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Terrorism And Its Influence In Creating A Legal And Economic Mayhem

The tryst to acquire new ways of knowledge of society is not new to human conscience. Separation and amalgamation of different disciplines is common practice to impart knowledge to new comers. It was there in Arthashastra, where Kautilya amalgamated all the spectrum of society, such as economy, polity, foreign relation, administration, law, to provide a fool proof ways to run a kingdom. Similarly, modern education system separates all those disciplines to specialize in each.

We say that law is the command issued by a sovereign, but this command too depends on other obligation of a sovereign. For this the sovereign have to go into other aspects of a particular society. When the law makers construct a law in accordance with the societal demands, they not only address what's and how's, but also the why's when's. To make it more clear, an example is essential here. Terrorism is a new threat to world peace, which have sheeted almost all the major countries.

In these circumstances, the first duty of a sovereign is curb terrorism by introducing new laws. But, making laws to curb terrorism is not enough. Terrorism increases not due to radical mentality but also due to terror funding and state sponsored terrorism and also due to publicity. Thanks to mass media. States sponsored terrorism or terror funding is the consequence of international competition.

International competition takes place because of asymmetrical development of all the world countries. Asymmetrical development is due to historical reasons. So this is practically a vicious cycle. What I will show in my very project is the linkages of these various issues. This works simultaneously, impacting each other, complexing the struggle to achieve perpetual world peace.

Although the term 'Terrorism' is not subject to a universally agreed definition, it can be broadly understood as a method of coercion that utilizes or threatens to utilize violence in order to spread fear and thereby attain political and ideological goals. According to the classic terrorist "triangle", A attacks B, to convince or coerce C to change its position regarding some action or policy desired by A.

The attack is directed against the innocent victims to put pressure on third parties such as governments to change their policy and position. On the other hand, State sponsored terrorism is a tool employed by the government against its own citizens, against factions within the government or against foreign governments or groups. With a rank of 7 in the Global terrorism index of 2019, India is suffering from both form of terrorism.

On the international scenario Pakistan's anti-India has the tacit support of China. China, in conjunction with Pakistan, is actively supporting and arming insurgencies within India. The Chinese 'string of pearls 'strategy is a reality but more importantly, this is being reinforced with Islamic radicalism in conjunction with Pakistan's proxies. Pakistan has been waging an asymmetric war against India for more than two decades. Internally the threat of terrorism is mainly coming from the Maoists group attacks.

The Maoists insurgency is the biggest threat to India's internal security. In 2018, India continued to face a diverse set of terrorism threats, from the ongoing territorial disputes in Kashmir, aSikh separatist movement in the northern state of Punjab to the secessionist movement in the north –eastern state of Assam. Moreover, a violent Maoist inspired left-wing insurgency has re-emerged across central India. source: Global Terrorism Index,2019 9(Fig 1)

On the basis of this present scenario this paper mainly focuses on the mayhem created in the economic and legal set up of the country and the strategic options for India to combat the menace using the Game theory models.

An Economic Perspective Of Terrorism In India

There is a complex type of relationship between terrorism and economic performance. On the one hand, terrorism may affect the economic growth negatively, and on the other hand, strong economic performance may generate less terrorism. Frey and Luechinger (2003) suggested that terrorism problem may be solved by increasing the opportunity costs of terrorism.

When there is economic prosperity, then the potential terrorist groups will have additional economic alternative such as jobs, employment opportunities, and reduction in poverty and relative deprivation and this will further increase the opportunity costs of terrorism. It is quite obvious that the incidents of terrorism are much higher in the developed countries than in the developing country.

According to the Global Terrorism Index (which measures the direct and indirect impact of terrorism, including its effects on lives lost, injuries, property damage and the psychological after effects. it is a composite score that ranks countries according to the impact of terrorism from 0(no impact) to 10 (highest impact). Fig 2 shows that, the index averaged 7.62 from 2002 to 2018.which clearly depicts that India is vulnerable to the terror attacks which is a cause of economic slowdown in the country.

If we study the GDP of the Indian economy during the same period then according to Fig 3 there is a negative relationship between GDP growth rate and the terrorism index, though not static but it is quite clear that, as income level and job opportunity lowers the incidents of terrorism rises.

