Egypt’s Role in Confronting Terrorism: Economic Effects and Proposed Methods

Terrorism is an enemy of development and they never meet. Hence, the direct danger of terrorism is in stopping the wheel of development and hitting the national economy, which is the lifeline of societies. It also has an impact on the human forces of the state, as the country loses a number of its children who are the forearms of construction, and this is a grave loss that affects the achievement of development. In addition to its clear repercussions on unemployment, inflation, investment, financial markets, bankruptcy of companies, the insurance sector, the tourism sector, the exchange rate and the balance of payments, and the spending of large amounts of money on confronting terrorism, which would have been spent on human development and infrastructure projects such as the construction of roads, hospitals and schools to serve all citizens. In addition to the reluctance of large and multinational companies to establish projects in society for fear of terrorism.

In this context, the research paper aims to identify the economic effects of terrorism in Egypt, the economic costs of combating it, and the ways in which these costs can be reduced, through the following axes:

First: The economic effects of terrorism in Egypt

Second: Global Terrorism Index

Third: The economic costs of confronting terrorism in Egypt

Fourth: Egyptian efforts to combat terrorism

Fifth: Ways to confront terrorism that Egypt focuses on

The research paper reached a number of results regarding the means used by the Egyptian state to confront and limit terrorism, as follows:

1- Equality between all classes of society, and addressing the phenomena of underdevelopment and unemployment.

2- Redistributing wealth and development resources and meeting the various basic needs of the individual in a balanced manner that makes him possess the ability to giving and building and to avoid aggressive behavior and actions inherent to the phenomenon of terrorism

.3- Building an advanced economic base, and combating administrative corruption and bribery in all state facilities and departments.

4- Providing a wide range of freedom and expression of opinion for different groups of young people to avoid marginalization and opening training and rehabilitation centers for young people that develop their abilities and enhance their talents.

5- Rehabilitating the communications and information sector throughout the country so that large segments of society can learn about scientific and technical developments.

First: Global Terrorism Index

The economic effects left by international terrorism on the economies of countries vary according to their different capabilities, policies and institutions to take steps and measures related to containing and reducing its negative effects, and work to develop and activate theories and applications of crisis management within the state’s public and private institutions.

The Global Terrorism Index ranks the countries most affected by terrorism according to the number of attacks within the country, the number of victims and injured in each attack, and the extent of the destruction inflicted on this country, as Afghanistan, Iraq and Somalia topped the list since 2019, while Pakistan fell in the 2021 ranking from eighth to tenth place, but this arrangement may change, given the escalation of terrorist activity inside it after the Taliban takeover of Afghanistan.The report indicated that Myanmar – located in Southeast Asia – was included in the list of countries most affected by terrorism, as attacks increased from 25 attacks in 2020 to 750 attacks in 2021, causing more than 500 deaths.

The 2022 Global Terrorism Index (GTI) noted that the impact of terrorism has continued to decline despite increased attacks. In 2021, deaths from terrorism decreased by 1.2% to 7,142, while attacks increased by 17%, which highlights that terrorism has become less deadly. Two-thirds of countries did not report any attacks or deaths due to terrorism – the best result since 2007 – and 86 countries recorded an improvement in their scores in the global terrorism index, and the number of deaths has remained almost the same over the past 4 years. The index highlights that terrorism remains a serious threat, with Sub-Saharan Africa accounting for 48% of all global deaths due to terrorism.

The index also indicated that Daesh turned its attention to the Sahel region after the military defeats in Syria and Iraq, as the death toll from terrorism in the region increased 10 times since 2007. The Sahel became the new center of terrorism, and terrorism is exacerbated in the region due to high population growth, lack of adequate water and food, climate change, weak governments, in addition to the complexity, many criminal organizations present themselves as Islamic insurgencies.

Second: the economic effects of terrorism in Egypt    

The effects of terrorism vary between economic, social and political. Terrorism is a phenomenon that threatens the national unity of the state, spreading a state of panic and fear, and leading to the consequent bad psychological effects on some individuals within the state.

1-Impact on economic growth

Many economic studies have concluded that terrorism negatively affects the rate of economic growth, and generates two types of effects. The first: the direct effects, which arise as a result of the deaths that occurred as a result of the terrorist attack or as a result of the destruction of part of the tangible or in-kind capital. The second: the indirect effects, which include the effects that occur as a result of a number of channels through which terrorism affects economic growth indirectly.

