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This paper treats terrorism as an economic phenomenonas a way to understand

it and to control it. It uses the tools of substitution, innovation, and cycles and concludes
by noting the importance of intelligence and that the most valuable approach to
defeating terrorism is that of denying resources to the terrorists rather than attempting
to protect assets at risk. It notes that we are probably not any safer than before the
implementation of the post9/11 strategies and emphasizes that new initiatives must
be undertaken to prevent terrorist use of weapons of mass destruction.

defined it in many different ways (Hoffman

2006). What makes terrorism special is that it
is usually aimed at ordinary people as opposed
to armies, criminals, warlords, etc. (Walzer
1976). Such terrorism has become a global phenomenon, evolving from a local, national, or
regional threat into a multinational and even a
global one. For example, al Qaeda first operated in Sudan, then in Afghanistan and Pakistan, and now has branches in Great Britain,
Morocco, Iraq, Indonesia, the Philippines, etc.
It has learned from modern corporations and
global businesses the value of franchising, the
use of the Internet, etc. and has a flat organizational structure in contrast to governments
trying to defeat it.
The threat of terrorist strikes, particularly
those involving weapons of mass destruction
(WMD) represents one of the most serious
threats to the United States and other nations
that are potential targets of subnational, national,
and transnational terrorist groups or networks
(Intriligator and Toukan 2006; Katona, Sullivan,
and Intriligator 2006; Katona, Sullivan, and
Intriligator 2010). Understanding the economic
aspects of terrorism can help to prevent or to
mitigate this danger.
This paper reaches conclusions as to how
antiterrorists, including the U.S. government and


The purpose of this paper is to treat terrorism as an economic phenomenon as a way to

understand it and to control it. It uses the tools
of economic analysis to understand the sources
of terrorism and how they could be countered.
It treats two main actors, terrorists and antiterrorists, as economic agents, each maximizing
their objective function (or utility) subject to
constraints. Such an economic approach is complementary to other approaches that treat the
phenomenon of terrorism in terms of political
science, international relations, security studies,
military studies, law, criminology psychology,
sociology, history, etc. This paper does not treat
the economic consequences of terrorism, such as
the economic impacts of the September 11, 2001
(9/11) al Qaeda attacks on the World Trade Center in New York and the Pentagon in Washington, DC, which is the subject of a different type
of study, but it is complementary to such studies.
(On the economic impacts of terrorist attacks,
including 9/11, see the National Commission on
Terrorist Attacks upon the United States, 2004.
See also DeVol et al. [2002], Makinen [2002],
and Richardson, Gordon, and Moore [2007].)
For purposes of this paper, terrorism will
be understood to be the use or threat of use of
violence to achieve political objectives through
intimidation, although various authorities have

DHS: Department of Homeland Security
IED: Improvised Explosive Devices
MAD: Mutual Assured Destruction
NGOs: Non-Government Organizations
NPT: Non-Proliferation Treaty
TEW: Terrorism Early Warning
WMD: Weapons of Mass Destruction

*Presidential Address to the Western Economic Association International Annual Conference, Vancouver, BC, June
30, 2009.
Intriligator: Professor of Economics, Political Science, and
Public Policy, UCLA, Senior Fellow, The Milken Institute and The Gorbachev Foundation of North America. Phone 310-825-4144, Fax 310-394-8007, E-mail
Economic Inquiry
(ISSN 0095-2583)
Vol. 48, No. 1, January 2010, 113

2010 Western Economic Association International


specifically the U.S. Department of Homeland

Security (DHS), are:
Engaging in an impossible task of trying
to protect vulnerable sites given the possibility
of substitution and the enormous number of
potential terrorist targets.
Making the classic mistake of generals
fighting the last war by concentrating too
much of their efforts on airports and airplanes.
(See Barnett [2004] on the divide within the
Department of Defense over what to do in the
post-Cold War world).
Not reacting to terrorist innovation in the
9/11 attacks by innovating but rather by reorganizing, creating an ineffectual bureaucracy in
Doing too little by way of communication
directly with the terrorists or via third parties to
address real or imagined grievances.
Doing too little in pursuing the most important way to defeat the terrorists, particularly the
al Qaeda terrorist group, which is to deprive
it of the means of attack, including the key
resources of financing, recruits, weapons, intelligence, support groups, propaganda, etc. (See
also de Soto [2002] on the economic dilemmas that create a space within which terrorists
can thrive.) Of greatest importance is to prevent terrorists from acquiring WMD, especially
biological and nuclear weapons.



Terrorists are assumed to be maximizing

utility in terms of inflicting damage subject to
constraints on funding, personnel, technology,
etc. leading to the supply of terrorist acts as
a perverse type of good from the vantage
point of the terrorists. Stemming from this utility
function there is a derived terrorist demand for
weapons, suicide bombers and other recruits,
financing, intelligence, etc.
Antiterrorists are also assumed to be maximizing utility subject to constraints, in terms of
seeking both protection from terrorism and risk
reduction. Risk perception affects on economic
decisions to prevent terrorism.
The overall result is an interaction between
terrorists and antiterrorists as economic agents
with equilibrium prices and quantities, as in a
general equilibrium model of the overall economy. There is a derived demand for weapons,
funding, recruits as suicide bombers, etc. on the
part of the terrorists and, similarly, a derived

demand for various forms of protection of

vulnerable assets on the part of the antiterrorists in a situation of asymmetric warfare. In
the resulting equilibrium, each agent affects the
other and the outcomesterrorist acts and acts
of protectiondepend on both sets of actors.
This paper uses tools of economic analysis
to understand the sources of terrorism and how
they could be countered. It builds in part on
the work of Todd Sandler alone and with others
on terrorism over a period of many years. See
especially Enders and Sandler (2005).



