Corruption Watch: August 19, 2005

On 8 July, one day after the suicide bombings on the London transport system that killed 56 people, the International Association of Chiefs of Police (IACP) issued recommendations saying that police officers should shoot to kill anyone suspected of being a suicide bomber if they believe that an attack is imminent.

Nearly two weeks after this and other recommendations were issued, Jean Charles de Menezes, a 27-year-old electrician from Brazil, was mistaken for a suicide bomber and killed inside a subway car in London after police fired seven bullets at point-blank range into his head and shoulder. De Menezes allegedly failed to stop when ordered by police to do so and was wearing what police described as a "heavy coat" during warm weather, a possible sign that he might have been carrying a bomb underneath it.

However, on 17 August, "The Times" reported that Menezes was wearing a "light denim jacket," did not have a bag or package, and had already been apprehended before being shot.

The police and the British government deeply regretted de Menezes's killing, but insisted that because of the terrorist threat, the shoot-to-kill guidelines they were operating under would remain in place.

Former Scotland Yard head John Arthur Stevens told the BBC on 24 July that these were the same instructions issued to Israeli police and that British police had been trained by the Israelis in how to recognize suicide bombers. According to an article in "The Jewish World Review" on 25 July, the Israeli authorities denied that they had ever issued such guidelines.

The shoot-to-kill orders that resulted in the death of de Menezes soon became the subject of a broad debate.

Practicality Of The Guidelines

How does a police officer recognize a suicide bomber about to detonate an explosive device?

According to "Training Key 581," published by the IACP, the profile of a suicide bomber, developed by "a noted authority on terrorism" using Israeli studies of behavioral patterns of suicide bombers, includes, among others, the following characteristics:

"The wearing of heavy clothing, no matter what the season. Long coats or skirts may be used to conceal explosive belts and devices.

"The appearance of being drugged...

"Bags or backpacks (used to carry explosives, nails, and other shrapnel). The bomber generally holds his or her bag or backpack tightly, sometimes gingerly, and may refuse to be separated from it.

"A fresh shave -- a male with a fresh shave and lighter skin on his lower face may be a religious Muslim zealot who just shaved his beard so as not to attract attention...

"A hand in the pocket tightly gripping something -- this could be someone clutching a detonator or a trigger for an explosive device..."

If the above guidelines were to be adopted by the New York City Transit police the results could potentially be disastrous. In the winter, few passengers would be found without "heavy clothing" and there are, according to "Newsday" on 4 August, an estimated 200,000 opiate addicts in the city. Of course, most New York subway passengers keep a tight grip on their bags.

Undoubtedly, police in other urban environments around the world face similar problems in using the IACP profile to identify potential suicide bombers.

Current Use-Of-Force Policies

Use-of-force orders, according to "The Washington Post" on 4 August, are established individually by each of the 18,000 law enforcement agencies in the United States. "Most law enforcement agencies, including the D.C. police, are supposed to use what is known as a continuum of force: If force is used, it should be applied or increased in proportion to the suspect's actions and level of resistance," the daily reported.

However, the appearance of suicide bombers in London is rapidly pushing police to consider changing the rules, Bruce Hoffman, a terrorism expert at the Rand Corporation, told "The Washington Post" on 4 August. "The police standard operating procedure of addressing a suspect and telling them to drop their weapon and put their hands up or freeze is not going to work with a suicide bomber.... You're signing your own death warrant if you do that."

This leaves police grappling with a seemingly unanswerable question: How does one recognize a suicide bomber who could detonate an explosive device with a twitch of a finger? Shooting without warning is seen by many as an arbitrary and often illegal use of lethal force. The public might accept a few accidents such as the de Menezes case, but there would certainly be a severe backlash before long.

Past Incidents

There have been cases in which police have stopped apparent would-be suicide bombers without killing them, as well as cases of police killing people whom they suspected of being potential bombers but who turned out not to be.

On 13 May in the Uzbek capital Tashkent, police shot and killed a man in front of the Israeli Embassy after mistaking the wooden object he was carrying for explosives.

