Terrorism and Poverty

Terrorism and Poverty: Causes and Impacts

This is the text of a paper I wrote some years ago for the NSW Geography Teachers Association (NSWGTA) Conference. It comes with an accompanying slide collection that focuses on the bali_bombing_and_poverty

This paper was also published in the International Schools Journal, edited by Caroline Ellwood. Until recently I’ve had it flagged as a page on my blog. I’ve moved it here, as a post, to make space for other pages.

I’m publishing it again because a friend in Indonesia, Nita Noor, has asked me to give her a copy. This arose because of a link to the International Crisis Group’s new report Indonesia: Nordin Top’s Support Base that Nita sent me.  Both Nita and I were volunteers in the aftermath of the 2002 bombings in Kuta Bali which resulted in more than 202 deaths.

Caroline Ellwood lost a son, Jonathon, in the bombing. Recently I was fortunate enough to meet this remarkably loving and generous woman in the UK, where she lives. I also had an opportunity to visit Jonathon’s grave, lying peacefully by his family church in Aldbury, UK.


One October night in Bali

October nights in Bali can be most pleasant.  The cooler winds from the south east have begun to lose both their strength and their chilly edge as Australia warms up.  Temperatures in the evening can sit around 24°C with barely a breath of air, the humidity comfortably low.

The night of 12 October 2002, was just such a night.  It was a night full of happy and enthusiastic conversation.

Two thunderous rumbles broke the conversation.  While thunder is common enough on this small island, with its dramatic relief, there was something unusual about this. The conversation paused, no one commented, then quite naturally we resumed our discussion.  It was an animated discourse on issues of environmental management around the margins of Bali’s large national park.

My day had been spent examining beach profiles along the island’s east coast so sleep was welcome that night.  I was a little sunburned but very optimistic about the future of field study activities in Bali and Indonesia.

My mobile phone rang at about 6.00am, it was my wife.  The news from Australia was the worst news I could imagine.  A bomb blast in Kuta, perhaps as many as 12 dead, unknown numbers of injured.

As our small group of volunteers set out from Ubud, later that morning, bound for Sanglah Hospital in Denpasar, the reality that lay ahead was far graver than any of us could imagine. Throughout the next four days, many were asking “Why?”, but this was, for the time being, overshadowed by the imperative to deal with the consequences of this act of terror.  It consumed almost all of our energy.

Examining the impact of this event on Bali reveals two things most clearly. First, the economic impacts of terrorism are more acutely felt in the developing world.  Secondly, the response to terrorism in Bali reflected cultural values that differ from those of the of the developed secular world.

The nexus between Terrorism and Poverty

After the bombing of the World Trade Centre, James D Wolfenston, then President of the World bank commented that,

Careful research tells us that civil wars have often resulted not so much from ethnic diversity, the usual scapegoat, as from a mix of factors, of which, it must be recognized, poverty is a central ingredient. And conflict-ridden countries, in turn, become safe havens for terrorists.

Our common goal must be to eradicate poverty, to promote inclusion and social justice, to bring the marginalized into the mainstream of the global economy and society. [i]

This understanding of the spread of terrorism was echoed by Philippines President Gloria Arroyo when she said:

“It is evil that causes terrorism but the evil needs to spread its ideology as a mass base and the best breeding ground is poverty” [ii]

She went on the stress the importance of inclusion adding,

“Even as the terrorists seek to make this a religious war, we must seek to make it an occasion for understanding one another’s different cultures, we must have broader inter-faith dialogue and we are doing that institutionally in the Philippines” [iii]

In testimony before the US House International Relations Committee E. Anthony Wayne, former Assistant Secretary for Economic and Business Affairs said:

“. . . It is the Administration’s position that poverty, weak institutions, and corruption can make states vulnerable to terrorist networks. In many nations, poverty remains chronic and desperate. Half the world’s people still live on less than the equivalent of $2 a day. This divide between wealth and poverty, between opportunity and misery, is far more than a challenge to our compassion. Persistent poverty and oppression can spread despair across an entire nation, and they can turn nations of great potential into recruiting grounds for terrorists..”[iv]

For others, the nexus between poverty and terrorism is not as clear-cut.  Several studies quite correctly challenge simple causal associations between terrorism and poverty. [v] Robert Pape in his work Dying to Win: The Strategic Logic of Suicide Terrorism [vi] offers a scholarly analysis of the underlying causes of suicide terrorism. According to Pape:

“ what nearly all suicide attacks have in common is a secular strategic goal: to compel modern democracies to withdraw military forces from territory that the terrorists view as their homeland.  This has been a major – or central goal – of every suicide terrorist campaign from Lebanon to Israel to Chechnya to Sri Lanka.  Religion is rarely the root of the cause, although it is often used as a recruiting tool in the service of the broader strategic objective.” [vii]

