Introduction

The end of the cold war and the rise of international terrorism have dramatically changed perceptions of national security. Where nations once saw threats emanating primarily from state actors located abroad, they now look also at nonstate entities acting both at home and abroad, as well as to failed states. Threats from nonstate actors have become a more significant issue for both rich and poor states. Table 2.1 displays those changes in perception of the threat, using the United States as an example.

A full analysis of the costs of terrorism would include the costs to rich and poor states, including those costs of rich country efforts to defend against terrorist threats imposed on the poor. This chapter takes a first step by examining the costs to the rich states of addressing the terrorism threat, not the costs of terrorism itself or of the immediate responses to an attack. In that sense, the costs might be thought of as the “secondary” cost of countering terrorism, rather than the “proximate” costs of terrorism. Understandably, the latter have received more attention than the former. However, some sense of where the money is going is necessary to identify possible trade-offs and ask whether the current portfolio of expenditures is the most sensible one. Table 2.2 summarizes the various distinctions and their implications for cost.