Terrorist Finance (merged thread)

[relative autonomy]

Terror Inc. by Loretta Napoleoni

Has anybody read this? I think its a pretty great economic analysis of the other side of the War on Terror/

A teaser quote from the preface:

"...over the last fight years, members of armed organizations have been hunted down like criminals at home by the same political forces that have fostered them abroad; the final aim being to serve the economic interest of the West and its allies, Muslim oligarchies and...the former Soviet Union in the past and Russia at present.This duality provided terror organizations with the motives to strike back and the opportunity to build their own economy. I have defined this phenomenon as the New Economy of Terror, an international network linking the support and logistical systems of armed groups. Today the New Economy of Terror is a fast growing international economic system, with a turnover of about 1.5 trillion, twice the GDP of the United Kingdom, and is challenging Western Hegemony, What we are facing today is the global class between to economic systems on dominant--Western Capitalism--the other insurgent--the New Economy of Terror...
...this scenario is reminiscent of the Crusades, when Western Chirstendom rebelled against the domination of Islam. Behind the religious conflagration, economic forces initiated and sustained the Crusades, enabling the West to repel Islam and begin its march to dominance....the political and economic dominance of the West has hindered the expansion of emerging economic and financial forces in the Muslim world. These forces have forge alliances with Islamist armed groups and hard-line religious leaders in a campaign to rid Muslim countries of Western influence and domestic oligarchic rulers. As in the Crusades, religion is simply the recruitments tool; the real driving force is economics.
The New Economy of Terror has become an integral part of the global illegal economy, generating vast amounts of money. This river of cash flows into traditional economies, primarily the US, where it is recycled. It has devastating effects on Western business ethics, but above all it cements the many links and opens new ones between the New Economy of Terror and legal ones.
September 11 was rude awakening for the world. It has triggered a war against a phenomenal enemy, who will attack whenever possible. What the world has not realized is that this enemy is the product of the polices of dominance adopted by Western governments and their allies--the oligarchic powers of the Middle East and Asia--its monetary lifeline is deeply intertwined with out own economies. The essence of it is being the New Economy of Terror."

[goesh]

I think the real money numbers are like the real terrorists - it's hard to flush them into full light for all to see. The alternate energy impetus is driven in part by these concerns you have posted, I'm sure of that much at least. Crooks have for a long time washed money with the soap of legitimacy but the collateral markets of clean and dirty gelt seem to take on a life of their own, distinct from their origins and what they create often runs contrary to the intent of their origins. Drugs 'n guns are the two most lucrative venues to be tracked IMHO.

[Rex Brynen]

...this scenario is reminiscent of the Crusades, when Western Chirstendom rebelled against the domination of Islam. Behind the religious conflagration, economic forces initiated and sustained the Crusades, enabling the West to repel Islam and begin its march to dominance....the political and economic dominance of the West has hindered the expansion of emerging economic and financial forces in the Muslim world. These forces have forge alliances with Islamist armed groups and hard-line religious leaders in a campaign to rid Muslim countries of Western influence and domestic oligarchic rulers. As in the Crusades, religion is simply the recruitments tool; the real driving force is economics.

I'm analytically allergic to sweeping, monocausal explanations, and frankly I think this one is especially deeply flawed.

This is not to say that there aren't important confluences and interrelationships between formal and informal economies, criminal activity and armed nonstate groups/terrorism--such groups, like all institutions, need to generate resources. However, to lump (as this seems to do) all Islamist political mobilization to an epiphenomenon of economic interest, to ignore political grievances and domestic settings, and even to lump very different groups together seems to me to be more about sound-bites (or word-bites) than it is about analyzing the real world.

More broadly, I think there is an interesting phenomenon whereby a variety of audiences--politicians, policymakers, the press, the public, even new CT professionals--look for an easy, engaging, sweeping diagnosis and answer to current security challenges. In my view, not only is it NOT that easy, but the real pay off is in understanding precisely the complexities and variations at work.

[Penta]

More broadly, I think there is an interesting phenomenon whereby a variety of audiences--politicians, policymakers, the press, the public, even new CT professionals--look for an easy, engaging, sweeping diagnosis and answer to current security challenges. In my view, not only is it NOT that easy, but the real pay off is in understanding precisely the complexities and variations at work.

Never mind the payoff - the complexity and puzzle of it is where the fun is.

[relative autonomy]

I'm analytically allergic to sweeping, monocausal explanations, and frankly I think this one is especially deeply flawed.

This is not to say that there aren't important confluences and interrelationships between formal and informal economies, criminal activity and armed nonstate groups/terrorism--such groups, like all institutions, need to generate resources. However, to lump (as this seems to do) all Islamist political mobilization to an epiphenomenon of economic interest, to ignore political grievances and domestic settings, and even to lump very different groups together seems to me to be more about sound-bites (or word-bites) than it is about analyzing the real world.

