Terrorism’s ripple effect: unveiling the true price of violence

Nov 6

Introduction

"We live in a time of terror, and contrary to what we see on television and allow ourselves to believe, the real goal of terror is not to kill people but to kill thought, to so demoralize a society that it implodes from within." - John Lahr. (A famous American theater critic and writer)

Then how do we fight terror, and what is the way forward? The attacks on the World Trade Center acted as a catalyst in the fight against terrorism. After various military operations by the US, Osama Bin Laden was declared dead. Osama was not fighting the American military. He waged war against the Western way of life, against democracy, freedom of expression, and multiculturalism. He destroyed the bonhomie between the Muslims and the West. Osama might even have unknowingly triggered America's economic downfall by making the country spend trillions of dollars on one of its costliest wars. Even after Bin Laden's death, the number of terrorist attacks has increased by over twelvefold since 9/11. Terrorist organizations like Al-Qaeda have passed on their legacy to the likes of ISIS, Boko Haram, al Shabab, and various others. Yemen has become a cesspool of terrorism. Afghanistan, Syria, and Nigeria are still some of the worst affected. India has seen a series of bloodshed among army officials as well as civilians. The 2008 Mumbai attacks (also referred to as 26/11 attacks or 26 November attacks) were a series of terrorist attacks that took place in November 2008, when ten members of Lashkar-e-Taiba, a militant Islamist organization from Pakistan, carried out 12 coordinated shooting and bombing attacks lasting four days across Mumbai. The attacks, which drew widespread global condemnation, began on Wednesday, 26 November, and lasted until Saturday, 29 November 2008. A total of 175 people died, including nine of the attackers, with more than 300 injured. Terrorism is also leading to socio-economic problems such as high unemployment rates, international displacement, refugee crisis, and drug-related crimes. With technology, cyberterrorism is acting as a new danger to the world. Thus, terrorism has proven to have an opportunistic form that evolves in response to the attempts to counter it. Then, is the fight against terror worth it? George Bush stated, "There is no bigger task than protecting our homeland. The terrorists are fighting against freedom with all their cunning and cruelty because freedom is their greatest fear, and they should be afraid because freedom is in March.” These words act as a source of inspiration for various countries to not only fight terrorism with guns but also with education. The whole world must aim to eradicate terrorism, which is imperative for society to grow.

We must understand the nuances behind terrorism to fully grasp what it demands from us to have a better understanding to tackle it. This article will focus on various segments. From the cost of terrorism, the policies and bureaucratic structure in place to deal with terrorism, to delving deep into the essence of terrorism, the funding it gets, and how terrorism thrives and survives. It is essential to understand the cost of terrorism (that includes several hidden charges) to realize why terrorism is something that a layman must be concerned about. It is also important to analyze the cost of terrorism to understand the areas where the cost incurred is the highest and consequently allot resources efficiently. To fight terrorism, it becomes important to take note of the existing policies in place to devise better policies in the sense that they are more comprehensive in their approach to tackling terrorism. To break down terrorism from its core, it is overwhelmingly crucial to understand the intricacies of how terrorism continues to survive and persist in the world, the funding, and its operations.

Cost of terrorism

Even after two decades following one of the most devastating acts of terror on the World Trade Center in New York, the US, in particular, and the world, in general, continue to feel the aftershocks of the cost incurred in that terror attack. Why is it important to talk about 9/11? Other than being a classic example of the magnitude and impact of a terror attack, the infamous attack changed the entire world order, global politics, and international relations as we know them. It became a trigger for something that would last decades and uproot generations. It is not in conjecture that billions of dollars were spent in rebuilding the World Trade Center and the Pentagon, paying reparations for human lives, and starting one of the longest wars on humanity, the Afghan War, after the US invasion of Afghanistan. But this is just the tip of the iceberg. Only when we dive deep do we realize the hidden costs of life, deteriorating human psychology, and worsening international relations that have far-reaching and binding effects on people's standard of living, especially in third world countries, and many more.

