidents 04 vs Street lights 04 (conditioning on street lights 02) e( p_inc X ) 0 5 10 15 Incidents 04 vs Garbage collection 04 (conditioning on street lights 02) Similar results if public garbage collection is used instead of 04 street lights -.6 -.4 -.2 0.2.4 e( street_light X ) coef = -2.2283984, (robust) se =.715622, t = -3.11 -.5 0.5 1 e( pub_garbage X ) coef = -.47651547, (robust) se =.30347421, t = -1.57 e( p_inc X ) 0 5 10 15 Incidents 04 vs Street lights 02 (conditioning on street lights 04) e( p_inc X ) 0 5 10 15 Incidents 04 vs Road quality 04 (conditioning on street lights 04) Similar results if road quality is used instead of 02 street lights -.4 -.2 0.2.4.6 e( street_light_02 X ) coef = 1.95034, (robust) se =.6454984, t = 3.02-1 -.5 0.5 1 1.5 e( road_qual X ) coef =.45150932, (robust) se =.12967818, t = 3.48 Implication: It looks like Past (current) public service provision predicts (reduced) 112 violence

Recap: Data supports both club and rational peasant models The next steps: Models have an additional prediction about tactics and geography: - In areas where noncombatants do not cooperate with government we expect conventional attacks, - while in areas where noncombatants cooperate, suicide attacks and other tactics which do not share information with noncombatants are required. 113

Where did these data come from? Capable of pulling classified data from military sources, declassifying it, and making it available for civilian researchers. In this case, the SIGACTs and survey data come from the US Central Command - don t ask for these two datasets until we ve examined, cleaned and written a paper www.ctc.usma.edu 114

What can we learn from CERP? (Commanders Emergency Response Program) CERP is spent on public service provision, among other things CERP per capita and sig. acts: But CERP is also directed disproportionately at the most troublesome areas 0 10 20 30 40 Mosul Al-Hamdaniya Al-Daur Al-Muqdadiya Al-Daur Mahmoudiya Mahmoudiya Al-Hamdaniya Mosul Tarmia Al-Hamdaniya Tarmia Balad Ramadi Al-Muqdadiya Al-Daur Al-Daur Haditha Mosul Tikrit Heet Balad Ana Al-Rutba Mosul Balad Mahmoudiya Falluja Tikrit Al-Hamdaniya Al-Ka'im Haditha Ramadi Abu Tarmia Al-Hawiga Ghraib Ana Haditha Al-Hawiga Mada'in Baiji Karkh Baladrooz Falluja Abu Ghraib Khanaqin Baladrooz Ramadi AnaAl-Muqdadiya Al-Rutba Abu Al-Hawiga Falluja Ghraib Heet Tikrit Karkh Al-Ka'im Tarmia Al-Muqdadiya Al-Ka'im Baiji Al-Mahawil Abu Heet Kifri Mada'in Al-Khaseeb Khanaqin Ramadi Al-Rutba Ana Falluja Khadamiya Al-Shirqat Telafar Adhamiya Baiji Tikrit Khadamiya Mahmoudiya Heet Al-Mahawil Al-Musayab Haditha Khanaqin Mada'in Al-Maimouna Baladrooz Makhmur Amara Al-Salman Al-Ba'aj Telafar Al-Zubair Sinjar Tilkaif Kerbala Kifri Kirkuk Al-Hawiga Badra Daquq Sadr Baiji Karkh Mada'in Al-Musayab Al-Mahawil Adhamiya Khadamiya Basrah Ba'quba Abu Al-Khalis Khanaqin Baladrooz Al-Mahawil Al-Zubair Resafa Sadr Mergasur ErbilKoisnjaq Al-Arab Al-Khaseeb Ain Al-Tamur Al-Salman Najaf Al-Shirqat KirkukDaquq Samarra Al-Musayab Adhamiya Basrah Sadr Al-Suwaira Hashimiya Kufa Afaq Sinjar Resafa Abu Al-Khaseeb Ain Al-Khalis Al-Tamur Al-Maimouna Al-Hindiya Akre Makhmur Shekhan Al-Zubair Telafar Tooz Al-Khalis Samarra Ba'quba Al-Musayab Tooz Al-Ka'im Al-Ba'aj Resafa Sadr Afaq Diwaniya Al-Shirqat Basrah Hamza Badra Shaqlawa Tilkaif Sinjar Akre Kifri Al-Ba'aj Daquq Al-Salman Al-Midaina Zakho Choman Soran Ain Al-Maimouna Ali Al-Manathera Kufa Sumel Amara Al-Samawa Najaf Hilla Dahuk Al-Mejar Al-Khidhir Al-Rumaitha Amedi Al-Kahla FaoShatt Shaqlawa Akre Al-Shikhan Qal'at Al-Qurna Al-Shamiya Diwaniya Kirkuk Shekhan Hatra Al-Gharbi Tilkaif Al-Tamur Telafar Daquq Chamchamal Afaq Darbandihkan Dokan Halabja Kalar Penjwin Pshdar Rania Sharbazher Sulaymaniya Al-Chibayish Al-Shatra Nassriya Al-Suwaira Al-Rifa'i Suq Kut Hamza Al-Na'maniya Al-Hai Kerbala Mergasur Al-Shoyokh Saleh Hashimiya Al-Arab Al-Kabi Sinjar Badra Shekhan Badra Dokan Al-Hindiya Makhmur Balad Al-Zubair Al-Salman 115 Abu Ghraib 0 100 200 300 400 500 CERP spending per capita Incident per 1000 persons Fitted values Al-R

Fao Choman Penjwin Ali Al-G Ain Al-T Ana Mergasur Al-Rutba Shekhan Badra CERP per capita and sig. acts. 06 (zoom on CERP pc <100) sig acts / 1000 Linear prediction 20 15 Haditha Ramadi Al-Muqda Al-Hamda Mahmoudi 10 Falluja Tikrit 5 Al-Hawig Baladroo Karkh 0 Basrah Samarra Tooz Al-Suwai Ba'quba Diwaniya Amara Baiji Al-Ka'im Al-Maimo Al-Chiba Al-Kahla Darbandi Halabja Al-Mejar Afaq Al-Khidh Al-Manat Al-Qurna Al-Samaw Qal'at S Dokan Chamcham Al-Shami Al-Midai Al-Na'ma Al-Rumai Al-Rifa' Al-Hindi Al-Shatr Kalar Kufa Kut Pshdar Rania Sharbazh Sulayman Zakho Najaf Hilla Nassriya Suq Al-S Dahuk Sumel Hashimiy Soran Erbil Al-Khali Mosul Al Sadr Al Resaf Al-Shirq Shatt Al Al-Ba'aj Kirkuk Amedi Al-Hai Khadamiy Adhamiya Sinjar Mada'in Al-Musay Hatra Makhmur Shaqlawa Al-Mahaw Telafar Al-Zubai Al-Shikh Hamza Kerbala Akre Khanaqin Abu Al-K Daquq Kifri Tilkaif 0 50 100 CERP per capita 116

Can Hearts & Minds Be Bought? Huge investment ~ $41B Uncertain impact Reconstruction spending IRRF CERP/CHRRP Community characteristics WFP ILCS 117

How to use CERP efficiently? To answer that research question we need access to more data In particular, we need a way to filter out the reverse causality due to CERP spending being directed at locations expected to be dangerous. One solution: Troop rotation data (declassified in the same way these data have been) 118