The pro-Israeli website icej.org reported on 25 July that Israeli Defense Forces (IDF) soldiers had captured a would-be suicide bomber as he was en route to Tel Aviv. According to the report, the man was "wearing a five-kilogram explosives belt" when he was arrested, although the report does not say how the police were able to identify him or to prevent him from detonating the device.

The Information Israel website, another pro-Israeli site, describes a few similar incidents:

"July 28, 2002 -- Hamed Mohammed Hamed, a 22-year-old Palestinian man, was arrested in the village of Kalil. During the arrest, Israeli security forces seized an explosive belt that Hamed had intended to use to blow himself up at Joseph's Tomb.

"July 27, 2002 -- IDF forces arrested Umaya Mohammed Danaj, a 28-year-old Palestinian woman who was on her way to carry out a suicide bombing in Israel."

Good Intelligence

Israeli experience shows that most intercepted terrorists were apprehended because of good intelligence work and not because a police officer happened to notice how they were dressed or how they behaved on a bus.

This was demonstrated in 1997 in New York, when the police acted on information supplied by a roommate of two Palestinian youths who were allegedly planning a subway attack. The two suspects were arrested and the attack was thwarted.

The Information Israel website contains numerous examples of how advance knowledge of an attack enabled Israeli security services to forestall them and, often, enabled them to capture and interrogate would-be terrorists.

Interrogations, according to most law enforcement officials, are a vital part of collecting information on a terrorist network and often lead to the capture of other suspects.

Good intelligence work coupled with practical prevention measures can go a long way in combating the threat of suicide bombers. Many experts feel that periodic random searches -- although they too face opposition from civil libertarians -- and reliable detection devices at the entrances to public places are the most useful measures to prevent terrorist attacks. On the contrary, profiling suicide bombers and using such profiles as the basis of shoot-to-kill policies are viewed by many as a haphazard approach that is fraught with the danger of producing highly counterproductive backlashes. (Roman Kupchinsky)

The extent of the damage to the London Underground and the country's tourism industry during and after the 7 July attacks has been estimated at nearly $1.1 billion. The incident was a reminder of the thorny issues surrounding insurance and terrorism, a reminder that is all the more pressing because the U.S. Terrorism Risk Insurance Act (TRIA) is due to expire at the end of this year.

The 7 July London underground bombing on 7 July cost an estimated 600 million pounds ($1.08 billion) in lost tourism and transport revenues according to scotsman.com. The lost revenues for the transport system are to be covered from London's Transport Reserve Fund. The material damage to the London subway system itself is estimated at $100 million and will be covered by the British government-backed terrorism-insurance scheme, Pool Reinsurance (Pool Re) according to the website of "Claims Magazine."

Pool Re, which was established in 1993 in response to terrorist attacks by the Irish Republican Army (IRA), covers damage from terrorist attacks by making insurers liable for up to $237 million per attack, while Pool Re covers the remaining costs. Pool Re covers claims up to $6.3 billion; the U.K. treasury is expected to step in for amounts beyond that.

The End Of TRIA?

The July events in London have focused attention on TRIA, which was passed by the U.S. Congress in November 2002 and is due to expire on 31 December 2005. What this could mean for America's economic well being and national security is being hotly debated by think tanks and the insurance industry.

TRIA was passed in the wake of the 11 September 2001 terrorist attacks in the United States, which ultimately cost insurance companies some $32.5 billion.

According to the provisions of TRIA, if damage claims exceed $5 million and if the treasury secretary deems the incident a terrorist attack, then TRIA will pay 90 percent of the value of claims. In order to qualify under TRIA, the attack must be carried out by a foreign entity. Payments for nuclear, biological, chemical, or radiological attacks are not covered by TRIA.

TRIA, however, has not actually paid out any money since its inception and has arguably been more of a psychological tool in the war on terrorism then a full-fledged government reinsurance mechanism. It has reassured business that the government will be there to cover catastrophic losses from a difficult-to-predict act of terrorism. This has helped boost confidence in the U.S. economy.

