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Following the 9/11 attacks, transnational terrorism is seen as a potential catalyst for interstate war. Yet, the willingness of states to fight in response to terrorist violence is puzzling, given that the damage created by terrorism is relatively marginal. This raises the question: if terrorists are so weak and create such little damage, and interstate conflicts are so costly, why are states willing to initiate seemingly ruinous wars to fight terrorist groups? This essay proposes an explanation to address this question using current theoretical and empirical research on terrorism and interstate violence. Recent work indicates that while terrorists appear weak compared to states, terrorists can wield significant coercive power in smaller geographic areas. I argue that if these areas are strategically crucial to the government, such as areas with oil wells or mineral deposits, terrorist activity may precipitously weaken states relative to their …