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Trends in Transnational Terrorism andImplications for U.S. National Securityand U.S. Terrorism Risk Insurance ActPeter Chalk aa RAND Corporation , Santa Monica, California, USAPublished online: 14 Aug 2007.

To cite this article: Peter Chalk (2007) Trends in Transnational Terrorism and Implications for U.S.National Security and U.S. Terrorism Risk Insurance Act, Studies in Conflict & Terrorism, 30:9,767-776, DOI: 10.1080/10576100701501992

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Studies in Conflict & Terrorism, 30:767–776, 2007Copyright © Taylor & Francis Group, LLCISSN: 1057-610X print / 1521-0731 onlineDOI: 10.1080/10576100701501992

Trends in Transnational Terrorism and Implicationsfor U.S. National Security and U.S. Terrorism Risk

Insurance Act

PETER CHALK

RAND CorporationSanta Monica, California, USA

The unprecedented losses brought about by the attacks of 11 September 2001 havecast the issue of terrorism risk insurance into sharp relief. In particular, it has raisedquestions as to whether attacks on this scale are an insurable risk and the extent to whichthe private insurance industry is able and/or willing to price such risks independentof a Federal safety net. Although the Bush administration has committed to renewthe Terrorism Risk Insurance Act (TRIA) to offset the human and materiel costs thatmight result from future cataclysmic terrorist strikes taking place on U.S. soil, it is notapparent that this legislative framework is relevant to the type of extremist contingenciesthat the United States is likely to face over the short-to-medium term. Any long-termsolution to providing insurance in America will necessarily need to go beyond TRIA’sexisting framework by dropping the “foreign interest” designation for certified attacks;including some sort of supplemental program that includes mandatory coverage forchemical, biological, radiological, and nuclear (CBRN) assaults; and investigatingways to increase the take-up rates of terrorism insurance by lowering its cost to thecustomer. An oversight board mandated to evaluate the Act’s performance and relevanceto evolving terrorist trends would also be useful.

The unprecedented losses brought about by the 11 September 2001 suicide strikes on thePentagon and World Trade Center have cast the issue of terrorism risk insurance into sharprelief. In particular it has raised questions as to whether attacks on the scale of 9/11 arean insurable risk and the extent to which the private insurance industry is able and/orwilling to price such contingencies independent of a federal claims safety net. Although theBush administration has moved to provide the foundation for a viable financial recoverysystem to offset costs that might result from future cataclysmic terror strikes—notably bypassing and renewing the Terrorism Risk Insurance Act (TRIA)—it is not apparent thatthis legislative framework is relevant to the types of attacks that the United States is mostlikely to face over the short-to-medium term. Just as problematically, there is no indicationthat the Federal government is permanently prepared to act as the lender of last resort.Given the inherent problems associated with predicting the nature and scope of a rapidlyevolving terrorist phenomenon, this could well prompt insurance companies to excludecoverage for contingencies linked to violent acts of political extremism.

Received 15 September 2006; accepted 29 October 2006.Address correspondence to Peter Chalk, Senior Analyst, RAND Corporation, 1776 Main Street,

P.O. Box 2138, Santa Monica, CA 90407. E-mail: chalk@rand.org

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This article examines the issue of terrorism risk insurance in the United States. It firstoutlines the background to TRIA and lays out the main provisions of the legislation. Theanalysis then “maps” the Act’s framework to evolving trends in contemporary terrorism,assessing these in relation to the types of attacks the United States is likely to face in theshort-to-medium term. The article argues that TRIA in its current formulation is not robustto an evolving threat and will need to be both extended and expanded if it is to provide aviable system of (terrorist-related) financial security.

