There are intermediate steps between an explosion in Spain and the domestic political effect. A major factor is economics surrounding the attack. Although it is difficult to place an exact dollar value on such an event, when terrorism is successful it usually involves an economic loss. As most definitions state, a successful terrorist event does not require a direct or even successful attack; the threat itself can often result in a situation favorable to the terrorists. The role economics plays in determining both what terrorists target and how a nation responds can be seen in the response to the Madrid bombings. Without stepping foot on U.S. soil the terrorists involved in the rail attacks in Spain have placed additional economic and political strains on the American rail industry.
Economic cost can be viewed as either direct or indirect. Direct cost is much more tangible. It includes the immediate and “real” loss due to an attack. Loss of life and property, interruption of business, and increased insurance premiums fall into this category. It is much more difficult to apply a numerical value to indirect loss. An attack on an industry causes many consumers to lose faith in the ability of the industry to provide adequate security and safety. In return the industry must invest in increased security and response measures. Additional funds must be spent as a result to convey these new measures to the public. Many industries call on state and federal governments to subsidize both direct and indirect cost. Politicians then must weigh the political cost of supporting or not supporting the industry’s response.
Direct loss concerns received attention prior to Madrid. U.S. rail industry and government officials have been aware of the threat to railways since before 9/11. In light of the attacks across the Atlantic, however, rail security has become more prominent and both industry and government must respond to public and private concerns regarding the security of American passenger and freight trains. In addition to making preparations to mitigate and respond to a terrorist attack, the rail industry and government officials must deal with some degree of the indirect loss resulting from the Madrid attack.
American rail and government organizations have began to – and must continue to – take further steps to prevent attacks on U.S. railways. The direct loss resulting from a terrorist attack on an American railway would depend on several factors. These factors would be: (1) type of attack, (2) location of attack (3) degree of success of attack and (4) capabilities of emergency response.
The type of attack conducted on a passenger or freight train will be a major factor in contributing to direct loss. Bombings such as those that recently occurred in Spain are not the only types of attacks in which passenger trains make excellent platforms. Close confines of a crowded passenger train could be used as a dissemination point for a chemical or biological attack. This very type of attack was conducted by the Aum Shinrikyo cult in Tokyo in 1995. Although the attack was not as devastating as the cult had hoped, 11 were killed and 5,500 were injured. The confined space and number of potential hostages also make passenger trains potential targets of hijacking.
Although the idea of terrorists setting off an explosive device, releasing weapons of mass destruction (WMD), or taking hostages on board a passenger train are frightening, the use of a freight train in a terrorist attack are even more devastating.
Reports of the devastation from the blast in North Korea caused by the explosion of rail cars carrying ammonia nitrate provide an excellent and powerful example of the ability of a rail incident to cause extensive damage. U.S. railways are used to transfer our nation’s food supplies, explosives, hazardous chemicals, and radiological material across the nation and through major population centers every day. Steve Dunham gives a perfect example in a Journal of Homeland Security article, “Securing Rail Freight.” He writes of a derailment and subsequent fire in Baltimore on July 18, 2001, that involved cars carrying combustible material and hazardous material including five cars loaded with acid.
Location of an attack will also determine the associated loss. An attack in a more remote location, while possibly easier to accomplish, will place fewer lives and less property in danger. The psychological effect of such an attack would be less dramatic, however. Not all terrorist attacks are completely effective either. The degree to which an attack is successful, such as with the Tokyo attack, also is key to direct loss. Success of an attack can be dependent on the amount of security involved, level of sophistication of the attackers, and safety designs involved in the equipment effected by the attack.
Finally, the ability of the local area, state, and federal government to respond to a terrorist event at any given location will help mitigate loss following an attack. Limiting the spread of WMD or hazardous chemical release, emergency medical treatment, and various other factors involving the quality of emergency response are vital to limiting casualties and property damage following an event.
Direct loss can be seen in the loss of lives, the loss of property, interruption of business, and increase in business premiums following a terrorist attack. The loss of lives from explosion, WMD, food contamination, or hazardous chemical release could be devastating. Direct loss is what the evening news covers; it is what the newspapers write about and it is what leads to indirect loss. Direct losses lay the foundation for tangible evaluation of cost-benefit analysis and risk management.
Terrorist events on railways can provide an excellent platform to take lives. Train accidents, the Tokyo sarin release, and the Madrid explosions provide more than ample evidence. An attack on a commuter or Amtrak train targets businessmen and women and people traveling to relatives for holidays. The large number of people located in a small area provide for maximum lethality. Trains carrying dangerous material ranging from radiological to explosives pass through major population centers daily. A major event on a freight train carrying such items could kill thousands.
A major attack involving a freight train in a populated area could cause millions if not billions of property damage. Buildings could be destroyed or contaminated with hazardous, toxic or radioactive material. Homes could be lost. Keys to infrastructure such as hospitals, roadways, bridges, communications centers and emergency response centers could be destroyed, adding to the loss of life and recovery time. Degradation of infrastructure also causes an economic loss due to interruption of business, delay in arrival and departure of goods, and overtime costs necessary to restore damaged facilities to operation.
