Come on, I gave you guys something to go to (Why terrorist do what they do). The people on my side are all asleep now. I want to sleep.
There's are a few types of terrorists, as far as I can see - the first is the group that commits terrorism because they can get away with it, and they think they personally will benefit from the results. These are the leaders, the politicians, the generals and the warlords. There are quite a few of these in the employ of the US government right now, and the US is (generally) quite supportive of these guys, so long as they profess the right sorts of beliefs. These are by far the most dangerous type, because they have something the others don't -
effectiveness. There's still no comparison to the campaign of terrorism launched by Mao, and hopefully there never will be again, and the various US mafias haven't really been averse to engaging in a little campaign of murder and intimidation to get their way before.
The second group is more interesting, because these terrorists do what they do for the same reason gang members or cultists do. This group has nothing to lose, no voice, and no power, and joining a terrorist organization seems like a way out, or a way to
matter. It allows them to exert control over their life, to find something of value and a place on society. It involves a lot of social pressure, from what I've read, and a lot of overt manipulation by the leaders. When you're at the bottom of a pit, and someone reaches out a hand and tells you they'll pull you up to freedom, you take hold. You'll find this type of terrorist throughout the Middle East, especially in places like Palestine.
Finally, there's the fanatics and idealists. These are the people that are committed to the idea, and truly believe they are doing the right thing. They'll often support the first group, and be the first on the front lines for their cause, because they believe in their heart that this is what they were meant to do. This seems to make up the bulk of domestic terrorists in the US and other heavily westernized nations which is (I think) telling.
In essence we have: The Powerful, The Desperate, and The Righteous.
Of these, I think the first can be controlled but not really dealt with - they only conduct terrorism because they think they have something to gain, so if circumstances become such that they have nothing to gain and something to lose, they'll probably stay away. It takes a special person to be a member of this group, a certain level of ruthlessness and sociopathy, but the ones you have to worry about generally aren't stupid. Effective laws, and clear consequences seem to be your best bet here. Unfortunately, societies tend to tolerate them as long as they direct their terrorism against some "other".
The second group is immune to worrying about something to lose, because they HAVE nothing - except that which has been given to them by their allegiance to a terrorist organization. I think what you need to do here (and I think history bears me out) is to
give these people something to lose. No, you don't have to respond to "terrorist demands", and it's probably better if (instead) you act pro-actively. Additionally, you need to give them a more productive outlet to express control and progress. These people are participating because they feel they have nothing to lose and no other choice - take away those motivations, and there's a good chance they'll stop being terrorists.
The final group is probably the toughest nut to crack, but I don't think they make up as significant a portion of the terrorist population as people would have us believe.