TRIA: Background and Provisions

The coordinated terrorist strikes of 9/11 galvanized an enormous response by the UnitedStates government (USG) to increase the country’s physical and financial security in theface of potential future attacks. With regards the former, the Bush administration has set inmotion an unprecedented Global War on Terror (GWOT), undertaken a major reassessmentof the organization and capabilities of the American intelligence community and through thecreation of the Department of Homeland Security (DHS), acted as the central guiding forcebehind what is arguably the most ambitious attempt to overhaul the federal governmentsince World War II. Now, more than at any time in the past, terrorism has assumed a centralplace of importance in U.S. foreign and domestic policy.1

The most prominent measure to increase financial security was the passage of TRIAin 2002. The legislation was introduced primarily to stabilize insurance markets in theaftermath of 9/11. Combined, the attacks on the Pentagon and World Trade Center inflictedan estimated US$80 billion in direct damage, of which approximately $38 billion wasinsured.2 Reeling from the magnitude of subsequent pay-outs insurance companies acrossthe country moved to drastically reduce the exposure of their capital base to future indemnityclaims by excluding or severely limiting terrorism coverage from their policies. Theseactions, in effect, deprived numerous corporate enterprises of a crucial safety net tomitigate losses that might arise from repeat attacks and were allegedly responsible forheightening business uncertainty as well as slowing property, Commercial, and generaleconomic development—particularly in areas deemed to be at high risk such as New YorkCity, Washington D.C., Los Angeles, and San Francisco.3

At its inception, TRIA obligated insurance companies to make certain kinds ofterrorism risk coverage available to customers requiring it and, in return, provided federalreinsurance—a “backstop” —for any losses thereby incurred. The government did notreceive any premium for providing this safety net, meaning that it was effectively free.4 Tobe eligible for Treasury reinsurance, terrorist acts had to be “certified,” meaning that theyhad to be both committed by or on behalf of a foreign interest and result in property andcasualty damage of at least $5 million. Certified losses were capped at $100 billion.5

TRIA applied only to certain lines of commercial insurance, of which the mostprominent are commercial property, business interruption, workers’ compensation, andgeneral liability (reflecting the intent of the legislation to cover attacks of a similar natureand scope to those of 9/11). In addition, although the Act did not exclude chemical,biological, radiological, and nuclear (CBRN) strikes from its stipulations, it did notspecifically mandate that private insurance companies cover these contingencies, whichhas, in fact, tended to be the preferred policy of most providers.6

TRIA was extended at the end of 2005 for a period of two years, retaining much ofthe essence of its original format. The Act continues to embody federal policy that themost effective foundation for a viable, post-terrorist incident financial recovery system

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is a strong and stable private insurance market. The legislation also keeps the “foreigninterest” designation for certified attacks, although the damage triggering threshold hasbeen substantially increased from $5 million to $50 million, with a further rise to $100million scheduled for 2007. Significantly, TRIA now also specifically states that coveragefor CBRN attacks will not be required in property and liability policies, which effectivelysanctions the full exclusion of these contingencies from terrorism insurance.7

TRIA and Evolving Trends in Terrorist Threats to the U.S. Homeland

To be sure, TRIA has helped to both stabilize the private insurance market and, by loweringprices for terrorism coverage, ensured that those demanding such protection have been ableto acquire it.8 The best indication of this is the rise in “take-up” rates that have occurred since2002. One study undertaken by Marsh Inc., for instance, showed that 44 percent of largecompanies purchased terrorism coverage in the third quarter of 2004, compared with only26 percent for the same period the previous year. Another survey by Aon produced figuresof 57 percent (2004) versus 24 percent (2003).9 More importantly, TRIA has encouraged thereemergence of a (federally backed) private terrorism insurance market that by spreadinglosses across those at risk should be able to cover attacks on a par with those that occurredon 9/11.

That said, the legislation remains problematic in at least three respects vis-a-vis thetypes of terror strikes that the United States is likely to face over the short-to-mediumterm: (1) the exclusion of attacks perpetrated by purely domestic extremist groups; (2) theincreasingly difficult task of determining whether an act of terror has been instigated byor on behalf of a foreign interest; and (3) the non-requirement to make insurance coverageavailable for CBRN contingencies.

