The Real Cost of Terrorism for Nations, Billions and Trillions

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This last week was a reminder that terrorism is far from gone. The dual bombs at the Boston Marathon were followed by ricin poison letters in the Senate and the White House mail rooms in Washington D.C. and now the news is littered with reports of scares and warnings all over. 24/7 Wall St. wanted to know something that sounds simple, but something which is extremely difficult to quantify: What is the economic cost of terrorism?

The answer is billions of dollars per year, but when you tally up more than a decade that figure goes into the trillions of dollars. You have to first think about the loss of life, then the economic damage, and then the raw dollars which get spent by governments, agencies, and individuals fighting terrorism. After that there are the costs of rebuilding.

We recently gave a list of American companies which are tracking terrorists and selling to law enforcement agencies. These services and products range from mail screening, bomb detection, telephone surveillance, guns, bullets, equipment and much more. These companies have seen combined spending in the billions of dollars if you consider that this war on terrorism is over a decade old now. Just last year we showed how outrageous some of the costs are in the war on terrorism have grown to after Brown University claimed that the total costs had risen to close to $4 trillion.

The long and short of it is that terrorism has cost billions of dollars to many nations. That would be in the trillions combined in America and its allies because of our counterterrorism efforts that also included two armed force invasions in Iraq and in Afghanistan. Osama Bin Laden was one of the men who suggested that the Al Qaeda and other terrorists should target financial stability as their means of how to win a fight against America.

There are some raw figures which start to become rather alarming. Steve Killelea is the founder of the Institute for Economics and Peace and he gave an interview to CNBC at the end of 2012 showing that the cost of the fight against terrorism was on the rise. This group put out a publication at the end of 2012 called the Global Terrorism Index ranking 158 nations around the world. This shows that in 2011 alone there were some 4,564 terrorist incidents globally which resulted in 7,473 deaths and also 13,961 injuries.

On the CNBC video, Mr. Killelea said that the cost to fight terrorism has risen handily. His estimate of the 9/11 cost the U.S. economy about $80 billion or 0.8% of GDP at the time. More recently, the cost to the airline sector in the United States alone went up by 25% to about $7.4 billion. Mr. Killelea said that this $7.4 billion cost compared to industrywide annual profits of about $8.6 billion at the same time.

While calculating the costs against terrorism are more than challenging, one issue stands out from the 2012 Global Peace Index: the economic benefit to the global economy was projected to be $9 trillion in the last year if the world had been completely peaceful.

If we go back further, there is a report from the Congressional Research Service showing the costs of the wars in Iraq and Afghanistan along with other terror operations since September 11, 2001. This showed in 2011 that Congress had approved a total of $1.283 trillion for things such as military operations, base security, reconstruction, foreign aid, embassy costs, and health care for veterans for the three operations initiated since the 9/11 attacks. Of that amount, $806 billion was allocated to expenses for Iraq and $444 billion for Afghanistan and related expenses.

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One article from 2010 rom the Kabul Press even went out and showed that the estimated cost to kill each Taliban member is conservatively and $50 million and that it could be as much as $100 million. We are leaving the methodology and fact-checking up top them for that.

Our guess is that the true cost of terrorism and the real expenses to fight to terrorism on a global basis over a decade or more are too difficult to count with a finite dollar sum. With one Tsarnaev brother dead and one on the run in Boston, this current terrorism event is unfortunately just one more costly event that resulted in death and injury and will drive up costs for security at all major public events.

Just this April, the White House asked Congress to appropriate $48.2 billion for the Fiscal Year 2014 National Intelligence Program and the Pentagon’s intelligence budget was another $14.6 billion. Keep in mind that this is lower than the prior year by close to $9 billion, but we think it is fair to guess that now more intelligence dollars will be sought now. Fiscal year 2010 was shown to be the highest budget expense when $80.1 billion was appropriated by Congress for intelligence activities.