Neither global nor disruptive By T T RAM MOHAN. The Economic Times | July 14, 2005 http://economictimes.indiatimes.com/articleshow/1170192.cms
The bomb blasts in London last week have predictably given currency to hyperbole about terrorism being a `global' threat. It is nothing of the kind. One does not hear of bombs going off in Switzerland, the Scandinavian countries, Iceland, Argentina or Botswana, to name only a few countries at random. True, there are many countries threatened by terrorist groups. But, among these groups, it is necessary to distinguish between those with global aims, such as Al Qaeda, and those whose objectives are entirely local in character. Hamas in Palestine, Hizbollah in Lebanon, the Kashmiri separatists and the North-East insurgents in India and the Tamil Tigers in Sri Lanka belong to the latter category. None of them, not even Hamas and Hizbollah that see themselves as victims of American support to Israel, is known to have chosen targets outside the limited areas of their operation. A small number of groups has grander objectives. Al Qaeda is the best known. But it would be inaccurate to portray even these as pitted against civilisation as a whole. Their ire is directed mainly at the US, Israel and America's principal allies in the "war against terror", namely, the UK, Spain and Italy. In Europe itself, France, Germany, the Benelux and Scandinavian countries have all been spared the attentions of terrorist groups thought to be global in their operations. This is because America's actions in the Middle East have failed to elicit either popular support or governmental backing in most of Europe. In Germany, Chancellor Schroder rode back to power on a campaign that was explicit in its opposition to American intervention in Iraq. In France, Dominique Villepin who, as foreign minister, led the opposition to the US stance on Iraq in the Security Council is today prime minister. Spain's Jose Maria Aznar, famous for grabbing photo-ops with the Bush-Blair duo during the invasion of Iraq, was cast aside by the electorate following the Madrid bombings. In Italy, Berlusconi remains in power but popular sentiment has forced him to commit to pulling out Italian troops from Iraq by the end of this year. Among the leaders of Europe, Tony Blair, who won the last elections, alone can claim a mandate for his support to the US. The targeting of Madrid and London after 9/11 must be seen against this background. It belies the contention that Islamic anger is directed against the entire world. The contention, of course, comes in handy for those seeking to mobilise popular support for American intervention in the Middle East. Those who talk of terrorism as a `global' phenomenon would like us to believe that it threatens not just lives but also world prosperity. Yes, if Middle East oil fell into the hands of terrorists, that would imperil world economic activity. But the economic impact of terrorist attacks in general is negligible. It took only a couple of days for stock markets to rebound after the blasts in London. The US stock market regained ground in just two months following 9/11 and this despite the fact that the attacks in the US had damaged infrastructure in America's financial capital. After 9/11, there were dire forecasts about how the threat of terrorism was bound to tell on the world economy by setting back global integration. The Cassandras warned that flows of FDI into the developing world would be adversely impacted, outsourcing would cease to be attractive and the absence of insurance cover against terrorism would curtail economic exchange. The markets clearly do not think so. The willingness of governments to act as insurers of the last resort where private insurance cover against terrorism is not available has been an important factor in ensuring that global integration is not disrupted. Terrorism may increase the risk premium for firms but it cannot halt the forces driving integration: lower costs in the developing world; the imminent shortages of labour in the industrial economies consequent to changing demographics that render both outsourcing and immigration inevitable; and the attractiveness of rapidly growing markets in the developing world. What terrorism does threaten is the quality of life everywhere. The loss of lives apart, terrorism provides a pretext for increasing militarisation, aggression, the abbreviation of civil liberties and the assumption of arbitrary powers by governments, all of which only serve to fuel further terrorism. Terrorism today is neither global nor disruptive of economic activity. It is the response to terrorism that poses the greater threat of disruption to democratic societies. (The author is a professor at IIM, Ahmedabad) -- This is ZESTGlobal. 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