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Speech by the Secretary for Security


Following is the full text of the speech entitled "The New Terrorism: The Threat And Our Response" by the Secretary for Security, Mrs Regina Ip, at the luncheon meeting of the Rotary Club of Hong Kong today (May 14):

Mrs Walters, Officers and Members of the Rotary Club of Hong Kong, distinguished guests, ladies and gentlemen,

First of all, I wish to thank the Rotary Club of Hong Kong, in particular Mrs Walters and Mr Litmaath, for inviting me to join you today. The subject of my speech is "The New Terrorism: The Threat And Our Response". As the traumatic effects of the treacherous terrorist attacks on the US more than eight months ago recede, I would not be surprised if many of us in this gathering are preoccupied with quite different cares and concerns. Yet the war on terrorism is far from over. It would stand us all in good stead to pause and reflect on the implications of the unprecedented attacks on the US, and the response that is required from us all.

The New Terror


Many Americans have observed that the searing events of September 11 are to this generation a defining moment, as much as the attack on Pearl Harbour and the assassination of President Kennedy were to earlier generations. The catastrophic attacks on the US last September are indeed a watershed event not just for Americans but also for the whole world. Prior to that, the world has seen different forms of terrorist attacks, ranging from sporadic violence caused by Palestinian groups from the late 1960's onward or by the Irish Republican Army and its splinter groups in the same period, to the 1996 Khobar Towers bombing in Saudi Arabia, and attacks on US targets, whether in the US itself or on US military and governmental targets outside the US. As a US scholar, Dr Kurt Campbell, has observed, in earlier forms of terrorist attacks civilian casualties were kept to double digit. The motives seemed to be to create a blaze of publicity or to exert leverage for a seat at negotiable table. The more recent attacks on US military and governmental targets were intended to inflict greater casualties. But civilians in the sense of ordinary citizens were clearly not the targets of the terrorists' vengeance.

The attacks on the US last September are truly a watershed in that they were as well co-ordinated as they were calculated to create maximum carnage, whether to civilians or to military personnel. The traditional reluctance to inflict indiscriminate brutality is gone: in its place is a terrifying, lethal, religiously motivated determination 'to create massive, history-changing bloodshed', preferably of sufficient magnitude to destabilise, if not topple, the hated, infidel Western world. Seen in this light, the attacks were tantamount to attacks on cities and qualitatively no different from acts of war.

Implications for the US and the Rest of the World


To the families and loved ones concerned, no scientifically based calculations could ever put a value on the human lives lost. Quantifying the economic costs of terrorist attacks, both immediate and long-term, is less elusive. According to Gary Becker, a Nobel laureate in economics, the direct economic costs caused by the terrorist attacks on the US of September 11, including the cost of the destroyed World Trade Centre, the lost assets of the buildings' tenants, the clean-up costs, the damage to the surrounding buildings and the Pentagon, the planes lost and the lost productive capacity of those killed, amounted to somewhere between US$25 billion and US$60 billion, or up to 0.2 per cent of physical assets and 0.06 per cent of total productive assets of the US. The economic costs of an on-going terrorist threat are harder to quantify. But taking into account the cost of enhanced security, periodic successful attacks on physical assets, and the investment response, Becker estimated that the on-going threat would have a total impact of about 0.3 per cent of GDP. However, Becker estimated that given the vast supplies of human and physical capital and its innovative skills, the US would be able to develop the right policies and measures to reduce the damage over time.

In today's globalised economy, we in Hong Kong were bound to be affected by the shock waves set off by the heavy losses, both economic and emotional, sustained by the US. The heavy blow to our economy caused by the contraction of the US economy, coupled by the sharp drop in confidence, have already produced painful effects in this part of the world. The developments since then - the military success of the US-led forces in Afghanistan and the resurgence of confidence as well as economic growth in the US - underscore the importance of vanquishing terrorism and keeping terrorists in check.

Economic damage apart, perhaps the greatest lesson learned from the unimaginable attacks of September 11 is the profound impact such attacks could have on confidence, and on the free and open way of life that we have known. One of the goals of terrorism is to undermine the confidence we have in our way of life and in ourselves, in matters large and small. To keep the upper hand on terrorism, all countries and territories, large and small, must work together to ensure that the spectre of terrorism does not deflect us from our collective or individual plans and projects to better our lives.

The Situation in Hong Kong


Compared to other countries in Asia, we in Hong Kong are fortunate in that no terrorist organisations are known to exist or have set up any operational base in Hong Kong. Since September 11, our law enforcement authorities have redoubled their efforts to trace any terrorist-related funding channeled through Hong Kong. I am pleased to say that no terrorist-related accounts based in Hong Kong have to-date been found. Hong Kong being an open and freely accessible city and an international financial centre, naturally we cannot afford to be complacent. We continue to work closely with our law-enforcement counterparts worldwide to keep a close watch on any terrorist activities that might affect or exploit Hong Kong.

Our International Obligation to Support the Global Alliance against




China being a member of the United Nations, Hong Kong is required by law to take appropriate and timely measures to implement United Nations Security Council Resolution (UNSCR) 1373, the main purpose of which is to choke off funding for terrorism. For this reason, I have, on April 17, introduced the United Nations (Anti-Terrorism Measures) Bill into the Legislative Council. The Bill seeks to strengthen our ability to counter the flow of funds to terrorists and terrorist organisations. It also seeks to implement the most pressing of the Special Recommendations of the Financial Action Task Force (FATF) on money laundering, a task which we are duty-bound to pursue with vigour, given the importance of these Recommendations in themselves and the leading role Hong Kong has played in formulating them in her capacity as the incumbent President of the FATF.

The United Nations (Anti-Terrorism Measures) Bill - Facts and




To explain the objects of the United Nations (Anti-Terrorism Measures) Bill, the following facts are worth re-emphasising.