Exclusion of Purely Domestic Extremist Groups

As noted, the TRIA mechanism specifies that only attacks carried out by or on behalf ofa foreign interest are eligible for federal reinsurance. This stipulation, which obviouslyexcludes acts of terrorism perpetrated by purely domestic groups, is problematic givenunderlying trends that seem to be occurring in the U.S. extremist environment. Anumber of outwardly militant organizations exist, many of which are exhibiting a risingproclivity toward directed political activism as a result of the spreading phenomenon ofanti-globalization (AG).10 This is especially true of anarchists, the far right, and radicalenvironmentalists, all of which have emerged with increasing clarity over the last fiveyears. Anarchists in the guise of the Black Block now routinely challenge symbols of stateand international order, focusing on a spectrum of self-defined enemies that have includedpoliticians, judges, the police as well as nongovernmental organizations (NGOs) such asthe World Bank and International Monetary Fund (IMF). In most cases these actions havebeen justified in explicit AG terms, particularly the self-proclaimed imperative to exposeAmerican foreign policy for what it is: the single-minded pursuit of hegemonic power inkey strategic regions of the world.11

By the same token, globalization appears to have sharpened and galvanized themilitancy of the far right—both on account of the concentration of central governmentpower that it entails and due to a conviction that fostering international finance is partof an American-led conspiracy that is being conducted by and on behalf of Jewishcapitalists. Indeed the National Alliance, one of North America’s largest neo-Nazi groups,

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has already moved to set up an “Anti-Globalism Action Network” that specifically affirmsWhite nationalists as both anti-capitalist and anti-establishment for racial, economic, andsovereignty reasons.12 Moreover, sections of the radical right have increasingly shiftedtheir attention to multinational corporations and institutions perceived as spearheadingglobal trade, commerce, and finance, charging that they have been directly instrumentalin propagating and further expanding the influence of the “American Zionist OccupationGovernment” (ZOG)—a longtime target of entities such as the U.S. Aryan Movement.13

In common with the far right, AG has also been a major factor driving the operationaldesigns of radical environmentalism. Advocates of the movement regularly articulateanti-materialist worldviews, decrying corporate greed as posing possibly the greatestcontemporary threat to the planet and its life. Certain militant environmental “theorists”have in fact suggested that the very basis of the ecological struggle to date has beenmisconceived precisely because it has overlooked the priority of targeting capitalismand the unrestrained and selfish discretionary spending that it is necessarily seen toentail.14

The growing nexus between the domestic radical American protest population and AGhas been reflected in an operational agenda that has progressively expanded to embrace abroad array of high-profile private-sector interests. The example of the Earth LiberationFront (ELF)—which is generally regarded as the main representative entity championing theradical environmental cause—is especially instructive in this regard. Apart from facilitiesand businesses that are judged to be detrimental to non-renewable resources and theplanet’s overall biosphere, a wide range of venues that are regarded as emblematic ofthe international capitalist syndrome have additionally been singled out for aggression,including:

Ĺ Luxury homes and mansions along the U.S. Eastern Seaboard, which are personifiedas epitomizing the selfishness that underscores America’s modern, well-to-dopopulation.

Ĺ Multinational companies such as Shell Oil, McDonalds, Starbucks, Gap, and Nike,which are variously accused of exploitative labor practices, union busting, and humanrights violations in the developing world.

Ĺ Financial NGOs deemed to be irreconcilably beholden to the so-calledWashington–New York capitalist consensus.15

Whether the threat emerges from the ELF, the Christian Patriot Militia, or the BlackBlock, all exist in much the same radically motivated operational environment. Morespecifically, the prevailing trend toward AG has manifested a clear threat to private-sectorcorporate interests, especially large multinational businesses. This has clear relevancefor domestic terrorist contingencies and will, by default, reinforce the overall exposureof commercial venues that directly depend on insurance.16 Seen in this light, TRIA’sforeign interest designation for certified attacks should be regarded as a significantgap.

Somewhat more seriously, at least some domestic extremists have demonstrateda clear penchant for extreme violence that could have direct ramificationsfor terrorism insurance. The 1995 bombing of the Alfred P. Murrah Federalbuilding in Oklahoma City is a clear case in point. Carried out by TimothyMcVeigh—a 28-year-old U.S. Army veteran (who has since been executed)—tocommemorate the second anniversary of the Federal Bureau of Investigation’s

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Terrorism Risk Insurance Act 771

(FBI) bloody assault on the Branch Davidian’s compound in Waco, Texas,17

the attack resulted in 169 deaths and over 500 injuries.18

Equally as pertinent was the 1998 firebombing of the Vail ski resort inColorado. Perpetrated under the auspices of the ELF, this operation causedproperty damage in excess of $12 million.19 Although neither of these attackswould be strictly pertinent to TRIA had they occurred today—the formerbecause it involved a Federal building that was (therefore) not covered by privateinsurance, the second because it was too small to trigger the current TRIAframework—they do underscore that domestic extremists are perfectly capableof significant violence, which if committed against nongovernment-ownedassets and/or on a larger scale, would potentially confront insurers with thethreat of insolvency.

