Daru is French and Algerian born. He knows of the French-Algerian conflict and that it is the result of French colonialism in Algeria. Darus is like one of Camus' existential characters and he recognizes the French/Arab conflict as a fight over land and people. One of the first reasons he gives for refusing to take the Arab to Tinguit is that he, a schoolteacher, has no place fighting or escorting a prisoner of war. 

"The orders? I'm not . . ." Daru hesitated, not wanting to hurt the old Corsican. "I mean, that's not my job." 

Daru does not want to partake in this war/culture clash, so he then asks what the Arab (still referred to by that nameless moniker "the Arab" - by the narrator) has done. Balducci replies that he's killed his cousin. Balducci is not even sure if this Arab man is against him or on their side. This makes Daru even more uncomfortable with taking the Arab as prisoner and shows how absurd Daru thinks Balducci's reasoning is: 

Daru felt a sudden wrath against the man, against all men with their rotten spite, their tireless hates, their blood lust. 

Daru does not think it is right or honorable to turn the Arab over. He thinks men like Balducci operate (as soldiers or nationalists) out of "rotten spite." Daru sympathizes with the prisoner and would rather let the man go than turn him in. However, he is conflicted with turning the Arab over in that it is his duty to do so. In the end, not knowing whether to do the right thing or his so-called duty, Daru offers the Arab two paths: one to the east and the police and one to the south where he will find shelter with nomads and perhaps, eventually his freedom. 

He lives like a monk, as a teacher, and he feels secure in this monastic lifestyle, feeling like an exile everywhere else. One reason Daru enjoys this monastic life is that he is removed from the cultural war between Algeria and France. He is therefore removed from colonialism in Algeria while still living amongst it. Daru, like Camus, was caught in this predicament: being sympathetic to those under colonization but with some loyalties to the colonizers. This is why he offered the Arab two options. 

Daru felt the cultural conflict was absurd and would probably have preferred if everyone lived like he did; having to answer only to himself. He felt guilty turning the Arab in but he also felt guilty for insulting the gendarme, Balducci: 

He could still hear the gendarme's farewell and, without knowing why, he felt strangely empty and vulnerable. 

Daru finds the entire situation (both sides of this conflict) to be absurd. Daru is annoyed by the Arab's crime and his own people (the French) for having created the situation (colonialism) in which he would even have to deliver a prisoner: 

And he cursed at one and the same time his own people who had sent him this Arab and the Arab too who had dared to kill and not managed to get away.