Pakistan, Uri, and the economics of terrorism

Updated on: Sep 28, 2016
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The economics of terrorism? Surely you jest!

Not at all. There are tomes of research devoted to this topic, for the reason that economic considerations are believed to underlie both ends of the spectrum: the root causes of terrorism, and the effects it has. In fact, in many cases, terrorist attacks are motivated as much by economics as by politics.

How so?

Consider what is arguably the most audacious terrorist attack we’ve seen in our time: the 9/11 attacks in the US. What do you think Al-Qaeda hoped to achieve when it ploughed airplanes into skyscrapers?

You tell me.

Surely Al-Qaeda wasn’t plotting an armed takeover of the US or the establishment of a Caliphate of America. Its intention was, rather, to poke the US in the eye with a brazen strike, stoke its military madness, and draw it into an ‘asymmetric war’ and bleed its economy. Osama bin Laden said it in so many words.

He did?

In a videotape released three months after 9/11, bin Laden said that while America cannot be vanquished militarily, “there is another way -- through hitting the economic structure… It is very important to concentrate on hitting the US economy through all possible means.” That strategy has proved enormously successful.

How has it succeeded?

America’s hot-headed response to 9/11 was to go to war in Afghanistan, and later Iraq. It got bogged down for years in unwinnable wars, and although it secured part-retribution by killing bin Laden and overthrowing Saddam Hussein, they came at enormous human and economic cost: nearly 7,000 US troops died in the two wars (more than twice the number of people who died on 9/11); and the “cost of the wars”, which public policy expert Linda J Blimes at the Harvard Kennedy School estimated in 2013 as $4-6 trillion, has haemorrhaged the US economy and enfeebled it. And the political turmoil across much of West Asia that the US intervention triggered has been exploited by more virulent jihadists.

What does all this have to do with the terror attack at Uri?

Plenty. Hotheads in India have been similarly clamouring for a military strike against Pakistan in retaliation for the latest terror attack. Among others, Subramanian Swamy, who is something of a loose cannon, has chillingly been building nuclear war scenarios, even saying that India should be ready to sacrifice 10 crore human lives as the price for wiping out Pakistan.


Yes, and that’s precisely the kind of overreaction that will be ruinous for India – in human terms, and in military and economic terms – far more than any terror attacks originating from Pakistan. As emotionally traumatic as terror attacks are, their “utility cost” is insignificant.

You’re suggesting we should learn to live with terrorism?

Not at all. All I’m saying is we should avoid the ‘politician’s syllogism’, whose logic runs thus: 1. We must do something; 2. This is something; 3. So, we must do this.

So, what’s an appropriate response?

At the first level, we should build up our defences against terror so we aren’t easy targets. But beyond that, a level-headed response that targets the economic foundations of the jihadi industry in Pakistan – and of the ‘deep state’ that sponsors it - will be far more effective (and come with far fewer self-inflicted wounds) than full-scale military options. The precise contours of those responses are best left to keener strategic minds than mine. But it’s fair to say that India has plenty of options if it avoids scoring self-goals in a heady rush of testosterone-driven machismo.

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Published on March 08, 2018

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