Economic theory postulates that terrorism incidents and terrorist attacks can reduce economic growth and generate economic performance. The rational choice theory explains that the main goal of the terrorists is to destabilise the economy. There are two economic agents, one is government and other is terrorist groups.

On one side from rational perspective, the government can weigh the costs of accepting demands of terrorists and the costs of economic damage in case of not fulfilling the terrorist demands. So, if the terrorist are going for the terrorist activities, it means that economic damage due to terrorism becomes comparatively less costly as compared to the acceptance of terrorist demands (Sandler and Enders 2008). The other economic theory "immiserizing modernization theory" elucidates that economic performance and terrorism have two way connections, if the benefits of economic performance could not be shifted through trickle-down effect to poor people of the economy.

The poor economic performance encourages income inequality, and therefore poverty prevails in the economy. The increase in the level of poverty diminishes the opportunity cost of terrorism which favours the poor masses to go for terrorism. This theory describes the economic performance and the vicious cycle of terrorism (shahbaz 2013) . The relative deprivation in the people compels people for doing such terrorist attacks.

So from the above data and theories we can see that, Terrorism do have a negative impact on the economy and the cocktail of unemployed youth, illiteracy, availability of drugs and weapons is a readymade prescription for terrorism, particularly in the developing countries where existing terrorist organisations lure the youth on the mere promise of employment.

Legal Perspective Of Terrorism In India

In 1994 the United Nations General Assembly established that terrorism was "criminal and unjustifiable, wherever and by whomever committed"..."what ever the considerations of a political, philosophical, ideological, racial, ethnic, religious or any other nature that may be invoked to justify them". By defining terrorism as a crime rather than as an international security issue, the General Assembly has chosen a criminal law approach rather than a war model of fighting terrorism.

While the General Assembly categorized international terrorism in 1994 in terms of a criminal justice model as a serious crime, the United Nations Security Council categorized it, on 12th September 2001, in resolution 1368,'like any act of international terrorism, as a threat to international peace and security," thereby applying a security rather than a crime model to such acts. It is widely accepted that a number of countries are strongly supporting the Security Council approach while other members of the International community feel more comfortable with General Assembly method.

It is often argued that, it would be more appropriate to prevent new terrorist attacks from happening rather than to punish the terrorist for the offences already committed. On the Basis of this anew phrase has emerged in the international legal arena i.e. proactive law enforcement. It is used to convey a contrast with reactive law enforcement. Proactive law enforcement emphasizes preventing and interrupting crime, rather than reacting to crimes already committed, and its novelty is often overstated.

Nevertheless, the label "proactive "is now used for almost every initiative to reduce crime. The goal of proactive enforcement is to proactively integrate substantive and procedural mechanisms to reduce the incidence and severity of terrorist violence and to do so within the strict constraints and protections of the civilian criminal justice system and the rule of law. Thus, countering terrorism through penal prevention would mean criminalizing acts that are committed before any terrorist acts take place.

And indeed in recent years, the international community has moved in this direction. Most importantly there were efforts to criminalize recruitment, training, supplying weapons to, support, financing, conspiracy, incitement, and glorification of terrorism.

Thus UNSC resolution 1373(2001) decides that all states shall:

  1. Prevent and suppress the financing of terrorist acts; decides also that all states shall:
    1. Refrain from providing any form of support, active or passive, to entities or persons involved in terrorist acts, including by suppressing recruitment of members of terrorist groups and eliminating the supply of weapons to terrorists;
    2. Take the necessary steps to prevent the commission of terrorist acts, including by provision of early warning to other states by exchange of information;
    3. Deny safe haven to those who finance, plan, support or commit terrorist acts, or provide safe havens;
    4. prevent those who finance, plan, facilitate or commit terrorist acts from using their respective territories for those purposes against other states or their citizens;
    5. Ensure that any person who participates in the financing,planning,preparation or perpetration of terrorist acts or in supporting terrorist acts is brought to justice and ensure that, in addition to any other measures against them, such terrorist acts are established as serious criminal offences in domestic laws and regulations and that the punishment duly reflects the seriousness of such terrorist acts;

      Ideally these provisions of the Resolution should be incorporated into criminal codes of the countries in order to ensure that they become separate criminal offences punishable under national laws.