2- Impact on unemployment

Among the most prominent effects of terrorism on the economy is the spread of unemployment, as the decline in consumer spending and the decrease in investment spending rates lead the economy towards further slowdown and then stagnation. At the sectoral level, thousands of workers may be laid off; this means the spread of unemployment, which is one of the dangerous manifestations in any country because of its negative repercussions on society.

3- The impact on human resources

The impact of terrorism is evident on the human resources of the state, as the nation loses a number of its sons who are the pillars of construction, and this is a grave loss in the effective developmental foundation. This is in addition to its impact on political and social stability, which is one of the most important ingredients for economic development.

4- Impact on goods and services

Terrorism negatively affects commodities that are divided into two types in terms of their nature: commodities that can be transported and can be exported (oil, minerals, etc.), and non-transportable commodities that cannot be exported, such as (tourism, local selling facilities, real estate, local investments). In the event of any terrorist attacks on the country, immovable goods constitute a large proportion of the economy of the affected country.

5- Impact on investment and financial markets

Terrorism leads to a decline in the level of investment, due to the state of tension and uncertainty among investors and its impact on canceling or postponing many investment decisions, the decline in mergers and purchases in various parts of the world, the slowdown in global economic growth, the decline in stock prices in global financial markets and expansion plans of existing investments, which results in deteriorating economic growth rates, lowering investment rates and increasing in military spending at the expense of other development sectors.

Among the negative effects of terrorism on foreign direct investment is the “flight” of foreign capital from the country to a safer haven, resulting in a decline in the financial and investment markets.

The financial markets enjoy great economic importance in the local, regional or international economy and due to their distinctive role in the transfer of capital, they are greatly affected by the political and security situations, as the biggest affected are the shares of tourism and insurance companies.

As for the insurance companies within the country, it will be burdened with compensation for the victims and destroyed private facilities, and sometimes leads to the bankruptcy of insurance companies from the terrorist attack.

6-   Impact on inflation

Inflation means an overall increase in most price values, accompanied by an impact on the value of money in circulation, resulting in a decrease in its actual value, an increase in the volume of money in the market, in turn resulting in a loss of the real value of the currency, and a rise in the prices of goods and services in commercial markets.

7- Impact on tourism

Terrorism undermines political, social and economic stability, which is directly reflected in the tourism sector, which means that the international political situation and the pervasive threat of terrorism are reflected in the low economic growth index in most of the world’s countries.

Third: economic costs of confronting terrorism in Egypt

Terrorism generally takes many forms, it may be economic terrorism from one country against another country, or a country against a group of countries, or a group of countries against a group of other countries, or a group of countries against one country, and it may be unorganized terrorism, or organized terrorism, or internal terrorism, and there are several forms of unregulated economic terrorism, summarized as follows:

1. Flooding the market with consumer goods.
2. Raising the prices of intermediate commodities with the aim of raising the cost of production.
3. Closing the markets of industrialized countries to third world products.
4. Employing cheap labor in large companies that have headquarters in developing countries
5. Sowing discord so that the economy does not stabilize, and to ensure the flow of capital to the European and American markets.
6. Freezing  assets of some depositors’ funds and preventing their withdrawal.

The most prominent economic losses of combating terrorism in Egypt are as follows:

1- Financial losses resulting from the destruction of buildings, cars, hotels, shops, and stores due to terrorist operations, bullying, and violence, and the cost of their reconstruction.

2- A shortage of tourism resources due to the flight of tourists resulting from terrorist operations, bullying and violence, especially since tourism is often considered a major source of foreign currency that the state needs to finance development.

3- The high cost of security due to the general mobilization of all state agencies concerned with it, which could have been directed to development and to raise the level of income of individuals.

4- Financial losses in the main facilities that were completely paralyzed due to terrorist attacks, bullying and violence, including roads, water and electricity, and the cost of rebuilding or re-establishing them.

5- The cost of treating the injured due to terrorist operations, bullying, and violence in hospitals, etc., which could have been directed to improving medical services and developing state resources.

6- The cost of wasted time resulting from cutting off roads and transportation and the like due to terrorist operations, bullying and violence, which should have been used for work, production and serving people’s interests.

