“COIN,” the counter-terrorism doctrine the United States used during the Iraq War, was in criminological terms overly reliant on militarized “incapacitationist” strategies. Based a on competing “societal reactions” or community-level labeling theory, we argue that COIN failed to anticipate but predictably produced state-based “legal cynicism” in Arab Sunni communities—increasing rather than decreasing politically defiant terrorist crimes. We test our hypotheses with nationally representative surveys and data on terrorist attacks collected before, during, and immediately after the 2007 Surge in US troops. The Surge increased perceptions of unnecessary US-led violence against Arab Sunni non-combatants, provoking cynical beliefs in Arab Sunni communities, creating local contexts in which terrorist attacks increased, and foreshadowing later advances by the Islamic State. Our findings show that oversimplified, incapacitation-oriented control tactics—in domestic policing, in COIN, or in the traditional warfare strategies that are replacing COIN—are likely to contribute to rather than reduce cycles of violence.