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Although terrorism is widely condemned, nevertheless many countries have given assistance to terrorist groups in the form of money, weapons, training, or bases for operations. Every year, the U.S. State Department releases a list of countries that support terrorism, and those countries face stiff sanctions. If a country's support for terrorist groups is not extensive enough for it to be placed on the list, the United States may impose sanctions nonetheless. The United States declared a war on terrorism following the September 11, 2001, attacks on the World Trade Center in New York City and the Pentagon near Washington, D.C.

During the Cold War, a decades-long period (1945–1991) of conflict with the former Soviet Union, the United States provided extensive aid to anti-Soviet and anticommunist groups in many countries. Likewise, the former Soviet Union was extremely open about its support for leftist groups—so much so that the U.S.S.R. was criticized for claiming to extensively support groups to which it gave little practical assistance. Some linguistic finesse was necessary: neither country claimed to support “terrorism,” arguing instead that it was assisting, in the terminology preferred by the United States, “freedom fighters,” or armed liberation movements that represented the true will of a given population. Many of these groups, however, would fit into contemporary definitions of terrorists.

The coinage of the phrase “freedom fighters” points to one reason why countries support terrorist groups: supporting terrorist movements, especially those with some popular backing, can actually enhance another nation's standing. The communist government of Cuba, for example, obtained international notice by openly promising to “export the revolution”—that is, to foster and support communist groups in other nations. Muslim governments in Iran and Afghanistan have made much the same promise to militant Muslim groups. While such proclamations can lead to international condemnation and trade sanctions, they can also establish a nation as an ideological leader, a country willing to make sacrifices to help support and export a certain political philosophy.

Exporting the revolution can also be a profitable business. Cuba routinely required leftist groups to pay for Cuban soldiers and civilians sent to help, and Bulgaria's government was once notorious for its willingness to sell weapons to terrorist groups at a hefty profit.

However, the primary reason countries support terrorist groups is neither prestige nor profits—ideological conflict that cannot be directly militarily expressed. A nation almost always supports terrorist groups that share a common enemy with the state, especially when peaceful reconciliation is impossible but war is also not an option. For example, during the Cold War the United States and the Soviet Union were implacable foes, divided by deep ideological differences. Both countries had extensive arsenals of nuclear weapons, meaning that an outright war could have very well led to global annihilation. Instead of making peace or waging war, both countries supported terrorist groups that operated in other countries and that were in ideological alignment with one or the other of the superpowers.

Obviously, adopting this kind of policy involves risks: if a country supports a group that conducts direct attacks against a second country, the second country may take military action against the first. Thus, during the Cold War, the United States and the Soviet Union did not support terrorist groups that conducted operations in each other's country. Instead, they would generally support insurgent groups operating in a third country. Usually one of the two—say, the Soviet Union—would support an insurgency in countries where the government was seen as friendly to the United States. The United States would then provide arms and assistance to the government to help put down the Soviet-backed insurgent groups. An armed conflict or “proxy war” often resulted within the third nation. Supporting terrorism sometimes leads to outright war. For example, in the 1990s Pakistan supported militant Muslim groups in the disputed state of Jammu and Kashmir, which is largely controlled by India. These groups attacked Indian targets, raising the hostility level between the two countries to the point of battle between Pakistani and Indian troops.

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