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Some Thoughts on the Economics of Terrorism

By mircrypt in Op-Ed
Tue Feb 19, 2002 at 04:55:07 AM EST
Tags: Politics (all tags)

For anyone who's interested about the economics of terrorism the following short piece might be of interest. Being something of a nascent political scientist, my field has been swamped with a lot of issues relating to terrorism since 9.11. Economics is only one of them. I worked on this a few months back as a reasearch item, and thought I'd take the intro bits and post them to see what you all thought, if anything at all, about the topic.

Any effort to mitigate the threat of terrorism must account for the economics as well as the politics of the terror trade. Terrorism in the age of globalization, no matter how cost-effective, must find the financing for its operation within the framework of the free-market climate of the global economy. The present estimate of the cost of the 9.11 terror attacks stands at approximately a half million dollars(1); a negligible sum in the world of global finance. The paltriness of this figure is further evidenced by the provision of this funding through various transfers from undisclosed foreign accounts in sums that fall far below the threshold of regulatory awareness. The aim of this study is to show why the current attempts to curb terrorism by regulatory mechanisms for asset transfer is misdirected. I propose that the level of assets transferred, together with the methods by which these funds often reach their destination belies the conventional wisdom that it is possible to cut the financial lifeline of terrorism. By highlighting the correlation between insufficient economic development and political violence in certain geographic regions I will put forward a model of behavior describing a symbiotic relationship between terror network propagation and poverty. Instead of focusing efforts in the economic sphere towards regulating informal asset transfer, a drive to fund long-term sustainable development and alleviate conditions of poverty holds the most promise for countering the threat of terrorism.

In speaking of the need to support the Marshall Plan, Dean Acheson called for Americans to "Do well by doing good". American efforts at economic aid to rebuild Europe went a long way to ensuring a solid base of support for US efforts during the Cold War. In the light of the new war in which America has declared itself engaged, what better way to engender multilateral support than to offer aid to impoverished regions themselves both suffering and supporting terrorism? Pressure to effect coupled with funding to support sustainable development at a much higher rate than that currently designated by the US would do more than any number of asset transfers regulatory mechanisms to curb terrorism.

I present the hypothesized model of the Al-Qaeda financial network to illustrate the nature of the network framework against which intended regulation is intended to operate. What should be clear from the outset is that even if regulatory mechanisms on transfer of assets were successful, a sufficient number of alternative options to finance are readily available for the terrorists' use to raise the required capital to carry out to realize the demand for terror that exists.

A recent article by the New York Times(2) presented the various facets of the Al-Qaeda operational financing framework . Three main origin points for organization finance were put forward: legitimate business, charitable organization (donations) and illegal activity. Examples of legitimate business provided include a bakery, a cattle-breeding concern, and a construction company. It is important to note that the operation of such institutions as yet unidentified is likely to fall outside the scope of the regulatory mechanisms intended to constrain terrorist asset transfer. Charitable organizations present a political nightmare for regulation. Differentiating the authentic from the somewhat terror affiliated, to the clearly front arrangements for garnering necessary capital is potential boon for the demand side of terrorism while offering little hope of regulation under the supply-side formulation. Illegal activity as a financing mechanism is the only one of the three resources that would potentially be governable or at least controllable to a degree by the proposed regulatory framework. At the same time that this situation would seem to make the case for regulation, the methods by which the funds themselves are transferred presents a very different picture.

Hawala is centuries-old method of asset transfer predominantly employed in South Asia. A large percentage of foreign transfers, usually from immigrant workers outside their home countries to relatives, to Pakistan, Afghanistan, the Central Republics of the Former Soviet Union, and India occur through hawala brokers. The reasons for this include the ease of transfer, the much cheaper cost (there is normally a flat fee as opposed to a percentage charge as employed by traditional asset transfer mechanism such as banks and / or credit unions) and the assurance that the person at the receiving end will be able to easily access the funds sent. Recent talk in the US congress of regulating the hawala trade is a laughable example of how little the mechanisms of terrorist financiers are understood by those intending to control them. Should the hawala trade by regulated, a goal doubtful to be realized, it is likely that the transfer of assets for terrorist operations would find alternative means by which to achieve their goals.

What the structure of Al-Qaeda's economics presents is a nebulous and highly flexible system of financing that is largely self-perpetuating. The requirement of cells to be self-sustaining in target countries suggests that even if regulation could be applied to the third of the resource base whose sphere is presently known, the curtailment of terrorist operations could not be a direct result or even a long-term expectation.

It is useful to imagine terror as an economic good with a high degree of supply elasticity. Supply will decrease given heightened costs for terror action, but only to a point. A complete elimination of the supply of terror demanded is not only impractical, the history of the previous three waves of terrorism indicate it to be an unattainable goal.

If one assumes propaganda to be a critical mechanism by which to catalyze operational financing through donations / contributions, more stringent regulation and pro-active counter-terror operations are counterproductive to the ends of eliminating terrorism. While such measures may in the short-term lessen the supply of terror to the "market", the demand side has not only been ignored, but has possibly been increased by the propaganda value that such measures could potentially provide to terrorist networks. An abrogation of pro-active policies to counter the supply-side of terror is not a viable solution to the issue. At the same time, excessive zeal in prosecuting terrorism, a la the arguably misspoken "crusading" that President Bush has proposed, threatens to offset the gains of supply side terror efforts (regardless of their minimal opportunity for success) with a demand side growth in terror. A compromise between the two extremes, between the "wishful neglect and wasteful exaggeration"(3) of counter-terror policy is necessary. I suggest that this compromise necessitates a demand side approach through development efforts.

The costs in question, while both economic and political, can be seen to negatively impact the supply side of the terror industry exclusively. Essentially, the end result of counter-terror policies can at most be a diminution in the supply of terrorism demanded, not an actual reduction in the demand for terrorism. It is possible to imagine increased counter-terror mechanisms exacerbating the conditions that fuel the demand for terrorist action. In a world with virtually completely efficacious counter-terrorist policy the threat of terror being supplied (terrorist incidents) has not been solved, merely temporarily suppressed. What is needed beyond counter-terror policy aimed at prevention and timely risk-assessment is a policy of anti-terrorism that addresses the root of the problem: demand for terror.

(1) Huban, Mark.. "Special Report Inside Al-Qaeda". Financial Times of London. November 29, 2001. Pg. 10.

(2) Eichenwald, Kurt. "Terror Money Hard to Block, Officials Find". New York Times. Dec 10, 2001.

(3) Ilke, Fred C. "An argument for homeland defense". The Washington Quarterly. Vol. 21 no2. Spring 1998. Pg.9.


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Terror and Economics?
o Who cares where the money came from...gimme the terrorist. 16%
o Legal constraints on illegal activity really do make sense. 22%
o Congress is able to figure out how to take money out of terrorist hands....yeah, right. 54%
o Screw the economic theory, how can you stop the money? 6%

Votes: 31
Results | Other Polls

Related Links
o Special Report Inside Al-Qaeda
o Financial Times of London
o Terror Money Hard to Block, Officials Find
o New York Times
o Also by mircrypt

Display: Sort:
Some Thoughts on the Economics of Terrorism | 61 comments (48 topical, 13 editorial, 0 hidden)
5000 bills (4.00 / 5) (#4)
by medham on Mon Feb 18, 2002 at 10:50:28 PM EST

May be a good estimate of the cost of the particular operation, but the cost of the operational apparatus that cloaked, shielded, and dematerialized the operatives is an operative factor to consider.