Definitively Determining an Act of Terror as One Committed by, or On Behalfof a Foreign Interest

A second and just as significant problem is that TRIA’s foreign interest designation doesnot take into account the increasingly blurred line between internal and external terrorism.In the current global context, this difficulty is one that essentially relates to the changingnature of Al Qaeda, which remains Washington’s chief focus of concern with regard toimported transnational militant extremism.

Although bin Laden’s network is still singled out as posing the single most seriousterrorist threat to the United States, the contemporary character of this entity differsmarkedly from that which organized and executed the attacks of 9/11. Not only has AlQaeda lost the benefit of its erstwhile Taliban benefactor in Afghanistan, many of itsmost adept field commanders and leaders have been either killed or arrested in a stringof unilateral, bilateral, and multilateral operations across Asia, Africa, and Europe. At thesame time, thanks to an unremitting campaign against the financing of terrorism, Al Qaedahas been deprived of an estimated two and half years of operating funds—a short-fall thathas been further exacerbated by the heightened global imperative to cut the internationalflow of terrorist finances and the movement’s forced concomitant reliance on securer butfar less lucrative localized sources of funding.20

These various developments have had a marked effect on Al Qaeda’s institutionalmake-up, which during the course of the past five years has become progressively morefluid and decentralized. Specifically, the eradication of a secure safe haven in Southwest Asiaand the loss of key human and capital resources have combined to strip the movement of thevital command, logistical, and functional assets needed to operate in a vertically organizedmanner. Indeed, the largely monolithic structure that emerged out of Afghanistan in thelate 1990s now better correlates to a “movement of movements” that although undoubtedlymotivated by the continuing message of transnational jihadism (itself strengthened by theGWOT, which many Muslims have clearly interpreted as an unjustified onslaught against theIslamic faith) is more nebulous, segmented, and polycentric in character.21 Commenting onthis evolutionary dynamic, various analysts have argued that the GWOT, far from destroyingAl Qaeda, has actually given rise to a new, less predictable “nebula” composed of dozensof like-minded extremists, many of whom have willingly taken up bin Laden’s call foranti-Western attacks independent of his money, training, or direction.22

In short, the disaggregation of Al Qaeda has served to muddy the traditional distinctionbetween national and international terrorism, resulting in an internal–external threat matrix

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that is no longer defined in terms of imported strikes emanating from foreign-basedextremists but that is increasingly revolving around the actions of homegrown cells andindividuals. Although there may be some public policy justification for creating a distinctionbetween attacks perpetrated by militants in New Jersey from those undertaken by jihadistsbased along the Pakistani–Afghan border, it is apparent that the practical utility of tryingto do so has become increasingly open to question. Certainly both the 2004 bombings ofcommuter trains in Madrid and the suicide attacks against the London underground a yearlater underscored that homegrown nationals either contracted out or motivated by widerIslamist designs is a reality one that can no longer be ignored.

The dilemma of differentiating between internal and external terrorist strikes hasimmediate relevance to TRIA. If a U.S. national, reacting to the global appeal oftransnational Islamist militancy, were to carry out a bombing on American soil, wouldthis be considered a manifestation of domestic extremism or one that is perpetrated at thebehest of a foreign interest? For example, had the alleged plot by seven Miami residentsto blow up Chicago’s Sears Tower in 2006 actually gone ahead,23 would it have beendesignated as a certified act of terrorism (in which case it would have been covered byTRIA) or simply judged to have been an independent, self-inspired expression of politicalviolence (meaning that it would not)? Such confusion over the “foreign” and “domestic”distinction is liable to hinder rapid and equitable recovery from an attack as until Treasurydefinitively certifies an event—or affirmatively declines to do so—there will inevitablybe a high degree of uncertainty over specific contract rights. Under these circumstances,it is entirely possible that large parts of the insurance-based benefit delivery system willsuspend compensation payments, which will not only place additional pressure on theFederal government to conclude its certification investigation, but in so doing would alsoelevate the potential prejudicial and political consequences of any decision thereby reached.

