Restitution or Retribution? Detainee Payments and Insurgent Violence

Counterinsurgents frequently rely on mass arrests to impede rebel operations, but in so doing, risk detaining innocent civilians. Wrongful detention can backfire, fueling insurgent violence by alienating detainees and their kin. Can counterinsurgents mitigate wrongful detention through targeted compensation? I study this question using project-level data on US payments to individuals deemed innocent and released from Coalition custody in Iraq between 2004 and 2008. Leveraging plausibly exogenous variation in the allocation of detainee release payments, I document a robust, negative association between counterinsurgent compensation for wrongful detention and insurgent violence. The violence-reducing effects of detainee release payments were greatest in Sunni and mixed sectarian areas; for the types of insurgent attacks, most prone to civilian informing; and when detainee release was complemented by other population-centric reforms. These results suggest that post-harm mitigation helps shift civilian perceptions, inducing civilians to share more information with counterinsurgent forces.