Abstract :
This article evaluates state-sponsored terrorism as a principal-agent
issue. More often applied to the study of licit national or international
institutions as a way to improve their governance, we argue that applying
principal-agent analysis to illicit relationships such as those between
states and terrorist agents is an equally fruitful application, though one
with different objectives. Rather than being used as a tool to improve
governance, applying principal-agent analysis to illicit relationships such
as state-sponsored terrorism may point to areas of susceptibility and
thus inform more effective counterterrorism strategies. In this article,
we explain why states delegate to terrorist groups, how they seek to control
their agents, and the tensions in the relationship, both generally
and through specific reference to Iran’s sponsorship of Hizballah, Syria
of various Palestinian groups, and the Taliban of al-Qa’ida. This analysis
yields propositions about the conditions under which states are likely
to delegate to terrorist groups and specific recommendations on how
principal-agent problems of these illicit relationships may be used in
practice to combat terrorism.
