Sunday, April 3, 2016

Off Topic: Changing Face of Global Terrorism

Terrorism is not a new thing for most of the existence of Human civilization. Wikipedia traces it back to 1st century AD. History is dotted with such atrocities, usually following a major epoch of change in the way of lives of a society(s). In modern times, the first organization to use modern terrorist techniques was arguably Irish Republican Brotherhood post WW-II. Since then we have an incessant series of them - with their eventual rise and fall.

But in recent time, the global terrorist activity has gone from a linear to exponential growth. And has some fundamental changes in characteristics. The chart shows the exponential growth of fatality attributed to terrorist attacks since 1970.
One of the most notable changes has been globalization of terrorism. Terror attacks evolved over time, moving from localized areas in South America and Asia during the cold war to engulf much of Eurasia and Africa now. This chart is in log scale.

The second characteristic of the change has been the changing ideology. We had an early peak of terrorist activities around the 70s dominated by localized communist movements. The first major peak came around the dismantling of the erstwhile USSR, driven by a much more wide spread, but still local, separatist movements. Since mid 2000s, and especially after the 2008 financial crisis, this has taken on a new never-before scale. This time dominated by a much more globalized Islamist version.

The third observation is the weapon used. While the separatist movements during the 90s was mostly focused on fire-arms as weapons of choice, the risk of Islamist violence has seen a specific shift towards use of explosives. Although very lately fire-arms have made a comeback and are used with almost equal deadliness.
Interestingly, in spite of this proliferation, it is not certain these terrorist attacks are in general getting more successful at scaling up in terms of individual impact. Below chart shows the fatality distribution in last decade (2004 to 2014) compared to the decade before (1994 to 2004). The extreme heavy tails are not that much different. What has accommodated this large increase in fatalities in the recent years, compared to past, is a higher number of relatively small intensity successful attacks.Note this distribution is plotted in log scale.

In fact, if we go back to the first chart and take a re-look, we see this is indeed the case, and the average fatality per attack is actually on a down trend (although there has been a relative reversal since 2012, around the Arab Spring).

Now this can be interpreted as more effective counter-terrorism measures to prevent large scale attacks, or a counter-counter-terrorism strategy to move away from large scale to low intensity multiple attacks.

Terrorism is sparked by ideologies, but as this video makes it amply clear, it is ultimately about the economics. The globalization in trade and finance has undoubtedly has helped the globalization of terrorism we see. In fact this globalization trend was first perhaps picked up by organized crime, even before terrorist organizations. This is why more than body search in Airports or x-ray scanner in departmental stores, a coordinated Anti-Money Laundering effort is perhaps the most effective weapon to fight this globalization of terrorism.

History shows most form of terrorism driven by ideologies comes to its eventual fall, either by acceptance or rejection by the main stream. I am hopeful this recent waves will not defy history. But the question is at what price. Financially, markets have not been very sensitive to individual incidents. However beyond that, terrorism has a huge cost on economics, by changing the behavior of the economic agents, and increasing the economic costs. And the human cost involved is incalculable.

All data from National Consortium for the Study of Terrorism and Responses to Terrorism (START). (2015). Global Terrorism Database [Data file]. Retrieved from The data span till 2014, the next release for 2015 is expected in August this year. The charts are based on this data and own calculation. The ideologies map is not provided in GTD itself, but is carried out based on association of terrorist organization and stated ideologies/ objectives based on public information, mostly Wikipedia.

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