One of the distinctive elements of President Barack Obama's approach to counterterrorism has been his embrace of Unmanned Aerial Vehicles (UAVs), or drones, to target terrorist operatives abroad. The Obama administration has used drones in active theatres of war, such as Afghanistan, but it has also dramatically increased the number of drone attacks launched by the CIA in other countries, such as Pakistan, Yemen and Somalia. The conventional wisdom on drone warfare holds that these weapons are highly effective in killing terrorist operatives and disabling terrorist organizations, while killing fewer civilians than other means of attack. This article argues that much of the existing debate on drones operates with an attenuated notion of effectiveness that discounts the political and strategic dynamics — such as the corrosion of the perceptions of competence and legitimacy of governments where drone strikes take place, growing anti-Americanism and fresh recruitment of militant networks — that reveal the costs of drone warfare. Focusing particularly on drone use in Pakistan, Yemen and Somalia, the article suggests that the Obama administration's counterterrorism policy operates at cross-purposes because it provides a steady flow of arms and financial resources to build up governments whose legitimacy it systematically undermines by conducting unilateral strikes on their territory. It concludes that the US embrace of drone technology is a losing proposition over the long term as it will usher in a new arms race and lay the foundations for an international system that is increasingly violent, destabilized and polarized between those who have drones and those who are victims of them.