Pape argues that poverty is a poor explanation for suicide terrorism.  While he is no doubt correct in arguing against such a simple causal association, his work suffers in two respects.  First, he fails to recognise that poverty itself is a constellation of factors that lead to reduced opportunities and exclusion from power.  Secondly, in relying on GNP per capita as his measure of poverty he uses far too simple an instrument, He apparently overlooks distribution of income in both a social and a spatial sense.  Nonetheless, his fundamental contention that suicide terrorism is about expelling invaders from lands that are presumed to be occupied, whether by the USA, by Israel, by Singhalese, by Russians, by Indians and so forth, has merit.

Pape’s research allows us to see terrorism in a multi-causal sense, in which poverty and exclusion are important contributors.

In poor areas, the absence of educational infrastructure can provide an opening for extremist views.  In Pakistan, for example, extremist Madrassas, Islamic schools, gave birth to the Taliban; in poor parts of Java extreme views have been cultivated within some Pesantren. [viii]

While the antecedents of terrorism draw on a variety of ideological rationalizations, poverty and civil conflict play a major role in the development of the conditions necessary to foster and harbour terrorism.  Osama bin Laden was based in Sudan and then in Afghanistan where social, political and economic disorder afforded him maximum freedom.

Facilitated by the process of globalisation terrorism can now assume a global reach.  Employing the energies and desperation of the poor it enlists the tools of globalisation such as rapid global transport; computerization; the internet; mobile phones, digital imaging; electronic funds transfer; and, the efficient global dissemination of information and expertise.

Targets and impacts of terrorism

It’s the developed world that’s most often the main target for terrorism, but the direct targets, often the so-called ‘soft targets’, can be in the developing world.  Indonesia, Kenya, Morocco, Pakistan, the Philippines and Yemen have all sustained terrorist attacks since 2000.

The logic behind this trend in terrorism is exposed in terrorism risk models[ix] which assume that rational terrorists will tend to substitute lesser, softer targets for the harder better-defended targets.  This approach is succinctly explained by the CIA accordingly:

“as security is increased around government and military facilities, terrorists are seeking out softer targets that provide opportunities for mass casualties.”[x]

The World Trade Center (WTC) attack on 11 September 2001, generated profound economic shock waves.  A direct attack on the developed world, it delayed global economic recovery but the economic effects were felt most acutely in the developing world.

In October 2001 the World Bank warned that the world’s poor would get poorer as economic growth in the developing world was retarded by the WTC bombing.  At the time Wolfensohn noted that while the immediate human toll of the bombing was obvious enough, there were serious implications for the developing world.  He said:

We estimate that tens of thousands more children will die worldwide and about 10 million more people are likely to be living below the poverty line of $1 a day because of the terrorist attacks [xi]

Such outcomes were attributed to depressed world trade, tourism and commodities prices as well as investors’ reduced appetite for risk.[xii] . James Wolfensohn also commented that:

We’ve seen the human toll the recent attacks wrought in the U.S.. .But there is another human toll that is largely unseen and one that will be felt in all parts of the developing world, especially Africa. [xiii]

Within the developed world wealth permits a more diverse array of counter-terrorism strategies.  In London, measures were adopted in response to the IRA bombing campaign that began to transform the very functional heart of the city.  In general simple strategies range from removing garbage bins to establishing security precincts.   New engineering and architectural solutions also form a part of the developed world’s response. Surveillance and security have been stepped up particularly in air transport.  New statutory solutions, sometimes running counter to Common Law presumptions of innocent passage, are being enacted.  The responses are numerous and sometimes expensive.

Indonesian Impacts

Indonesia, particularly Bali, following the bombing of October 2002, demonstrates the differential impact of terrorism on the developing world.

The immediate impact of the bombings is well documented.  The most often quoted death toll is 202 people (figure 1) with a similar number injured.  Victims sustained severe burns, and other blast injuries.  Many who survived the initial blast died of their injuries soon after, others survived only to die sometimes weeks later. Sanglah Hospital was seriously overtaxed.  Fortunately, Australia’s response was swift and highly effective evacuating casualties to Australia.  Such was the severity of the injuries, and so great were the numbers injured, that victims had to be distributed throughout the Australian hospital system.  They were transported to all states and territories except the ACT and Tasmania.

