When terrorism influences the economy

By attacking the Twin Towers of the World Trade Center on September 11, 2001, terrorists attacked a symbol of the economic and financial power of the United States. The attacks had immediate effects on the North American economy, some of which continue to this day.

Stéfane Marion was already working in the financial markets field when the two planes struck the heart of New York. “At the time, it was amazement on the various desks. Most people froze, ”says the chief economist of the National Bank.

The Wall Street stock markets remained closed for four days, then suffered large losses. Private companies have lost $ 14 billion in physical assets and 200,000 jobs have disappeared in the American megalopolis, according to a report by the Organization for Economic Co-operation and Development (OECD) from 2002.

A pivotal moment

However, these events have come at a “turning point” for the US economy, says Marion. “The American economy was already shaky – we had just experienced the bursting of the techno bubble – and the stock market slide caused by the attacks only bogged down it more”, explains the economist.

On November 26, 2001, the National Bureau of Economic Research announced that the United States was in recession, that is to say in a period of substantial economic decline. “Before the attacks, it would have been possible that the decline of the economy was too mild to be called a recession,” reads the announcement made by the American economic research organization at the time. The attacks clearly deepened the contraction and may have been a significant factor in turning this episode into a recession. “

The emergence of China

Another significant event: China joined the World Trade Organization (WTO) in December 2001. According to Mr. Marion, many American companies, facing a decline in profit, then relocate their production to the Asian country. . Canada is also increasing its trade with China and its investments in the country.

On the other hand, the United States has astronomical military spending in connection with the war on terrorism, disbursing $ 6 trillion between 2001 and 2019, according to a study by Brown University.

However, this is a less productive sector of the economy, especially in a context where this production is done a lot in other countries, underlines Mr. Marion.

“If it hadn’t been for the events of September 2001, China’s framework would surely have been different. They favored its advent much faster, analyzes Mr. Marion. Twenty years later, we find ourselves with a supply chain that is far too concentrated in certain countries and that we are questioning. “

According to him, the pandemic has highlighted the need to repatriate part of the production of goods to Canada and the United States.

Patrick Leblond, professor at the Graduate School of Public and International Affairs at the University of Ottawa, believes that the long-term economic consequences of the attacks were more modest.

“The attacks were a tipping point, but quickly the US economy started to grow again. The Chinese economy was already in a hurry to go, and I do not believe that it is this recession that allowed it to experience this growth, ”said the professor, who was in New York on September 11, 2001 since ‘he was studying there for his doctorate.

He stresses, however, that terrorist acts have come “on top of” “various elements which put downward pressure on the world economy”.

On the other hand, the aftermath of the attacks made it possible to become aware of the link between economy and security, Judge Leblond.

Disruption in transport and tourism

In the world of transport and tourism, we remember as if it were yesterday the events that have forever transformed these industries. “Trucking has been tough for weeks; there were delays at all borders, ”said Jean-Robert Lessard, vice-president of public affairs for Groupe Robert, who was in Detroit at the time of the tragedy.

Trucking companies, drivers, and even companies whose cargo was being transported suddenly had to get certified in order to enter the United States.

“It took two or three years to adapt to the measures put in place,” said Mr. Lessard, stressing that they generated significant costs.

It awakened us to the vulnerability of our industry [du transport aérien]. Before, you went to the airport 30 minutes before your flight, there were few checks.

“It woke us up to the vulnerability of our industry,” comments Air Transport Association of Canada CEO John McKenna. “Before, you went to the airport 30 minutes before your flight, there were few checks. “

We are far from the queues at security, the removal of shoes and the examination of luggage with x-rays now unavoidable in any contemporary airport.

Mr McKenna points out that several airlines have not survived the drop in passenger numbers, which lasted for several months, combined with the costs of security measures.

The CEO of the Montreal agency Voyages Constellation, Moscow Côté, first lived through catastrophic weeks, when his customers canceled their flights by the dozen. But the activities returned to normal in more or less four months, he says.

The COVID-19 pandemic is already having even more disastrous consequences on tourism. Rather, it will take four years, starting in March 2020, to achieve a vigorous recovery, believes Mr. Côté.

But, just like after September 11, he is convinced his industry will recover.

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