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Recent research suggests that liberal displacement policies may aggravate nativist backlash against migrants, worsening conflict in host communities. Yet, liberal policies may also magnify the positive economic externalities of refugee-hosting, with ameliorative effects on conflict. We examine the relationship between forced displacement policies and violence in refugee-hosting areas. Using fine-grained data on de jure displacement policies and subnational violence in a triple-difference framework, we document a robust negative effect of policy liberality on violence in refugee-hosting communities. Our analysis of disaggregated policy domains reveals that this conflict-mitigating effect is especially large for policies on access, social services, and free movement. Presenting new evidence on the allocation of aid to refugee-hosting areas, we argue that liberal refugee policies undercut the risks of conflict associated with refugee-hosting by promoting local development. Our findings counter populist narratives that view refugees as security threats and advocate restricting their rights: liberal refugee policies enhance security in host countries and communities.