Attack on the World Trade Center: One Year On

In the wake of the attack on the World Trade Center and Pentagon, world leaders made grave predictions for our society’s future, threatening economic upheaval and a long war against terror. Economist Hans Kunnen reviews the year since.

W hat, if anything, has changed since two planes crashed into New York’s World Trade Center towers, and another into the Pentagon on September 11, 2001? How have we coped? And, have we seen the worst? September 11 wasn’t responsible for everything that’s happened in the past year; it just happened to come in the midst of what was already looming as a bad year.

The US economy, responsible for about a quarter of world production, had already moved into recession; unemployment in Japan reached record levels even as its banks lent at virtually nil rates of interest, and European economies slowed as demand in the world’s two largest economies declined.

Talk of a depression appeared in the media.

But without doubt, much has changed, but equally, many aspects of life continue as it was prior to September 11.

what’s changed? Have you received your insurance renewals recently? While the destruction of New York’s Twin Towers was a long way from here, many companies were involved in insuring them and surrounding office buildings. The payout of an estimated $US30-70 billion ($A13 billion* for the two towers) has seen insurance companies folding, premiums increasing and excluding terrorist cover. But those same companies were already losing money on weakening sharemarkets. Several major insurers collapsed, leaving individuals and many businesses without cover. There’s been turmoil in building, medical and general insurance sectors, which, in part, is directly linked to events of last September.

Equally, post-September 11 hasn’t been a good time for airlines and the associated hospitality and tourist industry. The loss of the four aircraft was just the beginning of an ongoing financial disaster as business travel dried up and ordinary people cancelled or postponed holidays fearing more attacks. The Caribbean, for example, has suffered hugely.

But the specific fears merely added to already falling levels of travel because of the generally weaker economy. Since September 11, international travel destinations and tourism have been doing it tough, but some local ones have benefited.

Estimates of the US economy place the direct cost of property losses at 0.15 per cent of its annual GDP.

And have you noticed the movements in petrol prices? Although the political instability of the Middle East might have been expected to cause a rise in the price of a litre of unleaded, conversely, following September 11, prices actually fell as the world anticipated a greater threat— recession. But with a major recession within the next year now considered only a remote probability, oil and petrol prices have drifted higher. And if events in the Middle East worsen, expect them to move still higher.

Another change has been the move from JIT (just-in-time) inventory management, as practised by manufacturing, to JIC crisis management economy wide. Factories and shops previously kept as little stock as possible on hand, since our efficient transport infrastructure usually meant that product could be delivered rapidly. This mode of thinking changed on September 11, as transport systems were brought to a halt.

These days, the stockroom contains more inventory—just in case.

Anyone familiar with air travel, especially internationally, has noticed major changes in the way of security, carry-on luggage and passing through customs and immigration. In the US, the extra security, including extra defence costs, is estimated at some $US2-3 billion annually.

In his most recent budget, the Australian Prime Minister flagged an upgrade of airport security with armed, plain-clothes officers travelling on selected flights, and that there would be increased cooperation with law-enforcement agencies overseas and improvements in screening arriving and departing international passengers, adding an extra $A539 million to Australia’s security bill.

Laptop computers must be taken apart for scanning prior to departure, nailfiles and Swiss Army knife keyrings are banned onboard, plastic cutlery has replaced stainless at the pointy end of planes (economy passengers wouldn’t have noticed the latter!), US travellers must remain seated for the last half-hour of a journey and baggage and body searches are far more frequent and invasive. While waiting in a departure lounge queue, don’t even joke about security issues; it could land you in strife.

n However, from amid these inconveniences and changes, some winners have emerged. Perversely, security firms are flourishing and owners of disaster-recovery sites have been taking more calls.

Taking the economy as a whole, activity has picked up over the months since September as, in response to the tragedy, central banks reduced interest rates to keep the demand pump primed. Money went from being “cheap” prior to September to being “bargain basement” by last Christmas.

Central bankers read the newspaper stories about possible depression and moved interest rates down to avoid such an outcome.

In the US the cost of the attack in lost productivity and time is an estimated $US20-25 billion.** The value of physical assets destroyed was around $US60 billion or, to put it in context, in an economy of some $US60 trillion in assets, 0.2 per cent.

When interest rates fall, people borrow, people spend, and overall economic growth picks up. But house prices—new and used—also move up as money becomes more freely available.

The river of money flowing out of the declining sharemarket in the past few months (only in part because of September 11) found its way into the real estate lake, pushing median house prices to record levels. It’s odd that a boom in Australian suburban house prices might flow from a terrorist attack on the CBD of a city 20,000 kilometres away. The world economy is an amazing web of intertwining forces.

More recently the Reserve Bank has begun withdrawing the “punch from the party,” allowing interest rates to increase.

Recession in Australia has been avoided, and our economic managers are working to ensure that we don’t move to the opposite, more damaging extreme—inflation.

what’s the same? Many aspects of life haven’t changed since September 11, 2001. It goes on much as it always has, economic and otherwise. We must eat, we must sleep in some form of shelter, and we will entertain ourselves. These ongoing basic human characteristics and needs mean that society and the economy continue to function despite September 11.

But something that probably didn’t change (that might have otherwise been expected to) because of it was the Australian government. Prior to September 11, the Labor opposition was well ahead.

It’s a cynical but reasonable assumption, but it’s possible September 11 kept the government in office at the Federal election.

For people around the world, but particularly in the United States, our sense of security has been diminished. People speak of and feel a greater vulnerability.