Fourth: Egyptian efforts to combat terrorism

According to the 2022 report of the Ministry of Foreign Affairs on Egypt’s efforts and its comprehensive approach toward combating terrorism, the state worked through four pillars, which are measures aimed at addressing the conditions leading to terrorism, measures to combat and prevent terrorism, measures aimed at building the capabilities of countries in combating terrorism, and strengthening measures aimed at ensuring respect for human rights for all and the rule of law as a necessity to combat terrorism.

Egypt was at the forefront of countries that warned of the dangers of terrorism and its destructive repercussions on the stability of international peace and security. It also participated in the international community’s efforts to combat terrorism by joining the majority of international and regional instruments concerned with combating terrorism. Among the pillars on which the Egyptian state has worked are measures aimed at ensuring respect for human rights for all and the rule of law as a necessity to combat terrorism, based on the importance of combating terrorism in preserving the security of citizens and ensuring their full enjoyment of human rights, and the need to respect human rights in the context of combating terrorism.

In the international context, since 2015, Egypt has submitted, in the Human Rights Council and the General Assembly, a resolution on the impact of terrorism on the enjoyment of all human rights, which deals with the impact of terrorism on the human right to life, liberty, and security of the person, and the threat of terrorism to economic and social development, and its serious repercussions on the enjoyment of all persons with human rights, a resolution that was merged in 2018 with the resolution submitted by Mexico on respect for human rights in the context of combating terrorism while paying due attention to the rights of victims, which was internationally accepted and appreciated, as the joint resolution is adopted under the title ” Terrorism and Human Rights” annually in the General Assembly and the Human Rights Council by consensus and without a vote.

Egypt also signed an agreement to start activating the Counter-Terrorism Center for the Community of Sahel-Saharan States in November 2021, as one of the most important components and mechanisms of these countries, and within the framework of Egypt’s efforts to support the capabilities of African countries, and as an affirmation of the pivotal Egyptian role in its continental environment. The center was established to coordinate the efforts of member states and exchange information that would help them in the comprehensive confrontation of terrorism, and to support peace and security on the continent. And the need for a collective and effective struggle against terrorism, in light of the assembly’s development of its activities and activities in several fields, including developmental, economic, social and others, to serve African society, in addition to the security field and combating terrorism.

Fifth: Ways to confront terrorism that Egypt focuses on

Among the most prominent economic solutions and proposals used by the Egyptian state to confront terrorism are the following:

1- Equality between all classes of society, and addressing the phenomena of underdevelopment and unemployment.

2- Redistributing wealth and development resources and meeting the various basic needs of the individual in a balanced manner that makes him possess the ability to give and build and to avoid the aggressive behavior and actions inherent to the phenomenon of terrorism, and in a manner that creates a state of mutual trust between the citizen and the state on the one hand, and the citizen and the members of the society surrounding him on the other hand. .

3- Building a developed economic base, and combating administrative corruption and bribery in all state facilities and administrations that provide the basic needs of the citizen.

4- Providing a wide range of freedom and expression of opinion for different groups of young people to avoid marginalization and opening training and rehabilitation centers for young people that develop their abilities and enhance their talents.

5- Rehabilitating the communications and information sector in all parts of the country so that large segments of society can learn about scientific and technical developments, break their inhibitions and stagnation, and control the borders of the country by land, sea and air.

The ways to reduce the economic effects of terrorism and violence are as follows:

1- Doubling work and production with enthusiasm, zeal and determination to increase production and develop resources in order to compensate for economic losses and rebuild and develop it for the better.

2- Reconsidering the priorities of eliminating the economic effects of terrorism and violence through well-studied strategies, and in accordance with Sharia guidelines, by focusing on necessities.

3- Saving expenditures at the level of the individual, the family and the state so that the state can get out of the economic crisis, and confront financial corruption in all its forms to reach stability and prosperity.

In conclusion, terrorism is no longer confined to a specific organization, such as ISIS and others. Rather, the phenomenon of terrorism itself has become associated with this wide geographical spread, regardless of affiliation with the terrorist organization. Terrorism, in turn, has opened up ways for globalization to spread and expand, such as the flourishing of arms markets and the consequences of that. Deals with multinational companies, which confirms the necessity of confronting and limiting terrorism and its multiple negative effects sweeping across countries. Therefore, confronting terrorism and limiting its presence is one of the priorities of the Egyptian economy.