Impact of Terrorism in Indonesia and on Its Relations with Its Relations - Research Paper Example

Impact of terrorism in Indonesia and on its relations with its relations Executive summary Terrorism is among the world’s biggest threats and has adverse effects on the targets’ various sectors of economy. Apart from terrorism impact on Indonesia, the issue also affects the country’s state relations in a considerable way. Indonesia is one of the numerous countries in the world that are struggling to eradicate the menace. Terrorism has serious negative effects on Indonesian sectors of economy. To start with, terrorism in Indonesia’s major tourist attraction, Bali was bombed in October 2002. Since the event, the country has experienced numerous problems. The tourist industry was directly related to job creation, consumer goods production, restaurants and accommodation. These businesses were all benefiting from tourism in Bali, but have since weakened. As well, terrorism has been a major obstacle in the country’s trade. Businesses and investments to suffered a great deal due to terrorist attacks in the country. It is also evident that the insurance industries in the country raised their high-risk premiums and lowered the terrorism risk coverage. In addition, terrorism has also affected the neighboring countries and Indonesia’s state relations. Countries, such as, Australia depend on foreign exchange from Indonesia and other Southeast Asian countries through export of various products including meat, fruits, and vegetables. Besides, tourism is known to have led to loss of lives and property in the country and its neighbors. It has also led to an increase in the number of cases relating to suicide bombing by Islamist groups. As well, terrorism has disrupted education systems and hampered healthy mental growth of children in the country. Generally, terrorism has also affected the country overall economic growth. Introduction Terrorism refers to planned politically triggered violence aimed at non-combatant targets by clandestine agents and subnational groups. This violence is usually meant to influence a particular group of people in a country or region. Terrorism exists in various forms, with the present one greatly focusing on the violence led by Islamic fundamentalists. It has been employed as a tactic for many years but has turned to be more universal since 1960s. After the first and second world war, colonial authorities redrew the boundaries in numerous parts of the globe and slowly condensed their colonies. This resulted in an increase in nationalist movements looking for self-determination, or aiming to replace leaders that had been forcefully placed by the colonists. Most of them result in conflicts and involve revolutionary guerilla tactics and warfare strategy.1 Effect of Bali bombings The Bali bombings had substantial negative effect on the regional and local economies. Bali depends heavily on tourism that fell at the start of the terrorist attacks. Indeed, whereas some analysts have stated that the economic effects of bombings were small given the huge contribution of the tourism industry to the Indonesian GDP was between 4 and 6%. Nevertheless, the effect of bombings on the Balinese’s livelihood may not be easily ignored. Further, the attackers disagree with the arguments that the Bali bombings had serious economic impact on the country. Samudra notes that any business operations involving the alcohol consumption and the sexual promiscuity encouragement; the activities that the targets overlooked are illegal in Islam. He also says that even businesses such as handicrafts were illegal, and the owners are guilty of engaging in non-Islamic activities.2 Kuta is one of the main tourist attractions in the Indonesia, but since the October 2002 terror attacks, it has turned into a ghost city. On 18 October, the rate of occupancy of the domestic hotels in the region had dropped from 80% to 27%. 1000 bookings were cancelled at the Jarkata’s Hilton International hotel and that affected the exports. It is worth noting that Australia is a major exporter of food in the country with approximately 20% share of its food import market. Indonesia exports products, such as fruit, meat, dairy products and vegetables as they are used in its hotel sectors. Nevertheless, the cancellation of bookings would in turn affect the number of such imports in Indonesia.3 As well, Bali is among the less-developed areas in Indonesia and it heavily relies on the industry to offer employment opportunities to the citizens, who otherwise engage in semi-subsistence agricultural activities. The region accounts for almost 40% of Indonesia’s earnings from the tourism industry. Tourism revenue is ranked alongside textiles, clothing, and petroleum products as the major foreign income sources in Indonesia. Visitors have been reported to desert the tourist sites in other regions of Indonesia after the Bali bombings.4 Effects on children and their mental health Terrorism, just like any other disaster often has detrimental effects on children, especially on their mental health. Children, either directly or indirectly, are specifically susceptible to the adverse effects of terrorism and other disasters. They risk experiencing mental health issues after terrorism, especially those next to or witnessing the incident. Others that are severely affected are those who have their loved ones perishing during the attacks, as well as those that live in the area of attack and even watch the coverage of the events on media.5 Some of the risk factors that could increase adjustment difficulties for children include sustaining or witnessing injuries; loss of siblings, parents, or friends; traumatized parents; interference with their routine, school, o residence; prolonged or intense exposure to the incidents and geographical proximity; and television exposure after the events. Posttraumatic stress disorder is a health condition that is caused in response to experiencing or witnessing a threat