August 23rd, 2011

Terrorism: Unstable Territories, Implications of Middle East and North Africa Unrest and Future Risks

Posted at 1:00 AM ET

David Flandro, Global Head of Business Intelligence, Paul Knutson, Managing Director, Emil Metropoulos, Senior Vice Present, Julian Alovisi, Assistant Vice President
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Unstable Territories

It is interesting to note that Maplecroft’s TRI has Somalia and Yemen showing an increasing trend of terrorist activity, as both countries are deeply unstable and some ungoverned regions have become havens for militant groups. As noted above, AQAP in Yemen is now considered to be one of the most significant risks to the Western world. The rising terrorist threat emanating from Somalia, meanwhile, means the country now tops Maplecroft’s TRI.

Maplecroft Terrorism Risk Index

2011-terror-chart-32

Source: Maplecroft. Please contact Maplecroft at info@maplecroft.com for the full Terrorism Risk Index

Somalia has been without an effective government since 1991, and the military has long been fighting insurgent groups for control of the country. The most prominent insurgent group in Somalia is al-Shabab, which has declared allegiance to al-Qaeda and controls swaths of central and southern areas of the country. Al-Shabab has recently adopted a more global agenda and issued specific threats against countries it perceives to be supporting the transitional government in Somalia. Al-Shabab is suspected of being responsible for the bombings in the Uganda capital of Kampala on July 11, 2010, which killed more than 70 people. It is thought that Uganda was targeted in retaliation for the presence of Ugandan troops in Somalia.

The long-standing absence of authority in Somalia has also led to Somali pirates becoming a major threat to international shipping in the region. According to the International Maritime Bureau (IMB), piracy attacks are now at an all-time high. Of the 53 vessels that were seized worldwide in 2010, all but four were taken by Somali pirates, the IMB stated.

Implications of Middle East and North Africa Unrest

Political uncertainty spread to parts of the Middle East and North Africa in early 2011 as widespread popular protests challenged regimes across the region. The wave of demonstrations, dubbed the Arab Spring, swept across several countries in the region, resulting in a change of government in Tunisia and Egypt, a civil war in Libya and widespread civil uprisings in Bahrain, Syria and Yemen. The unforeseen turmoil has also emphasized the need for adequate terrorism and political risk cover, resulting in strong worldwide demand for coverage.

The Arab Spring movement unleashed a surge of peaceful protests across Tunisia that culminated in the ousting of President Zine El Abidine Ben Ali. Following the uprising in Tunisia, sustained protests in Egypt through January and February forced President Hosni Mubarak to resign. However, the swift toppling of the presidents of Tunisia and Egypt has not been replicated elsewhere, with regimes in Bahrain, Libya, Syria and Yemen deploying troops to resist the protestors. There have been other, smaller scale protests in almost every other Arab country in the region.

What does all this mean for international terrorism? Certainly, the unrest in the Middle East and North Africa region raises important questions about the future of the international terrorist threat. Al-Qaeda and its affiliated groups have been notably absent from the popular uprisings. Western governments are hopeful that the peaceful protests engulfing the region, along with the demand for greater political freedom, will challenge terrorist groups and their ideology. Some analysts believe that extremist groups have been sidelined by the demonstrations and the protestors’ success in peacefully overthrowing autocratic rulers that al-Qaeda failed to topple. These may have undermined one of the group’s foundational arguments - that violence is required to defeat such regimes.

However, al-Qaeda has expressed support for the protests and some commentators fear that the group has benefited from events. They believe some of al-Qaeda’s goals, such as weakening US influence in the Middle East region, have been achieved and the new governments that emerge could be less friendly to the West (with a detrimental impact on counter-terrorism cooperation). There are also fears that terrorist groups will attempt to exploit the political instability in the countries where protracted conflict looks likely. Terrorist groups have traditionally targeted unstable regions with little or no government control. There is concern that the stalemate in Libya, Syria and Yemen could offer militants an opportunity to strengthen their presence in the region. Finally, many of the grievances used by extremists to recruit militants (such as the conflict in Afghanistan and the Palestinian situation) remain unresolved. Until such issues are settled, analysts believe al-Qaeda’s ideology will continue to galvanize extremist groups and individuals.

Future Risks

The long-term implications of the Arab Spring will very much depend on what type of political structure emerges in the Middle East and North Africa. While the West will hope to see reforms that promote democracy, al-Qaeda has long advocated a political system based on its interpretation of Islamic law. Whatever the outcome, it is likely al-Qaeda will remain a global security threat for the foreseeable future.

Although international terrorism will continue to be the focus of (re)insurers’ attention over the next decade, domestic terrorist attacks also continue to be a concern. There have been several high-profile domestic attacks recently, with fatal bombings and shootings in Norway, Russia and Northern Ireland. Norway suffered its worst post-World War II attack in July 2011 when a Norwegian national with extreme right-wing links detonated a car bomb in the government district of Oslo before traveling to an island outside of the city and gunning down youths at a summer camp. The bomb in Oslo targeted buildings connected to Norway’s governing Labor Party, and the youth camp on Utoya Island was also run by the party. Several buildings were badly damaged by the car bomb. A total of 77 people were killed (eight people by the bomb blast in central Oslo and 69 during the mass shooting at Utoya Island) in Western Europe’s deadliest terror-related attack since the 2004 Madrid train bombings. The suicide bombing at Moscow’s Domodedovo International Airport in January 2011 killed at least 37 people and injured 180 others. Chechen militants fighting for independence from Russia claimed responsibility for the attack and warned similar suicide bombings would continue. In Northern Ireland, increased dissident republican activity has seen a spate of shootings and bombings. Moreover, a Real Irish Republican Army statement in September 2010 threatening attacks in mainland Britain prompted the UK government to increase its terror alert level for Irish-related terrorism to “substantial.”

The recent series of cyber attacks have also fueled fears that the threat posed by cyber terrorism is growing. Due to the global economy’s increasing reliance on computer systems, the Central Intelligence Agency (CIA) has described cyber terrorism as the battleground for the future. Cyber risks are a mounting concern for governments and organizations around the world, prompting warnings that any successful attack on critical infrastructure, such as military installations, financial markets, aviation control centers, water systems and power supplies, could have devastating consequences.

The British government has warned that cyber terrorism could become a serious issue after al-Qaeda threatened to mount cyber attacks. According to a report outlining the UK government’s counter-terrorism strategy, al-Qaeda has explicitly called for ‘cyber jihad’ since bin Laden’s death. Furthermore, the Pentagon recently announced plans to categorize cyber attacks as acts of war, allowing the president to consider all appropriate options (including economic sanctions, cyber retaliation or a military strike), if key US computer systems were attacked.

Overall, the threat from terrorism, in all its forms, is likely to continue for the foreseeable future. Events over the last 10 years have shown that terrorism poses a risk to the (re)insurance industry as groups continue to plan and execute attacks in Western countries. The (re)insurance market, therefore, needs to ensure that it continues to manage and adapt to the changing terrorism landscape.

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