TSG IntelBrief: Accelerating Threats Amid Slowing Economies
January 20, 2016

Accelerating Threats Amid Slowing Economies

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Bottom Line Up Front: 

• 2016 is witnessing an unfortunate confluence of growing regional terrorism threats and shrinking budgets with which to counter them

• Many of the countries most hurt by collapsing oil prices are also facing current or potential terrorism threats

• Significant reductions in subsidies in fuel and other needs will further exacerbate societies already contending with economic and demographic challenges

• The UN says $40 billion is needed annually to provide aid for those affected by war and disaster—a huge increase in need that is unlikely to be met.

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The price of oil has dramatically fallen during the same period in which the cost of terrorism has risen in equally dramatic fashion. The global economic slowdown is occurring amid an increase in threats posed by groups such as the so-called Islamic State and al-Qaeda, and their many followers scattered across the globe. The economic stress on budgets has a two-fold negative effect on counterterrorism and countering violent extremism efforts. The first and most obvious are possible reductions in current or planned funding for agencies and programs that play a large role in many nations’ counterterrorism efforts. Consistent pressure—to detect, deter, and disrupt terrorist plots—by intelligence and law enforcement agencies is expensive to maintain for healthy budgets; the dramatic increase in the terrorism threat across Europe exacerbated by the refugee crisis will have to be addressed in a time of serious economic pressure. Across parts of Europe, it is a case of dueling emergencies. On January 19, France announced an ‘economic and social emergency’ to help the country’s moribund economy, on top of the terrorism state of emergency that was extended ‘indefinitely’ December 2015.

The timing of the two trend lines—security and economic—heading in opposite directions is particularly painful in the Middle East. It is not just oil-rich countries such as Saudi Arabia that are bracing for economic slowdowns; countries such as Egypt and Jordan—both dealing with serious extremist problems—depend heavily on aid provided by Saudi Arabia. The last thing Amman needs as it contends with a massive refugee crises on its northern border and a war-torn Iraq on its eastern border is a reduction in aid. The same can be said for Cairo as it fights the Islamic State affiliate in the Sinai amid tourism revenue shortfalls. Cuts in subsidies in vulnerable countries are a recipe for instability.

Amidst sinking revenues, the pressures on security and subsidies present very real challenges and few options. The low price of oil, and the reality that it will stay relatively low for the foreseeable future, led Riyadh to cut fuel subsidies in December 2015, with a 50% increase in the cost of gas per liter. When the subsidy cuts were announced—along with a record budget deficit of $98 billion—oil was trading at $36 a barrel; it is now hovering at $30. All of this comes at a time when Saudi Arabia is dealing with increasing terrorism threats at home and across the region. Other Gulf countries face similar pressures.

France and Saudi Arabia are hardly the only countries entering 2016 with growing threats and shrinking budgets. The persistent conflicts in SyriaIraqAfghanistanYemenNigeria, and elsewhere have generated massive humanitarian crises such as historic and unmanageable numbers of refugees seeking safety and stability in Europe. Oil-producing Nigeria and Iraq are suffering from the double blows of low oil prices and persistent violent insurgencies. Natural disasters such as droughts across parts of Africa only add to the suffering; the scale of need is unprecedented. The UN issued a report on January 15, 2016 finding that a minimum of $40 billion of humanitarian aid is needed annually to help with the massive increase in need; currently there is a $15 billion gap in funding—a gap that will be harder to fill in any widespread economic downturn.

In addition to the huge increase in humanitarian aid, the UN also recently asked for $7 billion to help with the immeasurable needs stemming from the Syrian civil war; the request was to cover 2016 only, and future costs are sure to skyrocket once the conflict subsides enough to begin a full assessment. After so many years of persistent conflict, donor fatigue will be exacerbated by continued economic slowdown.

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For tailored research and analysis, please contact: info@soufangroup.com

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