or harmful event that triggers horror, helplessness, and fear. Children involved in terrorism events always tend to develop the condition, which in turn negatively affects their mental health.6 Nevertheless, some of the protective factors that could boost their ability to cope and positively adjust to the subsequent life include ensuring adaptive, positive problem solving and coping skills; parental support for them and coping; strong support from community, parents, and teachers; prior successful academic performance; economic resource to aid adjustment; and capacity to understand events on the basis of development level and age.7 Effect on state relations Despite Imam Samudra’s views, the effect of the bombings was so adverse. State-relations all over the region were substantially hit by the attacks, particularly Indonesia. Just after the attacks, the majority Muslim intelligentsia in the country did not accept that there could be radical people among them who were motivated to cause death to many innocent civilians. For instance, Nadhatul Ulama (NU), an Indonesian biggest Muslim group and a moderate movement accused the United States of using unethical political ways in order to force Indonesia, and issued to a warning to Washington to avoid antagonizing Indonesia with propaganda issues. Nonetheless, the perpetrators were caught and charged upon which they pleaded guilty of the attacks. Besides, the bombings also caused recognition of danger of terrorism in the Southeast Asian authorities’ security strategies. This acknowledgement led to enhanced law enforcement harmonization and intelligence sharing in the region. This collaboration might not have eliminated radical movements, but it surely weakened them.8 Suicide terrorism The Bali bombings introduced the issue of local suicide terrorism in the Southeast Asia. Although there was earlier martyrdom operation in the area, it was run by the Middle Eastern group. Therefore, the employment of the Southeast Asian suicide terrorists has substantial regional effects. The tactic may have also been copied by other radical organisations in the area. Reports have it that Abu Sayyaf Group and Jemaah Islamiyah have recently strategized common suicide bombing attacks in the region. Others also indicate that Thai Muslim youths have trained on terrorism and paramilitary from madrasas in the country so as to conduct terror attacks in their country. 9 Effect on Jemaah Islamiyah Attacks The Bali bombings also caused disintegration of the group because of the resultant arrest and murder of the group’s top leader. Besides, the great number of deaths of Muslims in later terror resulted in schism in the group. An argument in the group presently rages over the advantage of terrorism in Indonesia. The members of the groups have opposed the fratricidal nature of the attacks, and showed concern on the sidelining of the urgent daily issues of Indonesians including corruption and unemployment. Nevertheless, disintegration has rendered the group less dangerous. As demonstrated by consequent operations, Jemaah Islamiyah holds the ability to conduct deadly suicide terrorism. There are signs that unhappy Muslims in the area are increasingly becoming radicalized, and willingly embrace international Islamist issues. This trend illustrates a differently negative advancement for later security of the region.10 Effects of terrorism on trade Terrorism threats are known to negatively influence the trade flows Indonesia and its state relations. In a study of more than 200 countries between 1968 and 1979 indicated a doubled number of terror attacks decreased bilateral trade among target economies by almost 6%. 11 In addition, terrorism causes closure of major airports and ports, which in turn lead to high costs, especially on those economies heavily dependent on trade. Constant terrorism also escalates the cost of conducting trade by various mechanisms. First, it raises the insurance costs for passengers and cargoes. Second, it triggers the need to hold high inventory levels as a way of preventing any bottlenecks in a country’s delivery systems. Thus, this decreases the benefits of just-in-time manufacturing operations and undermines the supply chain management. Global automobile production and information technology that majorly operate in target economies are prone to disruption of supply chains and security issues.12 Economic effect Terrorism has negative impact on the country’s economic status. Financial losses caused by pirate attacks in Indonesia are approximated to amount to billions of dollars. According to OECD report, it is estimated that the total cost of a huge terrorist activity on shipping in a tactical location would be easily measured in many billion dollars.13 (Joint Economic Committee 2002). Oil contributes to half of the energy consumption in Asia. It is known that Japan imports about 98% of the oil and estimated by 2020, China’s will nearly double its oil consumption compared to the present amount.14 Most of the oil will pass through the South East Asia’s narrow straits. Oil tankers a particular juicy target. Apart from distracting energy supplies in the region, one well-managed attack on a huge tanker obstruct a chokepoint, such as, Strait of Malacca completely, putting the whole shipping industry in trouble. 