DISCUSSION PAPER SERIES IZA DP No. 14265 Aid and Radicalization: The Case of Hamas in the West Bank and Gaza Amit Loewenthal Sami H. Miaari Anke Hoeffler APRIL 2021 DISCUSSION PAPER SERIES IZA DP No. 14265 Aid and Radicalization: The Case of Hamas in the West Bank and Gaza Amit Loewenthal Tel-Aviv University Sami H. Miaari Tel-Aviv University, University of Oxford and IZA Anke Hoeffler University of Konstanz APRIL 2021 Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world’s largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. ISSN: 2365-9793 IZA – Institute of Labor Economics Schaumburg-Lippe-Straße 5–9 Phone: +49-228-3894-0 53113 Bonn, Germany Email: [email protected] www.iza.org IZA DP No. 14265 APRIL 2021 ABSTRACT Aid and Radicalization: The Case of Hamas in the West Bank and Gaza In this paper we study how radical political factions secure support. In order to achieve their objective of gaining support, radical political factions can choose from a number of specific strategies. They can provide financial assistance and generate a reciprocal relationship with their beneficiaries (political clientelism). On the other hand, financial assistance from other, non-radical sources, may raise the opportunity cost from militant policies performed by radical factions, making recipients of such financial assistance less likely to support radicals (opportunity cost theory). Smaller payments may induce loyalty, especially if the assistance is part of a “club good” offered by the radical faction, (club good theory). Costly forms of political violence by the radical faction signal resolve and may attract more support, (outbidding theory). We examine all four tactics for the case of Hamas, a radical faction in the Palestinian National Authority. We exploit a unique dataset that includes the sources and extent of assistance received by Palestinian households, data on Israeli and Palestinian fatalities as well as data on the level of support for particular Palestinian factions. We find that residents of districts that receive assistance from religious charities are more likely to support Hamas, even though this support is relatively small in monetary terms. These support patterns are in line with existing theory on armed religious groups as club good providers. By comparison, residents of districts who receive more material aid from Palestinian Authority agencies are more likely to support Fatah, except in the Hamas-controlled Gaza Strip. Finally, aid from international organizations is associated with support for moderate factions and decreased support of radical factions. While it is possible that charities only target districts and households that support them, testing for reverse causality, by regressing charity support on lagged political preferences, yields no such evidence. JEL Classification: D72, D74, H56 Keywords: Hamas, charities, radicalization, conflict, Palestine, humanitarian aid Corresponding author: Sami Miaari Department of Labor Studies Tel-Aviv University Ramat Aviv Tel-Aviv 69978 Israel E-mail: [email protected] 1. Introduction During the summer of 2000 the leaders of the USA, Israel and the Palestinians met at Camp David for further negotiations on the Middle East peace process. These peace negotiations failed and soon after Palestinians rose up against Israel. This uprising is commonly referred to as the “Second Intifada”. The fighting continued until early 2005 and the effects were devastating; more than 4,000 people were killed and average Palestinian incomes fell by 40% (Statistics, 2005). Declining incomes made more Palestinian families reliant on humanitarian aid. In 2004, 29% of Palestinian households reported that they had received humanitarian aid. By 2009 this figure had risen to 59%. Our study focuses on developing an understanding of the importance of material aid in shaping political preferences, and on identifying a plausible mechanism through which this effect is achieved. The rest of the paper is organized as follows: the next section provides some contextual background on the Israeli-Palestinian conflict, the different political factions and their provision of financial assistance. In Section 3, we discuss various theories of how radical factions widen their political support. These theories include the opportunity cost theory, the “religious club theory”, which involves religious groups providing club goods, outbidding and political clientelism. In Section 4, we discuss our data and estimation methods, as well as the threats to identification. Our results are presented in Section 5. We find that aid from charities was associated with an increase in support of Hamas, that aid from the Palestinian National Authorities (PNA) agencies is associated with support for the faction currently in power and that aid from international organizations has a moderating effect on Palestinians’ political preferences. We discuss these results in Section 6 and analyze them using our competing theories. The impact of aid very much depends on the source of aid. Financial support from charities is small in absolute terms, but increases support for Hamas, and can best be explained in terms of the religious club theory. The effect of aid from PNA agencies can be attributed to political clientelism, while aid from international organizations fits the opportunity cost theory. In the conclusion we discuss the policy implications of our findings for countries and international institutions that fund humanitarian aid to the Palestinians. 2. Background and Context The Israeli-Palestinian Conflict has a pervasive impact on the day-to-day existence of both Palestinians and Israelis. To understand the dynamics of the conflict it is important to analyze the political preferences of the population, in particular the support for radical factions. The Israeli-Palestinian Conflict The conflict has a long history, but of particular importance to our analysis is the fact that, following the Six Days War in 1967, the West Bank and Gaza Strip came under Israeli control. A Palestinian uprising against Israeli control (the “First Intifada”) broke out in December 1987. This uprising led to the signing of the Oslo Accords in 1993. The period of peace following the Oslo Accords came to an end with the “Second Intifada” (2000-2006). The Second Intifada was characterized by violent clashes between Palestinians and the Israel Defense Forces (IDF). From 2000 to 2006, there were 703 Israeli civilian deaths, 316 Israeli military deaths, and over 4,000 Palestinians were killed (B’Tselem, 2007). Furthermore, this period also saw the establishment of a comprehensive system of mobility restrictions, imposed by the IDF, severely curtailing the freedom of movement of Palestinians throughout the West Bank. This system was enforced through various manned and unmanned physical barriers placed on roads between settlements and at points of entry to villages, towns, and cities. Political factions in the West Bank and Gaza Strip. The focus of our investigation is on how parts of the Palestinian population became more radicalized and in this section we provide some brief information on the main political factions.1 We use the term “faction” instead of “party” to describe Palestinian movements for two reasons. First, existing literature on the political economy of the Israeli Palestinian conflict generally uses the term “faction” (see Jaeger et al, 2012; 2015). Second, we focus less on electoral politics and these organizations in their capacity as parliamentary parties, but more on their capacity as insurgent factions with armed and social wings. 1 Further information on the main political factions can be found in the works of Jaeger et al. (2012; 2015). One of the main political factions is Fatah. The movement was founded in 1959 and was led by Yasser Arafat until his death in 2004. Throughout this period Fatah dominated the Palestinian national movement and was the sole representative of the Palestinian population, both in the Gaza Strip and the West Bank, and abroad. Fatah led the Palestinian National Authority (PNA) after its establishment in 1993, following the Oslo Peace Accords. As the majority party in the Palestinian Legislative Council, (PLC), until the end of the Second Intifada in 2005, Fatah was the primary negotiator with the Israeli government. Fatah supports the two-state approach to the Israeli- Palestinian conflict, agreeing in principle to a partition between an Israeli and a Palestinian state (Calì and Miaari, 2017). The other main political faction is Hamas, founded in 1987, soon after the First Intifada, as an offshoot of the Egyptian Muslim Brotherhood. The key distinction