THE COST OF TERROR: HOW TERRORISM AND ANTI-TERROR LEGISLATION IN THE EUROPEAN UNION MAY HINDER BUSINESS.

Author:Quinn, Amanda
 
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  1. INTRODUCTION

    Democracy and the values it represents is a frequent target of extremist terrorist groups. (1) Terrorism occurs regularly throughout the world regardless of the underlying motivations, but the attacks on the World Trade Center in New York on September 11, 2001 (September 11th), brought greater attention to its looming presence. (2) Subsequently, European governments took preventative measures to limit attacks in their own countries. (3) The prevalence of terrorism on European soil in recent years has prompted countries to consider enacting laws that strengthen the government's authority and tighten immigration policies. (4) Businesses can be severely affected by terror attacks; however, they are also in danger of being stifled by these new laws. (5) The European Union functions as a unit and corporations and small businesses alike located within its Member States will need to adapt in order to sustain the economic interests of the European Union as well as those in their individual countries. (6)

    This Note examines proposed legislation regarding stronger governmental control and immigration in France, Germany, and the United Kingdom aimed at preventing terrorism in their respective countries. (7) It further explores how these laws may affect businesses and the economy within each country. (8) Part II will discuss legislation enacted as a result of the attack on September 11th and previous legislation enacted in an attempt to strengthen government authority, streamline immigration, and the overall effects on multination corporations and small businesses. (9) Part III of this Note will examine recent terror attacks in the United Kingdom, Germany, and France and the resulting legislation proposed and enacted. (10) Part IV will analyze the potential effect regulations may have on various types of businesses within each respective country and the overall effects on the E.U. economy. (11) Finally, Part V will conclude by stressing that while stronger laws to prevent terrorism are justified, European countries should be wary of implementing harsh restrictions, as it may ultimately hurt the economies of each country. (12)

  2. HISTORY

    1. Government Intervention and Restrictions and Their Effects on the Economy

      1. The Nuremberg Laws

        Governments frequently attempt to pass laws strengthening their power; however, these laws have not always proven to be in the best interest of the citizens or the country. (13) For example, in September 1935, the Nazi party instituted the Nuremberg Laws in Germany, which precluded those of Jewish descent from retaining German citizenship. (14) The laws also restricted the Jewish from voting in German elections and holding certain positions of employment. (15) Jewish participation in the economy was severely limited as their businesses were seized and they were unwelcome in most stores. (16) As Adolph Hitler's regime persisted, the rights of the Jewish people within Germany continued to dwindle. (17)

        Prior to the creation of the Nuremberg laws, the Nazis called for a boycott of Jewish businesses. (18) The boycott, combined with the newly enacted laws and the Nazis' increasing power in Germany, left the Jewish people personally and economically destroyed. (19) Hitler and the Nazis felt that those of Jewish heritage were hurting their country and took drastic steps to protect it from perceived, albeit nonexistent, harm. (20) The Nazis' rise to power eventually led to World War II, which left the German economy in shambles. (21)

      2. Japanese Internment

        The Jewish people in Germany were not the only group marginalized during World War II. (22) In the United States, the government became suspicious of the Japanese following the bombing of Pearl Harbor. (23) As a result, President Franklin D. Roosevelt signed an executive order that authorized certain areas to be deemed military zones and thus allowed Japanese and Japanese descendants to be removed. (24) The relocation was explained as a precaution for both the safety of the Japanese from those who may not trust them and for the safety of the United States. (25) While the removal and internment of the Japanese was not as harsh as what the Jewish experienced in Germany, the Japanese still had their lives uprooted and much of their property taken away. (26)

        After the war, when the Japanese were allowed to return to their homes, many were not welcomed back to their jobs working on farms. (27) American farmers frequently purchased Japanese-Americans' land for mere cents on the dollar, leaving little for Japanese-Americans to return to, after internment. (28) While the farmers benefitted from acquiring the land, without the Japanese-Americans, they were often left with a shortage of workers to assist in managing their crops. (29) Additionally, the agricultural market in the United States was negatively affected because many crops were largely or exclusively produced by those now confined away from their farms. (30) The average earnings of those displaced were dramatically reduced and often unrecoverable. (31)

