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  • Mathieu Provencher

Financing anti-terrorism, who pays for peace?


(picture from Wix's library)

Hello everyone! With the Islamic State (IS) and North Korea flexing their muscles in their respective turfs, one can be forgiven to ask why we allow such bullies to terrorise, destroy, and kill when they please. I feel the media has explained fairly well how they came to be and how they finance their operations. However, few have tried to explain why we, i.e. the rest of the world, have not put a stop to them.

In this article, I define “terrorism” as any violent act that is part of a sustained effort to destroy, diminish, or impede decisions made by the representative majority. Terrorism can thus be seen in the context of the world, a region, or a single country. Before you ask, yes the United-States of America and Europe in general have engaged in terrorism multiple times in the past (old and recent history).

Just as a side note, I did not use the word “democracy” (instead of "representative majority") for two reasons: first, because you can have undemocratic leaders making decisions in line with most of their citizens (representative majority); and second, because that word has very intense political meaning at the moment and I don’t want to exclude anyone from that discussion (I’m an Economist, not a Politician). This article, as most Economic thought, is not applicable only to the current situation. I am trying to describe a process that applies to all situations, at all times… humility is not exactly one of my good traits!

SO!!!! Let’s get on with it!

Why then do the majority not stop the extremist minority from enacting these violent and destructive acts? It doesn't seem to make any sense at all does it? The rest of the world has resources that are millions of times more abundant than IS, we could crush then in a snap! North Korea has around 25 million people, of which not all are soldiers… how difficult could it be to invade them and stop terrorism against their own people and against neighbouring countries?

Well, here comes the Economist (not the journal, the guy… me)!!!!

I think of terrorism as I think of bread (and almost absolutely everything else in the world… almost). There is a cost, there is a benefit, and there is a profit. Some people supply it and some people demand it. The same goes for anti-terrorism, with its costs and benefits.

With higher costs, less people supply it. With higher benefits, more people demand it. Instead of describing the different costs and benefits of anti-terrorism, which are very obvious I feel, I will describe the different characteristics that greatly influence these costs and benefits. Let’s see why the rest of the world has not stopped these terrorists yet.

I have identified four main characteristics that influence the willingness to stop terrorism. Again, this applies to all terror situations of all times… well that’s the aim at least! I’ve organised them into the following questions:

(1) Where does it happen, who is affected? The furthest from you, the less likely you are to act

The obvious first question is proximity. Geographical proximity is not the only concern as countries will consider proximity to their economic, ideological (including religious), political, and strategic interests. The groups affected by terrorism will be put in the context of a country’s interests when deciding to act or not. An obvious example of that is how late the USA entered WWI and WWII, where the conflicts were very far removed from them. Peru also gives us a good example with their struggle with the Shining Path (in the 80’s). The government of that country did not seem to take the terrorist group seriously up until it came to Lima and started disrupting life in the capital (where economic and political activity was, and still is, very centralised).

(2) What are the risks of contagion? The less likely it is to spread to your interests, the less likely you are to act

If a conflict is believed to be local and stay local, there is less chance for countries to spend resources in stopping terrorism there. It again comes back to the idea of proximity to a country’s interests. IS, for example, could have been dismantled fairly fast when it started as it was quite weak. The countries that could have dealt with the problem early on, however, seemed to believe that it would stay a local militia with a local impact. Unfortunately for everyone, IS became an international threat that is now terrorising people all over the globe.

(3) How many partners are potentially involved? The more partners, the stronger the free-rider effect

This argument relates to a concept I introduced in a few previous posts: public goods. Peace is a non-excludable product, which means that once peace has been obtained, everyone has access to it even if they didn’t participate in the peace-making process. I am not necessarily talking about world peace here as it could be applied to a region or even a country. As such, “everyone” is meant for all those in that context. That market failure (free-riders) describes very well the current problems with IS and North Korea (amongst others). At the moment, many countries would have the incentive and the means to stop IS and North Korea… too many.

Let’s put ourselves in the shoes of one of these partners. Tackling terrorist groups can be very expensive, both in financial and human resources. In addition, political costs can be very high if public opinion is not in favour of spending these resources on that goal. So, why would I spend all this money and send all these people (“my” people) to die if someone else can do it instead? This question gains even more importance given that if the USA or Russia, for example, take care of the problem, I get all the benefits without having spent a dime or lost a person… welcome to the free-rider problem!!!!!

At the same time, the USA and Russia, for example, are wondering the same thing… why would they pay for peace that everyone will enjoy? As such, most countries that can act will spend much less resources that they should, which leads to the total amount of efforts against these terrorist groups being much lower than necessary… to the great benefit of these terrorist groups.

(4) Is it worth it? Cost-benefit analysis of each individual partner

Finally, countries will see these considerations (and others) and contemplate their options. If their individual benefits outweigh their individual costs, they may act. If their individual costs outweigh their individual benefits, they find it better to let someone else deal with the problem.

Please note that most of this is not made on a conscious level. Economic agents often act without knowing why… they just do. These considerations are most probably in the back of leaders’ minds when they make decisions. However, this little model of anti-terrorism behaviour seems to fit with a number of recent and old examples… and it hopefully entertained you guys for a number of minutes.

This approach can be applied to many other situations that are not linked to terrorism. It can probably explain some of the decisions Europe has made with regards to the recent wave of immigration for example. It does have its limits as it may not explain so well why Canada has accepted refugees… but hey nothing is perfect right?

Take care everyone and don’t forget to have fun!

#Microeconomics #Terrorism #Behaviour #Behavior #BehaviouralEconomics #PublicGood #MarketFailure

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