Apart from the immediate impact of the bombing, impacts were felt throughout Indonesia in all aspects of life: economic; social; educational; and, cultural.  Nowhere was the impact greater than on the island of Bali.

deaths by nation

figure 1

Numbers of Indonesians killed

We will never know just how many Indonesians died in the blast and in subsequent months. The severity of the blast was such that simple methods of identification were impossible in many cases.  DNA analysis and forensic dentistry were only used where it was possible to locate living relatives or dental records.  While this may be relatively easy in the developed world, it is a far from simple task in the developing world. Up to 12 months, later bodies and body parts remained unidentified.

A commonly quoted figure is that 38 Indonesians were killed, at least 20 of these were Balinese. It’s hard to be certain.  There is a view amongst people who worked on the relief effort and the aid program that followed, myself included, that the number of Indonesians killed has been underestimated.  Without going into the grim details we do know that identification of the dead was a protracted and difficult exercise that depended on DNA matching, forensic dentistry and fingerprinting.  The success of these techniques is greater where records can be easily accessed and where the absence of people is noted and recorded. We are certain that some Indonesians went home after the bombing and subsequently died of their injuries.  It also seems possible that others from the informal sector such as beggars, street vendors and sex workers who may have been working in the area might not have been counted.

Impact on tourism in Indonesia and Bali

Before the bombing tourism contributed more than US$5 billion annually to Indonesia’s GDP, it was second only to Oil and gas exports as a foreign exchange earner.  In Bali domestic and international tourism was the province’s major foreign income earner.  Tourism provided 58,000 jobs and about 20% of the island’s population was directly dependent on the tourism sector. It contributed 60% to 70% of the value of Bali’s economy.  Tourism had been responsible for significant growth in household income.  It had stimulated substantial internal migration as workers from other provinces, particularly East Java and Lombok, sought work in Bali.

The globalisation of the Balinese economy through tourism can be seen in the percentage employment by sector.  Compared with Indonesia there are less people in agriculture and more people in manufacturing (clothing), construction, trade restaurants and hotels, financial services and public administration and services.

Structure of Balinese Economy Compared with the
National Economy (2002) [xiv]







Mining & Quarrying












Trade, Restaurants, & Hotels



Transport and Communications



Financial Services



Public Administration and Services



Table 1

Up to 1997 tourist arrivals in Bali were growing steadily at around 12 – 15 % per annum, from 34,147 in 1971 to 1,306,316 in 1997 (about 25% of all foreign arrivals in Indonesia) .  This growth faltered in the late 1990s beginning with the Asian Economic Crisis in 1997 then the political turmoil in Indonesia associated with the fall of the Suharto regime and the riots of 1998.  The impact of these events was so substantial that it can be clearly seen in figure 2 Visitor arrivals: Indonesia – 1990 to 2002.

visitor arrivals

figure 2 – Source: Indonesia Culture and Tourism [xv]

With the WTC bombing (9/11) growth slowed. National receipts from Tourism in 1999/00 grew by 22.1% but declined by 5.9% in 2000/01. [xvi] , despite this the impact of 9/11 had been largely overcome by May 2002.  At this time there were about 16% of Indonesians on or below the poverty line but in Bali, this was only 4%. [xvii]

bali numbers

Figure 3

Tourism demand slumped dramatically following the Bali bombing. In September 2002 direct international visitor arrivals to Bali stood at 150,747.  In November it dropped to 31,498 arrivals (figure 3).  There was a slight up turn in December 2003.  Unfortunately the Severe Acute Respiratory Syndrome (SARS) outbreak took its toll on the years tourism figures. Indonesia’s Central Statistics Agency spokesperson Sudarti Surbakti observed recently that:

“The decline is a continued impact of various shocks occurring in late 2002 and early-to-mid 2003; Bali bombings, SARS outbreak and (fear of retaliation here over) the U.S.’s invasion of Iraq”. [xix]

Between October 2002 and May 2003 incomes in Bali declined by an average of 43%.[xx]
In Indonesia as a whole tourism revenues declined by less than 10%, from USD4.3 billion in 2002 to USD4 billion in 2003.

To gain a sense of the economic impact of the bombings on Bali it is first necessary to look at the administrative structures operating.

First, the Province of Bali is divided into 8 sub-provinces or Kabupaten. Tourism occurs within all Kabupaten but it tends to be concentrated in four, Karangasem, Ginyar, Badung and Buleleng.