Non-Requirement to Make Insurance Coverage Available for CBRN Contingencies

As noted earlier, TRIA in its current formulation affirms that coverage for CBRNcontingencies is not required for property and liability insurance policies. This is asignificant gap, particularly when one considers that bin Laden—the ostensible spokesmanand spiritual emir of Al Qaeda and the global jihadist that the movement purports torepresent—has specifically affirmed inflicting punitive damage on the American homelandthrough the deployment of such weapons is a religious duty beholdent on all Muslims.24

Given the resource-depleted nature of Al Qaeda and the organization’s increasedreliance on locally based affiliates/sympathizers to carry out attacks (see earlier), it isextremely unlikely that the manifestation of this type of unconventional terrorism wouldtake the form of large-scale biological or chemical releases, much less a nuclear strike.However, given its low-cost, relative ease of execution and genuine potential to causelarge-scale disruption (if not destruction), an attack involving a radiological dispersaldevice (RDD, commonly referred to as a “dirty bomb”) is certainly not beyond the bounds ofthe possible.25 There are myriad sources internal to the United States that could be exploitedfor this purpose, ranging from radiation equipment employed in medical facilities anduniversity laboratories, to research stations, commercial sites, and atomic waster storagetanks located at prominent nuclear facilities. Most of these venues are characterized by lax oruneven security protocols (something that is particularly true for educational establishmentsand radiotherapy clinics) and at least some power plants have already been the focus ofaccidental atomic releases.26

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Terrorism Risk Insurance Act 773

Depending on the size of the RDD employed, an area as large as ten square miles couldconceivably be contaminated above recommended civilian exposure limits. In serious casesdemolition may be the only practical means for dealing with affected buildings; should thisbe required in a major metropolitan hub such as Manhattan, it would result in huge losses.27

A radiological release at a major commercial port could be equally, if not more costly. AsStephen Flynn observes:

[A] dirty bomb . . . set off in a seaport would likely kill only a few unfortunatelongshoremen. . . . But if there is no credible security system to restore thepublic’s confidence that other containers are safe, mayors and governorsthroughout the country, as well as the president, would come under witheringpolitical pressure to order the shutdown of the inter-modal transportationsystem. Examining cargo in tens of thousands of trucks, trains and ships toensure that it poses no threat would have devastating economic consequences.When containers stop moving, assembly plants go idle, retail shelves go bareand workers end up in unemployment lines. A three-week [American] shutdown could well spawn a global recession.28

Because TRIA does not stipulate mandatory coverage for CBRN contingencies, exclusionsfor radiological attacks on property have been common. Several reasons account forthis, including, notably: (1) the difficulty of proving that long-term health problemsexperienced by individuals in the vicinity of a RDD strike were not caused by adirty bomb; (2) the problem of accurately determining exactly how many people wereactually exposed to elevated levels of radiation (every person downwind of a RDDdetonation could, conceivably, have a claim to compensation); and (3) the unbounded coststhat could be potentially associated with large-scale and, largely, experimental (in the U.S.context) decontamination operations in an unaffected urban/commercial area. All of theseconsiderations expose insurers to possible open-ended liability (which they generally seekto avoid), which greatly complicates the process of forecasting ultimate losses arising from(and, hence, correctly pricing for) these types of strikes.29

In short, there is good reason to speculate that a radiological attack could lead toextensive business interruption and property damage, much of which would be uninsured.The financial risk of failing to ensure that such attacks are covered by TRIA’s overallframework should, as a result, be deemed significant—not least because it could opencompanies and corporations to exorbitant losses, if not full insolvency.