I might also add the U.S. is the world's leader exporter of terror and terror-related equipment, though this in no way detracts from your presentation.

The real 'medham' has userid 6831.

Exporting terrorism (4.25 / 4) (#27)
by gleesona on Tue Feb 19, 2002 at 08:53:13 AM EST

It's not just the US, but most of the leading western nations and specifically the arms industry.

Look at Iraq, who supplied them with their weapons: the USSR and France. Who complained most on the Security council when the US wanted to renew sanctions against Saddam last year? No points for guessing it was Russia and France. Could they so cynical, that they are thinking only of renewing arms sales? Surely not....

In short, a German spy is giving away every one of our battle plans.
You look surprised, Blackadder.
I certainly am, sir. I didn't realise we had any battle plans.[ Parent ]
5 permanent members=5 biggest dealers (5.00 / 1) (#59)
by imperium on Thu Feb 21, 2002 at 09:59:03 AM EST

Coincidence? The US, the UK, Russia, China and France are not only the 5 permanent members of the UN security council (as open owners of nuclear weapons in 1950ish), but the same five are the world's five biggest arms exporting nations. Strange...

[ Parent ]

very interesting, but kinda difficult to read (4.66 / 6) (#5)
by sayke on Mon Feb 18, 2002 at 11:07:21 PM EST

i had to read it a couple of times to actually get all your major points. that's not necessarily a bad thing - you packed a lot of information into a little space - but some people may not like it. i did, though.

your article genuinely required thought. few articles on k5 seem to do that anymore.

regardless, i think you pretty much demolished any hope of cutting off terrorism's (and, in general, asymmetrical warfare's) funding. i can't think of any relevent criticisms. bravo, and good show =)

sayke, v2.3.1 /* i am the middle finger of the invisible hand */

Counter-terrorism pisses off the masses. (4.87 / 8) (#8)
by adamant on Mon Feb 18, 2002 at 11:56:41 PM EST

The article did more than discredit the idea of cutting off terrorism by monetary regulation. I think it really hints at the ineffectiveness US counterterrorism efforts in their entirety. I would say that all the bravado of the latest counter-terrorism efforts in my neighborhood (US) has accomplished is pissing people off.

I've been pat down and partially disrobed as well as had my vehicle searched in airports. I had to sit out in the cold with my family waiting to go through the screening at the Olympics. All of this inconvenience, and I don't think it has been effective AT ALL. There's always going to be some vulnerability when we live in a free society. Furthermore, it's foolish to believe that the risks of terrorism can be eliminated while maintaining liberty.

As offensive as it may be to many Americans (and anyone else who faces terrorism), I think that the main point of this article is correct: terrorism and be minimized by minimizing its value in the market. For Americans, this likely means coming clean on how US policies from the last century destabilized the region and made them a target for fanatical hatred.

It just doesn't seem like the current climate in this country allows for an academic discussion about the cause and the solutions of terrorism. It's more of an us or them/love it or leave it/with us or against us sort of thing.

I've rambled enough . . .


[ Parent ]
Speaking for myself... (3.75 / 8) (#12)
by UncleMikey on Tue Feb 19, 2002 at 02:10:08 AM EST

...it's not so much that there's no room for the discussion, as that the time for talking our problem to death is past us. I, for one, am more than happy to discuss this topic to death with just about anyone, but my position in such discussions does start from 'with us or against us'; and has since some months before 9/11.

Governments exist to protect the interests of their own people by whatever means those people see fit. The key words there are 'their own people'. The American Government exists to protect the interests of American citizens, not Saudis or Afghanis or Israelis or Brits or anyone else. Americans. Period.

Right now, America's interest is best served, IMO, not by trying to be the world's friend (read: patsy), but reminding the world that America is the strongest nation on Earth and is not amused by having airplanes slammed into its skyscrapers. The terrorists did this in large part because they believed there would be no consequence, that they could whittle America away with attacks of this nature because we had lost the will or the strength to fight back. Or perhaps because Allah would keep us from doing so.

All that said...the irony is not lost on me that the most overtly evangelical Christian we've had in the Oval Office in a long time has chosen a Jewish response, rather than a Christian one. About the only thing Jesus said that was truly new compared to Jewish belief at the time was, "Turn the other cheek."

Right now, we turn the other cheek, we're likely to get that one punched, too. No thank you.
[ Uncle Mikey | Radio Free Tomorrow ]
[ Parent ]

no. (4.00 / 2) (#25)
by sayke on Tue Feb 19, 2002 at 08:43:59 AM EST

The terrorists did this in large part because they believed there would be no consequence, that they could whittle America away with attacks of this nature because we had lost the will or the strength to fight back.

what? i've seen no evidence for that. i've seen plenty of evidence, though, that the terrorists did what they did because they wanted to incite a massive worldwide uprising against the US, and in so doing force the US's retreat from islamic holy lands. it remains to be seen whether they furthered that end or hindered it.

sayke, v2.3.1 /* i am the middle finger of the invisible hand */
[ Parent ]

Some evidence (4.00 / 3) (#28)
by wiredog on Tue Feb 19, 2002 at 08:57:51 AM EST

On the bin Laden tapes he seems to make clear that he thought the US wouldn't do what it did. Certainly the previous US responses would have given that impression.

Peoples Front To Reunite Gondwanaland: "Stop the Laurasian Separatist Movement!"
[ Parent ]
Here's your evidence (4.66 / 3) (#37)
by Stickerboy on Tue Feb 19, 2002 at 12:20:53 PM EST

what? i've seen no evidence for that.

Here's your proof:

1. 1st World Trade Center bombing. Result? Nothing... a few expendable underlings are arrested and thrown in jail.

2. Khobar Tower bombings in Saudi Arabia. Result? A fruitless investigation.

3. Somalia, 1993. With or without al-Qaeda involvement, bin Laden specifically mentions the battle of Mogadishu as evidence that the US has no courage for a battle that involves US casualties.

4. US Embassy bombings in Africa. Result? Clinton launches a few cruise missiles into an empty training camp. An amazing show of resolve.

5. USS Cole bombing. Result? More "effort" into anti-terrorism cooperation with Yemen.

Hell, if *I* was bin Laden, I would have taken our responses as clear evidence that the US was an impotent "superpower".

i've seen plenty of evidence, though, that the terrorists did what they did because they wanted to incite a massive worldwide uprising against the US, and in so doing force the US's retreat from islamic holy lands.

Bingo. Bin Laden was counting on an ineffectual US response to the 2nd WTC bombings, which he could then use as propaganda to espouse: 1) "The US is attacking innocent Muslims! Muslims of the world, unite! (behind me, of course)" and 2) "The US can't defeat me! Join behind me, who will lead you to victory!"

[ Parent ]
"With us of against us" (5.00 / 3) (#39)
by bodrius on Tue Feb 19, 2002 at 12:46:56 PM EST

Although I agree completely with your definition of the role of government (sadly, it is often forgotten), the problem is that the interests of the population often requires collaborating with other countries, and taking into account the full consequences of foreign policy actions.