Between October 2002 and May 2003 income in local government areas dependent on tourism fell by the following amounts:

A Summary of the Economic and Social impacts on Bali **

Income Between October 2002 and May 2003 income in local government areas (figure 5) dependent on tourism fell by the following amounts (figure 7):

  • Karangasem – 49%
  • Gianyar – 47%
  • Badung (Denpasar) – 40.7%
  • Buleleng – 39.6%
Demand A slump in demand, up to 60% in some occupations.  A 30% fall in demand in the Badung market (Denpasar) and 71% in the Ubud market.
Employment – large enterprises 29% of workers affected, through under employment or reduced incomes.  Up to 75% of workers in the hotel sector were working reduced shifts or ‘temporarily’ redundant.  The impact on informal parts of the industry such as freelance transport providers, hawkers and souvenir sellers is difficult to estimate
Employment, small and medium enterprises (SME) 52% reduced staff by almost 60%.  Difficulties meeting loan obligations on cars, motor bikes, equipment.
Education and schooling Increased drop out rate from schools.  Highest drop out rates in poorest areas of Karangasem (60%) and Buleleng (55%).This is directly related to difficulty in paying school fees
Social tension and conflict While there has been a slight increase in social tension, there has been no major sectional violence.  There has been some re-emergence of resentment towards ‘outsiders’ migrants from other islands.  Most tension has been in the poorest areas of Buleleng and Karangasem

Table 2

Even though tourist arrivals have begun to increase, there is less tourism from Australia, New Zealand, the USA and Europe.  The Japanese, Taiwanese and Korean markets have been an important source of new tourist arrivals.  Anecdotally, it seems that there has been a shift away from smaller locally owned and operated tourist accommodation, and local tourism services, in many areas such as Kuta, Legian and Ubud.  There is also likely to have been a similar trend in all of the other 18 declared tourism development areas.  These changes are associated with a decline in the numbers of FITs (Free Independent Travellers) and a relative increase in package tourists.

In 2002, 71 percent of the poor in Bali depended on agriculture.  The impact of the bombing on the poor depends on the extent to which they provided services to tourism.  It is likely that the number of Balinese people now on or below the poverty line has increased..

Economic impacts on neighbouring provinces

In neighbouring Lombok, a poorer island than Bali but not as totally integrated with the tourism economy, those areas affected reported average income declines of around 50%. There was also a reduction in opportunities for the export of handicrafts. There were also reduced opportunities for migrant workers.

In East Java “ . . . there was little impact at the provincial level in macroeconomic terms, but impacts were more severe in certain villages and districts that have strong economic linkages to Bali including trade and migrant labor silver and wood industries in Pasuruan, granite and metal producers in Tulungagung, and wood and bamboo producers in Banyuwangi all experienced more than 50% reductions in turnover.”[xxi]

The Cultural Impact on Bali

There are many unique cultures in the developing world, all are losing some of their uniqueness in the face of globalisation.  Evidence of cultural integration and the homogenization of landscapes is widespread in the developing world, Bali is no exception.

Terrorism’s arrival in Bali is an aspect of processes of globalisation.  It has had an impact on Balinese culture but responses to it have also reflected the uniqueness of Balinese culture.

On the whole developed countries have well developed general and mental health facilities, this is not the case in Bali.  Also, while the secular nature of much culture in the developed world enables people to regard terrorism in a manner that is separate from their own individual actions, this is not necessarily the case in Bali.

Many Balinese people believed that the bombing was a form of divine retribution[xxii].  Such views are directly related to Balinese culture and religion.  The Balinese belief in karma pala, the law of cause and effect leads directly to an understanding of the bombing as divine retribution. Balinese psychiatrist, Dr Benny Thong, describes this belief in John Darling’s film The Healing of Bali[xxiii]:

“Balinese always try to be polite to guests.  They are the owners of this island and they did something wrong.  That’s why when you go out everywhere in Bali people say ‘I’m sorry. I’m sorry’, because they haven’t been able to take care of the guests.

This is actually a sign of the gods.  You did something wrong.  Look for it and repair it.” [xxiv]

One common view expressed was that development on the island had been too fast and too uncoordinated.  This view suggests that the development had not been in accord with the doctrine of Tri Hita Karana. This isaSanskrit, term meaning that the basis of human welfare and security comes only through humans having harmonious relationships with God, with fellow human beings and with the environment.

Again in Darling’s film the temple priest Mangku Sekenan, is very clear about this when he says:

“I think we were at fault in not having taken enough care of the natural environment, which is an insult to the gods.  The gods are angry.  They are no longer protecting us so we are more vulnerable to our enemies.” [xxv]

Another Balinese psychiatrist, Dr Luh Ketut Suryani, who was most active in grief counselling after the bombing was reported as welcoming the subsequent decline in mass tourism and its destructive foreign influences, including prostitution, pedophilia, drugs and gambling, as a chance for Bali to correct its direction.[xxvi]

Shortly after the bombing, on 26 October, 2002, a representative of Parum Samigita Kuta representing the banjar, village councils, of Kuta, Legian and Seminyak, made the following comments to a news conference.