Conclusion

Although the Bush administration has committed to renewing TRIA until the end of 2007,there is presently little indication that Washington will contemplate further extensions ofthe legislation beyond this date largely because government solutions in this particular areaare not supported by key people in Congress and the administration.30 Indeed, it is arguablethat both the higher deductibles (up from 15 percent to 17.5 percent) and elevated eventtriggering thresholds (which, by 2007, will have risen to $100 million) that have been builtinto the post-2005 version of the Act are already reflective of preparatory moves to shift theburden of underwriting terrorism risk away from the Federal government back to the market.Problematically, however, the insurance industry has still to develop appropriate models forforecasting the nature and scope of future acts of extremist, sub-state political violence, and

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as such exists in the absence of a suitable benchmark for independently pricing this risk (atleast of the sort that are used to manage natural disasters such as earthquakes, hurricanes,and flooding). Under these circumstances, allowing TRIA to sunset in 2007 would be sureto drastically raise the cost of terrorism insurance as companies try to forestall their ownexposure to insolvency. As happened in the immediate aftermath of 9/11, actions of thiskind would merely have the effect of once again lowering take-up rates—thereby increasingthe magnitude of uncovered losses that might result from future attacks.

Allowing TRIA to sunset at the end of 2007 would, thus, seem inadvisable. However,any long-term solution to providing terrorism insurance in the United States will necessarilyneed to go beyond the Act’s existing framework—both by dropping the “foreign interest”designation for certified attacks and by incorporating some sort of supplemental programthat includes mandatory coverage for CBRN contingencies, possibly modeled along thelines of War Risk Insurance.31 In addition, an oversight board should be established tosystematically review TRIA’s performance and validate that its provisions remain relevantto evolving trends in terrorism. Finally, Congress might consider policy options that aredesigned to increase the take-up rates of terrorism insurance by lowering its cost tothe customer, such as the institution of security-based premium discounts. If correctlyformulated, these types of incentives would have the additional advantage of promotingenhanced physical security in the private sector and would, therefore, constitute a usefuladjunct to the state’s overall counterterrorist “tool kit.”

Notes

1. Peter Chalk, Bruce Hoffman, Robert Reville, and Anna-Britt Kasupski, Trends in Terrorism.Threats to the United States and the Future of the Terrorism Risk Insurance Act (Santa Monica, CA:RAND, 2005), p. 1.

2. Erwann Michel-Kerjan and Burkhard Pedell, “Terrorism Risk Coverage in the Post-9/11Era: A Comparison of New Public-Private Partnerships in France, Germany and the U.S.,” TheGeneva Papers 30 (2005), p. 145; R. Hartwig, The Fate of TRIA: Is Terrorism an Insurance Risk?(New York: Insurance Information Institute, 2004); “Compensation for 9/11 Terror Attacks Tops $38Billion,” RAND Review (Fall 2004), p. 8; David Chen, “New Study Puts Sept. 11 Payout At $38Billion,” The New York Times, 9 November 2004.

3. Chalk et al., Trends in Terrorism, p. 2.4. It should be noted, however, that the TRIA mechanism stipulates that primary insurers are

responsible for a deductible, which they must pay in advance of any federal reinsurance. In 2005, thisfigure was calculated as 15 percent of a group’s direct earned premiums on commercial property andcasualty policies during the previous year. The figure was revised and increased to 17.5 percent in2006. Chalk et al., Trends in Terrorism, p. 6; AON, “The U.S. Extends the Terrorism Risk InsuranceAct (TRIA) Until December 31, 2007,” Global Risk Alert, January 2006.

5. United States Congress, Terrorism Risk Insurance Act, 107 Congress, 23 January 2002,sections 102–103; “A Limitless Risk,” The Economist, 23 November 2002; Howard Kunreutherand Erwann Michel-Kerjan, “Policy Watch: Challenges for Terrorism Risk Insurance in the UnitedStates,” Journal of Economic Perspectives 18(4)(Fall 2004), p. 204. Reinsurance for losses exceeding$100 is at the discretion of Congress.

6. Marsh Inc., Marketwatch: Property Terrorism Insurance Update—3rd Quarter 2004 (NewYork: Marsh and McLennan, December 2004), pp. 34–35.

7. “Congress Passes TRIA Renewal; Legislation Sent to President’s Desk,” InsuranceJournal, 18 December 2005, available at (http://www.insurancejournal.com/news/national/2005/12/18/63174.htm), last accessed 6 July 2006.

