Effects of a WMD Attack on the Current Economy

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Table of Contents

Introduction
WMD
Infrastructure
Conclusion
References

Introduction

The end of the cold war opened up the gateways for the transition of the world community’s system of international relations. It can be said that the divergence from the system of bipolar peace after World War II, did not stabilize the security on the regional level, specifically with the occurrence of the Weapons of Mass Destruction (WMDs). Before the events of 9/11, the countries were somewhat protected with different agreements and various sources of international laws from the attempts of using such weapons. Nevertheless, taking into consideration the current situation in the world, it can be seen that the development of WMDs is a real threat, the potential effect of which can and should be assessed. In that regard, this paper analyzes the potential of a WMD attack, in terms of its effect on the country, specifically in the field of economy.

WMD

The numerous publications in the international press on the threat of biological terrorism and the weapons of mass destruction distort the representation of the weapons, as well as the possibilities of the terrorists themselves. In that regard, some statements of authoritative figures in the world of politics and science might only add to such distortion, in terms of the scale and the level of the threat. Such is the statement of the former CIA director James Woolsey, who claimed back in 2000 that, “a B-plus high school chemistry student” could produce biological agents”, and also the statement of “Kathleen Bailey [who], after interviewing professors, graduate students, and pharmaceutical manufacturers, concluded that several biologists with only $10,000 worth of equipment could produce a significant quantity of the biological agent.” (Randall, 2002) Although biological weapons are only part of the weapons of mass destruction, a proper definition should be presented.

“Weapons of mass destruction”, according to the security and foreign policy analyses, is a term that “generally encompasses nuclear, chemical, and biological weapons, with radiological weapons occasionally included.” (Fidler, 2003) Although there was no authoritative definition of the WMD, the classical representation was of intercontinental ballistic missiles, equipped with a nuclear warhead and capable of causing millions of deaths. The current, more “liberal definition”, includes battlefield artillery shells, mortars, short-range rockets, or other systems fitted with nuclear, chemical, biological, or radiological warheads. The key component that survived from the classical definition is for the weapons to have a strategic impact, which has “consequences far outweighing the size and effectiveness of the weapons themselves.” (Evans, 2004) In the context of the effect on the economy, considering the scale of the WMD threats, this effect can be divided based on several pillars, on which the economy is holding.

Infrastructure

According to Paul and John (2004), infrastructure refers to all the installations, services and other facilities that enable the society to operate efficiently. These include transportation, the communication networks, water, power, and the public institutions such as schools, hospitals, prisons and post offices (Paul & John, 2004, p. 1). Alternatively, infrastructure can be defined as a system of networks that are interdependent in their operation and are composed of people and a variety of procedures.

In terms of WMD attack, the most influence can be inflicted on critical infrastructures, i.e. “physical and cyber-based systems essential to the minimum operations of the economy and government.” (Lewis, 2006, p. 34) In that regard, not only the economy will be affected, because of the capital needed for the restoration of these critical infrastructures, but also because of the dependence of the economy and its operations on the infrastructures, where in case of an attack, these operations would be disrupted.

Transportation, Networks, and Communication

The size and the complexity of the communication networks make them hard to protect. Additionally, as with other infrastructure sectors, their structure is almost always structured around critical nodes, which contain a concentration of other assets. Thus, a negative effect on the economy can be seen through “the cascading disruption of other critical infrastructure and key resources”, when the communication network are being attacked. (Lewis, 2006) The scale of the financial and the economic operations, which are dependable on communication and transportation, cannot be overstated. For example, the destruction of ports, through which maritime trade accounts for an approximate 20% of all international trade, and which in turn accounts for about 25% of the total GDP in US, will result in a massive economic loss. (Anthony, 2006, p. 4)

An aspect that can be related both to the communication system and informational system is internet. The internet, which has been called “the information superhighway”, has been strongly related to the area of commerce, specifically in last decades, and thus the influence of its disruption, because of a terrorist attack, can be highly linked to economy. Assessing the scale of the disruptions’ impact, the example of virus attacks can be representative, where a study on the effect of a computer worm, “Blaster” was reported to inflict an average of $494,391 on each respondent. (SunGard, 2004) The scale can be multiplied in case a major disruption occurred nationwide.

The dependence of the society on the internet has been highly increasing, and at the current time, this dependence on internet can be compared to the dependence on interstate highway system. In that regard, the destruction or the disruption of the internet would have a great impact on the national economy. The importance on a national level was outlined through an advisory issued by the US department of Homeland Security on the vulnerability to heighten awareness of potential internet disruptions. (SunGard, 2004)

The Health System

The impact on the economy through the health system can be seen in two directions: one is the costs associated with the preparations and the preventive measures for terrorists attack, and the other can be seen through the direct costs associated with casualties and medical costs. The first direction was implemented through the consideration of four main aspects in relation to the effects of attacks by WMDs. These aspects include bio-surveillance, casualty care, community resilience and countermeasure distribution. Through bio-surveillance, the government is able to have early warnings of the attacks, while causality care ensures a rapid response and sustainable care to any attacks’ casualties. Additionally, a big part of the costs can be related to investments in “medical countermeasures and public health interventions that have the greatest potential to prevent, treat, and mitigate the consequences of WMD threats.” (Office of the Press Secretary, 2007)