“Please, we beg you, talk only of the good which can come of this. Talk of how we can reconcile our ‘apparent’ differences. Talk of how we can bring empathy and love into everybody’s lives.

The overwhelming scenes of love and compassion at Sanglah Hospital show us the way forward into the future. If we hate our brothers and sisters we are lost in Kali Yuga.”[xxvii]

In Balinese understanding The term kali yuga, refers to the Hindu notion of the present times. Also known as the “age of iron”; or an age of materialism and ignorance.  It is believed that at the end of the Kali Yuga, this world will be destroyed and cleansed, with a new era of peace and enlightenment beginning.

These sentiments are, this notion of valuing the good, emphasising love and compassion are consistent with the Balinese world view of seeking to balance out evil deeds with those inspired by love, overcoming adharma[xxviii] with dharma[xxix].

It is significant that there was no retribution exacted on Bali’s minority Muslim community.  This is not to say that it remained outside the realms of possibility but that highesdt Ba;linese ethics prevailed.

Russell Darnley OAM

[i] http://www1.worldbank.org/devoutreach/fall01/special.asp

[ii] From Demaria, A Arroyo links terrorism to poverty  –


October 29, 2001 Posted: 10:44 AM EST (1544 GMT)

[iii] ibid

[iv] 9/11 Commission Report Recommendations. E. Anthony Wayne, Assistant Secretary for Economic and Business AffairsTestimony before the House International Relations Committee Washington, DC August 19, 2004


[v] Mallaby, S Poverty causes terror? Either way, aid works The International Herald Tribune. Tuesday, May 21, 2002 http://www.iht.com/articles/58280.html

[vi] Pape, R. Dying to Win: The Strategic Logic of Suicide Torrorism.Scribe Publications Pty Ltd. Carlton North, VIC. 2005. ppx.

[vii] Ibid.

[viii] Both terms Madrassa and Pesantren refer to Islamic schools, usually boarding schools, that have traditionally provided education for the poor.  Within Indonesia these institutions have provided a very valuable service to the rural poor and are not, in general, extremist organizations.

[ix] Risk Management Solutions – the RMSTM U.S.Terrorism Risk Model. http://www.rms.com/publications/terrorism_risk_modeling.pdf

[x] op cit.pp.6

[xi] BBC News Monday, 1 October, 2001 http://news.bbc.co.uk/1/hi/business/1573858.stm

[xii] Source: Bloomberg New Report on statement by World Bank President James Wolfensohn http://www.detnews.com/2001/business/0110/02/c04-308069.htm

[xiii] ibid

[xiv] Bali Beyond the Tragedy – Impact and Challenges for Tourism-led Development in Indonesia. Conflict Prevention and Recovery Programmes, UNDP Indonesia. pp. i


[xv] http://www.budpar.go.id/statistik.html?catid=Visitor+Arrival&idstat=T-1

[xvi] Op cit. The Healing of Bali.

[xvii] Bali Beyond the Tragedy.  Op cit pp. 6. Source: National Socio-Economic Survey (SUSENAS) 2002 and BPS Regional Accounts.

[xviii] op cit pp. ii

[xix] http://www.budpar.go.id/news.html?id_news=0402040001

[xx] Bali Beyond the Tragedy.  Op cit pp. ii

[xxi] Bali Beyond the Tragedy.  Op cit pp. iii

[xxii] Radio National Breakfast. 23/10/2002

[xxiii] The Healing of Bali.  Directed and Produced by John Darling.  50 mins. PG. Distributed by Ronin Films PO Box 1005 Civic Square ACT 2608.  http://www.roninfilms.com.au email: orders@roninfilms.com.au

[xxiv] Op cit. The Healing of Bali.

[xxv] Op cit. The Healing of Bali.

[xxvi] ibid

[xxvii] Now We Move Forward! – Sekarang Kita Maju! Address by Asana Viebeke L. Kuta Desa Adat. Parum Samigita.  In the authors personal collection of documents.  The term kali yuga, refers to the Hindu notion of the present times. Also known as the “age of iron”; or an age of materialism and ignorance.  It is believed that at the end of the Kali Yuga, this world will be destroyed and cleansed, with a new era of peace and enlightenment beginning.

[xxviii] Absence of righteousness and the presence of evil and irreligion

[xxix] righteous, good, positive, holy

Posting this I noticed that at least one link wasn’t loading.  It was written a few years ago so I would expect some links will point to urls that no longer exist.  If you’re having trouble sourcing things, please get in touch with me and I’ll try and up date the link(s).

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