      The UNSC in its Resolution 1624(2005) further expanded this list of offences to incitement when it decided to "calls upon all states to adopt such measures as may be necessary and appropriate and in accordance with their obligations under international law to:
      1. Prohibit by law incitement to commit a terrorist act or acts;
      2. Prevent such conduct;
      3. Deny safe haven to any persons with respect to whom there is credible and relevant information giving serious reasons for considering that they have been guilty of such conduct.
Though internationally this scenario prevails; Indian anti-terrorism laws lags behind which is mainly traditional in its approach. In India, for years, adequate attention was not paid to enactment of specific enabling domestic legislations that could effectively deny operating space and maneuverability to terrorist groups and their support structures that would deter them from executing any acts of terror.

In the earlier stages, incidents of terrorism in India were generally dealt with as law and order issues and therefore investigation and prosecution in such cases largely followed the penal provisions enshrined in major laws such as the IPC, Indian Explosives Act, Indian Arms act, and such others, while procedurally, the provisions of the Criminal Procedure Code were followed.

Over the years, as acts of terror became more frequent, intense and geographically widespread, aided and abated by external forces, the inadequacy of the general laws of the country as well as the traditional approach of treating them get exposed. Need for special enactments for counter-terrorism was observed.

Now if the country is to tackle the menace of terrorism effectively, then national security must get precedence over all other considerations including those related to federalism. An effective Counter terror infrastructure needs to rest on a 'tripod' which must incorporate three main elements- an omnibus law governing all aspects of terrorism; a single investigative agency to single-minded pursuit of terrorism cases in a time-bound manner and an agency to collect,analyse and disseminate intelligence inputs relating to terrorism. So, in a nutshell:
  1. The reactive adhoc approach of India towards counter terrorism should be changed and the evolution of its statutory approach from adhocism to zero tolerance will be appropriate
  2. The language and structure of Counter terrorism efforts as well as the anti-terror statutes reflects the legal structure of 1980s, which is not adequate to effectively deal with the terrorism which has transformed with the evolution of technology in various field.
  3. The transnational nature of the terrorism and its rapid utilization of technology not only make it a country specific challenge, but also a global threat. Hence, to effectively with the new aspects of terrorism in the field of cyber, weapon technology, recruitment and financing a timely adoption of legal measures is the need of the hour.
  4. Hence it is high time for India to learn from its past experiences and underscore a grave need of in-depth analysis of execution and impacts of various provisions of counter terror legislations which has caused significant incoherence.

Game Theory: An Effective Tool To Combat The Mayhem

Over the last two decades, a small group of analysts in economics and political science have applied game theory to study terrorism, which involves the premeditated use or threat of use of violence or force on the part of terrorists to achieve a political objective through intimidation or fear.

For example Sandler et al. (1983) present some rational-actor models that depict the negotiation process between terrorists and government policymakers for incidents where hostages or property are seized and demands are issued. In their model, terrorists 'valuation of likely concession to be granted by a government is based on a probability distribution, conditioned on past governmental concessions. Their analysis illustrates that the terrorists 'choices and actions are influenced by those of the government and vice versa.

A strategy is a complete algorithm for playing the game, telling a player what to do for every possible situation throughout the game. The game theory basically helps to model strategic behavior by the agents who understand that their actions affect the actions of other agents. Today game theory is applied in wide range of areas like military strategy, international relations, political science, history, sports, crime, theology, business, trade and everyday life.

Although much work is needed to be done before a model could be applied in decision making, but its importance and applicability can be best understood by the following paragraph.

"It should be emphasized at the outset that we are not seeking a magic formula to solve difficult planning situations. Such a result is far in the future, if it can be deducted at all. Neither do we offer hope of simplifying the decision process. If anything, considering an estimate from the game theory point of view requires a higher degree of analysis and logical thought than does the present standard planning doctrine. But it is hoped an understanding of what game theory is and the type of reasoning behind it will aid the commander in marshalling his own abilities to the maximum when faced with a difficult planning situation." (Beebee, 1957)
  1. India vs. Pakistan ( Iterated Prisoner's Dilemma)
    Here both the countries have a set of strategy i.e. whether to attack the other country or not. If both countries attack each other, both of them pay the heavy price of war. If one attacks while the other chooses to remain peaceful, then the aggressive country wins the war. The best scenario, however, would be when both countries choose peace. The following payoff matrix depicts the same story for the two players i.e. India and Pakistan.


