This paper suggests that current tactics in the ‘war on terror’ are predictably counterproductive, and that these ‘failing’ tactics actually serve a range of political, economic and psychological functions for diverse actors who make up the ‘war on terror’ coalition. It compares the ‘war on terror’ to civil wars, especially in Africa, where experience shows that predictably counterproductive tactics are common and the aim is not necessarily to win. Current violent responses to terror—which represent ‘magical thinking’ in important ways—are based on the fallacy of a finite group of evil people who can be physically eliminated; more productive would be a genuine attempt to understand the processes that lead people to embrace violence and an attempt to engage with processes of exclusion, humiliation and discrimination. This is something that needs to be built into any developmental initiative; otherwise, we are left with a vast pool of anger and a counter-terror reflex that only exacerbates the problem. Copyright © 2006 John Wiley & Sons, Ltd.