Terrorism, Economics, and the London Olympics

On July 25, I spoke on a panel at the Potomac Institute for Policy Studies on the topic of Combating Olympic Terrorism (video of which can be found here). This entry is adapted from my remarks.

Here is a provocative question: how much did hosting the 2004 Olympics contribute to Greece’s current economic meltdown?

The Olympics were probably a more significant contributor than you would intuitively think. In general, the Olympics is a very expensive spectacle event to host, and the costs of the past three summer games (including London) have skyrocketed. But cities and countries still want to host the Olympics because they realize the games can serve as a valuable investment. If you have been to a city that hosted the Olympics in the past twenty or thirty years, and paid attention to development patterns, some of the host cities have been revitalized by the Games. That is the case for Los Angeles (the 1984 host), and it isn’t difficult to discern how the Atlanta and Sydney Olympics produced development and revitalization.

But the Greece Olympics faced a double disadvantage that simply could not be foreseen when the country won the bid in 1997. The first problem was that the Athens Games would be the first post-9/11 Olympics, which increased security costs exponentially. Greece had initially budgeted about $1.6 billion for the entire Olympics, not including infrastructure and development projects. But unfortunately for Greece, the cost of security itself ended up being about as large as the entire estimated budget for hosting the Olympics. (The 2004 Olympics ran over budget in virtually every way: they cost $15 billion, about ten times as much as the initial proposed budget. This is in addition to about 20.9 billion Euros spent on venues and infrastructure upgrades.) The other problem that Greece faced was the collapse of the global economy in 2008. Because of the financial collapse, the gains that Greece expected to make from its investment in the Olympics did not materialize to the degree expected. Greece’s economic and fiscal problems obviously run far, far deeper than the Olympics — but hosting the Games did not help, and other commentators have also pointed to the causal role that the Olympics may have played in Greece’s debt crisis (along with other factors, of course).

The reason I begin with this point is because when I think about the Olympics and terrorism, the main lens I look at it through is economic. My major argument in Bin Laden’s Legacy is that al Qaeda’s strategy has focused on economics. The economy of the foe was important to Osama bin Laden since before he declared war on the United States. He first cut his teeth in the Afghan-Soviet War, and his perspective was that this war brought down the Soviet Union — that not only had he defeated a superpower on the battlefield, but also actually caused its collapse. (His self-perception was overly grandiose, of course: foreign fighters were entirely incidental to the outcome of the Afghan-Soviet war.) If you think through the logic of that perception, it clearly points to the importance of economics. Nobody would contend that leaving Afghanistan is what caused the Soviet Union to fall. Rather, the way you might get from the Afghan-Soviet war to the Soviet Union’s demise is through economics: through the argument that the costs imposed by the Afghan-Soviet war prevented the Soviet Union from adapting to other problems, such as a major grain crisis and the collapse in the worldwide price of oil (something that the Soviet Union’s budget depended upon because it was a major oil exporter).

I am not endorsing the view that the Afghan-Soviet war brought about the Soviet Union’s demise; but bin Laden thought so. He expressed that belief repeatedly, even explaining how it was the economic cost of the war that destroyed the Soviet Union. This colored his view of how to make war on a superpower. Thereafter, al Qaeda’s war against the United States and the West went through a number of identifiable phases. But the global financial crisis left an indelible impact on al Qaeda’s strategy. The group’s current strategy has been articulated in a significant document, a special issue of Inspire (the English-language online magazine of Al Qaeda in the Arabian Peninsula) published in November 2010. That special issue dramatically illustrates the differences in how the U.S. has viewed this war and how al Qaeda perceives it.

The November 2010 issue of Inspire was a commemorative issue celebrating a plot that occurred in October 2010, in which bombs disguised as ink cartridges were put onto two planes (a Fed Ex plane and a UPS plane). What we might think is odd about the publication of this special issue of AQAP’s magazine is the fact that the group would issue a special edition of its magazine to celebrate a plot in which nobody died. Saudi Arabian intelligence was able to infiltrate the plot, and alerted U.S. officials to the danger. Locating and defusing the bombs was harrowing: after the tip came in from Saudi Arabia, the UPS plane was diverted to Britain’s East Midlands Airport, where officials cordoned off the cargo area and emptied the plane. They conducted a thorough search, but found nothing out of the ordinary. Even a seemingly innocuous printer cartridge hiding 400 grams of PETN was cleared by security. Fortunately, officials called from Dubai. They had discovered PETN in a Hewlett-Packard cartridge routed through their country, and instructed their British colleagues on how to locate the explosives, which were disguised to avoid detection by an X-ray machine. British authorities again cordoned off the area, and this time found the bomb. So the process was harrowing, but to us this was a failed plot. Yet AQAP issued a commemorative issue of their magazine devoted to it. Why?

