The Impact of the War on Terrorism on Neo-liberal Globalisation and Political Regimes

For most of the 1990s, globalisation seemed to march in one direction. Markets were opening, tariffs were falling, and governments across the world were told that prosperity lay in deregulation, privatisation and free trade. Then came 11 September 2001. The attacks on the United States did not end neo-liberal globalisation, but they did change its mood. Security returned to the centre of foreign policy, and the relationship between open markets and state power was rewritten. This post explains how the ‘war on terrorism’ reshaped neo-liberal globalisation and influenced political regimes around the world.

Neo-liberal globalisation before the war on terror
The ‘war on terrorism’ and the return of security
A new balance between openness and control
The rise of the neo-conservatives
Trade in a security context
Bilateral and regional FTAs as foreign policy tools
How security moderated the momentum of neo-liberal reform
Securitisation of movement and surveillance
Implications for political regimes
The South Asian dimension
Varied responses to economic pressures

Neo-liberal globalisation before the war on terror

Neo-liberalism is the belief that free markets, limited state intervention and the free movement of goods and capital produce the best economic outcomes. Through the 1980s and 1990s this idea spread rapidly, shaping the policies of institutions like the World Bank, the International Monetary Fund and the World Trade Organization. The dominant assumption was that economics, not security, would drive global integration. Trade agreements were treated mainly as commercial instruments, and most policy debates focused on growth, efficiency and competitiveness.

By the late 1990s, however, this confidence was already under pressure. An anti-globalisation movement had emerged, financial turbulence had exposed the risks of unregulated capital flows, and the end of the Cold War had removed the simple framework that once explained global conflict. Neo-liberalism was facing mounting challenges even before the towers fell.

The ‘war on terrorism’ and the return of security

The Global War on Terrorism was launched by the United States in response to the September 11 attacks. It quickly became the organising principle of American foreign policy and, by extension, of international politics. Counterterrorism moved to the top of the agenda, and governments dedicated enormous resources to non-traditional security threats.

This produced a visible shift towards the securitisation of society. Airport screening, body scanners and restrictions on what could be carried on flights became normal. Western governments expanded surveillance and built new networks for sharing intelligence. The point to understand is that the war on terror did not replace economic liberalism. Instead, it forced economic openness to coexist with a renewed emphasis on national security. Markets still mattered, but they now had to be reconciled with the fear of attack.

A new balance between openness and control

Before 9/11, the logic of globalisation pushed states to lower barriers to people, goods and capital. After 9/11, states faced a contradiction. Open borders were good for trade but were now seen as a security risk. The result was a balancing act: continue liberalising the economy while tightening control over movement and information. This tension runs through almost every policy area discussed below.

The rise of the neo-conservatives

The changed climate empowered a group of thinkers and policymakers known as the neo-conservatives. Amid the uncertainty that followed the attacks, they appeared confident and decisive, and they pressed strongly for military action. They soon became architects of US foreign policy, arguing that America should use its military power to spread “freedom” and democracy, particularly in the Middle East.

This matters for globalisation because it linked economic and political goals to a security mission. Spreading democracy and spreading markets were treated as two sides of the same project. Foreign policy was no longer just about trade and diplomacy; it was about reshaping regimes. This blending of economic liberalism with an assertive security doctrine gave neo-liberal globalisation a sharper, more interventionist edge.

Trade in a security context

One of the clearest effects of the war on terror was the way trade policy was absorbed into the security agenda. Shortly after the attacks, the United States announced plans to negotiate a Middle East Free Trade Agreement, presenting commerce as a tool to promote peace and stability in a volatile region. Trade was no longer only an economic matter. It became a way to reward allies, stabilise friendly governments and advance strategic interests.

Bilateral and regional FTAs as foreign policy tools

Multilateral negotiations through the WTO continued, and the Doha Development Round was launched in November 2001 with an emphasis on helping the poorest countries. But it was in the area of bilateral and regional free trade agreements that trade policy became most tightly woven into foreign policy. The United States chose its FTA partners partly for strategic reasons, using agreements to consolidate relationships with countries that supported its security objectives.

