9-11 terrorism cost - 9/11 Terrorism: Global Economic Costs...

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9/11 Terrorism: Global Economic Costs Dick K. Nanto Specialist in Industry and Trade Foreign Affairs, Defense, and Trade Division Summary The 9/11 attacks were part of Al Qaeda’s strategy to disrupt Western economies and impose both direct and secondary costs on the United States and other nations. The immediate costs were the physical damage, loss of lives and earnings, slower world economic growth, and capital losses on stock markets. Indirect costs include higher insurance and shipping fees, diversion of time and resources away from enhancing productivity to protecting and insuring property, public loss of confidence, and reduced demand for travel and tourism. In a broader sense, the 9/11 attacks led to the invasions and occupations of Afghanistan and Iraq (and the Global War on Terrorism) and perhaps emboldened terrorists to attack in Bali, Spain, Morocco, and Saudi Arabia. A policy question for Congress is how to evaluate the costs and benefits of further spending to counter terrorism and its economic impact. This report will be updated periodically. A strategy of Al Qaeda is to hurt the Western world by attacking economic nodes and avenues of commerce. Osama Bin Laden has pegged the cost of the 9/11 attacks on the U.S. economy at $1 trillion.1 This attack, along with the Bali bombings in Indonesia and the Madrid train bombing, was aimed partly at taking down the global economic system and inspiring recruits by demonstrating that Al Qaeda’s terror attacks could cause significant damage and to raise fear levels that would cause governments, businesses, and individuals to change the way they behave in everyday life. This fits into aim of Al Qaeda to destroy Western powers by exhausting them in much the same manner that the resistance did after the USSR’s invasion of Afghanistan or the United States did to Russia in the Cold War. In each case, the prolonged war ended as much from economic exhaustion as from military victories. The purpose of this report is to briefly survey the global economic costs of 9/11. Details of the effects of 9/11 and terrorism on the U.S. and world economies are also addressed in other CRS reports and various studies.2 The global costs of terrorism — particularly 9/11 — are a policy concern for Congress, not only because imposing such costs is part of Al Qaeda’s strategy, but because, in certain cases, Congress provides the funds to cover those costs. H.R. 10 (Hastert) and S. 2845 (Collin/Lieberman) both touch on many of these issues. This “economic warfare” also may affect U.S. economic growth and productivity, cause financial instability in other countries, and hamper international trade and capital flows. The policy issues for Congress center on how much more security to fund, actions to be taken to sustain world economic growth (particularly in the nations cooperating in the anti-terrorism effort), how to maintain the integrity and security of the American and global economy, and how to expedite trade flows and business activity hampered by increased security procedures. The 9/11 terrorist attacks affected the world economy at different levels depending on how the attacks are
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9-11 terrorism cost - 9/11 Terrorism: Global Economic Costs...

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