The analogous first category in terms of terrorism is the direct economic harm caused by terrorist attacks: buildings and infrastructure are destroyed, and productive lives are lost. Besides, terrorism also creates market uncertainty, lowers investors' confidence, and raises risk perceptions, ultimately resulting in lower investment rates and slower economic growth.
The budget cost of government responses to terrorism is the second category. It includes money spent on national defense and homeland security to prevent or mitigate future terrorist acts. In theory, this is simple to measure; nevertheless, in practice, we encounter the challenge of disagreement about what portion of increased defense spending is a response to terrorism.
The third category is the subtlest: The cost imposed by the way people respond to fears of terrorism. This category includes comparatively tangible costs, such as the value of over and above the normal time spent waiting in line to pass through airport security checks, but also more spread out costs, such as the “friction" imposed by increased fears about the security of cargo on the global supply chain. Terrorism also indirectly impacts the economy by reducing tourism and increasing insurance claims.

The Global Terrorism Index (GTI) measures the direct and indirect impact of terrorism and ranks countries according to the impact of terrorism from 0 (no impact) to 10 (highest impact). As per the results shown by GTI 2022, Afghanistan continues to remain the country with the highest impact due to terrorism for the third consecutive year, followed by Iraq and Somalia. The report identified Islamic State (IS) and its affiliates as the world’s deadliest terrorist group in 2021. An ISIS suicide bomber detonated two bombs at Afghanistan’s Kabul International Airport, resulting in 170 deaths and more than 200 injuries, making it the worst attack of 2021. In the past decade, the Global Peace Index (GPI) has also presented increased global violence and less peacefulness trends.

The impact upon foreign direct investment and foreign trade

Regarding Foreign Direct Investment, these attacks disrupt and destroy infrastructure in a country, limiting output from a given set of inputs. A study found that both domestic and transnational terrorism have a considerably negative effect on FDI in the country where the attack takes place. According to a study based on econometric conditions, a rise in one standard deviation in domestic terrorist incidents per 100,000 people results in a fall of net FDI by between US$323.6 and US$512.94 million for an average country. In contrast, a one standard deviation increase in transnational terrorist incidents per 100,000 people decreases net FDI between US$296.49 and US$735.65 million for a moderate country. A research paper estimated that terrorism in Spain reduced the average annual FDI inflow by 13.5% from 1975 to 1991.
Similarly, terrorism in Greece reduced FDI by 11.9% p.a from 1976 to 1991. Terrorists can quite easily disrupt and damage foreign-owned firms, seriously affecting their activities. Even quite mild terrorist activity tends to create a sizable reduction in the inflow of capital to a terror-stricken country or region because foreigners have a choice of numerous countries to invest in. The particular reason for these reductions in FDI is likely the fact that terrorism affects the allocation decision of firms investing money in real foreign assets.

International trade is also severely affected by terrorist events, leaving negative impacts. To begin with, the cost of doing business rises significantly with a general increase in insecurity in a country. Second, transaction costs also rise due to increased security measures in response to a terrorist attack. Third, there's always a possibility of traded goods being destroyed in their entirety in the wake of terrorist incidents. In the view of India-Pakistan relations, bilateral trade between the two neighboring countries has always been one of the biggest casualties of cross-border terrorism. This was evident when India removed the most favored nation status from Pakistan in the wake of the Pulwama attack in February 2019. It has triggered a series of tit-for-tat trade derogatory between the nations. A large amount of empirical evidence also reinforces that terrorism hurts international trade. For instance, in September 2019, drones were used to attack oil processing facilities at Abqaiq and Khurais in eastern Saudi Arabia. As a result, severe damage has been caused to the global oil trade. The attack, fortunately, caused minimal damage in human costs, but the economic effect of the attack was staggering, resulting in serious economic hardships. Refineries were forced to shut down due to the post-attack repair work, cutting Saudi Arabia’s oil production by half, representing 5% of the global oil supply. The pipelines in Iraq had also been targeted by terrorists after the fall of the regime of Saddam Hussein. Hence impacting the foreign trade of these countries.

