Dean Barber

And There Will Be Blood

In Corporate Site Selection and Economic Development on November 15, 2015 at 5:41 pm

In the wake of carnage in Paris, could the Islamic State jihadist group wage a similar multiple-team, commando style terrorist attack here in the United States?

It might be tougher to pull off, but I think you don’t have to be security expert to believe that such an attack could take place here in the U.S., despite what the White House says.

What is clear is that ISIS has revealed a new dimension to its demented death cult, with the downing of Russian airliner in Egypt, suicide bombings in Beirut and now the massacre of innocents in Paris.

A growing issue worldwide, terrorism has caused around 130,000 fatalities worldwide between 2006 and 2013. Business people instinctively know that there is a cost, not just in lives but where and how investment takes place.

No doubt the Paris attacks will test already-fragile global markets, especially in Europe, where a shaky economy is still attempting to recover from a series of debt crises and lackluster growth.

There are costs. There are always costs.

Analysts Point to Resiliency

Analysts trying to put the Paris attacks in some historical context say prior events like this in Europe have tended not to have any durable market or economic effects.

“As horrific as these events are – and this is truly awful – economic activity does tend to be pretty resilient,” Howard Archer, chief UK and European economist at His Global Insight, told Reuters. “The UK, Spain and France itself has all seen its economies little damaged by terrorist atrocities in the past.”

Europe has suffered similar coordinated attacks on public transport systems in Madrid in 2004 and London in 2005. Almost 250 people were killed and more than 2,500 wounded in those bombings on trains and buses by Islamic militants.

Still, I’m not sure I buy the argument that economies are little damaged by terrorism as there is evidence of the contrary.

While the direct economic costs of terrorism may be shorter-term in nature, the indirect costs can be significantly larger as they affect the economy in the medium term by undermining consumer and investor confidence.

Consumer Spending at Risk

Just imagine for a moment all the soft targets posed by Christmas shopping, both here and abroad. If such an attack were waged on American shoppers in an enclosed, crowded mall, well, I don’t even want to think about it.

If the U.S. were to be hit again, depending on the scale of the attack and damage inflicted, an economic contraction would likely happen as fear and uncertainty would cause people, at least initially, to stay home.

Consumer spending, which accounts for 70 percent of the U.S. economy, could be severely affected. Airlines, restaurants, entertainment, cruise lines, automobiles, appliances, and big box retailers would take the biggest hits, while utilities, pharmaceuticals, and consumer staples would do well.

The Global Economy Pays

According to the 2015 Global Peace Index, war and violence cost the global economy upwards of $14 trillion each year. These costs include lost productivity due to conflict, falling levels of consumption and costs associated with homicides and terrorism.

A 10 percent reduction in global violence would inject $1.43 trillion into the global economy – that’s over six times the value of Greece’s bailout and loans from the IMF, ECB and eurozone combined.

A decade after 9/11, the New York Times published a survey of estimates of the true economic costs of the attacks. The total cost of 9/11 was pegged at a staggering $3.3 trillion.

It was the U.S. military response which accounted for 95 percent of the costs, whereas the economic toll from actual damage due to the attacks is estimated at $178 billion.

White House Policies Under Scrutiny

President Obama’s counter-terror policies are now under serious scrutiny by both Democrats and Republicans. It has become increasingly apparent that ISIS was re-born in the power vacuum as a result of Obama’s 2011 decision to withdraw virtually all U.S. forces from Iraq and his 2012 decision to renege on his “red line” threat to take action in Syria if chemical weapons were used.

Remarks by the president last week that ISIS is “contained” seemed as out of touch as President George Bush’s “mission accomplished” moment. And wasn’t it Obama who not so long ago referred to ISIS as a “JV team”?

It’s becoming clear that we don’t have a strategy, but are just employing half-measure tactics. Presidential leadership is needed.

I have to believe that Paris will serve as a wake-up call – that there will be a realization in this country that a more robust military approach is required, which unfortunately will entail boots on the ground along with a coalition force.

And there will probably be a respondent increase in military spending. Watch for market analysts to be recommending many defense and security stocks as buying opportunities.