More broadly, I think there is an interesting phenomenon whereby a variety of audiences--politicians, policymakers, the press, the public, even new CT professionals--look for an easy, engaging, sweeping diagnosis and answer to current security challenges. In my view, not only is it NOT that easy, but the real pay off is in understanding precisely the complexities and variations at work.

The book is an economic analysis. it maybe be limited economic determinism to a degree but i don't think that makes it sweeping and monocausal. Napoleni talks about the emergence of codified irregular warfare doctrines how the US and USSR spread them around the world. Between the Cold War (and especially foreign support for corrupt dictators) and wars for national liberation there are a lot of armed groups. she details how they construct a "state-shell" to create and economy to support their efforts and becuase armed groups, and especially armed revolutionary movements, have to out administer their opponents to perpetuate and institutional their opponents illegitimacy. These state shells are linked in many concrete and readily observable ways. Here is just one example from the book:

"In Lebanon in 1972, George Habash hosted one of the first international summits to form a front against Zionism and Western imperialism. Representatives came from the Japanese Red Army, the Iranian Liberation Front, The IRA, the Bader-Mienhof, and the Turkish Revolutionary People's Liberation Front. The participants agreed to set up an international network which included economic and financial cooperation, the exchange of intelligence, sharing safe houses, joint training programs and arms purchases."

The policies of the Cold War and War on Terror fuel armed groups. Armed groups operate in the same clandestine space as organized crime and intelligence agencies. I don't think it is sweeping or monocausual to detail their economic relationships, how those developed into a real economic force and how that force helps to motivate the War on Terror.

I would really suggest actually reading the book before you write it off. You may not agree with her world-systemic analysis but she gives a lot of insight into how armed groups operate and are funded. Also I bet there is some new information in there that you will be happy to have read and learned.

[Jedburgh]

....I would really suggest actually reading the book before you write it off. You may not agree with her world-systemic analysis but she gives a lot of insight into how armed groups operate and are funded. Also I bet there is some new information in there that you will be happy to have read and learned.

Well, given the bit from the preface that you quoted at the top of the thread, I'd say that Rex's statement is dead on. Based solely on what you've given us, I'd hesitate to waste the limited time I have to deal with my overloaded reading list on junk.

But I did take the time to look her up, and read through some of her other commentaries and interviews that are readily available. I'll give her that she's a smart woman, and well-informed on the broader general subject. However, the impression that I ultimately come away with is that she's made some seriously flawed assumptions - both about the threat, and about the manner in which the agencies tasked with monitoring and disrupting terrorist financing are dealing with the threat. In some interviews, she comes off as very patronizing with those assumptions of hers. In sum, I perceive her personal political beliefs coloring her analysis to a degree that it contaminates her conclusions.

[Rex Brynen]

I would really suggest actually reading the book before you write it off. You may not agree with her world-systemic analysis but she gives a lot of insight into how armed groups operate and are funded. Also I bet there is some new information in there that you will be happy to have read and learned.

Actually, I read most of what she has on her website before posting--and, as I said, was not impressed. Partly, this is because her sweeping meta-economic analysis gets in the way of her insights into particular operational and financial intersections.

Moreover, some of her insights into insurgent finances are simply wrong--for example, her throw-away statements on Fateh's diversion of funds in the Arafat era are incorrect, and show no knowledge of the vast amount of OS material on the mechanics, destinations, and purposes of revenue diversions (including a very large IMF report and several available forensic audits). In the same piece she quotes Arafat on Hamas (a completely unreliable source), and in so doing contributes to a grand tradition of exaggerated accounts of Israel's role in Hamas' creation. She also dramatically overstates the magnitude and role of Hamas financing and social services in recruiting (again, an area where there is some OS data).

These might seem nitpicks, but they all point to an inclination to shoehorn data to support a grand thesis, and in so doing distorting the former.

[relative autonomy]

These might seem nitpicks, but they all point to an inclination to shoehorn data to support a grand thesis, and in so doing distorting the former.

You're probably right, I am not all that familiar with Hamas to evaluate her or your claims. Her thesis is probably too board to be proven but at the same time i think there is some worth to trying to explain events on the level of world systems. It's nice to have frameworks to locate events within even if the framework flattens some of the complexity.

I would like to know if anyone else knows of another work that tries to explain the macro-economics of the war on terror?

As far as her analysis being tainted by her politics, i don't think that makes different than any other person who has ever written anything. Jedburgh, maybe it just seems like more of a problem becuase you don't agree with her politics? Either way, calling a well researched book by written by a former Fulbright scholar and London School of Economics PhD "junk" is a bit misguided. Every work has it flaws and personal biases but if we only read what we agree with were not really interested in solving problems as much as perusing political agendas and I think therein lies the fundamental dilemma of the war on terror but that is another topic.

