States provide foreign assistance for many reasons, including their achievement of strategic goals. Previous research suggests that rivalries exert a meaningful impact on foreign aid allocations, not only in direct rivalry situations (i.e., rivals are less like to receive aid), but also in indirect rivalry situations (i.e., potential recipients located near rivals or with rivalries in common with the donor are more likely to receive aid). What happens as a consequence of such strategic aid allocations? In this paper, we examine the effect of foreign aid on conflict within direct and indirect rivalry situations. Specifically, we identify and develop two contending arguments about the likely consequences of foreign aid and conflict in indirect rivalry situations. To test these arguments, we examine foreign assistance by the United States and the conflict history of recipient states from 1962 to 2000. Our results indicate that when foreign aid recipients and donors are rivals with a third state, increased foreign aid to the recipient leads to increased conflict between the recipient and the third-party rival
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