This implies consistent foreign policy, showing you value your allies, and behaving as something better than an international bully. It also implies remembering that the rest of the world exists, and that your actions, whatever they are, will create grudges and new enemies you have to be aware of.

Often governments act on the interests of the votes of the people, which is not the same as the people's interests. Issues of moral outrage, charity or pure sentimentalism are considered more important than real consequences because they affect focus groups more directly.

The US is in the special position as world power to pretty much ignore the world when they make foreign policy decisions, acting to meet (directly or indirectly) the expectations of their voters for the next election.

The result is an schizophrenic history of foreign policy, part-bully, part-benefactor, part-absent-king. Sometimes strong, sometimes weak, sometimes supiciously disinterested.

Obviously this makes it difficult for most of the world to trust the US, not because it acts solely in defense of their citizens, but because sometimes it doesn't, and because regardless of what it's doing there's a suspiciously altruistic discourse involved. When your friends are unpredictable, so is said friendship.

Cultivating such lack of trust is definitely not in the interests of American citizens. But since most of them are not concerned with that, but with whether they can fight wars without casualties, eliminate terrorists without toppling governments, get cheap resources without supporting oppresive governments, etc., all while thinking that anything south of the border is named Mexico and Pakistan is populated by Arabs, their votes tend to guide the actions of their administration.
Freedom is the freedom to say 2+2=4, everything else follows...
[ Parent ]
State sovreignty (5.00 / 1) (#47)
by ariux on Tue Feb 19, 2002 at 11:50:17 PM EST

Governments exist to protect the interests of their own people by whatever means those people see fit. The key words there are 'their own people'. The American Government exists to protect the interests of American citizens, not Saudis or Afghanis or Israelis or Brits or anyone else. Americans. Period.

Take this to a philosophical extreme, and you end up with pretty sick results. The United States government, as the agent of its people, has some level of responsibility to the rest of humanity, as they do.

Admittedly, go too far in the other direction and you wind up metaphorically waking up in the gutter with no shoes and a pain in your head.

[ Parent ]

Don't complain. :-) (4.00 / 2) (#29)
by Lethyos on Tue Feb 19, 2002 at 09:56:21 AM EST

your article genuinely required thought. few articles on k5 seem to do that anymore.

Well, you could always get your news and opinions over here. I think K5 is loaded with high quality articles and arguments. Even if they are not completely right, or lack citation, they are usually intelligent and not merely meant to inflame readers. Every day I read K5, I encounter articles that genuinely require thought. Some of them are opinion pieces, others research. It's a mixed bag, but over all it's quite good.

earth, my body; water, my blood; air, my breath; fire, my spirit
[ Parent ]
A New Marshall Plan? (4.85 / 7) (#7)
by WombatControl on Mon Feb 18, 2002 at 11:45:42 PM EST

In speaking of the need to support the Marshall, Plan Dean Acheson, called for Americans to "Do well by doing good". American efforts at economic aid to rebuild Europe went a long way to ensuring a solid base of support for US efforts during the Cold War. In the light of the new war in which America has declared itself engaged, what better way to engender multilateral support than to offer aid to impoverished regions themselves both suffering and supporting terrorism? Pressure to effect coupled with funding to support sustainable development at a much higher rate than that currently designated by the US would do more than any number of asset transfers regulatory mechanisms to curb terrorism.

First, with the Marshall Plan, we bombed the Nazis into oblivion before we had any thought of sending aid to Germany. Sending any kind of aid to these nations simply doesn't work until the regime supporting terrorist activity is eliminated. Otherwise the aid money simply goes to the military while the civilian population starves. Just look at Iraq and North Korea for this idea in action. The military gets fed, the government develops weapons of mass destruction, and the people starve in the streets.

The fact is, the best way to deal with terrorism is to eliminate the terrorists, then worry about aid. Once you've excised the terrorist regime, then the time is right for aid. And even then aid money should be used only when necessary and should be secondary for incurring real capital through foreign investment. Elsewise you end up with a nation with an infrastructure it can't support and a boatload of debt.

I agree (in theory) (4.40 / 5) (#9)
by mircrypt on Tue Feb 19, 2002 at 12:27:17 AM EST

It's certainly nice to have my first submission in the years I've been hanging around this place get at least some response. :-)

I agree completely with the idea that the terrorists must first and foremost be eliminated...that their networks cease to be operational is the best policy outcome. The point this little snippet from a hell of a lot longer piece (that in of itself still only preliminary literature review and not focussed on actual data collection) hoped to make was that taking out perceived methods of terrorist financing is pointless in the long-run. I agree that most development aid never reaches those its intended to help. I lived 14 years overseas and saw the effects of this process, or lack thereof, quite vividly.

At the same time that direct aid doesn't work, there are in this day and age viable alternatives for much smaller amounts to find their way into the communities that could use this money to good ends. What are good ends? Raising the standard of living. Basically, I premise that by raising the transaction costs, as it were, for local populations to remain complicit in terrorist activity, the bases for terrorist operation (be it planning safe-houses or actual cells) cease to be viable. Development aid divested through locally-based non-religous affiliated NGOs has the potential to help alleviate the problem of terror. At least in my mind.

The whole issue of terrorism is a lot more complicated and nebulous than most lawmakers tend to think. I've read their policy recommendations and the congressional quarterly reporting on their perspectives enough to know that there's a lot missing in their understanding. Ok...I'm rambling on. To answer your comment. You're right. There's a big difference between funding development on a grassroots level in less-developed countries. At the same time, the aims are similar. The Marshall Plan was a reconstruction effort to influence the re-economizing of Europe and the nature of the political parties coming to power in the post-war years. A development plan and / or technical assistance for law enforcement efforts (a robust anti terror plan) has the potential to do more damage to terrorist operations than simply trying to stop the way they channel small amounts of funding.

I see the problem of terror as much in the demand-side context as the supply. Killing terrorists works to stop those targeted from acting but it does nothing, in fact it works against, the ethos / ideology spurring on these acts of terror. When you take away the perceived truth from the rhetoric of the terrorist, all you have is an agitated extremist with no support base from which to actualize the potential of his or her terrible designs.
"Experience is not what happens to you; it is what you do with what happens to you". - Aldus Huxley -
[ Parent ]

Aid and reconstruction (4.75 / 4) (#21)
by Znork on Tue Feb 19, 2002 at 06:32:35 AM EST

Aid is mostly useful to prevent another terror regime from rising. To prevent Nazi Germany the support would have had to been given after WWI. To prevent the Taliban the aid should have been given at least 10 years ago.

Once the ground is laid for a terror regime to rise through poverty and extremism, it is, I believe, almost inevitable that it will rise, and at that point you're right and aid is much less effective.

Of course, aid isnt exactly guaranteed to help either. Terrorism may be largely born in poverty, extremism and war, but it isnt easily cured with money.

[ Parent ]
First catch your terrorist (4.00 / 1) (#57)
by Paul Johnson on Wed Feb 20, 2002 at 06:43:42 PM EST

The fact is, the best way to deal with terrorism is to eliminate the terrorists, then worry about aid.