Public expenditure, Debts, and borrowings

Terrorist events can also cause governments of the affected countries to incur greater debt costs. Indeed, these events encourage an upward trend in national defense spending, which results in either a reallocation of public resources and a reduction in productive investment or an increase in sovereign debt and borrowings, ultimately resulting in the independence of a country from some other nations or world organizations. During times of conflict and war, the mindset of the reactive governments and citizens induces them to give up economic and political freedoms in exchange for security, which could result in higher taxes, government deficits, and inflation. According to a study, in the absence of terrorist attacks between 2008 and 2013, state borrowing costs in Pakistan could be reduced by 100 basis points and in Iraq by 150 basis points. Terrorism raises borrowing costs for states and affected countries, according to Procasky and Ujah (2014); on a 10-point scale, a 2-unit increase in terrorism results in a half-unit decrease in state credit rating. Terrorist attacks also impact financial markets, increasing risk premiums, which raises the cost of government borrowing. The condition of Afghanistan after the 2011 US attack bears testimony to these costs. When the United States (US) declared the ‘War on Terror’ and initiated nation-building in Afghanistan, there were attempts by NATO aiming at westernizing the Afghan institutions, training, weapons, vehicles, and counterinsurgency tactics. As a result, the US decided to deploy more troops and employ local mass recruitment and training tactics. This led to further dependence of the country on the West for leadership, funding, logistics, salaries, military operations, and air cover. Hence, over 20 years, nearly a trillion dollars were spent by the US alone to fight against the Taliban and build the Afghan security forces. Analogously, the subsequent Afghan governments failed to sustain their economic growth. Consequently, over 80% of the Afghanistan government’s public expenditure continued to be covered by international aid. A parallel trend was seen in the Afghan security sector, too.

Cost of fighting terrorism

Fighting terrorism necessitates the utilization of resources, thus imposing an economic cost on the concerned organization and country that allocates resources for this purpose. When terrorism is recognized as a threat, governments, business organizations, and individuals worldwide spend more on security. The government spending on security and private expenditure is touted to grow between 100 and 200 percent by the end of the 2020s, and the private security industry has seen an exponential rise. Costs have to be allocated for insurance since the risk of terrorism is similar to risks due to natural disasters like floods, natural fires, and even events due to extreme weather conditions like hurricanes and storms. Resources set aside for insurance and security purposes reduce funds available for other activities that yield better returns and are more productive. The only beneficiary here stands to be the provider of insurance and security-related services. The increased costs incurred on such services by businesses and governments alike are passed onto the consumers and the country's citizens regarding higher prices of products and services and higher taxes. Certain costs are incurred but are difficult to quantify in mathematical terms. Tighter security and surveillance at airports and ports significantly increase the costs for tourists and business travelers. During terrorist alerts and otherwise, as well as when increased counterterrorism activities are going on, firms and businesses feel these increased costs in terms of higher logistics costs, as most businesses today rely on just-in-time inventory systems. Higher transport costs, on the one hand, result in added costs and, on the other hand, act as a significant and invisible trade barrier. This can jeopardize trading relationships between countries and penalize the trade partners even though they might not have any links with terrorism. Tighter immigration restrictions on account of terrorism and counter-terrorism activities represent another cost as it becomes quite difficult for skilled and semi-skilled workers to immigrate. Greater restrictions have been imposed on the import of pathogens to the United States after the 9/11 attacks, even though the import of pathogens is pivotal to biomedical research and bio-defense-related innovations and research. These can only be understood as an implicit cost or tax on economic activity as they do not contribute to improving either the quality or quantity of the services rendered. However, the costs talked about above were only invisible costs.
The most visible costs and expenditures are those which are incurred by governments on counterterrorism activities. The United States has been at the forefront of counter-terrorism activities after the 9/11 attacks and has incurred significant costs and expenditures on the same. Taking the United States as an example here, it added a Department of Homeland Security after the 9/11 attacks. Budgetary allocation for this department saw a significant share increase from $15 billion in the financial year 2001 before the 9/11 attacks to almost $32 billion in the financial year 2003 in just two years. The Budgetary outlays and expenditure by other departments involved in counter-terrorism operations also significantly increased. In this context, the Costs of War Project undertaken by the Watson Institute for International and Public Affairs of Brown University seeks to estimate the costs of the 20-year war against terrorism. Look at the figures to understand the humongous costs involved in fighting terrorism.

The United States continues to lead the worldwide anti-terrorism war based on its total military budget. Russia spent $61.4 billion on its military in 2018, a 22.3 percent decrease from 2016, partly due to its economic woes. Military spending surged in Central and Western Europe in 2017 and 2018, possibly due to a need to combat terrorism and a NATO-wide agreement to enhance military spending. This also shows that a clear worldwide definition of counter-terrorism does not exist, and there have been shifts in the definition of counter-terrorism, making tracking difficult.

