How does democracy influence terrorism? Some scholars argue that lack of representation in autocracy motivates terrorism; others claim that individual liberty in democracy permits it. This thesis explores the debate by using Chile as a case study to examine how democracy influences terrorist organizational processes. It traces how variations in levels of representation and individual liberty in Chile between 1965 and 1995 influenced terrorist strategic capacity, or the ability of groups to think and act towards long-term survival and success. Analyzing the five observable features of strategic capacity - mission, hierarchy, membership, tactics, and violence level - reveals that democratic characteristics positively influence some dimensions and constrain others. High-functioning democracy and highly repressive autocracy are unlikely to experience violence, due to the high constraints that each places on different features of strategic capacity. However, democracies with weak representation and autocracies with some individual liberty allow strategic capacity to strengthen, making violence more likely.