At the end of the day, though, I think her basic argument is spot on: that corrupt dictatorships, supported by foreign powers, have kept an increasingly dynamic business class down in the middle east. This political situation, coupled with Cold War meddling in wars of national liberation, created very real motivations for armed to groups to form and try to out-administer their state and create a economy that can provide for the population better than the formal one. These economies came to be linked becuase they operate in the same clandestine space and often share the same broad political goals. The fact that Islamist banks filled the power vacuum in the Central Asia and the Caucuses--two places were the War on Terror existed in a very dramatic fashion before 9/11--after the USSR collapsed and Soviet subsides dried up speaks for itself. I think conflating this with the crusades is a bit much but I think an ambitious economic analysis of the War on Terror is needed and, as far as I know, this is the only work that attempts to do so.

[Jedburgh]

As far as her analysis being tainted by her politics, i don't think that makes different than any other person who has ever written anything.
Everyone writes from their own personal perspective. However, when composing anything that purports to be an in-depth analysis of an issue, it is important to make a conscious effort to put those personal biases aside, otherwise the final product leans more towards op-ed than reasoned analysis. I tend to be more dismissive of the former than the latter.

Jedburgh, maybe it just seems like more of a problem becuase you don't agree with her politics?
Now you are the one making assumptions. Anyone attempting to come to grasp the nuances of any issue needs to look at it from many points of view. Dismissing perspectives because you dislike their politics is foolish. Dismissing a product because it is poorly put together is a completely different matter. I think perhaps Rex's specific observations highlighted the latter point about the book better than my general comment.

Either way, calling a well researched book by written by a former Fulbright scholar and London School of Economics PhD "junk" is a bit misguided.
I you believe that Fulbright scholars and PhDs (the institution doesn't matter) are somehow on some sort of intellectual pedestal and incapable of publishing "junk", then you still have much to learn.

[relative autonomy]

jedburgh, i understand your points and i think they're fair enough but do you know of any economic analysis any work similar to this that you think is superior?

[Kevin23]

For my undergrad poli sci class we have to write a final paper and my prompt is on the worldwide illegal illicit goods trade. Which deals with everything from knockoff parada bags, sunglasses and pirated movies to bogus medinces, auto/aircraft parts, as well as illegal arms, and even humans themselves. Now in my paper I want to deal with this particular trade's links to organized crime and terrorism. However I haven't been able to find many useful sources in the academic library here at the college and the same goes for the internet also.

So I was wondering if someone would mind pointing me in the right direction in terms of finding sources?

Thank you,

[davidbfpo]

Kevin,

This blogsite often comments on the links between crime and terrorism, albeit with a focus on just a few places: http://counterterrorismblog.org/ There is a recent story from The Guardian on cocaine into West Africa and AQIM. A fellow blogsite worth trawling is: http://www.investigativeproject.org/ and www.nefafoundation.org

I have commented before on this reported overlap: http://council.smallwarsjournal.com/...?t=6290&page=3 'Mice & Men' thread and http://council.smallwarsjournal.com/...ead.php?t=6806 'Gangs & Insurgencies'.

Try Europol: http://www.europol.europa.eu/index.a...home&language=

[Jedburgh]

For my undergrad poli sci class we have to write a final paper and my prompt is on the worldwide illegal illicit goods trade. Which deals with everything from knockoff parada bags, sunglasses and pirated movies to bogus medinces, auto/aircraft parts, as well as illegal arms, and even humans themselves. Now in my paper I want to deal with this particular trade's links to organized crime and terrorism. However I haven't been able to find many useful sources in the academic library here at the college and the same goes for the internet also.....

RAND published a study earlier this year, Film Piracy, Organized Crime, and Terrorism

This report presents the findings of research into the involvement of organized crime and terrorist groups in counterfeiting a wide range of products, from watches to automobile parts, from pharmaceuticals to computer software. It presents detailed case studies from around the globe in one area of counterfeiting, film piracy, to illustrate the broader problem of criminal—and perhaps terrorist—groups finding a new and not-much-discussed way of funding their nefarious activities. Although there is less evidence of involvement by terrorists, piracy is high in payoff and low in risk for both groups, often taking place under the radar of law enforcement....

The study was funded by the Motion Picture Association, thus the focus on film piracy. However, as the quoted intro blurb states, the study ranged across a wider range of pirated goods than simply films. You may find some sources cited at the end of the book that could be of use - you could also attempt to contact the authors individually and discuss their insights and sourcing.

[bourbon]

Terrorist Precursor Crimes: Issues and Options for Congress. CRS, May 24, 2007. (PDF)

Congressional Research Service reports are excellent primers on issues, and for undergrad homework. Most can be found at FAS. Google Scholar and Google News Archives (example) are also invaluable tools for basic undergrad research.