The reasoning was that expanded trade would promote economic development, and development in turn would support democracy and stability. Implementing a trade agreement also required partner countries to build legal and political institutions that could enforce property rights and contracts, which was seen as a way of hastening democratic development. In short, free trade agreements were now negotiated within a security framework, not purely a commercial one. This represents a significant departure from the assumption that economic gain alone drives trade policy.

How security moderated the momentum of neo-liberal reform

It is tempting to assume that the war on terror simply accelerated globalisation. The reality is more complicated. The renewed focus on security actually slowed the momentum of certain neo-liberal reforms, especially those involving the free movement of people.

The most striking example is immigration. Before 9/11, debates about immigration in the United States focused mainly on economics, such as wages and employment. The attacks introduced a powerful security dimension. The immigration system was rebuilt around national security priorities, and reform efforts that had been gaining ground were stopped in their tracks. A framework for closer cooperation on migration had even been announced just days before the attacks, only to be shelved afterwards. The lasting legacy was years of legislative paralysis on immigration.

Securitisation of movement and surveillance

The same logic produced sweeping legal change. The USA PATRIOT Act, passed within weeks of the attacks, expanded the government’s powers of surveillance. In 2002 the Department of Homeland Security was created, bringing together more than twenty agencies in the largest reorganisation of the federal government since the Second World War. Visa procedures were tightened, and foreign students and visitors faced heightened scrutiny under new tracking systems described by the American Bar Association.

This is the crucial insight. Neo-liberal globalisation promised the free movement of people alongside goods and capital. The war on terror restricted that freedom in the name of security. The momentum of liberalisation was not reversed everywhere, but it was clearly moderated, and movement of people became one of its main casualties.

Implications for political regimes

The war on terror did not only affect economic policy. It reshaped how states exercised power. Many governments used the language of counterterrorism to justify expanded authority. Scholars argue that Washington helped normalise a permanent “state of exception”, in which emergency powers became routine. Other governments around the world borrowed this model to justify surveillance, detention and the suppression of dissent, sometimes targeting peaceful critics rather than genuine threats.

For political regimes, this had two effects. Liberal democracies expanded executive and security powers in ways that strained civil liberties. At the same time, authoritarian and semi-authoritarian regimes gained a convenient justification for tightening control. The security framework therefore influenced the character of regimes themselves, not just their foreign policy.

The South Asian dimension

For an audience in this region, the South Asian experience is especially relevant. Economic liberalisation had already produced uneven growth that disproportionately benefited dominant classes, castes and communities, leaving the rural and urban poor behind. The post-9/11 climate, combined with new anti-terrorism legislation, reinforced these trends. It contributed to a greater securitisation of society and, in some cases, the targeting of religious minorities and marginalised groups. Here, the combination of market liberalisation and a security-driven state created real human insecurity for the most vulnerable.

Varied responses to economic pressures

Because the war on terror moderated the single-minded push for liberalisation, it opened space for different responses to economic pressure. The earlier idea that there was no alternative to rapid neo-liberal reform lost some of its force. States now weighed economic openness against security, political stability and strategic interest. Some pressed ahead with liberalisation, others slowed parts of it, and many used security as a reason to keep tighter control over borders, capital and dissent.

The larger lesson is that globalisation is not a fixed, automatic process. It is shaped by politics, and major events like 9/11 can change its direction. The war on terror reminded the world that economics and security cannot be separated, and that the relationship between the two is constantly renegotiated.

What do you think? If security concerns can slow down or redirect economic liberalisation, does that make globalisation more of a political choice than an economic inevitability? And when governments expand their powers in the name of fighting terror, how should a democracy decide where openness ends and control begins?

How useful was this post?

Click on a star to rate it!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.

References

PDF 📄

Table of Contents

Neo-liberal globalisation before the war on terror 🔗

The ‘war on terrorism’ and the return of security 🔗

A new balance between openness and control 🔗

The rise of the neo-conservatives 🔗

Trade in a security context 🔗

Bilateral and regional FTAs as foreign policy tools 🔗

How security moderated the momentum of neo-liberal reform 🔗

Securitisation of movement and surveillance 🔗

Implications for political regimes 🔗

The South Asian dimension 🔗

Varied responses to economic pressures 🔗