Fact #1 - Hong Kong Seeks to Adopt a Minimalist Approach


to Discharge her Obligations under UNSCR 1373


As I explained earlier, the prime purpose of UNSCR 1373 is to clamp down on the flow of funds to terrorists and terrorist organisations. Our bill was drafted precisely with this objective in mind. For this reason, unlike the anti-terrorist legislation of Western countries (such as the USA Patriot Act or the UK's Terrorism Act of 2000), our bill does not seek to increase extensively the already wide-ranging enforcement and investigative powers of law enforcement agencies, such as interception of communications, detention without trial, or even the systematic surveillance of overseas students and residents. To curb the flow of funds to terrorists, our bill prohibits the provision of funds or other financial services or economic resources to terrorists or terrorist organisations; and to strengthen the reporting requirement on the part of any person who knows or has reasonable ground to suspect that certain funds are related to terrorist activities. In sum, the main thrust of the Bill is to augment our arsenal of financial weapons against terrorists. This is what the UN required of us; and this is what we are doing in response.

Fact #2 - Definition of Terrorist Acts is in line with


International Standards


The most important clause in the Bill is obviously the definition of a terrorist act. Contrary to concerns in some quarters that the authorities might use anti-terrorist provisions in the Bill to outlaw certain organisations through the backdoor, our proposed definition is based on the definition of terrorism under the United Kingdom Terrorism (United Nations Measures) Order 2001, and is in line with the definition in the anti-terrorists laws of almost all common law jurisdictions. The definition follows the international trend by requiring that a 'terrorist act' must involve the use or threat of action to influence a government or intimidate the public, and that the use or threat be for the purpose of advancing a political, religious or ideological cause. In addition to these two criteria, the action must also involve serious violence, serious damage to property or serious risk to public health or safety, etc. Behind this internationally accepted definition is the consensus that there is a qualitative difference between terrorist acts capable of inflicting massive and indiscriminate injury and damage to the public and ordinary criminal activities, such as criminal damage, assault or even murder. In accordance with this definition, unlawful acts will not be caught by the proposed bill unless all three criteria are met.

Fact #3 Chief Executive and Secretary for Security not Given


Overly Wide Powers


The Bill empowers the Chief Executive to specify in the gazette that a person or property is a terrorist, terrorist associate or terrorist property when he has reasonable grounds to believe so. It also empowers the Secretary for Security to direct the holders of funds not to make those funds available to any person when she has reasonable grounds to suspect that the funds are terrorist property. These measures are essential to ensuring that law enforcement agencies are able to deal with terrorist activities effectively and expeditiously, especially in the freezing of terrorist funds to minimize any chance that they could be withdrawn or transferred.

The Bill stipulates that it shall be an offence for anyone to collect funds with the intention that the funds be used to carry out terrorist acts, and prohibits making funds, financial assets or economic resources or financial services available to terrorists. The Bill also prohibits the supply of weapons to terrorists, and bans the recruitment of persons to serve with bodies which have been specified by the Chief Executive as terrorists or terrorist associates.

These provisions may look onerous, but let me assure you categorically that they are not. We have included in the Bill effective safeguards to prevent the abuse or wrongful use of enforcement powers. Any person affected by the Chief Executive's specifications and directions by the Secretary for Security to freeze terrorist property may apply to the Court of First Instance to have the specifications or directions revoked. Moreover, to provide additional protection to concerned parties, the Bill provides that the Chief Executive or the Secretary for Security must bear the burden of proof in proceedings in the Court of First Instance. We are satisfied that the Bill is in full compliance with the International Covenant on Civil and Political Rights, in protecting the rights and interests of affected parties and preventing the abuse of enforcement powers.



Perhaps some statistics could also explain the need for the proposed measures. According to US experts, the 1993 bombing of the World Trade Centre, which killed six and injured hundreds, cost the terrorists less than US$50 000 for making the bomb and other related expenditure. Estimates of the expenses for the September 11 attacks, involving the hijacking of four planes by a handful of extremists, ranged from US$250 000 to US$2 million. Although the sums involved are not inordinately large, they were the lifeline of the terrorists. But they are at the same time very modest compared to the hundreds of billions of dollars that flow through the global monetary systems every day. How can terrorist funds be tracked and stopped effectively? We are required, literally, to find a needle in a haystack, as the saying goes.

The answer lies in full and effective international cooperation. Through the implementation of the internationally agreed measures to counter terrorist financing and money laundering, such as UNSCR 1373 and the Special Recommendations of the FATF, suspect terrorist funds would not be able to flow through our systems undetected and with impunity. The cooperation of all countries and jurisdictions is needed to maintain vigilance against the sources and recipients of terrorist funds.

Terrorism knows no borders. The world around us abounds in dangerous terrorist activities - whether in Pakistan, India, the Philippines, Malaysia or Singapore. Chinese separatist and extremist groups and Moslem terrorists in the Philippines, just to name some examples, are known to be connected to and trained by Bin Laden and his Al Qaida accomplices. They continue to cause havoc and disruptions around the world and such activities need to be stopped.

As Senior Minister Lee Kuan Yew said recently, "The way they (i.e. terrorists) operate is just like a multi-national corporation. You buy materials in one place and prepare them and I make arrangements from another place." The international campaign against terrorism will not be able to come out victorious unless concerted efforts are maintained to hit the terrorists where it hurts - at the sources of their funds. As US Defence Secretary Donald Rumsfeld said, "the uniforms of this conflict will be bankers' pinstripe and programmers' grunge just as assuredly as desert camouflage." With the steps that we are taking in unison with our international partners, I believe we will prevail.

Thank you.

End/Tuesday, May 14, 2002


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