After the 2001 attacks on New York and Washington, Congress approved the Patriot Act, which expanded access of law enforcement agencies to business records, including library and financial records.

Europe already had similar measures, which were enacted in the 1970s and 1980s following attacks by communist terror groups. But in the wake of Paris, the push to increase surveillance and boost police powers will intensify further. Moves that once seemed politically unthinkable may well become unstoppable.

G-20 Point to Rising Inequalities

Leaders from the world’s largest industrial and emerging economies meeting in Turkey won’t exactly ignore GDP, but the attacks in Paris have shined a light on Islamic extremists and hundreds of thousands of people fleeing war in their homelands.

The G-20 will say that rising inequalities in many countries may pose a risk to social cohesion, according to a draft of the final conclusions obtained by Bloomberg News. In it, member governments will pledge to create jobs and bolster inclusiveness while targeting an additional 2 percent growth in gross domestic product by 2018.

As well as the economic communique, a separate statement on terrorism will talk of striking at the heart of terrorist financing and tightening border controls.

“We have to wonder whether one of the causes of these terrorist attacks is jealousy,” Turkish President Recep Tayyip Erdogan said in a speech Sunday at the opening of the two-day summit. “We have to investigate whether unemployment, poverty caused these attacks.”

A Third World War

Well, maybe there is some truth to that. I am certainly no expert to argue. But I must point out that many of the Jihadists have been college educated, with seemingly bright futures ahead of them if they only didn’t become radicalized.

The Saudis responsible for 9/11 were not poor and unemployed. Nor was Nidal Hasan, a U.S. Army major responsible for the fatal shooting of 13 people and wounding of 30 others at Fort Hood near Killeen, Texas, on Nov. 5, 2009.

How and why the perpetrators of these horrendous crimes against humanity became jihadists, with no fear of death, is something we have to figure out, as I don’t know if we can kill them all to prevent their atrocities.

The terror attacks in Paris are part of a “piecemeal Third World War,” Pope Francis said Saturday.

And the economic impact of this Third World War is likely to be significant. There will be costs to be borne by us all, from the plains of West Texas, to the mountains of East Tennessee, to the shores of Boston Harbor.

And there will be blood.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas.  If you liked what you read here, invite Dean to speak at your next meeting. He can be reached at dbarber@barberadvisors.com or at 972-767-9518.

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  1. This was a risky article to send out!
    It is fairly balanced, except where you say “I have to believe that Paris will serve as a wake-up call – that there will be a realization in this country that a more robust military approach is required, which unfortunately will entail boots on the ground.” That reads like it’s your view. Surely not?

    If only for the economic costs as you’ve identified above, such a move is “off the scale” when looking at the financial burden inflicted. But more importantly, the human cost is beyond comprehension.

    Putting boots on the ground with the original invasion of Iraq initiated the power vacuum and since then, the shift of where the seat of control and power now resides only further undermines the possible effectiveness of putting boots on the ground.

    These guys – ISIS would welcome a full on attack. It would be the best recruitment vehicle they could ever dream of. Disenfranchised people from all walks of life would be signing up big time. The Turkish President is right and the french ambassador to Australia put it even better where he identified the people pushed to the edges are the recruitment target for this organisation. They’re not “Muslims” they’re people who feel pissed off and they come in under the banner of Muslim.

    It’s a really tricky problem, but boots on the ground would be a disaster.

    • Your opinion. Not mine.

    • I feel that William’s opinion is based on reality. Also Dean you right when you state that “we cannot kill them all”. What we are seeing now is the result of W’s ill advised decision to invade Iraq. Also one can argue that the genesis of the violence is the carving up of the Middle East after WWI. The history, geography and culture of this part of the world is complicated and does not lend itself to an “American Remedy”. However ISIS is now desperate and striking out at civilian targets may be the result of their losing on the battlefield. Much like Nazi Germany in the Battle of Britain, their decision to begin terror bombing was an indication of their military failure. So it may be with ISIS. I pray that saner heads will prevail not only for the obvious reasons but as a father whose only son is a navy aviator aboard the USS Harry Truman that left yesterday for the Persisn Gulf.

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