Not so. "eliminate the terrorists" sounds very simple, but first you have to identify the terrorists in question.

Over here in the UK we have a very long history of dealing with terrorism, and we have made just about every mistake in the book along the way. The rest of the world would do well to learn from our mistakes.

  • We invented concentration camps in South Africa as a way of fighting the Boer irregulars by effectively taking their families prisoner (the Boer would today be labelled as guerillas or terrorists). They were not death camps in the Nazi sense, but an awful lot of Boer wives and children died in them, and we ultimately lost South Africa.
  • In (IIRC) the 70s we tried internment in Northern Ireland. Nothing as violent as "elimination", just lock up anyone suspected of having links with republican terrorists and maybe take the opportunity to do some heavy-duty questioning as well. That didn't work either.
No matter how many terrorists you kill or lock up, there always seem to be more. This is because every move you make against supposed "terrorists" becomes a potential propaganda point for the other side.

If you use a broad brush to make sure you get all the terrorists you inevitably sweep up a lot of innocent-but-sympathetic people too. One of the most effective ways of converting an innocent sympathiser into an active fighter is to imprison or murder one of his friends or family.

But if you stick to probable cause and fair trials then you only catch a tiny fraction of the terrorists and every trial simply creates a hero figure for the terrorists. To young men with no hope the option of becoming a local hero has real pulling power.

You are lost in a twisty maze of little standards, all different.
[ Parent ]

Jerusalem (3.60 / 5) (#10)
by Torgos Pizza on Tue Feb 19, 2002 at 12:49:39 AM EST

While you might eliminate poverty, you won't eliminate terrorism. As long as the issue of Jerusalem is unsettled, there will continue to be suicide bombers and terrorists in the Middle East. This is one of many global issues that defy economics and is defined by religious and cultural differences. Throwing money at them won't solve their problems.

I intend to live forever, or die trying.
Maybe it would not solve it,but it may minimize it (4.80 / 5) (#15)
by Tezcatlipoca on Tue Feb 19, 2002 at 04:12:13 AM EST

The current wave of Palestinian terrorist attacks on Israeli civilians has a very clear message: we have no hope, we just don't not care anymore.

The parents of the bombers (very often people in their ealry 20s) don't mourn them but hail them as heroes because they just killed other young people of the same age.

If the people in Palestine had a good level of life promoted by international help to build an stable country and by containment of Israeli expansion and excessive agression(by mean of UN forces) maybe many of the terrorists that all so willingly are blowing themselves up would consider to try political means to solve the problem.

At the faintiest glimmer of hope that was the Oslo agreements violence diminished noticeably and both Israel and Palestine began to look at the future with optimism.

Now, thanks to a corrupt Arafat administration and a bellicose Sharon (that we should not forget promoted the escalation of violence by insensing Palestinians with his now infamous visit to the Muslim quarter of Jerusalem) there is no hope for Palestinians or Israelis to see their children grow in peace.

History will not forgive these two persons, but neither will forgive the several other parties that could not bring themselves to contribute in a positive manner to the resolution of this conflict (*cough*Bush*cough*ayatollahs).

"At eighteen our convictions are hills from which we look;
at forty-five they are caves in which we hide." F. Scott Fitzgerald.
[ Parent ]
How many things can you get wrong at once? (none / 0) (#60)
by twr on Fri Feb 22, 2002 at 06:12:31 PM EST

Let's go through the list:

1. More Israeli civilians have been killed SINCE Oslo and BEFORE the current Intifada than had been killed since Israel occupied the West Bank and Gaza in 1967. Some agreement.

2. Israel doesn't trust UN forces, with good reason. There are currently UN forces on the border between Lebanon and Israel. Last year, they SAT AND VIDEOTAPED while three Israeli soldiers were kidnapped by Hizbollah, during a cross-border raid. The UN denied it had the video for nearly a year, and then refused to show an unedited version to the Israeli government. This is while the UN was supposed to be guarding an internationally recognized border. Why should Israelis expect any better for a UN present between a Palestine and Israel?

3. Sharon didn't go to "The Muslim Quarter of Jerusalem." He went to the Temple Mount, where the Jewish Holy Temple used to stand. The Western Wall is at the base of the Mount, and the Dome of the Rock and Al-Aqsa mosques are on its top. To attack Sharon for going there would be like Americans attacking Indians for trying to visit Mount Rushmore (which is a sacred American Indian mountain).

The Palestinians don't recognize any Jewish claim to the land of Israel. That's the problem. Every "solution" that's been presented to the Middle East problem has been for the Jews to magically disappear, which works out fine for everyone except the Jews.


[ Parent ]
McJerusalem (4.00 / 2) (#22)
by ghjm on Tue Feb 19, 2002 at 08:26:34 AM EST

The UN or the US should just take over the holy sites of Jerusalem and turn them into a tourist attraction. Disneyland Jerusalem. With a Starbucks, unless of course there's already one there, which there very well might be.

Seriously, there is just not going to be an answer to the question of Jerusalem. Holding it in trust as a religious sanctuary is probably the best answer, but it would have to be done by someone with no historical or religious stake in the outcome (e.g. no Christians, Jews or Muslims). However, the nation managing the trust would still have to be powerful enough that the Jews and Muslims would feel inhibited from starting a war with them.

Japan, perhaps?


[ Parent ]
Jerusalem (5.00 / 2) (#31)
by bodrius on Tue Feb 19, 2002 at 11:36:03 AM EST

Eliminating poverty would considerably help settle the issue of Jerusalem.

Poverty tends to breed fanaticism. Prosperity favors the will to compromise.

When the population has more to lose at the prospect of war, political unstability, etc. they are quite unwilling to support extremist factions, and the moderate factions have more flexibility to negotiate without losing support.

Only when the population actually wants to settle the issue can the leaders negotiate an agreement. Only when you give them something to lose, will the population want to settle the issue.

It will require more than that to solve the problem of Jerusalem, but it is a requirement.
Freedom is the freedom to say 2+2=4, everything else follows...
[ Parent ]
But not in religion (5.00 / 1) (#41)
by Torgos Pizza on Tue Feb 19, 2002 at 04:55:18 PM EST

You're talking about some of the richest countries in the world in the Middle East. Economics play a huge role in class warfare where there are Have's and Have-Not's. But we are not even talking about that here. In regards of the situation Middle East, economics simply do not matter to religious fanatics. You have two groups who want control of Jerusalem at any cost. Give each of these people $100 and they'll go out and buy a rifle and some bullets. It's part of their culture, their religion. Each group is raised from a child being taught that someday Jerusalem will be theirs and God will help you do it. These people don't care about money. They only want what was promised by their ancestors.

If you want to put your money in a place that would stop terrorism, give it to the farmers who raise drug crops. These poor farmers know that the coca and poppy crops are being used for drugs, but in order to feed their family they raise them anyway. In the third-world, raising corn or wheat doesn't pay bills, but growing coca and poppy fields do. Drug dealers pay these poverity stricken farmers to raise these crops and harvest them.

So if you want to put your economic know-how to use, pay these farmers to raise something else. Something useful, like corn, wheat, potatoes... whatever. At the very least, it cuts down supply and forces the drug dealers to shrink their profit margin by having to pay more for their drug crops.