The best opportunity to recover direct loss is through insurance coverage. In recent years, insurance companies have begun to respond to increased threat of terrorism. As shown in David Russell’s book, “It’s a Disaster,” coverage is now available for political events (wars, terrorism) and kidnapping for the right price. In order to protect the investments, however, insurance companies promote solid mitigation and contingency programs from their customers. A pamphlet from The Hartford Loss Control Department, called “Preparing for and Responding to Incidents of Terrorism,” gives direction in the location of facilities, access controls, and control of communications, security and hazardous materials.
Direct loss from a terrorist attack on U.S. railways is tangible. The loss of lives, damage to structures, delay in transport, and receipt of goods and costs to rebuild are all immediate and predictable elements. Less apparent are the effects of indirect loss. Indirect loss accounts for consequences that result from direct loss. It is this indirect loss that plays a major role in the effectiveness of the Madrid bombing’s impact on U.S. industry and politics.
News coverage of the Madrid bombing was often followed up by the question, “How safe are U.S. railroads?” This question is at the heart of indirect loss and is what makes terrorism difficult to combat. The attack overseas forces us to reevaluate our own situation and apply both political and economic energies against possible attack.
Politicians call upon increased security, mitigation and emergency response capabilities. The rail industry must address the loss of faith in the rail industry suffered by the images of destroyed trains. Under political pressure and a need to regain public faith, cost must be incurred to not only improve security, mitigation and response but to make the public aware of these improvements. As cost builds, the rail industry in turn calls upon the politicians to gain economic support.
“The harsh truth is that our passenger rail system is far from safe and unless we do something about it and quickly, we could suffer a similar or even worse fate,” said Sen. Joseph Biden (D-Delaware) following the Madrid bombings. He also said that Madrid was a “wake-up call” and it was time to start “investing in rail security” or face a “tragic mistake.”
Several current and former bills addressing rail security have been introduced to the House and Senate. All have received bipartisan support, but not enough to become law.
Politicians are quick to call upon improved security measures in order to show constituents their concern for their safety. Respectively, the industry must respond to public concern by showing positive actions in regard to security and safety.
The reporting of the correlation between the Spain bombing and U.S. railways brings the story home to viewers but also addresses key questions. Whether industry believes threats are credible and the cost of certain measures is worth the benefit, they must be addressed once opened to public forum. Studies must be conducted, committees formed and press releases published. These items take time and money. Once completed industry must spend the time and money conveying the reason why certain measures are and are not taken and why railways are still safe.
Railway safety and security does not come cheap. As reported in the Washington Times this April, close to $1.3 billion for rail security would be authorized under legislation following the Madrid bombings. This would include $515 million in 2005 for surveillance of facilities and improve passenger monitoring. In addition to this funding, an additional $777 million will be allotted for tunnel safety. This funding falls on the heels of a $3 billion request presented to Congress in October of 2001.
In 2001, the Association of American Railroads initiated a program to address rail security and safety. The program included increased coordination with law enforcement and intelligence communities, establishment of a 24x7 operations center and the creation of five teams. These teams looked at (1) hazmat, (2) infrastructure, (3) military liaison, (4) operational security, and (5) information technology and communications.
As this shows, rail security is a major economic and political issue. Following 9/11 and again in the highlight after the Madrid bombings, rail security is vital to our economy and our society and thus places pressure on government and industry to ensure safety and security of American railways.
Insurance companies read and watch the news just like everyone else. The attack in Spain has caused reevaluation of security, safety, and response measures in the U.S. The risk of direct loss such as loss of lives, damage to facilities, and loss of production resulting from an attack against a freight or passenger train must be addressed by the rail industry. Additionally, this added awareness of the potential for direct loss may result in additional cost due to the creation and implementation of mitigation, planning and response measures. Companies may purchase additional insurance or see an increase in insurance cost in response to both perceived probability of attack and estimated loss if an attack occurred.
Indirect loss was incurred by the idea of vulnerability created by the Madrid bombing. Rail companies must evaluate the potential for loss of business due to this renewed awareness of a threat. Studies must be done to determine what the public expects from rail security and where they will draw the line in regards to freedom of movement and level of security measures taken. Once this is done, the information must be made available to ease the fears of the public.
This cost due to preventative measures from possible direct loss and controlling the impact of indirect loss will place added financial burden on the rail industry. Prices for transportation of goods and for passenger tickets may increase. Industry will also call on government leaders, who in response to public opinion and concern for constituents, have called for increased security measures. Requests may be for additionally funding or increased taxes to support the rail industry.
Whether direct or indirect, perceived or real, the implications of loss generated in the U.S. rail industry due to the recent attacks overseas have forced both industry and government to reevaluate the status of U.S. rail security and safety. By creating this increased concern and resultant political action, the reaction in the U.S. falls into the parameters of the goals of terrorism. As such, the bombings in Madrid have resulted in a somewhat successful attack against U.S. society and economy.
hristopher Dorsey is an ensign in the U.S. Navy, a former chief petty officer with 14 years of military service. He has a bachelor’s degree in history and radiation health physics from Oregon State University, and is currently pursuing a master’s degree in emergency disaster management from American Military University.