15 Presently, the Straits of Malacca has adopted a crucial maritime importance due to the large amounts of trade transactions. Besides, the World Bank has foreseen that by 2020, the seven top ten economies in the world would be India, China, Japan, Indonesia, Taiwan, South Korea, and Thailand, and that Germany and France in Europe. It is also expected that the Chinese economy will be approximately 40% bigger than the United States.16 Asia, specifically, has turned into a focal point of the globe’s interest as its economies grow at an amazing rate as compared to the western ones. Additionally, 60% of the globe’s population stays in Asia. Asia generates 50% of the globe’s GDP and this is likely to rise to 75% in the next decade.17 Apart from the human costs of terror attacks in Indonesia, there are other significant effects. Indonesian tourism is said to have been drastically affected by terrorism, specifically the Bali bombings. The number of tourists dropped noticeably just after the attack. There was also an adverse reduction in the number of international flights and the resultant decline in tourism. The constant attacks in the country have had a pronounced effect on the tourist revenue amounts. For Bali, the effect was particularly high, with visible drops in Australian and Japanese tourist numbers. Whereas the 2006-2007 figures indicated an enhancement, the country’s economy has not recovered completely. This is evidenced by the 22 hotel and restaurant closures in Bali’s hilltop resort after the 2002 attack.18 Terrorism also reduces economic growth and investment. This is because terrorism and the possibility of future attacks cause a lot of uncertainty to potential investors within and outside target economies. Consequently, it escalates the perceived risk and in turn increases costs by dampening economic activities.19 Enhanced risk perception reduces investor confidence; hence reducing their readiness and willingness to fully commit to new ventures. With time, higher risk payments boosts the essential return on investment rates, decreasing equity prices and allowing biased investment decisions against more risky, possibly higher return and lasting investments towards reduced risk, lower return, as well as short-time investments. The snowballing impact is to decrease total investment and delay economic growth. Higher risk percentages mostly affect economies with significant external financing needs that should contribute more for their capital; hence reducing output growth and investment.20 Tourism, travel, airline, restaurant, accommodation, insurance, and post services industries are especially vulnerable to enhanced terrorism in Indonesia and its state relations. Economies and regions with a concentrated number of such industries tend to suffer most from employment and output falls. Subsequently, operators attempt to discount their rates in order to attract their customers; hence lowering return on investment and retarding future investment. For instance, in 2001, global tourist arrivals declined by 0.6% for the first time since 1982. Besides, the Bali bombings caused Indonesia’s 2002 tourist numbers decline by 2.2%. Since tourism contributes to 3.4% of the country’s GDP, financial market experts placed the possible losses at about 1% of the country’s GDP.21 What is more, Addison, enhanced terrorism attacks and related uncertainty negatively affects the consumers’ readiness to spend, especially on optional items and main consumer durables, thus reduced investment in consumer goods businesses and depressed growth. Besides, those growing economies are concerned with markets perceived to be failing to handle terrorism effectively will experience greater risk premiums and high costs incurred in asset protection. This will in turn reduce Foreign Direct Investment inflows.22 It is also worth noting that currencies of the countries that hold high premium rates could face volatility exchange rate and immediate depreciation in reaction to terrorist attacks, as investors resort to reserve currencies, such as, the US dollar. Hence, this can impose heavy costs on the countries. There is fear inflation a depreciation that can also negative affect the financial deepening process by weakening confidence in the local currency.23 Further, insurers are also reacting to high terrorism risks by raising their premiums and lowering risk coverage of terrorism. This may considerably reduce investment and production in affected economies and sectors. Whereas insurance markets might learn to set prices for greater terrorist risk incidents, the uncertainty and possible size of terrorism attacks will make it hard and premiums for high-risk activities will drastically rise. 24 Conclusion Clearly, terrorism is one of the security threats that are widespread in the world. In Indonesia, terrorism is a significant threat to its development due to its negative effects on the society. Terrorism does not only negatively affect Indonesia, but it also poses serious problems to its state relations. Some of the adverse effects associated with terrorism in the country include a challenge in children’s mental health due to direct or indirect experience; weakened economic growth, high inflation, unemployment, loss of property, loss of life, disrupted businesses and education. References Addison, Chowdhury & Murshed. By How Much Does Conflict Reduce Financial Development', WIDER Discussion Paper No. 2002/48. 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Terrorism and Trade, Paper for Workshop, the Economic Consequences of Global Terrorism. Berlin, DIW/German Institute for Economic Research, 2002. Organisation for Economic Co-operation and Development. “The Impact of the Terrorist Attacks of 11 September 2001 on International Trading and Transport Activities. TD/TC/WP(2002)9/FINAL.” Working Party of the Trade Committee, OECD, Paris, 7 March, (2002). Reuveny, Rafael & Thompson, William R. Coping with Terrorism: Origins, Escalation, Counterstrategies, and Responses. New York, NY: SUNY Press, 2010. Saywell & Borsuk. “The fallout of the Bali bombings on regional economies: The neighbourhood takes a hit.” Far Eastern Economic Review. Hong Kong, 2002. Saywell. “Shipping News”. Far Eastern Economic Review, 2002. Shalev,Tuval-Mashiach ,Hadar. “Posttraumatic Stress disorder as a result of Mass Trauma”. J Clin Psychiatry 65, no. 1(2004): 4-9. Victoroff, Jeffry. Tangled Roots: Social and Psychological Factors in the Genesis of Terrorism. New York, NY: IOS Press, 2006. World Health Organization. “Mental health in Emergencies: Psychological and Social Aspects of Health of Populations exposed to extreme Stressors.” Geneva: World Health Organization; (2003). Read More