The Anthrax Economy. (Capitol Ideas).

It turns out that the peace dividend of the 1990s wasn't just about turning government deficits into surpluses, expanding NATO, or creating allies out of cold war enemies. As President Clinton's national security adviser, Sandy Berger, liked to say, "The first peace dividend is peace." And peace paved the way to profits: The biggest dividends were reaped by businesses that, for the first time in post-World War II history, could truly become global.

CEOs no longer had to worry about doing business in a world divided by the Berlin Wall or the Great Wall. Companies like Enron spread by building power plants in territory that was politically off-limits for decades. The symbol of the age was the cell phone that rang almost anywhere, the ultimate indicator that electronic networks were more powerful than political barriers.

Efficiency ruled the day. Nothing annoyed globetrotting CEOs more than cold war barricades. That is why Washington was under pressure to lift its sanctions on Iran, and to eliminate its ban on doing business with Cuba. Those sanctions seemed like vestiges, as useless (and ridiculous looking) as the crumbling, 19th century forts dotting the U.S.-Canadian border. After all, a truly borderless world was inevitable --just ask the futurists.

Like most projections based on straight-lining an existing trend, this one was wrong--or at least premature. In the past two months, the peace dividend has been transformed into the terror tariff. The first things to go were the surpluses themselves. The government will be in deficit next year, after toting up the costs of rebuilding New York City, boosting airline security, insulating the mail against anthrax, and handling other threats. But whatever price the government pays will be dwarfed by the price American businesses will pay-- the loss of security and efficiency that greased the wheels of globalization.

Since September 11, the new barriers are not geo-political. They are psychological: The world is legally open to business, but every calculation of risk seems suddenly very different. Around the globe and even at home, CEOs will have to spend billions on security measures that, until the terror attacks, only seemed necessary in Colombia, Jerusalem, and Jakarta.

More important, the borderless market looks very different. American companies thrived around the globe in the 1990s in part because employees were willing to travel and relocate abroad, because they knew they could hop a plane to London in time for dinner, and move on to Shanghai the next day. They felt safe at headquarters and in satellite offices. Because the infrastructure of everyday life appeared secure, it was easy to focus on leaping borders m a single bound.

That is the anthrax economy's real cost: When the security of infrastructure seemed to evaporate, the world's horizons seemed to narrow.

Politically, it's easier now than ever to invest in China, to strike a deal in Moscow, or to export cars to Japan. But suddenly investment bankers who once prided themselves on how many time zones they crossed weekly are reluctant to travel more than a few hundred miles from home. Building a power plant in India or a fast-food joint in the Dohar seem like invitations to trouble, especially for American companies.

"Who needs to become a target?" a top executive of a major U.S. bank said to me during October's Asian economic summit in Shanghai. "We have more opportunities than ever around Asia," he continued, "but we re not sure we want our name on the door, or our employees at risk." In fact, the whole mood of the Shanghai summit was one of retreat.

As time goes by, life will edge back toward normal. Projects will start up again m emerging markets. People will board airplanes without sweating. The mail will look like mail, not like the plague.

But things may never go back to the way they were--when the unspoken assumption was that the business environment from Shanghai hai to Islamabad to Hamburg would steadily become more like America's. Sure, there would be political resistance, especially in the Islamic world, but it would be overcome by the economic logic of doing things the multinational way. No one seems so certain anymore. Now, those forces of resistance loom far larger in the American mind.

David E. Sanger covers the White House for The New York Times. Previously he served as the chief Washington economic correspondent and Tokyo bureau chief.