DON'T ATTACK -10,-10 5,-20
-20,5 0,0
Fig 1: Iterated Prisoner's Dilemma

The stable solution of a game can be found by finding its Nash equilibrium (NE). "Nash equilibrium is a concept of game theory where the optimal outcome of a game is one where no player has an incentive to deviate from his chosen strategy after considering an opponent's choice. Overall, an individual can receive no incremental benefit from changing actions, assuming other players remain constant in their strategies. The Nash equilibrium of this game is (Attack, Attack). This is also evident from the recent situations of the Kashmir region, which has always been in a tensed situation.

However, in this game the Nash equilibrium is not the Pareto Optimal situation.Pareto optimal solution is the one which is a Win -Win for both. At this solution point it is not possible for any player to be better off without making the other player worse off. Therefore, the nations can cooperate and choose not to attack each other to reach the Pareto optimal solution i.e. (Not Attack, Not Attack).

Appropriate binding agreements (various accords and UN resolutions) can ensure peace in the region by making them stick to the mutual cooperation point. Indeed, such agreements had been signed by both the nations from time to time to ensure peace by keeping them at (Not attack, Not attack). So it seems appropriate to study their long-run relationship through Iterated Prisoner's dilemma.

Bayesian Games

The declaration of a player's (nation's) doctrine or foreign policy is a way to communicate with all the other players (nations) by revealing one's own strategies and preferences (and therefore payoffs). This shapes the beliefs of other nations and thus enables them to form their own set of strategies against other players.

After all the players form their strategies against each other and reveal them (declaring their foreign policies), then the players (nations) may decide their point of operation. By cooperating with each other they may sustain at the Pareto optimal point, thus win-win for both of the players (nations). Because players (nations) know each other's strategies and payoffs, so in the absence of formal binding agreements, both the players (nations) are rendered to mutually cooperate since the other player (nation) would then know the way punish (be stringent) the opposite player. This reduces the risk of any one of them to deviate.

Therefore it can be now understood that a nation's ability to achieve its objective depends on the actions of other nations states, and the outcomes depend upon the strategic interaction amongst these nations (Stephen J Majeski 1995). However, declaration of doctrine by the nation is a necessary but not a sufficient condition for smooth functioning.

Along with declaration, adhering to the declared policy is equally important or otherwise, the declared policy would be considered a sham. Nonadherence to their own declared policy instigates feelings of distrust, creates suspicions about opponents' cooperation in the future and therefore brings back the component of uncertainty. And in the condition of uncertainty, each nation has to make choices independently without knowledge of the choice of other nation.

Decision making in such an environment can be understood through Bayesian games. The Bayesian game between India-Pakistan related to the insurgency in Kashmir has been described in the following paragraph. Suppose, Pakistan while deciding to support insurgents to infiltrate into Kashmir is uncertain about India's response.

It assumes that India will remain amicable with probability p, with probability 1-p it would turn aggressive and conduct counterterrorist attacks. Based on its experiences, interactions with India and Indian counter- terrorism policies Pakistan will have a belief, which it would translate appropriately into the numerical value for p. Now, Pakistan has the following strategies - to support the insurgents (SI) or not support the insurgents (NSI).

While India's strategies will be - harsh response or attack (A) or soft response or not attack (NA). The difference between harsh and soft response has been incorporated by the payoffs in the described game Figure 2.

Finding an optimal strategy for India is straightforward to derive. If India is non-aggressive, then it will choose a soft response (NA) irrespective of whether Pakistan sends or does not send insurgents. However, if India is aggressive then it will respond softly (NA) if Pakistan does not send insurgents but will give a brutal response if Pakistan sends insurgents. Pakistan's decision to send insurgents given this behaivior of India then depends on its expected payoff. Remember we assume that both nations act rationally. Therefore, The expected payoff of Pakistan for NSI:

= 30 + (1 − 0)

= 20 + 1

The expected payoff of Pakistan for SI:

=40 + 0(1 − 0) → 40

For Pakistan to not send insurgents, expected payoff from NSI > expected payoff from SI, or

20 + 1 > 40 → 0 < 0.5

It has been argued that the counter-terrorism measures of India lack appropriate response. "There is no doctrine and most responses are knee-jerk (Asthana 2010)." Some have even said that India's responses have been ludicrously shy and episodic (Asthana 2010)."