8. During the first nine months of 2002, rates for property insurance declined by an averageof between 50 and 75 percent and since 2003 have continued to fall by roughly one-half.

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See Congressional Budget Office, Federal Terrorism Reinsurance: An Update (Washington, DC:Congress of the United States, January 2005); Jeffery Brown et al., “An Empirical Analysis of theEconomic Impact of Federal Terrorism Reinsurance,” Journal of Monetary Economics 51 (July 2004),pp. 861–898; and Christine Seth, “Reinsurers Cut Rates Despite Losses,” The Times (UK), 20 January2005.

9. Congressional Budget Office, Federal Terrorism Reinsurance: An Update, pp. 6–7; MarshInc., Marketwatch: Property Terrorism Insurance Update—3rd Quarter 2004; Aon Corporation,“Terrorism Risk Management and Risk Transfer market Overview,” December 2004, availableat (http://www.aon.com/about/publications/issues/2004 global terrorism wp.pdf), last accessed 30June 2005.

10. For more on the anti-globalization movement see Joseph Stiglitz, Globalization and itsDiscontents (New York: W.W. Norton, 2002); “Anti-Globalization—A Spreading Phenomenon,”Perspectives (Ottawa: Canadian Security Intelligence Service, Report Number 2000/08, 22 August2000), pp. 1–3, available at (http://www.csis-scrs.gc.ca/eng/miscdocs/200008 e.html), last accessed30 June 2005; Stanley Hoffman, “Clash of Civilizations,” Foreign Affairs (July/August 2002),pp. 107–110; and Bob von Sternberg, “Call it Anarchism or New Left, It Has a Big Voice,” TheStar Tribune, 21 May 2000.

11. Hoffman, “Clash of Civilizations,” p. 108.12. See, for instance, Walter Nowotny, “Pro-White Nationalism Versus Globalization,” Pro-

White Forum, 17 July 2002, available at (http://www.churchoftrueisrael.com/nsforum/ns7-17.html),last accessed 30 June 2005.

13. Bruce Hoffman, Inside Terrorism (London: Victor Gallancz, 1998), p. 111.14. See The Earth Liberation Front (ELF), Frequently Asked Questions About the Earth

Liberation Front (Portland, Oregon: North American Earth Liberation Front Press Office, 2001),p. 4.

15. See, for instance, “Anti-Globalization—A Spreading Phenomenon,” pp. 1–3; and TamaraMakarenko, “Earth Liberation front Increases Actions the USA,” Jane’s Intelligence Review(September 2003), pp. 28–30.

16. Chalk et al., Trends in Terrorism, p. 53.17. McVeigh apparently interpreted the 1993 assault in Waco, which resulted in the deaths of

74 people, as well as the siege of an alleged White supremacist’s rural cabin at Ruby Ridge, Idaho ayear earlier as part of a wider federal government plan aimed at outlawing and seizing all privatelyowned firearms. See Hoffman, Inside Terrorism, p. 105. For a detailed account of the various incidentssee James Tabor and Eugene Gallagher, Why Waco? Cults and the Battle for Religious Freedom inAmerica (Berkeley: University of California Press, 1995).

18. Tim Weiner, “Focus on Arizona,” The New York Times, 23 April 1995; Peter Wilson, “TrainSabotage ‘Retaliation’ for Waco Shoot-Out,” The Australian, 11 October 1995; Peter Applebome,“Radical Right’s Fury Boiling Over,” The New York Times, 23 April 1995.

19. Robert Sullivan, “The Face of Eco-Terrorism,” The New York Times Magazine, 20December1998; “Environmental Arson,” USA Today, 18 January 1999; Mark Riley, “ArsonistsSabotage Top Ski Resort,” The Sydney Morning Herald (Australia), 24 October 1998.

20. Mark Huband, Edward Alden, and Stephen Fidler, “The West Has Hit al-QaedaHard But Terrorism Is Still a Formidable Enemy,” The Financial Times (UK), 11 September2003; Steven Kiser, Financing Terror: Analysis and Simulation to Affect Al Qaeda’s FinancialInfrastructures (Ph.D. dissertation, Santa Monica, CA: Pardee RAND Graduate School, RGSD-185,2002).

