Effects of Domestic and International Terrorism on the Economy - Term Paper Example

Domestic and International Terrorism and how its effects on the Economy This paper looks into domestic and international terrorism and the impacts of the two categories of terrorism on the world’s economy, as well as the economies of affected states. Over the last two decades, acts of terrorism have been on a high rise prompting countries to invest more on the fight against terrorism. The US in specific is on record as the leading advocate of the fight against terrorism both in its own states and around the world in areas known to harbor terrorists. Acts of terrorism come with countless negative impacts, but they are more pronounced on the economies of the affected States than on other areas such as psychological aspects of the people affected. In general, terrorism is a global issue that calls for a collective responsibility from all regions of the world. Domestic and International Terrorism Aspects of Domestic and International terrorism The term terrorism lacks a definition that is accepted worldwide. The US State department refers to terrorism as a premeditated and politically influenced violence, which is directed towards noncombatant targets by groups within a State or clandestine agents, and its motive is to influence an audience. The same department recognizes international terrorism as a form of terrorism that involves citizens or territories of more than one country. On the other hand, domestic terrorism refers to violence against civilians in a given state mostly by their fellow citizens with an aim to intimidate or influence national policies (Law, 2009). Up until 2001, cases of terror attacks were few, but 9/11 attack on the American territory changed the situation. The attack was the deadliest in the beginning of the 21st century, which prompted America to declare total war on terror. Since America’s invasion in Afghanistan and Iraq, cases of terror attacks have risen drastically. Day in and day out, news reporters are reporting on attacks against insurgencies and against civilians. There are a number of themes that try to explain the causes of terrorism. One theme points out that terrorism is an advanced stage of incompetent political processes that are marked with inequalities and injustice. In such situations, persons affected become frustrated due to their failed attempts to get reforms. The hallmark is the emergence of political confrontation through all forms of violence (Dyson, 2011). For a long time, many were for the opinion that poverty and economic deprivation are vital factors that lead people to engage in terror activities. However, continued research on terrorism revealed that terrorists are neither poor nor uneducated. This is evident because there is almost total absence of terror attacks in the world’s poorest 49 nations. It is also evident from the fact that 9/11 attacks were perpetuated by terrorists from middle and upper-middle class families. Domestic terrorism may be viewed as a tactic of the weak people who are seeking public attention. Domestic terrorists lack essential resources to attack the state, which force them to use other unconventional tactics in order to express themselves (Dyson, 2011). The main aim of all terror activities is to create a climate of fear within a population and escalate economic costs that drain states financially. Today, much focus is on terror activities perpetrated by the Islam community. The Islamic Fundamentalists have managed to move terrorism to a whole new level through their religious ideologies. It is evident that Islamist extremists are no longer mindful about taboos against killing innocent people. They defend their actions through distortion of Islamic teachings. The distortion of Islamic teachings is tailored to portray a common enemy. According to the Islamists, the common enemy is the Western culture of democracy, individualism, and capitalism (Law, 2009). The birth of international terrorism According to studies conducted on the emergence of international terrorism, three factors stand out as the major precursors of international terrorism in the late 1960s. These factors are extensive growth of commercial air travelling, emergence of the media, and the emergence of diverse political and ideological interests among extremists. The emergence of commercial air travel provided terrorist groups with a new form of mobility, enabling them to move to their target nations and strike their terror attacks. On the other, emergence of the media gave terrorists an avenue to spread their agenda and propaganda. The emergence of Islamic Revolution in 1979 has established an extensive network of international terror groups across the world (Innes, 2002). Experts point out that the evolution of Islamic Revolution was as a result of globalization, whereby the Muslim community complained of oppression and spiritual bankruptcy of western nations (Dyson, 2011). The inability of the Muslim community to interconnect with other cultures due to globalization resulted to rebellion, which is now expressed in the form of terror attacks. Furthermore, experts observe that the continued attempts by the Western powers to establish democracy in Muslim communities will increases political violence and acts of terrorism. America has so far reported that its symbols and citizens are the prime targets of international terrorism due to its involvement in the fight against terror (Perl, 2010). Domestic terrorism As already stated, domestic terrorists seek to air their agendas within a country through