Funding of terrorism

Terrorist activities occur in various forms, and the criminal network is such that these activities can be linked to minor crimes in the city. The forms of financing terrorism, therefore, vary accordingly. These organizations need a significant amount of funding to undertake these activities and to function as a unit. In addition, the basic needs, weapons, and technical necessities, as well as to cover costs related to spreading related ideologies among many others, form the idea of how necessary money is to undertake such acts. Adding to where these funds are allocated, we must know the various funding sources these organizations receive.

Firstly, they may originate from illegal activities, including low-scale criminality and organized crime. Drug trafficking, weapons trade and production, and even human trafficking can be used as a source of income. These can directly be procured from, for example, abusing nonprofit organizations or members of the organization itself. Several important findings emerged from the analysis of case studies submitted by FATF member states or compiled from open sources, as well as current research on the threat environment as it affects the NPO sector. These findings can be summarized as follows: The NPO sector has interconnected vulnerabilities, and terrorist entities seek to exploit more than one type of vulnerability. The diversion of NPO funds by terrorist entities was a dominant method of abuse. However, other types of non-financial abuse, such as the abuse of programs or the support for recruitment, also appeared regularly as a feature. The NPOs most at risk appear to be those engaged in ‘service’ activities and that operate close to an active terrorist threat. This may refer to an NPO operating in an area of conflict with an active terrorist threat. However, this may also refer to an NPO that operates domestically but within a population that is actively targeted by a terrorist movement for support and cover. In both cases, the key risk variable is not geographic but the proximity to an active threat.

Recently, the Financial Action Task Force (FATF) has discovered the new funding techniques being used by terrorist organizations concerning Islamic states. Among many others, imposing taxes on exports and the goods supplied within the territory under their control has been frequent, along with exploiting natural resources such as natural gas and oil.

Existing Policies of Bodies on Counter-Terrorism

The following section will analyze the Counter Terrorism Policies adopted by the United Nations, United States of America & European Union. Under the efforts undertaken by the UN, we will examine the past efforts by the UN & its security council, the counter-terrorism efforts after the attacks on 9/11, and try to understand the formation & ideals of the United Nations Office of Counter Terrorism. We will also look into the role of UNOCT in the current context, i.e., the pandemic, and highlight various steps undertaken by UNOCT in recent times.

UN Policies to Counter Terrorism

The UN General Assembly incorporated its first anti-terrorism convention more than fifty years ago, while the Security Council imposed sanctions on Libya for sponsoring terrorist actions 31 years ago. The UN General Assembly adopted a Global Counter-Terrorism Strategy over fifteen years ago. The terrorist events on September 11th, 2001, acted as a catalyst for UN efforts to combat the menace of terrorism.

In recent years, the UN's counter-terrorism efforts have been categorized into three parts:

first, a norm-setting role that includes a) the development and promotion of a Global Counter-Terrorism Strategy and efforts to counter violent extremism, b) a set of international conventions, and c) far-reaching Security Council resolutions imposing counterterrorism obligations on member states;
second, capacity-building activities to assist countries in meeting these obligations; and
Third, counter-terrorism operations with the help of sanctions approved by the UN Security Council.

Since 2006, the UN has actively gathered information on state and regional counter-terrorism operations from the Member States. The Counterterrorism Committee has received over 1000 reports, making it the custodian of "perhaps the largest body of information about worldwide counterterrorism capacity." In 1992, the Security Council imposed sanctions on Libya for refusing to cooperate with investigations into two airline bombings; in 1996, Sudan was sanctioned for alleged involvement in an assassination attempt on Egyptian President Hosni Mubarak; and in 1999, the Taliban were sanctioned for propagating Al Qaida's leadership. The UN Security Council (UNSC) adopted a new Plan of Action to Prevent Violent Extremism in 2016, which would be undertaken at the international, regional, and national levels in priority areas. The plan calls for using all “UN efforts—including on conflict prevention, governance and rule of law, human rights, sustainable development, and gender equality—to prevent “radicalization” and ultimately “violent extremism.” In 2017, UN Secretary-General António Guterres refined and strengthened the UN counterterrorism infrastructure by establishing The United Nations Office of Counter-Terrorism, which Under-Secretary-General Voronkov now leads. This office's mission is to lead UNGA-led counterterrorism mandates, improve coordination and coherence across the Global Coordination Compact's 43 institutions, and generate resources for UN counterterrorism activities. Even though the UN regular budget covers only 4% of UNOCT's yearly financing, it has risen quickly since its inception thanks to voluntary contributions through the UN Trust Fund for Counter-Terrorism.