Terrorism is a tactic used by the weak against

the strong in an asymmetric warfare situation,
with those outside the mainstream or establishment organizing as terrorists with a political agenda. It is a tactic used by the weak,
those without power or access to military command, weapons, etc. but with real or perceived
grievances. It can be studied using the rational
actor model of economics, attempting to achieve
a political agenda subject to financial, organizational, logistical, and other constraints. The
terrorists generally seek a political agenda but
also publicity, recognition, financing, etc. as a
means to their political goals.
The terrorist policy is to use violence to
impose its will upon another party. According
to the classic treatise by Karl von Clausewitz,
On War, It is clear that war is not a mere
act of policy but a true political instrument,
a continuation of political activity by other
means. This is also true of terrorism, which
involves the continuation of politics by other
means, paraphrasing Clausewitz.
There are terrorists in every region, culture,
religion, not just Islamic extremists, such as al
Qaeda. Thus, it is a mistake to focus only on
Islamic extremist terrorists. These various terrorist groups have different agendas, and there
is a type of competition among terrorist groups
in various countries and in different religions.
These groups have different goals, with some
intent only on inflicting destruction but others
with a clear political agenda, especially the overthrow of a regime. Furthermore, these groups
are trying to outdo one another in their competition for publicity, funding, recruits, contacts,
etc. A can you top this mentality is one
driver toward terrorist use of WMD starting perhaps with radiological dispersal devices (dirty


bomb) or chemical weapons that are relatively

easy to obtain, but eventually escalating into
the use of biological or nuclear weapons. The
terrorists are looking for new and even more
spectacular strikes that would give them news
coverage and publicity. Their issue now for them
is how to outdo 9/11, and the answer is probably
WMD, whether biological or nuclear.
The source of terrorism is probably not
poverty and ignorance, as is often alleged, but
rather, in all likelihood, humiliation and retribution for past actions. This was noted by Prime
Minister Mahathir Mohamad of Malaysia in his
speech to the Tenth Islamic Summit Conference
in Putrajaya, Malaysia on October 16, 2003 and
further elaborated on by Tom Friedman in his
column in The New York Times and at Davos as
well as by others (See also Friedman [2006]). It
should be noted that the terrorists of 9/11 were
neither poor nor uneducated but rather middle
class or rich and well educated. That is similarly true of other terrorists, including those in
Europe, Asia, and Africa. Examining the common beliefs as to the underlying causes of terrorism, Berrebi (2009) finds that if anything, those
with higher educational attainment and higher
living standards are more likely to participate
in terrorist activity. As to why this might be
the case, Krueger and Maleckova (2003) speculate that well-educated individuals may participate disproportionately in terrorist groups if
they think that they will assume leadership positions if they succeed, or if they identify more
strongly with the goals of the terrorist organization than less educated individuals, or if they
live in a society where the relative pay advantage of well-educated individuals is greater for
participation in terrorist organizations than in the
legal sector.
Noricks (2009) investigates the validity of
many of the alleged root causes of terrorism and finds the only factors likely to be
present, agreed by scholars to be important
when present, and amenable to policy influence are grievances and mobilizing structures.
As Friedman (2003) states, The single most
underappreciated force in international relations
is humiliation. (See also Krueger and Maleckova [2003], Krueger and Laitin [2004], Friedman [2006], Abadie [2006], Krueger [2007],
Abrahms [2008], Davis and Cragin [2009](especially Figure S1, A Factor Tree for Root Causes
of Terrorism), and Berrebi [2009].) Of course,
different terrorist groups have different motivations and ideologies, so there is no such thing

as a stereotypical terrorist. Furthermore, a terrorist network would not be able to operate in

the capacity that they do in the absence of the
other components that engage in fundraising,
recruitment, and social support. In contrast to
previous forms of transnational terrorism, the
support base of transnational terrorist groups has
spread throughout the globe rather than in any
distinct geographical cluster.
According to Louise Richardson (2006), terrorists want the three Rs: revenge (for perceived injustices and humiliation), renown (the
attention of the world), and reaction (disproportionate enough to perpetuate a sense of moral
outrage), and she notes that the 9/11 attacks
achieved all three. She concludes that terrorism can be contained not by a War on Terrorism but rather by depriving them of these
three things that they want. As she and others
have noted, it was a mistake for U.S. President George W. Bush to declare a War on
Terrorism which amounts to war on a tactic,
comparable, for example, to a war against the
blitzkrieg in World War II (WW II). Furthermore, previous such Wars such as the War on
Poverty, the War on Cancer, the War on Drugs,
etc. have largely failed to achieve their goals.
(de Soto [2002] argues that it is necessary to
undercut the supply of terrorists by reducing the
disaffected recruit population. See also Codevilla and Seabury [2006] on the implications of
poorly defined wars.)
There are various antiterrorist entities in addition to governments that are fighting the terrorists. Among them are international organizations, private sector firms, and other organizations, including non-government organizations


A standard result of economic theory is

substitution, with economic agents substituting
against an item that becomes more expensive
or less valuable in favor of another item. This
result also applies to terrorism, with terrorists
substituting other forms of terrorism if one
form of terrorism becomes more expensive or
less valuable. They will substitute one target
for another as it becomes harder to hit that
target. An example is the shift from planes as
targets because they are more protected and
harder to hit. Thus, terrorists have shifted to
targets other than airplanes; such as a nightclub
in Bali in 2002; suburban trains in Madrid in


2004; a school in Beslan, Russia in 2004; buses

and subways in London in 2005; and urban
infrastructure in Mumbai, India in 2008. One of
the first articles on the economics of terrorism
was by William Landes, of the University of
Chicago Law School, An Economic Study
of U.S. Aircraft Hijacking 19611976 in the
April 1978 issue of the Journal of Law and
Economics. He noted that adding metal detectors
in airports would not stop terrorism but rather
shift it to other areas such as embassy bombings,
which did in fact occur many years later in
the strikes on U.S. embassies in Kenya and
Tanzania. Then, he noted, that adding protection
to embassies would lead to kidnappings of
embassy personnel as hostages. Ultimately, this
would lead to suicide bombers as the weapon
that is hardest to deter or defeat.
Besides altering their attack modes, terrorists also substitute intertemporally by engaging
in more attacks during periods of relatively less
enforcement and vice versa. This will be discussed in more detail in Section VII.