I intend to live forever, or die trying.
[ Parent ]

economics analogy (5.00 / 5) (#23)
by streetlawyer on Tue Feb 19, 2002 at 08:41:53 AM EST

It is useful to imagine terror as an economic good with a high degree of supply elasticity

No it isn't as proved by the fact that your (rather good) article doesn't actually do anything with this analogy. One can make all the points that you make without dragging in the apparatus of neoclassical supply and demand (in any case, if "terrorism" is a good, it's a very funny good as it isn't consumed by anyone), and you risk confusing the issue by doing so.

All the points that you make are actually very good economics of the institutionalist school of political economy, but bringing in the neoclassical supply and demand model doesn't fit.

Just because things have been nonergodic so far, doesn't mean that they'll be nonergodic forever

economics analogy (5.00 / 1) (#42)
by jeremycit on Tue Feb 19, 2002 at 05:58:25 PM EST

in any case, if "terrorism" is a good, it's a very funny good as it isn't consumed by anyone

yeah, it is perfectly apt to consider terrorism a good. the consumer is naturally the one who paid for it to happen, ie. bin laden and those who financed him (to the extend that they knew what they were buying).

and what's with this adjective neo-classical? it's just supply and demand. we all know what supply and demand is. what does neo-classical add to the discussion?

[ Parent ]
wrong (none / 0) (#50)
by streetlawyer on Wed Feb 20, 2002 at 02:07:23 AM EST

and what's with this adjective neo-classical? it's just supply and demand. we all know what supply and demand is. what does neo-classical add to the discussion?

No; talking about "elasticity" ties down the model to a specific mathematical form. The Austrians and (neo-)Ricardians would certainly disagree over whether supply elasticities exist.

The idea that Bin Laden is a "consumer" of terrorist services merely underlines how bad an analogy this is, in that very few other goods are consumed by their producers. And the ones that are, are typically not traded in the kind of open, competitive markets in which it makes sense to talk about supply elasticities.

Just because things have been nonergodic so far, doesn't mean that they'll be nonergodic forever
[ Parent ]

Terrorist Gold (4.00 / 4) (#24)
by wiredog on Tue Feb 19, 2002 at 08:43:12 AM EST

From The Washington Post
using couriers and the virtually untraceable hawala money transfer system, they transferred millions of dollars to this desert sheikdom, where the assets were converted to gold bullion. The riches of the Taliban and al Qaeda were subsequently scattered around the world -- including some that went to the United States -- through a financial structure that has been little affected by the international efforts to seize suspected terrorist assets.

Peoples Front To Reunite Gondwanaland: "Stop the Laurasian Separatist Movement!"
very interesting (5.00 / 1) (#44)
by fhotg on Tue Feb 19, 2002 at 06:47:25 PM EST

Not because I believe very much of the WP article, but because using gold as payment is pictured as typical terrorist behaviour.

It's more typical of people who do not have so much faith in fiat money but prefer backed currency instead.

It stands to reason, if "terrorism" is here used again as a means to crack down on economic behaviour detrimental to the control-structure of the current economic system, to which the kind of money used is essential.

On a side note: The popularity of e-gold seems to have gone up big time (last graph on page) following 09/11.

[ Parent ]

Economics on Terrorism (4.66 / 6) (#26)
by gleesona on Tue Feb 19, 2002 at 08:44:05 AM EST

An interesting article. I think there are elements of truth it what was suggested. However terrorism is a complicated beast, and not so simple as our political leaders seem to like to suggest. I don't think that we can really effectively chase the money supply, as there are too many easy ways to launder money and conceal it. However, it is important to keep them under pressure and make the financial side as difficult as possible. The solution must be a multi-faceted one, targetting the economic, financial and political aspects. Politically, first of all the problems in the middle east must be solved, and I think it is worth putting a lot of effort. Much of the anti-American feeling in the middle-east comes from the fact that the US backs Israel more than the Palestinians (or so the people think). I also think it amusing (also predictable) that Bush has seriously raised the budget for the armed forces. Everyone knows that the USA has the biggest 'big stick' and isn't afraid to use it (so long as no US personnel are hurt!), but the armed forces are designed to fight other countries' armed forces (eg WWII) and not terrorists. Despite all the technology, what the US and it's allies need is good human intelligence on these organisations; something that up until know has been lacking. An informer is often worth much more than all the satellites and evesdropping equipment. In the Moslem world, the US is also a convenient scapegoat. Most Islamic countries (gulf states excepted) are pretty poor, and their governments not so good. It is very convenient to deflect criticism by blaming the bad times on American foreign policy. There is no quick-fix to this problem, and if our politicians don't come up with a sensible strategy there will be no fix at all.
In short, a German spy is giving away every one of our battle plans.
You look surprised, Blackadder.
I certainly am, sir. I didn't realise we had any battle plans.
Very interesting (4.66 / 3) (#30)
by epepke on Tue Feb 19, 2002 at 11:32:02 AM EST

This is a very interesting article. However, there is one obvious hidden assumption which needs to be addressed:

The present estimate of the cost of the 9.11 terror attacks stands at approximately a half million dollars(1);

This, I think, reflects the costs of training and establishing the particular group that did the attacks. However, the real cost of 9/11 must necessarily include the cost to the terrorists, if any, of the destruction of the Taliban.

It is also important to note that 9/11 was not a classical terrorist action. In a classical terrorist action, a specific group takes credit for the actions and makes demands. This did not happen. Truly, for all we know, the attackers flew those airplanes into the WTC just for the hell of it.

People are willing to die for causes, but the image of themselves as heroes to a cause is an important part of their motivation. It's hard to find a clear cause here. "We are willing to die so that Afghanistan will be blown up" doesn't quite work. "We are willing to die for revenge" sometimes works, but you need a very special person to go into a certain death situation for such an abstracted version of revenge as might be represented by the WTC. I can see the Pentagon; I can see the Statue of Liberty; I can even see the NYSE as a target, but the WTC makes very little sense. That is, unless the leftists are wrong and the rightists are right, the attack was on Western civilization in general. But this would be incredibly quixotic.

It is also important to point out that this was the first (and second and third and fourth) case in history where a commercial flight taking off from the U.S. was destroyed as a result of "terrorist" activity.

What I'm trying to get at with my prolix circumlocution is that 9/11 was hardly typical. The pilots of those planes had to have a peculiar combination of intelligence and stupidity, sanity and insanity. I suspect that this combination of qualities is much rarer than those for your garden variety terrorist. Therefore, these people must be created or found, and so you have to include the costs of creating and finding them, which is a lot more than the cost of supporting them when they have been created or found. As an analogy, consider Ender Wiggins of Ender's Game. The entire cost of the battle school has to be considered a cost to produce him.

The truth may be out there, but lies are inside your head.--Terry Pratchett

I disagree (5.00 / 1) (#33)
by modmans2ndcoming on Tue Feb 19, 2002 at 11:54:58 AM EST

what you don't think that smart, informed people can be pulled toward such a fanatic group and be willing to die for their belief?

[ Parent ]
No (5.00 / 2) (#38)
by epepke on Tue Feb 19, 2002 at 12:39:04 PM EST

what you don't think that smart, informed people can be pulled toward such a fanatic group and be willing to die for their belief?

