The cost of global terrorism

March 28, 2016 12:40 PM

We were saddened last week to hear that at least 30 people were killed and many dozens more injured in ISIS-related suicide bombings that targeted an airport and train station in Brussels.

The Belgian and European Union capital joins Paris, San Bernardino, Ankara, Jakarta and too many other cities in the past year alone that have come under fire from the Islamic terrorist group.

I was in Brussels most recently three years ago for an International Crisis Group meeting, and I was stunned by its beauty and elegance, highlighted with gold-trimmed architecture and vibrant flowers. In August, the city will celebrate the 20th anniversary of its Flower Carpet, which makes jaw-dropping use of over 600,000 begonias.

This artistry stands in stark contrast to the cowardice and brutality we saw last week.

While we can’t leave aside the immeasurable loss of life, tragic events such as these tend to have an enormous ripple effect on the economy. Between 70 and 80% of the European economy is based on consumption, and when people’s sense of safety and security ends up being rattled, they might temporarily avoid spending on travel and at malls, cinemas, restaurants and elsewhere.

I definitely saw this to be the case in the days following the 9/11 attacks. As I’ve shared with you before, I was in Manhattan at the time, attending a financial industry conference. Except for emergency services, all of New York City shut down in every way imaginable, from subways to airports to cell phones. (Because I had a San Antonio area code, I could still make calls on my phone.) I was lucky enough to reserve one of the last available rental cars in the area, and on the long drive home to Texas, I passed many stores and businesses that had closed for the week.

Indeed, few things are as disruptive to our lives and the economy as terrorist activity. A recent Gallup poll found that 79% of respondents believe global terrorism to be a “critical threat” to the U.S., the highest of any other potential threat.

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About the Author

Frank Holmes is CEO and chief investment officer of US Global Investors. This first appeared in his Frank Talk blog. For more updates on global investing from Frank and the rest of the U.S. Global Investors team, follow on Twitter at www.twitter.com/USFunds or like on Facebook at www.facebook.com/USFunds.