Usawc strategy research project



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USAWC STRATEGY RESEARCH PROJECT



transnational terrorism’s affect on THE u.s. economy

by


Lieutenant Colonel Michael A. Curci

United States Army

Dr. Robert Murphy

Project Advisor


This SRP is submitted in partial fulfillment of the requirements of the Master of Strategic Studies Degree. The views expressed in this student academic research paper are those of the author and do not reflect the official policy or position of the Department of the Army, Department of Defense, or the U.S. Government.

U.S. Army War College

Carlisle Barracks, Pennsylvania 17013


ABSTRACT
AUTHOR: Michael A. Curci
TITLE: Transnational Terrorism’s Affect on U.S. Economy
FORMAT: Strategy Research Project
DATE: 19 March 2004 PAGES:31 CLASSIFICATION: Unclassified

The strategic economic impact experienced following the terrorist attacks on September 11, 2001 is startling. It was only after the immediate crises that the United States and nations around the world realized the implications -- and concluded the attacks threatened the very existence of democracy and capitalism. Nations from around the world denounced terrorist acts and vowed to take part in the war against terrorism. But regardless of the numbers of nations who have denounced terrorism, organizations like al Qaeda remain willing to sacrifice their existence to defeat democracy and capitalism. Today, two years after the terrorist attacks, the blow to the U.S. economic stability is still visible; however, the research in this paper indicates the U.S. economy is very resilient and that it would take a great deal of domestic and external pressure to generate a long-term and lasting economic affect.


This paper analyzes the impact terrorism has had on the U.S. economy and seeks to determine how well the U.S. economy will stand to future terrorist attacks on U.S. soil that match magnitude of economic affect caused by the attacks of September 11, 2001.

To the veterans.


TABLE OF CONTENTS


ABSTRACT iii

List of Tables vii

transnational terrorism affect on u.s. economy 1

U.S. economic objectives and the terrorist threat 1

acts of terrorism 2

status of u.s. economy 3

US Economy pre-september 11, 2001 3

U.S. Economy post-September 11, 2001 4

COMPLEMENTARY ECONOMIC CONDITION: TERRORIST ATTACKS AFFECT ON U.S. CITIES. 6

U.S. action to strengthen the economy 10

concluding comment 14


ENDNOTES 17

BIBLIOGRAPHY 19

List of Tables




Table 1. Airline Industry Initial Job Cuts and financial remarks 5

Table 2. THE Economic Impact on New York City of the LOSS of the World trade Center FROM TERRORIST Attacks, $ in billions 7

Table 3. Average Age and Remaining Working Life of WTC Victims 8

transnational terrorism affect on u.s. economy


On September 11, 2001, the United Sates lived through what is recognized as the worst terrorist attack in American history. Hijacked commercial airplanes slammed into the World Trade Center, the Pentagon, and a field in Pennsylvania, killing over 3000 people. The terrorists who piloted the aircrafts delivered calculated strikes against symbols of national power. The aim of al Qaeda’s attacks was to show the world America’s vulnerability and to weaken the American and Western capitalistic way of life.

The attack on America raised questions about the degree of vulnerability of the U.S. and the new world economy. U.S. economic prosperity is arguably the U.S. center of gravity. According to Dr. Daniel Yergin until September 11th the U.S. economy’s prosperity, expansion, and link with economic globalization was seen as inviolable; since September 11th the U.S. has come to realize our economy is vulnerable in those three areas.1 The influence of terror manifested itself in the economy in a matter of weeks following the events in NYC and Washington D.C.: air travel, cruise line sales and stocks, hotels, restaurants, recreation and entertainment events all experienced known monetary losses. Some businesses filed for bankruptcy, while others struggled to recover from the physical and physiological effects caused by the devastation of transnational terrorism. Based on the present global operating environment, the President of the U.S. and the National Security Council see the act and its result as having escalated from random attacks into “war”. This paper explores the economic impact of the September 11th terrorist attack against the United States and investigates vulnerability of the U.S. economy to transnational terrorism. The paper, furthermore, takes a close look at the economic affect of terrorist attacks on a U.S. metropolitan area. The primary focus for the paper is New York City (NYC), the city that suffered directly from the attacks (in terms of loss of life, infrastructure, and gross city products) against its international financial district, World Trade Center, on September 11th.2


U.S. economic objectives and the terrorist threat


Given that the National Security Strategy (NSS) of September 2002 identifies economic growth as one of eight U.S. national goals and that terrorists continue to target the United States with their destructive actions to cripple its economic activity, it is fitting to review today’s operating environment and U.S. economic objectives. The U.S. goal as articulated in the NSS is “…to establish political and economic freedom by igniting a new era of global economic growth through free markets and free trade.”3 To achieve that end, the nation must preserve the freedom and vibrancy of its market economy while restoring security and confidence to the American people and to international investors.

The al Qaeda terrorists, in a shift of their strategic aim are now targeting our economy as well as our politics. Before the declaration and establishment in 1998 of the World Islamic Front for Jihad invoked a Muslim holy war against the “Crusaders” and the Jews, attacks on America were largely directed toward American institutions and symbols of power rather than to the broader target of “the West”.4 Since the 1998 change in the focus of al Qaeda’s terror, the world has witnessed an escalation of attacks against American symbols of power but, more importantly, it has also seen an increase in attacks against the West’s capitalistic way of life.5 The apex of the al Qaeda assaults, to date, has been the attack against the Pentagon and the World Trade Center carried out in September 2001.

Since those tragic events the U.S. government has responded against terrorism with all its instruments of national power. In partnership with the United Nations, the U.S. began leading military forces in a multifaceted Global War On Terror (GWOT). Initially the U.S. led strong coalition strikes against the Taliban in Afghanistan and the al Qaeda leadership. Then the U.S. led a coalition of specific willing participants against an Iraqi government that threatens the freedom and security of the American people and those in other Westernized nations around the world. The fighting in Afghanistan was a decisive move by President Bush to strike against the root of the problem, the location of the al Qaeda leadership and their training camps. The fighting in Iraq is a statement of the U.S.’s resolve to punish any regime that harbors or supports terrorism or lives by violence and deception with an aim to threaten the civilized world.6 It is also a statement that demonstrates U.S. resolve to protect the free market and free trade and to restore consumer and investor confidence. To date there appears to be no public scorecard by which to measure these U.S. successes or failures.

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