That's a rather odd representation of what I'm saying. I'm not saying that it can't be done; I'm saying that it costs money to do it and that this money has to be considered part of the cost.

I'm primarily saying that the amount of money is large rather than small, although I think it is. I am primarily saying that it needs to be addressed and needs to be included in the cost.

The difference is crucial. What does it cost to find or create a Mohammed Atta? If people like that are extremely common, just ripe for the picking, then it costs very little. If people like that are rare, then the cost of finding them is high and may include the cost of locating, maintaining, and training everyone who washes out.

I think they are rare, partly because of the reasons in my earlier post, but also partly because the current thinking is that only one or two people in each group knew what the mission involved. It seems most likely that the others could not be trusted. So, out of the entire network, they could find between four and eight people who were at the level of Mohammed Atta. The whole network, however, is necessary to find those four to eight people. Of course, some of the people who fell short of Atta had uses, too, so some of the cost can be considered to require training them. However, it would be naive to think that all of it can--if terrorism is though of as goods, then people like Mohammed Atta are so much more valuable that it only makes sense to consider much more of the cost going toward them than to any given grunt or washout.

This is critical, as it may turn out that the probability of getting a Mohammed Atta bears a nonlinear relationship to the size of the terrorist network. Halve the size, and you may get a quarter the number of Mohammed Attas. I don't know that this is true, but I strongly suspect it from experience with existing military and educational institutions: the finest networks produce more truly excellent people than one would expect given the amount of funding they get. It could be that even modest reductions in funding could significantly reduce the number of exceptional terrorists.

One might argue that this is partly due to competition: those who have the stuff are attracted to the exceptional networks. This does not really change the picture, however, as there are other careers for fanatics than terrorism, and these networks will compete as well. The same drive and passion that might make someone a great drug kingpin under one set of circumstances could also make that person a great business leader or actor or inventor or whatever.

To recap, though, the main thing is that these auxiliary costs need to be addressed.

The truth may be out there, but lies are inside your head.--Terry Pratchett

[ Parent ]
I still disagree (none / 0) (#53)
by modmans2ndcoming on Wed Feb 20, 2002 at 09:44:33 AM EST

Because a movement like what Bin Laden has/had (depending on the state of his life) has a reputation in fanatic Muslim circles. All Atta needed to be was a fanatic and he would have been plugged into the system that promotes al-queda...at no cost mind you since it is a word of mouth sort of system.

Then he just makes the decision to go over to the place that bin laden is based at the time and say "I want to join".

Yes training him costs, but that is about the same for all terror trainees.

The fact that he has the skills needed to lead a group was most likely self evident during the training process and he was moved into leader ship.

The kind of endeavor that you speak of sounds like advertising in local papers and having recruitment centers, all of which are not needed and would bring great punishment from the government of that nation the centers and news papers are located in (since the US would almost surly have diplomatically pressured the national government to crack down on those places)

Costs for finding bright people are minimal in such situations.

[ Parent ]
Re: Very interesting (5.00 / 4) (#35)
by bodrius on Tue Feb 19, 2002 at 12:12:49 PM EST

The motivation is not that hard to see: "I'm willing to die to pay back the Americans".

It may be considered irrational, stupid, or even ridiculous, but it's not hard to see at all.

The rational calculus, miscalculations included, behind that motivation is extremely common throughout the world, and it's just a subset of another erroneous rational calculus that concludes "the Americans want to keep us down", "the Americans are out to get us" and "the Americans want to take over the world".

The WTC is seen as a symbol of America, and was attacked as such a symbol. Much to the suprise of some americans, I guess, most of the world do not differentiate that much between the WTC and the Statue of Liberty, or even the White House. It could very well have been Mt. Rushmore, if the death-toll had ensured as much coverage.

It's a symbolic attack, a political message, and the target audience is not going to analyze whether the WTC is that linked to the government, much in the same way they don't analyze that much whether the foreign policy is linked to the population, what are the motivations behind that foreign policy, and whether the US is really their adversary. Those are assumed truths.

Really, the fact that for most americans to even notice the love-hate relationship even their closest allies have with them as a nation and a culture, and find it hard to figure out the motivation behind any attack to their nation, is part of the problem.

Such obliviousness is taken for imperialist arrogance, encourages bad foreign policy decisions often based entirely on domestic policy, and provides a clear field for more radical versions of the consensus to develop into successful hate-cults.
Freedom is the freedom to say 2+2=4, everything else follows...
[ Parent ]
World Tarde Center (none / 0) (#51)
by IriseLenoir on Wed Feb 20, 2002 at 02:23:31 AM EST

Did you all forget that WTC stands for World Trade Center?? It is not only a "symbol of America", but of the global capitalist centralization of wealth and economical issues, the "New World Order". New York claims to be the Capital of the World. The Pentagon is of course the hidden fist without which the hidden hand of the market would never work. It is not mistaken for, it IS imperialist arrogance. I have to give them that the targets were very well choosed for their symbolic value.

Whether the WTC is linked to the government or whether it is the other way around really doesn't matter in the end: they are both key players and offenders.

And I used to pity Americans because I believed Bush stole the vote and they didn't agree with the foreign policy and would eventually wake up. But it really seems the majority really supports it and virtually none of them will ever move their fat ass for someone else. Keep bragging about how democratic you are... it only justifies not distinguishing between military and civilian targets because you claim each and every one of you is responsible.

I'm not saying it is deserved, but you reap what you sow. One thing is for sure, going on like this is only begging for more.

"liberty is the mother of order, not its daughter" - Pierre-Joseph Proudhon
[ Parent ]
Who's bragging? (none / 0) (#54)
by Fon2d2 on Wed Feb 20, 2002 at 01:53:36 PM EST

I don't support it. I may not have understood NAFTA when it was first drafted back when I was in elementary school, but I get the gist of it now. In my opinion, as in many others' opinions, trade agreements such as NAFTA are harmful both to the US and to the rest of the world. It is a major setback both to the development of a living wage here and the promotion of civil rights abroad.

The fact of the matter is that both the Democratic and the Republican party support agreements such as NAFTA and their is almost no talk about such issues in the mass media. Often times labor groups capitulate to the "lesser of two evils" rhetoric and offer up their party endorsements without securing any promises in return.

By the time you add the collective effects of media blackouts, party rhetoric, and party entrenchment the average voter feels truly powerless to effect any real change. Perhaps that's why 63%* of the population didn't vote in the 2000 presidential elections. 63% sounds like a majority to me and I doubt these people are touting the greatness of American democracy.

*63% is based on total voter turnout and total population.

[ Parent ]
other costs (5.00 / 1) (#40)
by proletariat on Tue Feb 19, 2002 at 12:51:31 PM EST

I agree that there are other costs that should be considered. I've read that $100 million in assets has been frozen which may or may not belong to the terrorists. And then there is the cost to the organization in its partial destruction. So if you're considering the total cost to Al Queda wouldn't it be quite a bit higher than $500,000?