The 9/11 strike was an example of innovation on the part of the terrorists because it
combined two approaches to terrorism that were
each used previously, airplane hijacking and suicide bombing, but never combined before in this
form. The response to this innovation on the
part of the antiterrorists in the U.S. government
was not innovation, as would be expected, but
rather reorganization, creating the U.S. Department of Homeland Security, which is top-heavy,
dysfunctional, and has been largely ineffective,
as seen in the disastrous response to hurricanes
Katrina and Rita in New Orleans and the Gulf
Coast. There was a need for but lack of comparable innovation on the part of the antiterrorists. More recently, the innovation of improvised
explosive devices (IED) in Iraq and Afghanistan
was not countered by innovation on the side of
the antiterrorists. There is also the innovation of
the modern suicide bomber that was pioneered
in Sri Lanka, building on the Japanese kamikaze
pilots in WW II. The recruitment, training, provision of weapons, control, etc. of these suicide
bombers was not countered by comparable innovation on the part of the antiterrorists. (See Pape



There is heightened awareness and interest

after a terrorist attack but they then erode in the
face of other concerns, leading to cycles that
have been observed in the work of Sandler and
Enders (1993), as well as Faria (2003). Faria
describes the cyclical nature of terrorist attacks
in a cause and effect manner. When enforcement is low, terrorists have lesser costs associated with terrorist activities, so terrorist attacks
increase. In response, governments increase the
level of their enforcement, increasing the costs
to terrorists and effectively decreasing the level
of terrorist activities. After the frequency of terrorist attacks declines, governments have less
incentive to invest in enforcement and the cycle
repeats itself. Enders and Sandler offer another
explanation for the cyclical nature of terrorist attacks. During periods of increased terrorist
activity, terrorists exhaust their finite resources.
The subsequent lull in terrorist attacks is then
a period when terrorist organizations replenish
their resources.
These cycles are similar to the corn-hog cycle
or cobweb model in microeconomic theory.
Such cycles also appeared in my earlier work
with Dagobert Brito on narco-terrorism, as in
Colombia, using the predator-prey model of
Lotka-Volterra used to study the interactions of
sharks and fish, rabbits and lynx, etc. (Brito and
Intriligator 1992). This model is widely used in
biology and other disciplines, and it leads to
cycles. In its application to terrorism, it leads to
situations where it might appear the antiterrorists
are winning against the terrorists when they are
actually losing or vice versa.


Intelligence is of crucial importance to both

terrorists and antiterrorists. For the antiterrorists, it is imperative to know the terrorists and
their motivation. According to Sun Tzus classic treatise The Art of War, from the fifth century
b.c. Know thy enemy and know thyself is a
basic precept of warfare, and terrorism is warfare, although a case of asymmetric warfare.
There is a need for in-depth intelligence on terrorists motivations and goals as well as their
means. There is also great value in communication directly with the terrorists or via third
parties as in the terrorist situations in IsraelPalestine (e.g., the Oslo process initiated by the
Norwegian Foreign Minister Johan Jrgen Holst,


that was working until Ariel Sharons visit to the

Temple Mount), Northern Ireland (e.g., Good
Friday agreement stemming from the work of
U.S. Senator George Mitchell), southern Sudan
(e.g., negotiations in Kenya), and other such
asymmetric warfare situations. Another example
of direct communication was General Alexander
Lebeds negotiations with the Chechen rebels in
Russia while he was the national security advisor to President Yeltsin that led to a peaceful
outcome while it lasted.
There is great value in a classical military
approach to terrorism that focuses on both the
capabilities and intentions of the other side,
whether that of the terrorists from the vantage
point of the antiterrorists or that of the antiterrorists from the vantage point of the terrorists.



Perhaps, the most valuable approach to

defeating terrorism is that of denying resources
to the terrorists: As emphasized by Sandler, it is
much more effective to deny terrorists resources
of financing, recruits, weapons, intelligence,
support groups, propaganda, etc. than to attempt
to protect assets at risk, which is extremely difficult or impossible in view of the extremely
large number of targets and the possibility of
substitution. (See Sandler [2002]. See also de
Soto [2002].) The terrorists demand for terrorist
acts is constrained by resources, and it is almost
impossible to raise the cost of these acts by protecting assets at risk given their numbers and the
technical difficulty of providing such protection.
Nevertheless, this is the approach that is largely
used by governmental antiterrorists, including
the U.S Department of Homeland Security.



There is great value in cooperation and

mutual support in defeating terrorism at the
national level and also at the local and global
levels (Intriligator 2009). Such cooperation and
mutual support should range from local law
enforcement and first responders to corporations, states and regions, up to and including nations and international organizations. An
example of cooperation to defeat terrorism at
the global level is the Shanghai Cooperation
Organization that includes China, Russia, and
the central Asia republics, that share intelligence and have a training program in Bishkek,

Kyrgyzstan. An example at the local level is the

Terrorism Early Warning (TEW) group in Los
Angeles County, with joint production of intelligence, mutual support, etc. that could be emulated at the national, international, and global
levels. It is discussed in the book I edited
with Dr. Peter Katona of the UCLA Medical School and Lieutenant John Sullivan of the
Los Angeles County Sheriffs Office on Countering Terrorism and WMD: Creating a Global
Counter-terrorism Network, John Sullivan being
the founder of TEW in Los Angeles County. It
builds on a long tradition among fire fighters in
coming to the assistance of others in extreme
situations. The same can and should be done
among antiterrorists.
In November 2007, the United Nations Security Council recognized the threat that terrorism
represents and the value of cooperation in dealing with this threat (United Nations Security
Council 2007).


