Oil and Terrorism: Uncovering the Mechanisms

Abstract

Is there an association between oil and terrorism? If so, how are they linked to each other? While there are literature and anecdotes about oil money financing terrorism, this article identifies three mechanisms through which oil is linked to terrorism: funding, targeting, and motivating. Oil-producing countries are prone to terrorism because they are important targets of terrorists who may attack oil facilities to cause greater impact and to harm powerful countries’ overseas interests and also because oil often generates grievances or greed among local people who may in turn engage in terrorist activities. Using data on terrorist incidents and oil income, this article finds a strong, positive relationship between oil and terrorism. To test the mechanisms, this article uses both large-N and small-N data analyses, and the findings suggest that while all three mechanisms appear to explain the oil–terrorism linkage, the targeting and motivating mechanisms are more likely than the funding mechanism. Oil-producing countries have a higher tendency to sponsor terrorism, but no direct evidence indicates oil money flowing to terrorists except for money from kidnapping or extorting oil workers.