[ Parent ]
Miscalculation or phase change? (5.00 / 1) (#48)
by labradore on Wed Feb 20, 2002 at 12:15:09 AM EST

Your comments are very insightful. However, I wonder if the results were miscalculated or signal the beginning of a new phase in terrorist behavior. If one groups all anti-western terrorists together then the total cost to the terrorists was very large. Billions of dollars and years of work by the Al-Quida network and other terror organizations have been wiped out by the retaliation on several fronts. But the balance of the transaction in "absolute dollars" clearly favors the terrorists. How many billions were lost by individuals and businesses in NYC alone? How many billions were spent on military operations in Afghanistan? What was the cost of the jolt to the world stock markets and to all of the lost sales and productivity that occured due to disruptions in people's lives? What is the cost in consumer and investor confidence and in the new frictions introduced in the world economy due to a perceived terrorist threat? The total amount is probably incalculable. I think the victims' families would argue that the loss is infinite.

A terrorist's accountant would look at these facts and quickly realize, however, that the business of high-profile, large-scale terrorism is now likely to be irrepairably harmed. The balance would seem to be--so far--on the side of The West. Vigilance against terror training camps and indoctrination schools and recruitment areas has most likely been substantially increased. Funding will probably decrease and networking will have to be kept more secret and thus be less effective.

If this attack was not a miscalculation then the new mode of terrorist operation would seem to be individual AND organizational suicide. An organizational suicide strategy is similar the business strategy of many of the .COM failures we have recently witnessed. The burn rate or attrition rate is supposed to be low enough and gain enough market share or build enough fear and paralysis to allow the remains of the business/investment or terrorist organization to succeed in becoming a market leader or a power broker.

The fact that no organization has claimed responsibility for Sept. 11 seems more likely to indicate that the organizations responsible or affiliated with the attack miscalculated its impact and did not wish to become targets of retaliation. If the impact was calculated then the responsible parties probably would have made demands on their western enemies. The extent of the miscalculation is interesting because it implies that the recent phenomenon of independent cells of terrorists led to "overproduction" of terror and a crashing retaliation. Future networking of terrorism may be more strongly unified to protect against this sort of error.

At this time I don't think terrorist organizaions have a credible option to resume "classical" terrorism. All terrorist threats will probably be perceived as suicidal and dealt with accordingly by the intended victims. Consequently, classical terrorism has very little bargaining power in this environment. A committed terrorist must now know that suicidal or remotely executed terrorism (like IT attacks) are the only remaining avenues for inflicting real harm.

This reasoning is speculative. When the WTC towers were destroyed, western aide workers in the third world found out by word-of-mouth that "a village in New York city had been wiped out by terrorists' missiles." Terrorists usually come from poor backgrounds in places that don't often subscribe to western thinking. Our rules may not apply. I think that mircrypt's conclusions are valid. In order to "win" against terrorism, the west needs to invest in the third world in ways that will bring cultures and societies closer together.

[ Parent ]

Thoughts (none / 0) (#58)
by epepke on Wed Feb 20, 2002 at 07:38:15 PM EST

A terrorist's accountant would look at these facts and quickly realize, however, that the business of high-profile, large-scale terrorism is now likely to be irrepairably harmed.

Indeed, that's a good point. 9/11 was really something that could only work once. If the terrorism is amenable to economic analysis

Terrorists usually come from poor backgrounds in places that don't often subscribe to western thinking. Our rules may not apply. I think that mircrypt's conclusions are valid.

The trouble with this is that an economic analysis of terrorism pretty much assumes that our rules, at least those of economics, do apply. As a result:

In order to "win" against terrorism, the west needs to invest in the third world in ways that will bring cultures and societies closer together.

may be correct, but I don't think one can conclude that it is correct on the basis of an economic argument.

Quite frankly, I think that most simple solutions are misguided. It isn't obvious to me that "bringing cultures and societies closer together" is more likely to lead to less terrorism than to more. What if it is percieved as cultural imperialism? What if, like the Babelfish, bringing down barriers causes more war?

I do think that the models I've seen with respect to attempting to rationalize the terrorism don't make much sense at all. This is consistent with the discoveries of cognitive and behavioral psychology which accurately predict sometimes surprising patterns behavior. One of the most disturbing findings of cognitive psychology is that at the level of cognitive dissonance, causal relationships don't work very well. Is someone accused because they're guilty, or are they guilty because they are accused? Cognitive dissonance doesn't prefer either direction, and which is assumed is usually that which is easier to assume.

Frankly, I'd like to see a bunch of anthropologists and a few psychologists hired and appointed to figure out a solution, but it isn't going to happen. What is going to happen is that people will try things and they will either work or they won't, and no matter what, somebody will say "I told you so."

The truth may be out there, but lies are inside your head.--Terry Pratchett

[ Parent ]
Catch-22? (4.33 / 3) (#32)
by lightsweep on Tue Feb 19, 2002 at 11:51:22 AM EST

Yes, there will always be religious "fanatics" who will use terrorism to seek their purest vision of religion. But it is the vast majority of the population that determines wheter to give them free-reign or not. And that comes down to the state of the economy and whether people have a vested interest in their society... whether they have something to lose and gain; whether there is any hope.

Looking at the Palestinians, and Afghanistan pre-war, there was no hope. Afghanistan has hope now. Palestine, sadly, doesn't seem to.

So what do you do about it? You can throw money at a country, but it has little affect without an economic system and government structure to utilize it productively, and build off of it. That, arguably, seems best achieved by democracy and capitalism. (I think one reason the Marshall Plan worked so well was because of their shared Western political and economic values.) The problem is, whenever we try to export these ideas, we are often seen as "imperialist" or "culturally arrogant", all of which breads resentment and, alas, such outcomes as terrorism.


What happened to the speculative options? (4.75 / 4) (#34)
by blamario on Tue Feb 19, 2002 at 12:09:29 PM EST

When I saw the article subject, I expected it to at least mention the still-unexplained surge of the speculative investments days before the WTC attack. After all, if the Wall Street hadn't been closed for a week, the terrorists' balance sheet wouldn't have looked the same.

Who was behind the speculations? After the first coverage we got a few months of "investigation is proceeding" and then a complete silence.

Does anybody else remember the millions of bucks betting on the fall of airline stocks and the companies headquartered in the WTC? Did it fall in the media's memory hole? Do I hallucinate? Did it ever happen?

Coincidence (5.00 / 3) (#36)
by wiredog on Tue Feb 19, 2002 at 12:15:40 PM EST

There was something in the Washington Post about this a few weeks ago. As I recall, it was an aside in an article about short sellers. They were expecting airline stocks to fall, so they sold short.

Which was not an unreasonable bet. The economy was in recession before the attacks and people travel less during a recession.

Semi-ot: There were some people who made a killing selling Enron short last fall.

Peoples Front To Reunite Gondwanaland: "Stop the Laurasian Separatist Movement!"
[ Parent ]

well (5.00 / 1) (#43)
by fhotg on Tue Feb 19, 2002 at 06:06:26 PM EST

That's a reasonable explanation, but the question why this explanaition didn't get more publicity and a more open treatment (i.e. who exactly cashed in here) leaves me wondering. Given the fact that every other fart, that could possibly be connected to the assassination, is publicly dissected.

