These statistics do not mean that foreign aid causes violence; but they do raise questions about the effectiveness of using foreign donations to promote moderation and combat terrorism. The graphs reveal that the increased budgetary aid to the Palestinian government after the start of the second Intifada in September 2000 was accompanied by a corresponding increase in the number of Palestinian homicides in 2001 and 2002. After mid-2002, Israeli countermeasures against suicide bombers began to reduce the number of Israeli dead. By August 2003, the first portion of the security barrier was in place, leading to a rapid decline in homicides in 2003. The appointment of Salam Fayyad, a moderate technocrat, to the finance ministry in late 2002 also resulted in reduced aid as Israeli tax revenue was restored to the Palestinian government. While Israeli countermeasures reduced the number of Israeli victims, Palestinian factional violence took an ever increasing toll. When including Palestinian victims of Palestinian violence as well as Israeli victims, the correlation between aid and homicides continues beyond 2003...

...Infusions of foreign funds into the PA budget from late 2000 through 2002 correlated with increased violence. Only when Israel enforced a near total separation from the Palestinians in 2003-2004 did the level of terrorist killing decline significantly. But this was soon followed by increasing factional violence, which is consistent with the fact that money was still being made available to purchase weapons and pay the salaries of the expanding militias...