activities that involve force and violence. Majority of domestic terrorists appear to be systemic, but in the US, they are cyclic. Domestic terrorists can occur in various forms depending on the agenda at hand. Examples include antigovernment, anti-tax, antireligious, paramilitary, anti-ethnic and many others. In America, almost all forms of domestic terrorism are present, but much effort in counterterrorism is on militia watching. The general principle is to let the terrorists know they are under strict scrutiny. This helps in keeping them underground, which denies them publicity and public audience. Current advances in technology, especially in transportation, communication, and weapons contribute immensely to the advancement of modern day domestic terrorism (Levin & Eubank, 2009). Impacts of terrorism on economies It is obvious that terror activities, whether local or international, impact greatly on the economy of the country affected as well as the global economy. Several approaches are available for the determination of economic impact of terrorism. In any terror attack, there are costs that arise from the direct destruction of property and effects on productivity, and the long term impacts that provide indirect costs as a result of responding to the terror attack. Studies conducted so far indicate that responses to terror attacks are highly costly, which is a result of increased spending on defense and homeland security (Richardson & Gordon, 2007). The 9/11 terror attack on America is estimated to have cost America a direct cost of over $20 billion. One of the experts points out that the US suffered a property loss of $21.8 billion, which is estimated to be approximately 0.2% of America’s GDP in a year. The Organization for Economic Cooperation and Development issued estimates of $14 billion citing it as the cost of the attack on the private sector. In addition, OECD estimated the terror costs on the federal government and cleanup process to be $0.7 billion and $11 billion respectively (Richardson & Gordon, 2007). The attack also had far reached impacts on the New York’s financial markets. On the day of the attacks, the financial markets never opened and remained closed until September 17. The closure was as a result of damages on communication and transaction processing systems that were located in the World Trade Center. The instability in the financial markets affected other world financial markets, but the impacts were manageable (Richardson & Gordon, 2008). The other pronounced impact of terrorism is the increased spending on defense and homeland security. In the US, about $500 billion is spent annually on departments directly involved in fighting terrorism. These estimates constitute about 20% of the US federal budget. After 9/11 attacks, the budget allocated to the department of defense increased by one-third. Expenditures on internal security and defense are vital in any nation, but it is necessary to note that they come with opportunity costs. Therefore, an increased risk to terrorism and the need to fight it increases the opportunity cost (Richardson & Gordon, 2008). Terrorism also has negative impacts on supply chains, which is the series of steps a supplier of goods follows in order to move his products from one location to another. These steps can be extremely costly in terms of money and time once strict security measures are put in place at ports and along borders. Experts warn that increase in transport costs can have negative effects on emerging economies. Therefore, the affected economies are unable to fight poverty with such strict measures in place (Suder, 2004). The insurance sector has seen changes since the 9/11 terror attack. The private and public businesses facilities are by far the greatest targets of terror attacks. This phenomenon has had significant impacts on the way insurance products are underwritten, prompting the need to introduce new insurance mechanisms. This is because risks associated with terror attacks are difficult to price and there is a possibility of several terror attacks occurring once. Therefore, insurance coverage on terror attacks is difficult to obtain, and premiums are on a high rise. After the 9/11 terror attacks, the US insurance market suffered losses that ranged between $30 and $58 billion (Suder, 2004). The only positive economic impact associated with terrorism is the increased growth of weapon manufacturing industries. This is as a result of the increased need to have adequate weapons and intelligence facilities to improve on a country’s internal security and defense. In addition, there has been a significant rise in the enrollment of military and intelligence personnel in order to boost the fight against terrorism. Therefore, new jobs have been created across the globe since the fight against terrorism started (Richardson & Gordon, 2008). References Dyson, W. E. (2011). Terrorism: An Investigators Handbook. New Jersy: Elsevier. Innes, B. (2002). International Terrorism. London: Mason Crest Publishers. Levin, J. & Eubank, W. L. (2009). Domestic Terrorism. Facts On File, Incorporated. Law, R. (2009). Terrorism: A History. New York: Polity. Perl, R. F. (2010). International Terrorism: Threat, Policy, and Response. New York: DIANE Publishing. Richardson, H. W. & Gordon, P. (2007). The Economic Impacts of Terrorist Attacks. New York: Edward Elgar. Richardson, H. W. & Gordon, P. (2008). The Economic Costs and Consequences of Terrorism. New York: Edward Elgar. Suder, G. G. (2004). Terrorism and the International Business Environment:. New York: Edward Elgar Publishing. Read More