Economic Dimensions
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Transcript Economic Dimensions
The relationship between economics and terrorism
is far more complicated than many have suggested
(e.g., “combat terrorism through poverty
eradication”)
At least 3 dimensions to the relationship between
economics and terrorism:
Economic conditions as motivation for terrorist violence
Economic conditions as facilitator of terrorist violence
Economic conditions as result of terrorist violence
Plato and Aristotle:
“Economic factors are fundamental in the outbreak
of violence.”
Marxism:
“War is a mechanism for maintaining inequalities in
a struggle for control of raw materials and markets.”
Violence is an inevitable outcome of capitalism
What role do economic grievances play in
motivating terrorist groups?
Well, it depends . . .
• Structural economic
challenges:
– Expectations and hopes vs.
limited opportunities for a
better life
– Unemployment & poverty,
particularly in oil-wealthy
country
– High inflation for necessities
(food, shelter, fuel, etc.)
– Ethnic favoritism (e.g., limited
opportunities for Tamils in Sri
Lanka)
• Structural economic challenge: Socio-demographic pressures
(youth bulge)
• Age composition of populations in developing countries affects:
– Resource consumption
– Prices
– Government revenues and expenditures
– Demand for jobs
– Labor wages, etc.
• “Current and projected demographic and socioeconomic conditions
in many nations throughout the Middle East, South Central, and
Southeast Asia could lead to the emergence of more terrorism and
terrorists for many decades to come . . .” National Intelligence Council
• Political-Economic
Grievances:
– Authoritarian/repressive
regimes providing limited or
no power to enact change
– Corruption/resource
centralization among elites
– Political instability leading to
market chaos
• Political-Economic
Grievances:
– Government revenues in oilproducing countries are
vulnerable to global price
fluctuations
– Lack of government
investment in education,
public infrastructure (esp. in
oil-rich countries like Saudi
Arabia, Nigeria, etc.)
Al Qaida’s leaders have consistently highlighted
economic grievances in their anti-Western ideology,
including:
Stealing oil from the Muslim world (e.g., keeping the price of oil
at artificially low prices)
Preventing economic advancement of the Muslim world by
supporting corrupt, apostate regimes
Economically disadvantaging poorer, underdeveloped countries
by subsidizing domestic producers of certain goods
Imposing harsh economic sanctions on important Muslim
countries (Iran, Syria, Iraq pre-2003, etc.)
AQ leaders have also encouraged attacks against economic
targets in the U.S. and other Western nations
Primary strategic objective: to “bleed” (exhaust) the
United States economically and militarily both by directly
causing inordinate economic losses and forcing the U.S.
to spend excessive amounts of money to protect its vast
infrastructure.
United States derives its considerable military power and political
influence from its superior economy
Thus, disrupting the American economy will in turn defeat the U.S.
as an opponent and end its military hegemony and presence
overseas
9/11 attacks against WTC, global financial center, as prime example
Local Dimensions
Impoverished communities vulnerable to exploitation by
criminal networks, militias, etc. – some of whom provide
social and economic programs that fill needs unmet by
official government
For example:
Hizballah in Lebanon
Hamas in the Palestinian Territories
Underpaid law enforcement, border security, etc. can
facilitate corruption, criminal or extremist sympathies
significant concern in some African countries
Regional and Global Dimensions
Globalization (reduction in barriers to global transportation, shipping,
asset transfers)
Arms trafficking (ease of access to AK47s)
Trafficking in drugs, humans, diamonds, etc. (revenue streams)
Global energy dependence facilitates funding streams for violent
groups
Oil-rich Gulf states providing support to Mujahideen in Afghanistan during
1980s and beyond, as well as to Palestinian “freedom fighters”, etc.
Disruptions in commerce, transportation, tourism, financial
markets
Increases in insurance premiums
If govt. subsidizes, it discourages self-protection while the public
bears the increased costs
Severe tightening of border controls can constrain trade
and increases costs
Increase in public spending on security, military operations
Economic conditions, like poverty, by themselves do not
produce terrorism, but can be a contributing
environmental condition
Particularly blocked social mobility, political repression and relative
socioeconomic deprivation
Economic conditions can help facilitate terrorist activities
Economic targets (oil pipelines, financial centers, Western
hotels, etc.) can be a prominent type of target for terrorist
attacks; such attacks can have significant economic
impacts
Various estimates . . .
•
NY City Economic Impact
– “Total Loss $83 billion”
(NYC partnership & Chamber of
Commerce: Nov 2001)
– “Total Cost $54 billion”
(NY Governor: Oct 2001)
– “WTC Replacement Cost &
Cleanup $25~29 billion”
(FEB NY: April 2002)
– “Total Cost $83 billion (quoting
NYCP-COC) but $67 billion
covered by Insurance
(US GAO: May 2002)
•
NY City Jobs Lost
– 108,500, 115,300, 105,200,
125,000, 84,000, 78,200,
129,000….
•
NY State Jobs Lost
– “99,000 in 2001, 78,000 in 2002,
77,000 in 2003”
(NYS Senate Finance Committee:
DRI-WEFA: January 2002)
– “Resulted at peak loss of 78,200”
(DRI-WEFA: March 2002)
– “50,000 immediately, 70,000 in 4th
Quarter” “Much of this loss is likely
linked to WTC attack”
(FEB NY: April 2002)
Immediate and Short-Term Economic Impacts
Financial Sector
40% of WTC casualties
NYSE, NYME closed
Aviation Sector
planes grounded for a week or more
20% drop in passengers
100,000 jobs lost; several airlines went bankrupt
Insurance Sector
loss of life and property estimated at $40-$50 billion
Other industries: hotels (higher vacancy rates, layoffs), tourism,
automobile rentals, travel agents, and civilian aircraft manufactures
Longer-Term Economic Impacts
Federal Reserve cut interest rates aggressively
Special financing incentives offered by the automobile companies led to
record motor vehicle sales for October 2001
Securities market was only closed for four days, opening again after the
telecommunications network in lower Manhattan became operational.
Stock market re-opened on September 17th; within 19 trading days, the
S&P 500 index had bounced back to its pre-September 11th level
Longer-Term Economic Impacts
Severe and immediate physical damage to all businesses, government
offices, and other organizations located in and around the WTC complex.
Thousands of dead, injured, missing, physically displaced and traumatized
employees; losses of data, information, and institutional knowledge
Nationwide, however, the economic impact of 9/11 over the long-term has
been most significant in the $ billions spent on new homeland security
initiatives, military deployments, etc.
Department of Homeland Security, TSA
Afghanistan, Iraq, (other countries, especially Special Forces)