It is probably not possible to deter suicide bombers, who represent the ultimate smart
weapon, but in principle it might be possible to
deter their controllers. There are great dangers
of incomplete deterrence as in Osama bin Laden
having escaped capture, making him a hero in
many places, and generating interest, funding,
recruits, etc. for al Qaeda.



Transnational terrorism and the potential

acquisition by terrorists of WMD, especially
nuclear weapons, are part of the asymmetric dynamics that have thrust the international
community into a new and uncertain situation.
These dynamics have been witnessed in the 9/11
(2001) al Qaeda terrorist attacks on New York
and Washington, the 3/11 (2004) terrorist attacks
against Madrid, and the 7/11 (2005) terrorist
attacks against London. Terrorist acquisition and
use of WMD, especially nuclear weapons, is an
extremely serious problem that must not be dismissed as the subject of works of fiction. Indeed,
the U.S. casualties and losses on 9/11 would be
seen as relatively minor as compared to a possible terrorist strike using even crude nuclear
weapons. Both candidates in the United States
2004 presidential elections agreed that this is the
most serious threat the country faces.


Graham Allison (2004) discusses this issue in

his book, Nuclear Terrorism, where he emphasizes that, as he puts it in the subtitle of this
book, nuclear terrorism is the ultimate preventable catastrophe. Unfortunately, his conclusion may be overly optimistic in that his
proposals of strict control over fissile material
and the prevention of the acquisition of nuclear
weapons by additional nations, while excellent
policies, may not work perfectly and are not yet
in place. Furthermore, it may be possible that
terrorist groups already have obtained enough
fissile material to produce a nuclear weapon or
even already possess such a weapon.
Considerable efforts to obtain WMDs have
been made by two major terrorist organizations,
Aum Shinrikyo and al Qaeda. For a detailed
discussion of their attempts, see Daly, Parachini,
and Rosenau (2005). Lewis (2006) examines the
economic considerations for terrorists interested
in acquiring a nuclear weapon. Using a cost
per casualty ratio, obtaining a nuclear weapon
capable of 100,000 casualties for $10 million
($100 per casualty) would be a bargain for
an organization like al Qaeda who normally
operate in the $100$300 per casualty range.
Assuming a terrorist organization already has
enough fissile material to make such a weapon,
Lewis estimates the cost of building it to be
$2 million (leaving $8 million to procure the
necessary fissile material).
It is possible to identify various nightmare
scenarios. Most devastating would be a repeat
of 9/11 but this time with a nuclear weapon. If
a subnational terrorist group could gain access
to a nuclear weapon, it could use it or at least
threaten to do so. If Osama bin Laden had even
a crude nuclear weapon, he could have used it
on 9/11 or in other al Qaeda attacks. There is
some information about terrorists intentions to
obtain nuclear weapons. Osama bin Laden has
specifically referred to the acquisition of nuclear
weapons by the al Qaeda terrorist network as
a religious duty, and documents were found
in the al Qaeda caves in Afghanistan regarding
their intent to use WMD that even included a
schematic diagram of a nuclear weapon. After
the 9/11 attacks, al Qaeda spokesman Abu
Gheith (2002) wrote:
We have not reached parity with them.
We have the right to kill 4 million Americans2 million of them childrenand to exile
twice as many and wound and cripple hundreds
of thousands. Furthermore, it is our right to fight
them with chemical and biological weapons,

so as to afflict them with the fatal maladies

that have afflicted the Muslims because of the
[Americans] chemical and biological weapons.
If this stated goal of retribution were true,
the only way that al Qaeda could attain this
objective would be to use nuclear weapons or
a highly destructive and sophisticated biological
Other nightmare scenarios involving terrorists using WMD would include a strike with
conventional weapons against a nuclear power
plant near a major city such as Indian Point just
above New York City or a terrorist group placing
a nuclear weapon in a container on a freighter
entering a major port, such as the Los Angeles/Long Beach port complex, by far the largest
in the United States. Terrorists could place such
a bomb in one of the many containers entering U.S. ports as less than 5% of them are
inspected. Furthermore, the Los Angeles/Long
Beach port represents an important potential target for terrorists as it accounts for more than
40% of all U.S. foreign trade and it borders on
a major metropolitan area, the second largest in
the nation. Thus, knocking it out of commission
would have enormous impacts on the economies
of the United States and all its trading partners,
potentially disrupting much of world trade as
well as potentially inflicting millions of casualties. (For other scenarios, see Lake [2000] and
Garwin [2002].)
Garwin (2002) most fears what he calls
megaterrorism, involving thousands of casualties, by means of biological warfare agents
or nuclear weapons. He postulates that terrorists could use a nuclear weapon stolen from
Russia or an improvised nuclear device based
on highly enriched uranium built in the United
States. Some acts of megaterrorism, including
9/11, were foreseen by the U.S. Commission
on National Security in the twenty-first century [the Hart-Rudman Commission] in its 1999
report that stated that, Terrorism will appeal
to many weak states as an attractive option
to blunt the influence of major powers. . .[but]
there will be a greater incidence of ad hoc
cells and individuals, often moved by religious zeal, seemingly irrational cultist beliefs, or
seething resentment. . .The growing resentment
against Western culture and values. . .is breeding a backlash. . .Therefore, the United States
should assume that it will be a target of terrorist
attacks against its homeland using WMD. The
United States will be vulnerable to such strikes.
(U.S. Commission on National Security in the


Twenty-First century [chaired by former U.S.