This may or may not endure, but for those affected by the repetitive TV footage of exploding buildings and scared, running dust-coated people, beyond those who experienced the event directly, it brings sense of loss and foreboding. It drove people back into churches seeking a spiritual fillip and the assurance of a greater, Higher Power.

Amid the fear, however, an increased awareness of community and duty has arisen, with a decline and surrendering of the rights of the individual and selfish ness. In the days and months following September 11, New Yorkers dispensed with their reputation of rudeness, arrogance and indifference as they pulled together, displaying a care and compassion for their neighbours—I was a grateful recipient (see “My escape from the World Trade Center” page 13)—that surprised even themselves.

September 11, combined with other events in the Middle East, has also caused an intense questioning of culture and religion (see box, page 10). It has led many to examine their beliefs. People are becoming more aware of who they are and who others are. Are people who are different a threat? they inquire. To what extent are my fears of “difference” based on my prejudices? And, What about the future? Have such catastrophic, worldaltering events been predicted?

What does Nostradamas or the Bible have to say about our times? It’s been a time of intense personal soul searching, and search for answers. We’ve been forced to question and to form opinions on the so-called war on terrorism: Can any war be just? What about “innocent” casualties? Where will this war turn next? Is the rhetoric fair and factual, or is it merely propaganda? What role should Australia or New Zealand play? And intertwined are our views on such issues as illegal immigrants, asylum seekers and refugees.

We’ve been forced to examine ourselves and our attitudes more deeply and widely than at any time since the Vietnam and second world wars.

There’s no doubt that September 11 was a black spot in history. But so were Gallipoli, the Somme, Hiroshima and Da Nang. Life does go on. It changes, but it doesn’t stop. We must learn lessons, respond and then move on.

* At the time of writing, a US District Court was attempting to decide if the destruction of the World Trade Center amounted to one or two separate insurance losses and thus a $US3.55 billion or $7.1 billion loss to the 22 insurance companies involved.

** Moody’s estimate of the size of potential claims for loss of life, business and property at $US30-$70 billion, the industry’s largest single claim ever. The attack also destroyed more than $100 million of artworks in and around Ground Zero, including a Rodin bronze sculpture.

When Muslim meets Christian: Impasse or opportunity?

There are more than a billion Muslims. After World War II, many migrated to the West—an estimated 40 million now live in North America, Europe and Australia. They made demands as to their religious rights, which created tensions and friction, even a few cases of violence.

Western respect for religious liberty seemed to have taken care of that.

Suddenly on September 11, 2001, the world experienced the greatest act of terror in history. Some 3000 people lost their lives when symbols of Western capitalism and US military power were hit.

“As we attempt to explain Islam and terrorism, we must accept that the same counteracting terms can be applied to Christianity, even in modern times,” says Børge Schantz, a former director of a Christian–Muslim study centre, in Britain.

“Christians have also experienced their share of intolerance and fanaticism. The disagreements were generally over a ‘right interpretation’ of Scriptures or purity in lifestyle, but even over power and leadership. In too many cases it was open war with arms and bloodshed, where the innocent often suffered at the hands of the guilty.” But the reason for Islamic violence against the West are legion, says Schantz. Islam is shared by believers on several continents and across scores of cultures and languages.

“The reasons can be political, such as when support of the Jews in the Israel– Palestine conflict is seen; sanctions on Iraq result in unnecessary death of children; the presence of US soldiers on holy soil in Saudi Arabia etc. Also, repressive Islamic governments are backed by Western, mostly Christian countries.

“There’s no doubt there are feelings of inferiority among Middle Eastern Muslims. Those living in the West or who watch Western life on TV, realise their own backwardness in matters of development and technology. This awareness can produce envy, which can result in aggressiveness.” He tells of a letter to an editor of a leading newspaper in Saudi Arabia claiming that Allah would help Islamic countries catch up to the West technologically if the believers became more faithful.

Other negative factors that help create an atmosphere for violence against the wealthy but “godless” West, he says, include the lack of democracy, political repression, economic and social inequality and poverty in many Islamic nations.

The strong secular influence from the West in TV and literature is a problem for fundamentalist-minded Muslims. It crosses closed borders and pollutes the lives of true Muslims. In Islamic theology, man is weak and must be protected; not that man should be strong to resist temptation by his own choice—this is seen in Islam’s strict dress codes for women.

“In most Muslim countries, there’s also a lack of a political forum to nurse serious grievances. This vacuum has, in many cases, been filled by Muslim militants.

The arena for expressing discontent becomes the mosque, where imams and mullahs, in the sacred places, enjoy ‘free’ speech. Authorities are reluctant to interfere in mosque services, and clerics clothe dissident words in religious, korannic language, and verbalise their complaints in religious terminology. In this way the clerics share a great responsibility in the various acts of terrorism in Europe, the Middle East and USA.

“Interpretations of selected verses in the Koran and passages in the Hadith will in some places encourage a jihad (holy war) against ‘infidels.’ The ‘holy war’ is not only waged against non- Muslim enemies, but also worldly Muslim leaders considered unfaithful to Islam.” Disagreements within Islam are often about purity and loyalty and a sense that the blessings of the supernatural powers are not with them because of a lack of faithfulness to the commands and rules.

“The few who are true and devout have a ‘duty’ to uproot the backslidden and stand up and fight the enemy of their religion. The solution is not only in fighting the opponents, but also a return to the religion in its primitive state.

“But,” Schantz cautions, “just as there are segments in Islam that are bigoted, militant and fanatical, we also have segments in various Christian traditions showing the same negative characteristics.”

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