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Monsters to DestroyUnderstanding the War on Terror$
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Navin A. Bapat

Print publication date: 2020

Print ISBN-13: 9780190061456

Published to Oxford Scholarship Online: April 2020

DOI: 10.1093/oso/9780190061456.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 06 December 2021

Terrorism and the Problem of Moral Hazard

Terrorism and the Problem of Moral Hazard

(p.39) 3 Terrorism and the Problem of Moral Hazard
Monsters to Destroy

Navin A. Bapat

Oxford University Press

Using the logic of a game theoretic model, this chapter argues that the project to cement American dominance over the global energy market failed because the U.S. security guarantee created a series of perverse incentives. Host leaders recognized that they would only receive American support if the threat of terrorism persisted, and that they would receive relatively more economic and military aid if the threat of terrorism became significant. Therefore, these host states had no incentive to disarm their terrorists. As a result, terrorism escalated throughout the energy market in the 2000s, leading to spiraling costs to the U.S. and a political backlash. Pressure mounted on American leaders to begin scaling back the war. To forestall this possibility, and protect the lucrative petrodollar system, the U.S. needed to quickly develop a strategy to force the host states to proactively address the terrorist threats in their territories.

Keywords:   moral hazard, military aid, counterterrorism, counterinsurgency, terrorism

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