Senators Gary Hart and Warren Rudman] 1999).
It is customary to include as WMD nuclear,
biological, chemical, radiological weapons, but
there are important differences among these
weapons. In fact, it is misleading or even
mistaken to lump together all of these weapons
as one category of WMD because nuclear
weapons are in a class all to themselves in
view of their tremendous destructive potential.
Although nuclear weapons are not now, as
far as we know, in the hands of terrorists,
they could be sometime in the future, given
that this is an old technology that is well
understood worldwide and given that there has
recently been a proliferation of WMD-related
technologies and material. Furthermore, recent
trends in terrorist incidents indicate a tendency
toward mass-casualty attacks for which WMD
are well suited. There is even a type of rivalry
between various terrorist groups to have the
largest impact and the greatest publicity, topping
the actions of other such groups.
The terrorist attacks on the World Trade
Center (the first attack in 1993), the Tokyo subway (1995), and the Murrah Federal Building
in Oklahoma (1995) clearly signaled the emergence of this new trend in terrorism: masscasualty attacks. Terrorists who seek to maximize both damage and political impact by using
larger devices and who try to cause more casualties have characterized this new pattern of terrorism. There have also been the revelations that
A. Q. Khan, the father of the Pakistan nuclear
weapon, provided nuclear weapons technology
to several nations, suggesting the emergence of
a type of nuclear weapons bazaar that will sell
components, technology, fissile material, etc. to
the highest bidder, including other nations such
as Libya, North Korea, or Iran or possibly a
well-financed terrorist group. If terrorists had
access to the needed funding, they could probably find another such expert or middleman to
provide them the detailed plans and even the
components for a nuclear weapon. Even without
a full-fledged nuclear weapon they could assemble a radiological dispersal device that could
cause massive disruption and also have massive
psychological effects on the population. North
Korea could in the future play the role that Pakistan has played in selling nuclear technology
or material. The role would repeat their experience in importing scud missiles from the Soviet
Union and then exporting improved versions of
these missiles using reverse engineering.

One important consequence of the U.S. invasion of Afghanistan was to eliminate the main
base of al Qaeda, destroying its central command structure. In the absence of this central
command structure, individual networks appear
to have gained greater freedom and independence in tactical decisions than the traditional
terrorist cells of the past. This particular trend
in terrorism represents a different and potentially far more lethal one than that posed by the
more familiar, traditional, terrorist adversaries.
The 9/11 attacks have demonstrated that transnational terrorism is now more lethal and that it
can have a fundamental political and strategic
impact. Furthermore, the threat of terrorist use
of WMD is still possible and perhaps inevitable
given the goals of al Qaeda, which is probably
now rebuilding its central command structure.
There has been to date only one example
of a terrorist group using WMD. This historical example is the Japanese terrorist group Aum
Shinrikyos release of sarin nerve gas on the
worlds busiest subway system in Tokyo on
March 20, 1995. This attack represented the
crossing of a threshold and demonstrated that
certain types of WMD are within the reach of
some terrorist groups. The attack came at the
peak of the Monday morning rush hour, right
under the Tokyo police headquarters, in one of
the busiest commuter systems in the world, and
it resulted in 12 deaths and more than 5,000
injuries. Although the number of deaths was
quite small, this was the largest number of casualties of any terrorist attack up to that time. This
number of casualties is exceeded only by the
9/11 attacks on the World Trade Center and the
Pentagon as well as in Pennsylvania that resulted
in approximately 3,000 deaths and almost 9,000
nonfatal casualties. (It should be noted that
most of the injuries in the Tokyo subway attack
were not serious; most casualties were released
from the hospital within one day. For the
numbers of deaths and injuries from this and
other terrorist strikes, see Johnstons archive:
Even before their attack on the Tokyo subway, Aum Shinrikyo had conducted attacks
using sarin and anthrax and had been attempting
to produce biological weapons (Hoffman 2006).
Following the 1995 attack in Japan, President
Clinton issued Presidential Decision Directive
39 stating that the prevention of WMD from
becoming available to terrorists is the highest
priority of the U.S. government.


Because of a number of global developments

over the past decade, the threat that terrorists
might resort to WMD has received increased
attention from political leaders and the news
media. These developments include: the proliferation of WMD-related technologies, materials,
and know-how; trends in transnational terrorist
incidents suggesting a growing tendency toward
mass-casualty attacks for which WMD are well
suited; and the interest in WMD that has been
expressed by Osama bin Laden and al Qaeda.
The events of September 11 and the wave
of anthrax-laced envelopes mailed in the United
States during 2001 together constituted a watershed in the perception of the non-conventional
terror threat in general and of bioterrorism in
particular. These events heightened the potential link between transnational terrorism and
WMD, with biological weapons that have been
largely ignored but could cause results comparable to those involving nuclear weapons, including economic, psychological, and social effects,
in particular, looming as a new and dangerous
threat. A warning on its effects comes from the
influenza pandemic of 19181919, sometimes
referred to as the Spanish flu, that killed more
people than both world wars and al Qaeda has
been working on these type of weapons since
1994, when it started its program in an isolated
farmhouse in Albania. It has also been working
on human bombs, individuals who would carry
and spread a highly virulent form of a contagious disease, such as bubonic plague. It has also
been seeking other biological weapons including ricin, anthrax, and various biological toxins.
After the 9/11 attacks, the American Taliban
John Walker Lindh told interrogators that a biological attack was to be the second wave of
the al Qaeda attack on the United States, which
is still possible.
Overall, although there has been remarkably
little past use of WMD by terrorists and very
few fatalities resulting from their use, one cannot
rule out terrorist groups gaining such weapons
and using them in the future. Sooner or later,
they could be available to terrorists. As former
Secretary of Defense William Cohen stated concerning WMD terrorism: The question is no
longer if this will happen, but when. In addition, other groups have sought to gain access and
use nuclear weapons and other WMD, which
compounds the problem as new nations and subnational groups seek these weapons. Some terrorist groups may feel that in order to attract
worldwide attention, they should escalate from

conventional to biological or nuclear weapons.

