Terror threat a ‘wild card’ for economy

Jeannine Aversa

Wednesday, May 22, 2002 | 9:52 a.m.

WASHINGTON -- America's recovery from last year's recession is gaining strength by the day but the threat of another terrorist attack is the big "economic wild card" facing the country, a top Treasury official said today.

"We do believe the economy is strong and growing stronger," said Deputy Treasury Secretary Ken Dam. Factories are boosting production, consumers are continuing to spend and help along the recovery and inflation is tame, he noted.

"Terrorism, however, remains an economic wild card," Dam said in remarks to the World Economic Forum at the U.S. Chamber of Commerce. "Unfortunately, we are almost certain to be attacked again," he said.

Dam's remarks follow a string of recent warning by top Bush administration officials. Vice President Dick Cheney said last weekend the prospects of a future terrorist attack in this country are "almost a certainty."

FBI Director Robert Mueller this week said that suicide bombers like those who have attacked public places in Israel will hit the United States eventually. And, Defense Secretary Donald H. Rumsfeld said terrorists inevitably will acquire weapons of mass destruction from countries like Iraq, Iran or North Korea.

A key component to President Bush's war on terrorism is separating terrorists from their money.

That effort is being overseen by the Treasury Department, which has ordered U.S. banks to freeze financial assets belonging to people, groups and businesess that the government believes support terrorists activities. The United Nations has its own list of targeted entities -- including many the U.S. has identified -- whose assets should be frozen.

"Frankly, there's been a little falling off in the alacrity which with some countries have been following the U.N. list," Dam said.

He believed part of the problem was that some countries don't have the proper legal framework in place to take such blocking action. "I would just say that many countries still lack the legal basis for going forward," Dam said.

Roughly $116 million linked to terrorists has been blocked worldwide since the Sept. 11 attacks, an amount that Dam recently referred to as disappointing.

In related matters, Dam said Treasury in around a month will release a revamped anti-money laundering strategy. The report may address the problem of laundering dirty money through the sales of counterfeited merchandise, he said. Efforts to cut terrorists off from their money also probably will be included, officials say.

Dam also urged Congress to pass a federal backup plan for terrorism insurance, something that has stalled on Capitol Hill.

"This unprecedented gap in coverage has serious adverse consequences for our economy. More specifically, it makes it more difficult to finance commercial construction and more difficult to sell commercial real estate," he said.

However, a recent survey by the Federal Reserve found that lack of terrorism insurance wasn't having much effect on companies' ability to obtain bank financing for big commercial projects such as stadiums and large shopping malls.