Essays on the Law & Economics of Terrorism in Pakistan

Summary

This thesis explores the origin of sectarian violence and terrorism, the impact of terrorism risk on the individual’s democratic preferences and the deterrence effect of the law enforcement interventions against terrorism and violence over time and space in Pakistan. It comprises of six chapters which fall under the category of ‘Illegal Behavior and the Enforcement of Law.’ The causes and effects of the illegal behavior (terrorism and violence) have been discussed in the chapters 2 & 3, while, chapters 4 & 5 focus on the enforcement of law against these crimes.

Chapter 2 serves two core dimensions: Firstly, to cater for the historical account of the origin of sectarian violence and terrorism and their temporal variation in Pakistan. Secondly, the construction of these crimes has been presented from the religious market perspective. Adam Smith argues in The Wealth of Nations that “... the hazards of government regulation are as real for religion as for any other sector of the economy.” Therefore, chapter 2 advocates historical evidence on the hazards of government interventions in the religious market of Pakistan. It explains that rent-seeking behavior on the part of the three players in the religious market, namely, religious sects, government and cold war allies of Pakistan, leads to regular interventions in the religious market. The interventions produce externalities in the form of intolerance in the religious space which slowly and gradually transforms into sectarian violence and terrorism.

The 3rd chapter discusses exposure to the risk of terrorism and its impact on the individual’s preferences for liberal democratic values. It explores the following question: Does exposure to terrorism and violence affect democratic opinions and perceptions? Exploiting the individual level socio-economic, religious and political information collected from the 6,000 respondents, the chapter empirically evaluates and presents evidence that acts of terrorism negatively affect preferences towards democratic institutions. The persistent shocks of terrorism decrease the support for the elected legislators while increasing it for the law enforcement institutions like the armed forces. The deterrence effect of the exogenous intervention by law enforcement institutions on different types of tribal violence is explained in the 4th chapter of the thesis. Approximately, 3% territory in the North-West of Pakistan is ungoverned but constitutionally presented in the lower and upper houses. It has never been exposed to modern law enforcement institutions like the judiciary, police and military. Thus, it experienced pervasive tribal violence, revenge killings and drug trafficking over the years. The incident of the September 11, 2001 and the consequent US invasion of Afghanistan provided an exogenous shock to the military institution to enter the ungoverned space for the first time. The empirical results show that the intervention significantly decreases different types of violent conflicts in the ungoverned terrain.

Finally, chapter 5 explores criminologists’ hypotheses on the displacement and diffusion of crime control benefits to test the displacement and diffusion effects of anti-terrorism interventions. The empirical analysis highlights that anti-terror interventions displace terrorist activities from the treated to the non-treated districts, thus, impose a significant public cost on the neighborhood. Displacement of the terrorist activities from one district to another in response to the negative sanctions imposed by the law enforcement agencies might be one of the reasons for the pervasiveness of terrorism in Pakistan.

With regard to the policy, this dissertation suggests the following recommendations: First, a more comprehensive understanding of the interactions between violent conflicts and the democratization process is needed. The democratic transition can revert to autocracy, if voters are exposed to persistence terrorism risks. Second, an ungoverned territory may not produce negative externalities in the form of organized crimes including terrorism in the short-term, but, exposes to such crimes in the long-term. Therefore, a responsible state needs to invest in the establishment and capacity building of the law enforcement institutions in such territories to avoid future spillovers. And third, effective law enforcement interventions requires not only to deter violence and terrorism in the given geographic space but also their externalities into the neighborhood.