The likely users of these and other WMD are
probably fundamentalist terrorist groups, given
both their motivation and their access to funding
and expertise. (See various articles in the journal
Terrorism and Political Violence.)
It should be noted that nuclear weapons are
self protectingthey are difficult to acquire,
to use, and to take care of properly. This
has the effect of keeping such weapons out
of the reach of most national and subnational
groups, including terrorists, but a well-financed
terrorist group could have the resources needed
to hire the experts who could build and take
care of such weapons, as was the case with
Aum Shinrikyo in its acquisition and use of
sarin nerve gas. The CIA had predicted copycat
phenomena in that case, but they did not in fact
materialize, probably due to the difficulties of
building and maintaining such a weapon. Also,
each weapon is different and, although there
are some weapons that can be developed easily,
such as ricin, others are extremely difficult to
build, including nuclear weapons. Nevertheless,
with demand rising and marginal cost falling, as
is also the case with other WMD technologies,
it is only a matter of time before such weapons,
including nuclear weapons, become available to
terrorist groups.
The likelihood of terrorist groups acquiring
WMDs is probably low in the short run but
high in the long run. There is no way to
demonstrate that terrorists will acquire and use
such weapons, but, conversely, there is no way
to demonstrate that they will not do so. Given
the chance that this might happen and given
the magnitude of potential losses involved, it
is important to prevent this as well as to be
prepared for such an eventuality, even at the cost
of many billions of dollars. Using the concept
of expected loss, the very low probability of
a remote possibility, such as a terrorist group
gaining access to and using nuclear weapons,
is more than offset in terms of expected loss
by the extraordinarily high losses such strikes
would entail. It is also a serious mistake to
underestimate the ability of terrorists to innovate
new techniques of terror, such as using hijacked
airplanes as suicide attacks as occurred on 9/11.
Both hijackings and suicide attacks were well
known before but never combined effectively in
this particular way.
There could be comparable innovations using
nuclear weapons in the future, possibly combined with an unexpected delivery system, such


as a rental van in a parking garage, a barge in

a harbor, or a cruise ship with thousands of
people aboard. In fact, there are many possible scenarios of unconventional weapons being
used in unconventional ways. It is important
to study in detail how truly effective WMDs
would be in furthering a terrorist groups ultimate agenda in both the short term and the long
term. Of course, terrorist groups must choose
among alternatives under constraints, but a wellfinanced group could choose to develop WMDs,
following the model of Aum Shinrikyo, but possibly on an even larger scale, as an ultimate
demonstration of its capabilities.
Although certain types of WMD have been
available for a long time, including nuclear
weapons, these weapons have only been used
by one country against another: the U.S. against
Japan at the end of WW II. That does not
mean, however, that subnational terrorist groups
would not use them in the future. The best
policy choices for governments in the area of
combating WMDs as opposed to combating
conventional weapons would be to identify those
policies that would best undermine resource
availability for terror groups and force them into
choice patterns that can be countered at least
cost to these governments.
It is difficult to even consider the challenges
presented by potential terrorist use of WMD
because we are currently in a stage of denial,
where these nightmare scenarios make even
thinking about the problem and its remedies
extraordinarily difficult. People find it hard to
consider this threat seriously and instead tend
to consign it to fictional scenarios, such as in
novels and films. It is necessary to overcome
this denial mechanism and to take active steps to
prevent potential terrorist threats to national and
global security using WMD. (Mueller [2006],
[2007], [2008], [forthcoming] takes the view
that this terrorist threat is highly exaggerated.
See also Jenkins [2008] for a skeptical view on
terrorist use of nuclear weapons.)
This problem is a global one that must be
dealt with on that scale; international organizations must be involved and close international
cooperation is necessary. Terrorism cannot be
addressed by unilateral action where there is little or no support from other states. Each nation
should realize that its major responsibility lies
in protecting its citizens, but that it cannot do
so without international cooperation and reliance
on international organizations that may require
it to give up some of its sovereignty.

The worlds nuclear weapons stockpiles and

the worlds stockpiles of weapons-grade materials (both military and civilian) are overwhelmingly concentrated in the five nuclear weapon
states (United States, United Kingdom, France,
China, and Russia). Additional nuclear weapons
or components exist in Israel, India, Pakistan,
and now also in North Korea. In addition, civilian plutonium for many nuclear weapons also
exists in Belgium, Germany, Japan, Switzerland,
and elsewhere, sometimes in quantities large
enough to make a weapon.
Access to WMDs can be treated as a supply and demand problem: supplies must be limited, with the current huge supplies of WMDs
safeguarded or destroyed. Russian stockpiles
of tactical nuclear weapons should be safeguarded, whereas Russian stockpiles of chemical weapons and biological weapons, the largest
in the world, should be destroyed through
an expansion of the Nunn-Lugar Cooperative
Threat Reduction program. As discussed by
Allison (2004), stockpiles of fissile material,
both highly enriched uranium and plutonium,
must be safeguarded under the same type of
protection that the United States gives to its
stockpile of gold at Fort Knox, a new type of
gold standard, as Allison calls it. Furthermore,
Allison emphasizes the importance of preventing the acquisition of nuclear weapons by additional states, including Iran. He correctly notes
that terrorists can obtain nuclear weapons only
through theft of such a weapon or acquisition of
the necessary fissile material, as they do not have
the technical and financial capabilities to produce this material. Thus, preventing them from
acquiring such capabilities can help make the
problem of terrorist use of nuclear weapons a
preventable one, although he appears to be too
sanguine in this regard.
Allison stresses the supply side, noting, correctly, that the problem of nuclear terrorism
would disappear if terrorists were to be denied
access to nuclear weapons and to the fissile
material necessary to produce them. It may
be the case, however, that such access cannot
be completely denied, and it may also be the
case that some of this material is already in
the hands of terrorist groups, so it is important to treat the demand side as well as the
supply side. To reduce the terrorist demand for
nuclear weapons, a new form of deterrence must
be developed, with a global deterrence system that would be used against any terrorist
group using WMD. Such a system should be