"Avoiding a hard line approach to counterterrorism responses, India has never used artillery or other heavy weapons against the terrorists that would lead to disproportionate use of force and collateral damage" (Kiran 2008). Even the UN 2007 review faults India for being soft in counterterrorism policy. Due to this Pakistan's numerically assigned value to p is much higher (p > 0.5).

Note that the numerical value of p depends on Pakistan's expectations of India's response. The recent declarations of "New India" aim at harsh counterterrorism response. But as discussed earlier, a mere declaration of policy might not have enough impact on the beliefs of other players (nations). They might only consider it as rhetoric. Therefore, a harsh action against counter-terrorism was very much required. This would then make other players (nations) alter the numerical value to p, which would subsequently make insurgents and their sponsor's think twice before acting.

In the game described, when a player's (nations) expectations about India's hard response for supporting illicit activities in India is high enough to make a numerical value of p < 0.5, then the player will not act against India. A befitting reply post the terrorist attack in Pulwama might aid India in achieving this objective and be beneficial to India and the region in the long run. The policies of austere operations and no compromises against terrorism by nations like the United States, United Kingdom and Israel are based on the same rationale.

The Structure of Terror Despite their diversity in motive, sophistication, and strength, terrorist organizations share a basic structure as depicted in figure 1. At the base, underlying conditions such as poverty, corruption, religious conflict and ethnic strife create opportunities for terrorists to exploit. Some of these conditions are real and some manufactured.

Terrorists use these conditions to justify their actions and expand their support. The belief that terror is a legitimate means to address such conditions and effect political change is a fundamental problem enabling terrorism to develop and grow. The international environment defines the boundaries within which terrorists' strategies take shape.

As a result of freer, more open borders this environment unwittingly provides access to havens, capabilities, and other support to terrorists. But access alone is not enough. Terrorists must have a physical base from which to operate. Whether through ignorance, inability, or intent, states around the world still offer havens-both physical (e.g., safe houses, training grounds) and virtual (e.g., reliable communication and financial networks)—that terrorists need to plan, organize, train, and conduct their operations.

Once entrenched in a safe operating environment, the organization can begin to solidify and expand. The terrorist organization's structure, membership, resources, and security determine its capabilities and reach. At the top of the structure, the terrorist leadership provides the overall direction and strategy that links all these factors and thereby breathes life into a terror campaign.
The leadership becomes the catalyst for terrorist action. The loss of the leadership can cause many organizations to collapse. Some groups, however, are more resilient and can promote new leadership should the original fall or fail. (Source: National Strategy For Combating Terrorism).

So, on a concluding remark we need to deal with the underlying factors of terrorism first to combat terrorism and moreover, India should regulate its legal framework in a proactive manner for its counter-terrorism approach. Game theoretic approach for selecting an appropriate policy and strategy framing can be used for more efficiency. The trans-national nature of terrorism and its ever expanding horizon is becoming a serious threat for the whole world, as India is situated at the epicentre of terrorism proper policy formulation and regulation should be enacted on a stringent basis.

  1. Citation: Pradeep, Siddhartha (2019): Game theory, Strategies and the convoluted triangle - India, Pakistan, Kashmir, ZBW – Leibniz Information Centre for Economics, Kiel, Hamburg.
  2. Jurisprudence of Anti-Terrorism Laws - An Indian Perspective; Ramanand Garge
  3. National Strategy For Combating Terrorism.
  4. Global Terrorism Index,2019
  5. Terrorism and India: an economic perspective Alam Khan1 • Mario Arturo Ruiz Estrada1 • Zarinah Yusof1
  6. Terrorism and Game Theory: From the Terrorists ' Point of View Kevin Chlebik Pepperdine University
  7. Terrorism and Game Theory By Todd Sandler School of International Relations University of Southern California And Daniel G. Arce M. Department of Economics Rhodes College
  8. Strategic Options Against State-Sponsored Terrorism Prakash Katoch
  9. Countering Terrorism:New International Criminal Law Perspectives-Jean Paul Laborde

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