[ Parent ]
Bumper Sticker? (5.00 / 2) (#45)
by X3nocide on Tue Feb 19, 2002 at 08:05:23 PM EST

After seeing the super bowl commercial about drugs supporting terrorists and reading this, I think it would be interesting to make a bumper sticker that says "For just cents a day, you can support your own starving terrorist." Actually I think cs_office in CounterStrike allready beat me to it.

no matter what we do... (2.50 / 4) (#46)
by hal9ooo on Tue Feb 19, 2002 at 08:05:30 PM EST

we're not going to be able to completely annihilate terrorism. It's a losing battle - there are too many ways in today's society to cover your tracks, and not enough ways to unearth them. a good site that explains why the war on terrorism will never be won can be found at Kryeda's War on The War.

[NT] That link is to gay pornography. Be careful. (none / 0) (#52)
by Afty on Wed Feb 20, 2002 at 04:53:22 AM EST


[ Parent ]
my two cents (none / 0) (#49)
by eudas on Wed Feb 20, 2002 at 01:11:01 AM EST

it sounds to me as if the author of this article is basically saying "it's more expensive to fight terrorism than it is to give in."

"We're placing this wood in your ass for the good of the world" -- mrgoat
Terrorism "Futures" markets (none / 0) (#56)
by Randall Burns on Wed Feb 20, 2002 at 05:30:23 PM EST

I am the author of some Ideosphere claims that relate to the topic of terrorism. USTerr was trading before WTC and shows that there was clear and high risk of major terrorist incident in the US before 2010.

Some additional claims are trading now or will be soon:

These claims show the sort of things that ought to be done by insurance companies and financial markets in this area. These claims use reputational markets because of the regulatory issues surrounding real money transactions. However, in key respects the methodology is very similar to what has been going on for years in financial markets and the insurance business(Lloyds of London consists largely of a network of betting pools for example).

At present, the reinsurance network is in quite a mess because of WTC. Given the likelyhood that there will be additional terrorist attacks, it is prudent in my professional opinion that steps be taken to mitigate the risks here(I'm thinking we need better financial instruments and insurance policies that would allow some of this risk to be managed more effectively). Frankly, if this sort of thing isn't done rapidly, the impact of future terrorist attacks could be far, far worse than what we have seen so far.


General Comments In Response To A Bunch-O-Stuff (none / 0) (#61)
by billman on Sun Feb 24, 2002 at 04:15:17 PM EST

First, while I appreciate the careful thought put into the article, I think there are a few issues that may be incorrect or up for debate.

The analysis of cost assumes something like $500,000. That is the cost of *that* mission. The cost of setting up, running, and managing a network like al Queda is certain to be much, much more. It has been widely reported that bin Laden spent untold millions setting up his network. Recruiting, establishing training camps, etc. It would be highly unlikely that one could simply be written a check for $500,000 and pull off a similar mission. As bin Laden comments on one tape, most of the hijackers didn't know it was a suicide mission until the very end. How many people do you have to recruit, train, etc. before you end up with a group of people:

a) willing do die
b) intelligent enough to conduct such a mission.

A large percentage of the people who go through the terrorism training can assumed to be uneducated and end up only serving the purpose of being armed labor. Running that type of organization takes considerable funding. That would be like saying that a US military operation only cost X number of dollars. Well, sure if you take out the last 150 years of military funded research, the cost of putting up satellites, the original cost to build warships and aircraft, etc., etc., etc.

I'm sorry for not having the reference (or the names off the top of my head) and I'm far too lazy to go hunt them down but bin Laden's number 2 guy was the head of another terrorist organization in Egypt that went bankrupt. al Queda was formed, in part, as the merger of his terrorist organization and bin Laden's group of rag tag warriors. I bring this up only to illustrate that running a terrorist network is very similar to running a corporation or charity in terms of the realities of having to raise money. Again without the benefit of the original reference, there have also been some reports that prior to Sept. 11, bin Laden was having trouble raising funds because people were growing tired of his lack of results. He was taking in huge amounts of money and he was doing relatively little damage to the US. Again, the point being that even as a terrorist organization, investors seek a return on their investment.

But, that being said, I do agree that trying to cut off the financial funding will be ineffective as long as we approach it from the same direction we have attempted to stop drug money. If one wants to move money, it can be done. In fact, the more clandestine your organization, the easier it is to move because of the need to keep such a low profile.

Another point which I don't think you attempted to make but some of the follow-up posts have hit on, and which has become one of my pet peeves, is that bin Laden and those like him, enjoy power. Everybody wants to oversimplify the problem by saying that if you simply improve the economic situation it gives people less reason to become terrorists. True, but when you mix in a religion that has a long history of breeding fanatics (as does Christianity btw), all bets are off. The biggest recruiting centers for terrorists are in the religious schools. The religious leaders preach anti-Western rhetoric and blame the West for all that is wrong. I don't think it to be a statistical anomoly that most prosperous countries have a seperation of church and state whether constitutionalized or not. The religious leaders are able to amass power and, of course, they all seem to want a nation run by religious leaders which . . . of course, would be pleasing to Allah (how's that for self-justification of your power grab?). They aren't interested in giving up power. Just look at Arafat. He rode on the backs of Hamas and other terrorist organizations for several decades, and I believe one of his big problems right now is that many of these groups realize that putting down the sword means the eventual collapse of their power. So while Arafat wants peace (or claims to), the guys with all the guns and fanatics who got Arafat to where he is, aren't done yet.

The Marshall Plan was mentioned and again, I think we're talking about the wrong issues. While it didn't hurt that the US helped rebuild Europe after WWII, and probably prevented more violence down the road, the main effect of the Marshall Plan was to establish heavy US influence in Europe. With heavy military, political and economic interests in Europe, the US was committed to influencing European policy instead of taking the isolationist approach which, many would argue, played a part in creating the conditions that led to WWII in the first place.

The US gets a bad rap for meddling in the affairs of other countries and countries like France cry out when we label countries like Iran as evil (funny enough, France happens to have major economic interests in Iran) but as was pointed out, the US government has but one role and that is to defend and protect the citizens and their interests. As some have pointed out, taken to the extreme, that is a bad thing but that's like saying that since eating is in your self interest and eating to excess can eventually kill you, you shouldn't eat. Moderation is the key. But right now, a big chunk of SW Asia needs some tough love. As much as I dislike the left-wing leanings of the West Wing, and I even more detest quoting fictional characters, in the words of Toby Zieglar (sp?) "I don't know why the US has to take every Arab country out for an ice cream cone. They'll like us when we win." Tough love, by definition means serving up some pretty strict guidelines. It means that most of the countries we apply the tough love approach with aren't going to be real happy with it until it kicks in and they start seeing the benefits. But, in the end, both the US and the victim/patient countries will both be better off.

Also, I disagree with a premise made that killing terrorist isn't effective. I believe it's highly effective if done correctly. al Queda isn't going to be staging any new missions anytime soon (they may still act on plans that had been in the works, but new missions will be far and few between). We need to play the game the same way they play. We wait, gather intelligence, look for the right opportunity and then one day you read in the newspaper that some suspected key terrorist was found shot to death on a deserted road.

Some Thoughts on the Economics of Terrorism | 61 comments (48 topical, 13 editorial, 0 hidden)
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