embodied in a formal agreement with a multipronged approach based on international cooperation with a credible enforcement mechanism
(Allison and Kokoshin [2002]). An important
step in this regard was the unanimous passage
by the UN General Assembly of the Nuclear
Terrorism Convention of April 13, 2005, which
makes criminal the possession or use of nuclear
weapons or devices by nonstate actors. It calls
for an appropriate legal framework to criminalize nuclear terrorism-related offenses, allowing
for arrest, prosecution, and extradition of offenders, and it will enter into force after it is signed
and ratified by at least 22 states, which took
place in June 2007.
There are several convincing reasons to
acknowledge and address the possibility of loose
nuclear materiel or even loose nuclear weapons
floating in the international system. Intelligence agents are regularly discovering previously unknown networks through which the
materials and information necessary to create a
nuclear weapon may have passed undetected. On
November 28, 2004, authorities thwarted a nearcomplete plan to smuggle the necessary elements of a uranium enrichment plant from South
Africa to Libya. Another concern is that highly
enriched uranium or plutonium may be missing
from Russias ill-protected supply, and that it
could already be circulating among subnational
networks. All of these concerns point to the need
for a viable strategy on the demand side to reinforce treatment of the supply side. Put another
way, traditional military analysis considers both
capabilities and intentions. Although Allison
focuses on capabilities in terms of preventing
terrorists from acquiring nuclear weapons, it is
also necessary to look at intentions in terms of
the demand for these weapons and how terrorists could be deterred from acquiring them or
using them. The Cold War deterrence model is
probably insufficient to protect national security,
so the issue is what can replace it. (For a discussion of deterrence of terrorism, noting that
deterrence still matters, see Stevenson [2004].)
There are clearly serious challenges to adapting existing deterrence models, designed for
state-to-state interaction, to nonstate actors, such
as terrorist groups and networks. Thus, traditional concepts of deterrence will have to be
reshaped to deal with the issue of how terrorist groups could possibly be deterred. It would
be a mistake, however, to dismiss deterrence
in this regard. For example, it is sometimes
argued that suicide bombers cannot be deterred

because they are already sacrificing their lives

for their cause. This argument is flawed, however, as it is not the suicide bombers that must be
deterred but rather their controllers, who make
the decisions. There is, however, the problem
of knowing where to find the terrorist group in
order to strike back (See Ferguson et al. [2004]).
Terrorists do have something to lose and could
thus potentially be deterred. In particular, terrorists have a stake in overall group survival.
In general, the possibility of deterring terrorism
must be systematically analyzed to determine
how that might be accomplished. For example,
it might be possible to deter rational authoritarian governments from supporting or hosting
terrorists by means of incentives and disincentives, and it might be possible to persuade warlords to help track terrorists, using a type of
indirect deterrence. Overall, the situation in this
area today is somewhat analogous to that of the
beginning of the Cold War before the doctrine
of mutual assured destruction (MAD) was developed. The challenge to strategic analysts now is
to develop a concept of deterrence that would
be effective against terrorists. (See also Codevilla and Seabury [2006], who make some related
arguments to this effect.)
Konishi (June 2002) argues that preemptive/preventive military action has the potential
to be a highly effective form of deterrence policy
that has gone unrecognized because the United
States had never [before] attempted to deter terrorists through military force. He states, The
United States has adopted a deterrence strategy
that involves overwhelming military force aimed
both at terrorists and states that harbor terrorists. He notes that, classic deterrence relies
on the ability to convince potential adversaries
that acts of aggression will result in greater
costs than benefits. It is uncertain whether classic deterrence can succeed against asymmetrical
threats such as terrorism. However, such a strategy is worth trying if over time it proves to
limit a rapid escalation of terrorist activities.
He notes that terrorists face an unprecedented
threat from U.S. forces, that such action would
teach them to respect U.S. military superiority,
and that terrorists cannot sustain armed action
in the long-term. It is, however, unlikely that
American military force would be able to deter
al Qaeda in this way, given that the Viet Cong
were not dissuaded by the U.S. preponderance
of force during the Vietnam War and the Mujahadeen, who were the base of the Taliban in
Afghanistan, were not deterred by the Soviets


