A Decade Later – What has the Economic Impact of the 9/11 Attack Been?

The Economic Impact of the 9/11 Attack

A Decade Later… What has the Economic Impact of the 9/11 Attack Been?

Yesterday, September 11th 2011, marked the 10th anniversary of the terrorist attacks that brought down the World Trade Centre, killed over 3000 people, shook the lives of countless Americans and completely repositioned the scale of terrorism.

And while this is not to understate in any way, the mental and emotional grief that this event caused to the people affected, given the current,  very shaky American economic situation, it is impossible to ignore the fiscal impacts of the 9/11 attack and the billions lost to the war on terror over the past ten years.

Mastermind terrorist Osama Bin Laden, who was killed in early May 2011 in Pakistan in an attack by U.S Navy seals, was known for his statement which said “We are continuing this policy in bleeding America to the point of bankruptcy”, relating the terrorist attack on America to the way in which Afghanistan very strategically bankrupted the Soviet Union.

Direct v/s Indirect Costs

While the direct short-term economic damage to the US economy caused by the 9/11 attack, estimated at anywhere between $50 billion – $100 billion, dissipated relatively quickly, the spiraling, colossal, indirect long-term costs have been in terms of trillions of dollars and are apparent in the superpower’s current financially distressed situation.

So what have some of the larger economic impact of the 2001 terrorist attack on the World Trade Centre been ?

Joseph Stiglitz, the Nobel prize-winning economist, has estimated the cost of the Afghanistan war to amount to anywhere between one to two trillion dollars. Added to which, the over-elaborate homeland security measures probably amount to another trillion according to Stiglitz.

These are the direct costs.

And the indirect ones ?

The soaring oil prices, which at the very least, can be partially attributed to the war on Bin Laden’s network, alongwith a cut-down in interest rates by the Federal Reserve post-9/11 to somewhat balance a fear-induced-recession, the general slow-down in economy, rebuilding efforts, etc.

Oil Reserves

According to statistics put forth by counterterrorism expert Daveed Gartenstein-Ross, the United States holds only 3 percent of conventional global oil reserves, yet uses 25 percent of the world’s daily production.

More than 66 percent of its oil is imported, amounting to a daily purchase of 12 million barrels of imported oil.

Gartenstein-Ross further says, “Al Qaeda views attacking the oil supply as a smart strategy for good reason: America’s reliance on oil for its transportation needs makes it a commodity that, if disrupted or made unaffordable, will cause the U.S. economy to collapse.”

Basically, a substantial hike in oil prices due to a terrorist attack would mean a massive economic blow to Al Qaeda’s biggest enemy – America.

Global Economic Costs

While these costs are much harder to estimate, the 9/11 attack has also caused significant damage to the world economy and the advance of globalization.

Over the past ten years, we have witnessed increasing costs of doing international business everywhere. Higher costs related to global trade and investment, alongwith a much more screened and restricted global mobility of people, have all stemmed from the 9/11 attacks. Add to this; higher, sometimes even prohibitive, security measures alongwith increased costs of international cargo inspection, insurance and shipping.

Before the 9/11 attacks, international transportation and business transaction costs worldwide had been witnessing a decline. The 9/11 attacks reversed this trend significantly.

On the 10th anniversary of one of the world’s worst attacks on mankind, these long-continuing economic damages to the U.S economy as well as to the world, need a good long thought…

 

Tom Parker

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