21. Comments made during the “New Trends in Terrorism: Challenges for Intelligence andCounter-Terrorism” International Seminar, Lisbon, Portual, 4–5 July 2002. See also Rohan Gunaratna,“The Al-Qaeda Threat and the International Response,” in David Martin Jones, ed., Globalisation andthe New Terror (Cheltenham, UK: Edward Elgar, 2004), pp. 51–55; “The Other War,” The Economist,8 March 2003.

22. “Al-Qaeda: Organization or Ideology? Interviews with Steven Simon, Jason Burke and JoshMeyer,” On Point, 25 November 2003, available at (http://www.wbur.org), last accessed 30 June

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2005; Michael Kenney, “From Pablo to Osama: Counter-Terrorism Lessons from the War on Drugs,”Survival 45(3) (Autumn 2003), pp. 187–206.

23. For more on the alleged attack see John O’Neil, “Terror Plot Was in ‘Earliest Stages,’Gonzales Says,” The New York Times, 23 June 2006.

24. In an interview with Time Magazine four months after the August 1998 U.S. embassybombings in Kenya and Tanzania, bin Laden specifically asserted that acquiring unconventionalweapons of mass destruction (WMD) was a religious duty for all Muslims and one that was fullyin accordance with Islamist precepts as set forth by Allah. For more on Al Qaeda’s suspectedWMD activities see Kimberley Resch and Matthew Osborne, WMD Terrorism and Usama BinLaden—Special Report (Monterey, CA: Monterey Institute of International Studies, 7 March 2001),available at (http://cns.miis.edu/pubs/reports/binladen.html), last accessed 30 June 2005.

25. Indeed, the United States has already confronted the potential specter of a dirty bombstrike instigated at the behest of a locally based Islamist seeking to further the wider cause ofjihadist extremism. In June 2002, the federal government announced that it had arrested an Americancitizen—Jose Padilla—suspected of having been in contact with Al Qaeda and in the process ofdeveloping plans to detonate a uranium-enriched RDD. Although U.S. officials have admitted thatthe plot had probably not developed much past the discussion stage, they do believe that substantialinitial surveillance had taken place of various attack locations, including in the region of the Capitolbuilding. Padilla continues to be held as an enemy combatant at a Navy brig in South Carolina.For more details see Michael Richardson, A Time Bomb for Global Trade (Singapore: Institute forSoutheast Asian Studies, 2004), pp. 56–58; Charles Lane, “Court Accepts Case of ‘Dirty Bomb’Suspect,” The Washington Post, 21 February 2004; Joan Ryan, “Not All Citizens Have Rights,” TheSan Francisco Chronicle, 13 January 2005; and “The Dirty Bomb Suspect: Lots of Questions, FewAnswers,” Time Magazine, 11 June 2002.

26. Robert Hutchinson, “The Struggle for the Control of Radioactive Sources,” Jane’sIntelligence Review (March 2003), pp. 32–36; Alexander Cockburn, “An Open Door for NuclearTerrorism,” The Los Angeles Times, 3 July 2003; Matthew Wald, “Bill Allows Atomic Waste toRemain in Tanks,” The New York Times, 10 October 2004.

27. Richardson, A Time Bomb for Global Trade, pp. 51–52.28. Stephen Flynn, “The Neglected Homefront,” Foreign Affairs (September/October 2004),

p. 25.29. Congressional Budget Office, Federal Terrorism Reinsurance: An Update, p. 2; Chalk et al.,

Trends in Terrorism, pp. 37–38.30. The Congressional Budget Office (CBO) also argues Washington’s reluctance to extend

TRIA beyond 2007 may be indicative of a belief that the provision of free insurance is working as adisincentive for private security. See CBO, Federal Terrorism Reinsurance: An Update, pp. 13–14.See also Congressional Budget Office, Homeland Security and the Private Sector (Washington, DC:Congress of the United States, December 2004).

31. For a succinct overview of the provisions of War Risk Insurance see Thomas Chappell, “WarRisk Insurance—Misunderstood and Under Appreciated,” CS&A Aviation Insurance, 3 February2002, available at (http://www.avweb.com/news/insure/182771-1.html), last accessed 10 July 2006.

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