RIYADH, 28 October 2003 — The Asia Pacific Economic Cooperation summit concluded in Bangkok last week amid criticism of US President Bush’s emphasis on the war on terror.
Malaysian Prime Minister Mahathir Mohamed especially was vocal in his resentment that the topic of terrorism had overshadowed the summit — a summit that is economic in nature and whose primary aim is to increase free trade among its members.
But Mahathir of all people should be aware that it is not possible to address economic issues without addressing the question of terrorism — especially since the Sept. 11 attacks on the United States.
Malaysia’s neighbor Indonesia, whose economic base is built on tourism, is a perfect example. One year after the October bombings in Bali, the crippled economy is still struggling to recover.
Following the terrorist attacks, tourism literally disappeared in the Kuta area of Bali. The occupancy rates of hotels in the area, which had averaged 74 percent, fell to 10 percent. The number of passengers at the island’s airport, which had been averaging 5,000 a day, fell to barely 1,000. Tourist flow from the US is down by 38 percent.
The hotels and resorts in Bali now have to employ large numbers of security guards, with some doubling their security staff.
The effects of terrorism on a developing country such as Indonesia are simply devastating, and no amount of free trade agreements alone can begin to offset this problem. Terrorism has become the world’s costliest business.
In the United States, the budget deficit will more than double to $374 billion by the end of this fiscal year. Although America has been experiencing a weak economy, there can be no debate that it is terrorism that has driven this cost upward. The three industries that are the hardest hit by terrorism are insurance, tourism and aviation.
The estimated insurance losses from the destruction of the World Trade Center alone are somewhere between $30 billion and $58 billion.
Worse still, the world has lost over 25 percent of its reinsurance capacity.
The cost of all businesses worldwide has increased to include additional security and mail screening devices. The cost in lost productivity is immeasurable, as all business travelers now spend additional hours waiting in lines at airports.
There is virtually no nation, large or small, rich or poor, that is not affected by terrorism economically, from local traders who make their living selling trinkets to the tourists to hotels, airlines and restaurants.
Governments recognize that they exist in an environment with increased security costs and decreased revenues. In Italy, there are over 600 special police assigned to the task of combating the financial roots of terrorism.
But the hardest hit are the developing nations, who were the most vulnerable prior to Sept. 11.
A UN representative from the Bahamas said: “The small economies of the Caribbean experienced massive disruption as they are vulnerable to external shocks and dependent on tourism”. It is ironic, given that one of the leading causes of terrorism is poverty, that these acts of terrorism are making the world’s poorest nations poorer.
The global campaign to root out the legal and illegal sources of funding for terrorists is key to winning the war against them, but it is also of paramount importance that the nations of the world fight back and help the economies of these countries recover.
There are over 1.2 billion people worldwide who live on less than one dollar a day. The UN goal to reduce world poverty by 50 percent by 2015 does not appear to be achievable.
There can therefore be no summits or meetings that do not center on terrorism — it has become the focus of our world. There is no retreating back to the days when groups like APEC could center on free trade agreements, eat a fine dinner and go home. The reality is that the terrorists have created a new world environment, in which they dominate everything from where a person feels safe to travel to how much money a business has to budget for security and insurance. Instead of less conversation about terrorism, the world’s leaders need to engage in a great deal more. The member nations of APEC should be addressing ways to help increase security in these countries. The simplest way for an affluent country to help a poorer one is to spend its dollars there. It is basic economics.
— Adrienne McPhail is an American journalist based in Riyadh.