US Strategy

Attack terrorists and their capacity to operate -The US continues to take proactive and successful steps against its major terrorist adversaries, as well as several other violent radical groups that constitute a genuine and ongoing threat. They're going after these terrorists' ability to operate successfully both at home and overseas.
Deny terrorists entry to the United States and disrupt their travel internationally. Denying their adversaries the ability to move globally and across and inside their borders limits their mobility and can reduce their impact. Terrorists frequently get fraudulent identity credentials through theft or in-house forging activities, and they rely on illicit networks to enable travel. Through a tiered system of safeguards at their borders, ports, highways, and railroads, in the sky, and with their foreign allies, the United States will continue to improve the security of the American people and their allies.
Deny WMD to rogue states and terrorist allies who seek to use them. Terrorists possessing weapons of mass destruction is one of humanity's most serious risks. To keep ahead of this constantly evolving threat, the US has made aggressive efforts to deny terrorists access to Weapons of Mass Destruction and related materials, equipment, and know-how. The Worldwide Initiative to Confront Nuclear Terrorism was established in July 2006 by the United States and Russia to develop an international framework for enhancing collaboration, building capacity, and acting to combat the global danger of nuclear terrorism. This program concentrates worldwide attention and action on ensuring that the international community is doing everything possible to avoid nuclear weapons, materials, and weapons of mass destruction in the hands of terrorists
EU’s Counter-Terrorism Strategy in the Current Context-

The EU's Counter-Terrorism Strategy commits the EU to fighting terrorism worldwide while preserving human rights and allowing its inhabitants to live in a safe, secure, and equitable environment. After the Charlie Hebdo incident, the Commission suggested establishing a European Counter Terrorism Centre (ECTC) to strengthen information sharing and operational assistance for Member States' investigators in its European Agenda on Security. The European Counter-terrorism Center gathers specialized resources, expertise, and information on foreign terrorist fighters, explosives, firearms, and financial intelligence to support Member States' law enforcement and counter-terrorist units.

The European Commission established a new EU Security Union Strategy from 2020 to 2025 on July 24, 2020. The strategy lays out methods and measures to be devised over the next five years to ensure protection in our physical and digital environments, from combating terrorism and organized crime to preventing and detecting hybrid threats. It also aims at increasing the resilience of critical infrastructure, promoting cybersecurity, and fostering research and innovation.

Conclusion

Terrorism is a complicated phenomenon that necessitates using various tactics to combat it, including security (military and policing), politics and diplomacy, economic and social policies, and so on. Nonetheless, the security issue is typically stressed above all others. When a terrorist incident happens, governments normally respond by retaliating in kind, followed by a succession of subsequent measures aimed at punishing and weakening the offenders. There are several advantages to using this punishment/deterrence formula. It delivers a sense of immediate gratification since the shock of being attacked is swiftly followed by the joy of punishing the perpetrators. This gives the government legitimacy because it has "done something" to meet the citizens' yearning for a visible response. Of course, this is exactly what happened after the 9/11 attacks.

However, another aspect of evaluating strategies is the proportional benefits that can be acquired. While retaliating in kind in the face of terrorist attacks may be psychologically and politically fulfilling, it is unclear whether it is effective.. Society benefits from the reduction or elimination of the threat of terrorism, just as it benefits from the reduction or elimination of the threat of crime. Terrorism has certain economic foundations, but they have more to do with the incentives and restrictions that individuals and organizations confront than with any single set of easily quantifiable elements that drive people to join terrorist organizations. As a result, governmental responses to terrorism should be multifaceted and adaptable.

Policies must be aimed at filling in the gaps left by weak states and altering society's incentive structures away from the use of violence. However, such regulations will never be complete, just as crime-fighting policies can never reduce crime to zero. There are far too many potential sources of violence for legislation to address, and incentive-based policies will never force people to ignore the ideological or psychological dispositions that lead them to use violence.

References

Written by Pratyasha Kar | Proofread by Yasmin Uzykanova

Yasmin Uzykanova