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After Brussels, U.S. State Department Hits Europe Where It Hurts: Its Economy

The State Department's travel warning could mean Europe's $780 billion tourism industry could take a severe hit.

GettyImages-517059512
GettyImages-517059512

The unemployment rate in the eurozone is 10.3 percent. Its economy grew only 1.9 percent last year. There’s a chance Britain could leave, taking with it $3 trillion in GDP. And now, in the wake of Tuesday’s terror attack in Brussels, its economy is being dealt another potentially severe blow -- this time, by the United States.

The unemployment rate in the eurozone is 10.3 percent. Its economy grew only 1.9 percent last year. There’s a chance Britain could leave, taking with it $3 trillion in GDP. And now, in the wake of Tuesday’s terror attack in Brussels, its economy is being dealt another potentially severe blow — this time, by the United States.

The U.S. State Department issued a travel alert late Tuesday warning American citizens about the possibility of another attack in Europe. That puts Europe — the strongest U.S.-allied continent in the world — in an cautionary category that includes Republic of the Congo and Uganda.

“Terrorist groups continue to plan near-term attacks throughout Europe, targeting sporting events, tourist sites, restaurants, and transportation,” said the State alert, which will be in effect until June 20, 2016 — the last day of spring.

These alerts can be bad news for a country’s economy, or, in this case, all of Europe. Last October, Bangladeshi Finance Minister Abul Maal Abdul Muhith argued that his country did not deserve the label when the State Department issued an alert about travel to his country. And after the U.S. issued a global travel alert following last November’s deadly terror attacks in Paris, flight bookings to the French capital dropped 101 percent from the same period the previous year.

Europe has long been a popular destination for Americans. According to the U.S. National Trade and Tourism Office, 11.8 million Americans visited Europe in 2015; March, April, May, and June were especially popular times to travel there. They likely played a large part in generating $780 billion in revenue from tourism in 2014 — or 3.4 percent of Europe’s GDP — according to the World Travel & Tourism Council. (2015 data are not yet available.)

Tourism is especially important in European countries with struggling economies, like Italy. According to the WTTC, in 2014, Italy benefited from $73.7 billion in tourism receipts, or about 4 percent of total GDP. Tourism also supported more than 1 million Italian jobs, or 4.8 percent of total employment in a country with an unemployment rate of 11.5 percent. And among 15- and 24-year-olds, who often fill many tourism jobs like valets and lifeguards, the unemployment rate is nearly 38 percent.

According to the State Department, this is the second Europe-wide travel alert in the past 20 years. The last one was issued on Oct. 3, 2010. After that alert, prompted by fears of an al Qaeda attack, searches by U.S. residents for flights to Britain, Germany, and France fell by 35 percent, 40 percent, and 42 percent, respectively, compared with the previous week.

The new State warning comes at a time when it’s cheap for Americans to travel to Europe because of the strength of the dollar. Right now, one euro is worth $1.12. Compare that with March 2011, when a euro was worth $1.48.

If there’s any upside to this, State issued an alert, not a warning, a tag reserved for more dangerous places like Nigeria and Pakistan. But at a time when its economy is struggling to grow, any threat to tourism is clearly a threat to all of Europe.

Photo credit: PATRIK STOLLARZ/Getty Images

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