In the case of direct costs, the estimations made by several, official reports assessing the risk posed by WMD attacks, specifically by biological agents, highlight the effects that these costs might have on the economy. For example, CDC estimated that anthrax attack would result in ”an economic impact of $477.8 million to $26.2 billion for every 100,000 persons exposed”, while OTA reported that “250 pounds of anthrax spores, spread efficiently over the Washington, D.C., metropolitan area, could cause up to 3 million deaths, more than from a 1-megaton hydrogen bomb.” (Spencer & Scardaville, 2001)

Energy

The energy infrastructure and its importance is a separate element in WMD protection, in terms of consequences. Accordingly, these consequences cannot be limited only to the economic influence, due to the fact that many energy facilities in the world constitute nuclear power plants. Thus, energy security can be considered as a great challenge for countries at the present time and the future. As with previous elements of the infrastructure, destroying the energy facilities would be a two-direction disaster, where on one hand the state would be economically affected through the expenditures of restoring the facility to operational modes, if not building them from scratch, and on the other hand, the effect will be apparent through the economic losses while the system is not working.

In that regard, the disruption of the energy distribution will have similar cascading effect, which will affect every aspect of the society, as well as other critical infrastructures, which are dependable on energy to be operational. The disruption or the destruction of energy infrastructures would have “a potentially serious, if not catastrophic impact on the health, safety, security and economic well-being of citizens. (Perl, 2008)

In order to assess the possible impact of an attack on the energy sector, an examination of The Northeast Blackout of 2003, a power outage that covered 24,086 square kilometers and affected over 50 million people in the Untied States and Canada for two days, will present a comparative picture of the consequences. (CBC News, 2003)In terms of the cascading effect, the influence on water can be seen as demonstration, where 1,500,000 people in Cleveland remained without water because of the blackout. In what concerns the economic effect, a preliminary study conducted in 2003, made estimations on the total costs of the blackout, based on direct costs (losses due to spillage, lost production and wages), and indirect costs (secondary effects of the blackout, including consumer’s willingness-to-pay (WTP)).

In that sense, the economic cost of this outage was estimated to be between “$7 and $10 billion for the national economy.” (ICF Consulting, 2003)Comparing the blackout to possible terrorists attacks using WMDs, in terms of economic impact, it should be noted that the latter “could prove significantly more costly and have potentially debilitating impacts on the affected region as well as the country” (ICF Consulting, 2003), as other factors will be added such as damage to equipment, hangover effect, and dividing the priorities of restoration between other sectors such as the military and defense.

It should be added that such effects on economy are neither limited to electricity nor to such direct consequences, in case WMDs were used. Assuming an attack occurred in one of the major oil exporting countries such as Saudi Arabia, the attacks would result into a reduction in the oil supply in the global market, culminating into an increase in oil prices. In turn, the attacks would result in the government incurring higher cost of importation, which would disrupt various economic sectors of the country that are energy intensive. (Perl, 2008)

Miscellaneous

It should be noted that there are other costs that will influence the economy and might not be associated with elements of infrastructure. The first and the apparent one is the element of fear which will influence various financial indicators and trading operations. This element will affect with various degrees of success in both cases, when the attack has occurred or there is a threat through various media resources. Other factors can be associated with the level of casualties, where a large scale attack will result in losses in human capital, which accordingly will result in disruptions in any professional and financial activities.

Conclusion

It can be concluded that the influence of WMD attack cannot be overestimated, where in addition to the instant impact, the long term consequences and costs associated with them would put an additional obstacle to overcome. In that regard, the importance given to any issue associated with security measures can be seen justified. The major elements of influence on economy outlined in this paper are based on estimated assumptions and comparisons, while it can be predicted that the real effects and costs can be sufficiently higher. The establishment of the Department of Homeland Security is definitely a step toward preventing, mitigating, or even eliminating the possible effects and threats associated with WMD attacks, and the concern raised after the events of 9/11 can be understood.

References

Anthony, H. G. (2006). Americas international ports and inter-modal transport system: ill-preparedness for biological weapons of mass destruction. Defense Technical Information Center. Web.

CBC News (2003). Blackout by the Numbers. CBS News Online. Web.

Evans, M. (2004). What makes a weapon one of mass destruction? Times Online. Web.

Fidler, D. P. (2003). Weapons of Mass Destruction and International Law. The American Society of International Law. Web.

ICF Consulting (2003). The Economic Cost of the Blackout. ICF Consulting

Lewis, T. G. (2006). Critical infrastructure protection in homeland security : defending a networked nation. Hoboken, N.J.: Wiley-Interscience.

Office of the Press Secretary (2007). Homeland Security Presidential Directive: Medical Countermeasures against Weapons of Mass Destruction. Biometrics.gov.

Paul, P., & John, M. (2004). Critical infrastructure and key success assets: definition and identification. Federation of American Scientists.

Perl, R. F. (2008). Protecting Critical Energy Infrastructures Against Terrorist Attacks: Threats, Challenges and Opportunities for International Co-operation. Organization for Security and Co-operation in Europe. Web.

Randall, V. R. (2002). The Requirements to Produce Biological Agents by Non-State Groups. University of Dayton.

Spencer, J., & Scardaville, M. (2001). Understanding the Bioterrorist Threat: Facts and Figures. Backgrounder. Web.

SunGard (2004). Security, Continuity and Recovery for Internet WhitePaper Disruptions and Disasters. SunGard Availability Services. Web.

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