        President Roosevelt issued an executive order he felt necessary at the time to protect the country. (32) While the United States Supreme Court held the order was constitutional, many felt the Japanese and Japanese-Americans were unfairly targeted. (33) It cannot be disputed however, that a large portion of the Japanese-American population had their lives forever altered as a result of the United States' rash decisions following Pearl Harbor. (34)

    2. Legislation Enacted as a Result of the September 11, 2001 World Trade Center Attack

      1. Counter-Terrorism in Europe

        The world expressed solidarity with the United States after the September 11th attacks and began a process to strengthen anti-terrorism laws. (35) Unlike many of its Member States that have had terror laws in place for years, the European Union itself did not have any substantial counter-terrorism legislation. (36) To begin to rectify that, in 2002, the European Union adopted the Framework Decision Combating Terrorism (Framework Decision), which gave a more concrete definition to terrorism and outlined steps Member States may take prosecuting terrorists. (37) The Framework Decision also directed E.U. Member States to implement "necessary measures" to comply with the provisions outlined within six months of its publication. (38) In addition to the European Union's actions, the United Nations sought to impose sanctions on those who were associated with Osama Bin Laden or the Taliban under Chapter VII of the United Nations Charter. (39)

        In 2005, the European Union adopted a comprehensive counterterrorism strategy, which covered four main areas: prevention, protection, pursuance, and response. (40) Its strategic commitment was "to combat terrorism globally while respecting human rights, and make Europe safer, allowing its citizens to live in an area of freedom, security and justice." (41) With the action plan in place, the European Union was able to pass legislation and initiatives in furtherance of their strategic commitment. (42)

        Those countries that already had anti-terrorism laws in place sought to bolster their policies and legislation, many specifically regarding criminal prosecution and security. (43) Germany amended their Penal Code to include provisions regarding the formation of terrorist organizations. (44) The United Kingdom enacted the Anti-Terrorism, Crime and Security Act in late 2001, which provided additional provisions to the Terrorism Act of 2000. (45) The provisions included topics such as terrorism and security, immigration and asylum, and freezing assets, among others. (46) While criticized by some as potentially harmful to human rights, the main goal was to substantially increase security in light of the World Trade Center attack. (47)

      2. Terrorism Risk Insurance

        Terrorism is impossible to predict and, as such, businesses had trouble determining the cost and obtaining insurance to protect themselves following the September 11th attacks. (48) In late 2002, the United States Congress enacted the Terrorism Risk Insurance Act (TRIA). (49) TRIA allowed businesses to obtain terrorism insurance by requiring insurance companies to offer policies that included terrorism coverage. (50) As there appears to be no end to terrorism in sight, TRIA was extended in 2005 and the program was reauthorized in 2015. (51)

        TRIA benefits only apply when a terror attack takes place within a U.S. territory. (52) Accordingly, European countries enacted their own programs. (53) France established the "Gestion de l'Assurance et de la Reassurance des risques Attentats et actes de Terrorisme" (GAREAT) in January 2002, while Germany enacted Extremus Versicherungs-AG in September 2002. (54) Generally, most terrorism insurance focuses on property damage rather than internal issues businesses may face resulting from terror attack. (55) As the world experiences increased terror risks, the nature of terror insurance has begun to adapt. (56) A terror event's categorization is critical in determining coverage because those events not classified as terrorisms will not be eligible for benefits. (57)

    3. Effects and Challenges of Terrorism on Business

      1. Corporate Industries

        1. Financial Sector

          Financial markets and institutions are often a target of terrorism because many regard them as "extensions of Western economic power and dominance." (58) The financial sector felt an immediate impact following September 11th. (59) In addition to market closure, financial companies had to adjust to dwindling foreign direct investments due to low investor confidence. (60) Despite these challenges, financial institutions have demonstrated the ability to bounce back from the effects of terror attacks. (61) Continued attacks, however, may have a detrimental effect on the global economy if confidence does not return and markets are unable to recover. (62)

        2. Tourism Industry

          Many countries rely on the...

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