After the 11 September 2001 attacks, it was feared that many insurance carriers would stop covering damages from terrorist attacks, which previously was generally included in standard property and casualty policies. These fears, however, proved largely unfounded, although many companies did raise the premiums for terrorism coverage.

However, there is at least some evidence that TRIA helped stabilize the situation following the attacks and that it reduced costs for some businesses. The American Hotel and Lodging Association reports on its website that "following passage of this legislation [TRIA], one hotel company reported a drop in insurance costs, which was initially quoted to range from $72,000-$95,000 annually, to less than $2,000 annually."

Nonetheless, a June report by the U.S. Treasury Department titled "Assessment: Terrorism Risk Insurance Act Of 2002" concludes that: "Consistent with its original purpose as a temporary program scheduled to end on 31 December 2005, and the need to encourage further development of the private market, the Administration opposes extension of TRIA in its current form."

Disputing The Treasury

The Rand Corporation in a 2004 study titled "Issues And Options For Government Intervention In The Market For Terrorism Insurance" presented arguments why Congress should not only extend TRIA, but expand the guarantees it offers to include coverage of attacks by domestic terrorist groups and attacks using nuclear, biological, or chemical weapons.

The Treasury Department's June report partially acknowledged this problem and estimated that one-quarter of policy holders might lose terrorism insurance if TRIA is allowed to expire. Nonetheless, the department apparently feels the private sector is robust enough to absorb possible claims.

The scale of the 11 September 2001 attacks demonstrated that modern terrorist attacks can cause severe damage, way beyond anything that had come before, making risk assessment and premium determination highly problematic.

The extension of TRIA is directly related to this question: Does the U.S. government feel secure enough from foreign terrorist attacks to allow private insurance companies to take the full financial risk themselves?

The TRIA debate centers in part on the ability to model terrorism risk for the insurance industry. One leading approach, known as probabilistic modeling, attempts to measure terrorist behavior and the possible types of attacks, and then decide which targets "present the lowest technical, logistical, and security barriers to [terrorist] mission success," according to the Treasury Department report. Insurers then assign a probability to the location and the scenario.

After 11 September 2001, several companies developed software that purportedly allows insurers to identify their exposure to terrorism risk in various countries around the world. However, there is not yet any reliable information on the accuracy of such assessments.

The Treasury Department report acknowledges that risk modeling has serious drawbacks and is far from a precise science. "Because of the difficulty inherent in assessing the probability of attack, use of terrorism predictive models is tempered by the large degree of uncertainty in their predictions," the report admits.

The Economic Impact Of TRIA Expiration

The question of what might happen if TRIA is allowed to lapse after 31 December and what impact this might have on the U.S. economy was discussed on 8 July at the American Enterprise Institute (AEI) in Washington.

Chris Lewis of the Hartford Financial Services Group presented the following scenario: A 10-ton truck bomb exploding in central San Francisco is estimated of having the capability of creating some $15 billion of damage - however, the impact on gross domestic product (GDP) could "be as high as a loss of $235 billion over a one year period." Without TRIA "the losses could be 25 percent -- or more -- higher," Lewis stated.

A 2004 study titled "Economic Effects Of Federal Participation In Terrorism Risk," which was commissioned by the American Insurance Association and five other insurance-industry trade groups that favor a TRIA extension, states that: "Even in the absence of another major terrorist attack, U.S. GDP may drop 0.4 percent, or $53 billion, due to the lack of a federal terrorism insurance backstop. It also would cut into new job creation by 0.2%, or 326,000 jobs," the website the "National Real Estate Investor" reported on 15 September 2004.

Participants in the AEI panel discussion also pointed out that many companies refused to buy terrorism insurance covering nuclear, biological, and chemical attacks in 2004, arguing that they feel they do not need it and that it is too expensive. The Treasury Department study reported that "the vast majority of policyholders without terrorism coverage reported that they felt they were not at risk."

Despite the Treasury Department's vote of no confidence, most experts believe TRIA will be extended in some form past the end of this year. Advocates argue that doing so will enable the industry to improve terrorism risk-assessment models while maintaining the economically important psychological assurance that the government will provide automatic assistance in the event of a catastrophe. (Roman Kupchinsky)