Superstition has it that Friday the thirteenth is unlucky, certainly, that was the case for the 129 innocent civilians that lost their lives in Paris, the City of Love, last Friday. These people were simply in the wrong place at the wrong time when terrorists, associated with Islamic State, struck in a series of coordinated attacks which left a further 352 injured of whom 99 remain in a critical condition. The victims were unknown to their attackers whose hatred was directed at what they believe Western society stands for; this will be of no comfort to the friends and relatives of the dead and injured. The aim of the terrorists was to create fear and chaos in Paris and subliminal anxiety across Europe: if it could happen in Paris, it could happen here, too. They needn’t have bothered: we have known this for decades as citizens of London, Madrid, Athens, Vienna and many other cities can attest.
The outrage in Paris comes hard on the heels of the destruction of a passenger jet returning Russian holiday makers home after a vacation in Sharm el Sheik on Egypt’s Red Sea coast. That atrocity claimed a further 321 lives and was almost certainly caused by a bomb placed in the hold of the jet.
These events generate anger and revulsion not just in the communities hit by the attacks, but around the world. As the death tolls from these atrocities mount, the likelihood of a more decisive Western military response must surely grow. In the West, there is no appetite for the type of ground warfare which would be needed to destroy IS on the ground because of the inevitable civilian and military casualties it would cause, but those attitudes will be hardening in light of recent events.
The response of markets in France and around the world to the latest terrorist attacks are likely to be muted. The reason for this apparent sangfroid is that the murder of civilians has minimal economic impact. France has a sophisticated security and intelligence community which works closely with counterparts in Europe and allies around the world, but the very nature of Friday’s attack and the willingness of its perpetrators to kill themselves whilst carrying it out make it all but impossible to stop every plot. For obvious reasons, the security forces keep quiet about most of the plans that they do defeat.
The terrorist attacks carried out on 9/11/01 in America were more destructive of property and, of course, human life; some 2973 souls perished that day and more than 6000 people were injured. The iconic twin towers which were destroyed that day were part of the World Trade complex of seven buildings. A new 99 year lease agreed on the towers not long before the outrage was worth $3.2 billion. The towers were business hubs hosting anything from a restaurant through insurance, administrative and financial concerns – in short, they had significant economic significance. It was estimated that immediate economic damage stemming from the attacks cost the US $75 billion – the French attacks, tragic as they are will see nothing like this level of (direct) economic fallout.
Travel and tourism account for 7% of French GDP and, naturally, Paris attracts a substantial proportion of this. Undoubtedly, whilst security measures remain tight and a manhunt is on for one of the attackers believed to have survived the onslaught, there will be a negative impact on tourism, but experience in Europe suggests this will probably be short-lived. The same cannot be said for Egypt, if it is concluded that a bomb brought the Russian jet down. The general perception is that North African tourist destinations do have security risks associated with them; as the beach massacre in Tunisia this June which left 38 dead underlined. These nations are likely to see a significant economic loss stemming from declining tourism and their (perceived) inability to keep guests safe whilst on holiday. Few Western tourists are likely to be attracted to a holiday destination where they perceive their safety is not assured.
At the time of writing, no direct consequences of Friday’s attack were to be seen on European stock markets which were all slightly higher than their closing values. The human costs to those caught up in the events of Friday night are impossible to calculate, of course.