during their invasion of that country. (See also

Levi, [2004], [2007]).
There are serious dangers in the current doctrine of preemption/preventive war as enunciated in the Bush administration Office of the
National Security Advisors September 2002
document The National Security Strategy of
the United States of America. (See Intriligator [2008]) The Bush administration introduced the doctrine of preemption, including
striking suspect sites before obtaining absolute proof. This Bush doctrine not only sets
a precedent for other nations to follow but it
also gives strong incentives for further nuclear
weapons proliferation as states threatened by the
United States seek such weapons for their own
protection, cases in point being North Korea
and Iran. In 1997, then Secretary of Defense
William Cohen stated that U.S. military superiority was so great that potential adversaries,
unable to compete in conventional arms, . . .
may feel compelled to use apocalyptic weapons
in a struggle against the United States Along
similar lines, after the 1991 Gulf War a Pakistani brigadier was asked what lesson he drew
from the war and he responded that it was . . .
dont fight the U.S. with conventional weapons.
Terrorist groups could reason the same way and
seek nuclear weapons or other unconventional
weapons. It should be noted that the European
Union adopted a security strategy in December 2003 focusing on preventive measures as
opposed to the Bush preemptive force doctrine.
Another nonsolution would be the elimination of all nuclear weapons or making
WMDs illegal. This is wishful thinking with no
enforcement mechanism. Even if there were a
treaty along these lines, for example, the NonProliferation Treaty (NPT), Article VI of which
calls for the eventual elimination of all nuclear
weapons, a nation could opt out of it, as North
Korea did.
An important question that has not been
addressed in the open literature and has hardly
been discussed at all is how the United States
ought to respond after a nuclear terror attack
on a U.S. city, although there is probably a
classified contingency plan for such an event
that ideally does not include indiscriminate
In April 2005, the U.S. Department of Homeland Security established the Domestic Nuclear
Detection Office (DNDO) to provide a single
accountable organization with the responsibility
to develop and deploy a system to detect and


report attempts to import or transport a nuclear

device or fissile or radiological material intended
for terrorist use. DNDO has been charged to
work in close cooperation and coordination with
Federal, state, and local governments and also
the private sector as part of a multilayered
defense strategy to protect the United States
from a terrorist nuclear or radiological attack.
Although it was important to establish such an
office to detect these weapons, it is equally
important to have contingency plans if this office
does in fact detect a terrorist nuclear weapon and
plans for what the appropriate response should
be to the actual detonation of such a WMD on
U.S. soil.
One member of the House of Representatives, Congressman Tom Tancredo of Colorado,
said that we should take out the Muslim holy
sites such as Mecca and Medina (or Jerusalem)
in the case of a WMD strike on the United
States This, however, is precisely the wrong
way to respond as it would only lead to much
more terrorism, unifying the Muslim world in
a holy war against the United States. Probably the best answer to what the United States
should do is to follow precedent. After 9/11, the
United States invaded Afghanistan, the host of
al Qaeda, and cleared out their bases there. This
retaliatory strike against those harboring the terrorists responsible for the attack was useful as a
warning to other terrorist groups and it has provided a brief period of respite from such attacks
until al Qaeda rebuilds its command and control structure. Of course, the United States may
not know the location of the bases of the terrorists who were responsible, or the particular
terrorist group behind the attack. In that case,
we have to do everything we can to avoid a
spasm response, such as the one suggested by
Rep. Tancredo. Rather we should work with our
allies and the UN to identify the source and take
out those responsible, including their hosts, their
funding sources, etc.


First, we are probably not any safer overall

now than we were before the implementation of
the post 9/11 strategies. In some ways we are
safer, possibly in terms of airplane hijackings,
but in other ways not, or the situation is even
worse, given the avowed goal of some terrorist
groups to obtain nuclear weapons. Overall, we
tend to react rather than acting proactively. (See
de Soto [2002] for a long-term strategy.)



Second, the major question is how can we

prevent a terrorist attack using WMDs, such as
a nuclear 9/11? We should recognize and avoid
the denial syndrome and instead begin thinking
about worst case scenarios and working on
ways to prevent them from happening. We
should certainly not ignore the possibility that
these events could ever happen, as we did before
9/11, where the weapons the terrorists used
were merely box cutters, a far cry from WMD.
We can also learn from historical experience
how terrorist movements end. (See Kurth Cronin
Third, there is need for more research on
these matters. It is important to study how terrorists think and the nature of their motivation.
Terrorists will likely be using the path of least
resistance, so tightening up airport security, for
example, will mean that they will substitute
other vulnerable targets, such as ports, nuclear
power plants, bridges, high-rise office buildings,
and other critical infrastructure. It is important
to encourage analysts to engage in thinking as
terrorists would, as in the Red Team exercises
of the Cold War and to act upon the conclusions
of these studies. It is also important to recognize
the importance of psychology in deterrence (See
Intriligator and Brito [1988]).
Fourth, we must establish clear priorities
for U.S. counter-terrorism policies. Part of
establishing clear priorities should be serious
improvements in intelligence systems that have
failed us repeatedly, including better organization, upgrading of capacities, better use of the
private sector (including universities), holding
intelligence services and individuals that lead
them responsible for their failures, etc. Some of
the initiatives that have been undertaken at the
local level, such as the TEW group that was initially established in Los Angeles County should
be expanded to the regional, state, national, and
international levels. Another initiative should be
providing more resources for diplomatic efforts
that have been starved for funds and personnel.
Yet, another point that somehow is not emphasized is destroying Russian stockpiles of chemical and biological weapons, which are larger
than those of the rest of the world combined.
Russia wants to destroy them and has committed itself to the Chemical Weapons Convention,
but it cannot afford to build the necessary incinerators, which the United States or a consortium
of nations could provide. This could be the most
cost effective use of any U.S. defense spending. Similarly, the Russian stockpiles of tactical

nuclear weapons and biological weapons should

be adequately protected or destroyed as they
could possibly be stolen by or sold to a terrorist
Fifth, and finally, new initiatives must be
undertaken to deal with the issue of terrorist
use of nuclear weapons and other WMD at
the global level, including through international
institutions. The proposals on reform of the UN
system, in the Report of High-Level Threats,
Challenges, and Change, are valuable in this
regard (United Nations 2004). They must, however, be supplemented by initiatives and reforms
that deal directly with this threat, including the
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