The reason is that AQAP believed all they needed to do was get the bomb on board the plane. Anwar al Awlaki wrote in Inspire that blowing up cargo planes “would have made us very pleased but according to our plan and specified objectives it was only a plus.” He continued: “The air freight is a multi-billion dollar industry. FedEx alone flies a fleet of 600 aircraft and ships an average of four million packages per day. It is a huge worldwide industry. For the trade between North America and Europe, air cargo is indispensable and to be able to force the West to install stringent security measures sufficient enough to stop our explosive devices would add a heavy economic burden to an already faltering economy.” To Awlaki, even this failed plot is a victory, presenting the enemy with a dilemma: either Western countries spend billions to address such plots, or AQAP is free to try again.

This special issue of Inspire dubbed this late stage in al Qaeda’s economic war against the U.S. the “strategy of a thousand cuts.” In their view, they don’t need to launch another 9/11. Rather, attacks focus on driving up the West’s costs, particularly security costs, and jihadi groups hope that their foes will collapse under their own weight.

The reason I focus on al Qaeda is because when you review recent security events related to the Olympics, we can see that the threat of al Qaeda and al Qaeda’s fellow travelers looms largest in the perception of security planners. To be clear, Islamist terrorism is not the only kind about which there are concerns. There are also concerns about far-left and far-right terrorism (think Anders Breivik, or else Eric Rudolph, the 1996 Olympics bomber). There are also fears of nationalist terrorism, although I think IRA attacks are exceedingly unlikely.

In terms of Islamist terrorism, the British press reported that an alleged militant thought to have fought for Shabaab in Somalia crossed through Olympic Park five times, breaking a ban that officials had placed on him. This is not as concerning a story as it has been portrayed: the reason we know he passed through Olympic Park this many times is because he wore an electronic tracking device: when you think of the greatest threats to the Games, someone wearing an electronic tracking device isn’t going to be in your first quartile. But there have been other incidents. In June, two Muslim converts were arrested on the suspicion that they were plotting to attack the Olympic canoeing venue in Waltham Abbey, Essex. And this month two separate anti-terror operations yielded fourteen arrests. So when you look at the combination of presence, persistence, and capabilities that al Qaeda and fellow travelers have demonstrated in Britain, much of the concern about terrorism underlying terrorism-related security expenditures has been driven by them. And these security expenditures, which many now see as so routine, are enormous. They are costly to the British government, costly to Londoners, costly even to Olympic sponsors.

The London Olympics has a security force of over 50,000, including 18,200 soldiers. (This number was larger than planned because a security contractor, G4S, was unable to provide the manpower that it had promised.) In addition to security costs, there is widespread perception of a city under siege due to these measures. Visible aspects include a 17.5 kilometer electrified fence around Olympic Park, constant surveillance by closed-circuit television cameras, and six surface-to-air missiles on downtown buildings. Londoners love to complain, and there have been a lot of complaints about the Olympics, but one has to concede that there is validity to these complaints. We have sadly reached a point where the threat of terrorism — and the way that it massively increases costs for events like this, as well as imposes great inconveniences — is taken as a given.

Unfortunately, there’s no easy fix. Even if you didn’t have the threat of terrorism, security outlays would be large due to concerns about crime, crowd control, and maniacs who can’t be classified as terrorists (such as what we just witnessed in Aurora, Colorado). However, looking for ways to reduce these costs moving forward is vital. In looking at security measures that have been reported in the press, those that hold the greatest promise for cost reduction are multilateral efforts where capabilities are paired. Interpol has played a role, with workers “compiling databases on fugitives and terror suspects who shouldn’t cross borders,” as well as “keeping track of lost passports to make sure they haven’t fallen into the wrong hands.” The U.S. is also providing assistance.

Combining capabilities in this manner can help to create economies of scale, so not every country that hosts the Olympics has to rebuild the whole security apparatus again and again. When we think of the Olympics and terrorism, it is worth keeping in mind the strategy of the terrorist group that has driven the past decade of U.S. national-security policy, and the centrality of economics to this strategy. Solutions are not easy, but we should be attuned to the crushing weight imposed by security for such events.