One of the more lucrative illicit schemes in the US for by terrorist financing groups involves tax fraud through tobacco smuggling, see:
Tobacco and Terror: How Cigarette Smuggling is Funding our Enemies Abroad, Prepared by the Republican Staff of the U.S. House Committee on Homeland Security. (PDF)

[Jedburgh]

RAND, 15 Dec 10: An Economic Analysis of the Financial Records of al-Qa'ida in Iraq

This monograph analyzes the finances of the militant group al-Qa‘ida in Iraq (AQI) in Anbar province during 2005 and 2006, at the peak of the group’s power and influence. We draw on captured financial records that recorded the daily financial transactions of both one specific sector within Anbar province and the AQI provincial administration. To our knowledge, this monograph offers one of the most comprehensive assessments of the financial operations of AQI or any other contemporary Islamic militant group....

Note: This post is copied from the Al Qaeda in Iraq thread, as it fits in both areas.

[Bill Moore]

http://www.whitehouse.gov/sites/defa..._July_2011.pdf

In years past, TOC was largely regional in scope, hierarchically structured, and had only occasional links to terrorism. Today’s criminal networks are fluid, striking new alliances with other networks around the world and engaging in a wide range of illicit activities, including cybercrime and providing support for terrorism. Virtually every transnational criminal organization and its enterprises are connected and enabled by information systems technologies, making cybercrime a substantially more important concern. TOC threatens U.S. interests by taking advantage of failed states or contested spaces; forging alliances with corrupt foreign government officials and some foreign intelligence services; destabilizing political, financial, and security institutions in fragile states; undermining competition in world strategic markets; using cyber technologies and other methods to perpetrate sophisticated frauds; creating the potential for the transfer of weapons of mass destruction (WMD) to terrorists; and expanding narcotrafficking and human and weapons smuggling networks. Terrorists and insurgents increasingly are turning to criminal networks to generate funding and acquire logistical support. TOC also threatens the interconnected trading, transportation, and transactional systems that move people and commerce throughout the global economy and across our borders.

While researching documents to better understand the potential links between terrorism and transnational organized crime I came across our relatively new TOC National Strategy.

[Bill Moore]

Fletcher Forum on World Affairs, Winter 2010: Tracking Narco-Terrorist Networks: The Money Trail

Before September 11, 2001, al-Qaeda funded and controlled operations from its base in Afghanistan. Al-Qaeda provided funding for the East Africa embassy bombings in 1998, the 2000 attack on the USS Cole in Yemen, and the 2001 World Trade Center attacks. Today, the terrorist threat is more decentralized, with the al-Qaeda core no longer funding other terrorist groups, cells, or operations as they did in the past. Local cells are being increasingly left to fund their own activities. While many fundraising techniques remain popular, including abuse of charities and otherwise legitimate businesses, terrorist cells increasingly engage in criminal activity to fund their actions. For example, Al-Jemaah al-Islamiyah, an al-Qaeda affiliate in Southeast Asia, helped to finance the 2002 Bali bombings by robbing jewelry stores. Another example is the 2005 attacks in London, which were partially financed by credit card fraud.

Break

All things considered, the growing nexus between international terrorism and organized crime may actually be a positive development. For one, tracking terrorists for their illicit activities, rather than their terrorism-based endeavors, is less complicated. Also, while countries may adhere to dissimilar definitions of terrorism or hold divergent lists of designated terrorist organizations, there is more of a consensus on the need to fight crime.

CRS, 24 May 07: Terrorist Precursor Crimes: Issues and Options for Congress

According to numerous terrorism scholars and analysts, there are indications
that terrorists are increasingly relying on non-terroristic, precursor crimes to facilitate their terrorist attacks and/or further their terrorist campaign. Additionally, it appears that terrorist groups are diversifying and expanding the variety of crimes they commit. The cause for the increase in pre-attack criminal activity may be due to the following four factors:
- the decline in state sponsorship;
- the amateurization and decentralization of terror;
- enhanced counterterrorism measures,
- and changing terrorist demographics (i.e. shifts in ideology, strategy,
and capabilities).

According to the United Nations, there is a convergence of organized crime and ideologically driven terrorist groups. Antonio Maria Costa, a UN official with the Office on Drugs and Crime, reportedly believes the “world is seeing the birth of a new hybrid of organized-crime-terrorist organizations.” For example, media reports suggest that “Jihadists have penetrated as much as a third of the $12.5 billion Moroccan hashish trade.” According to the Brussels-based World Customs Organization, “counterfeiting is one of the fastest growing industries in the world with an estimated market worth more than [$]500 billion each year, or 7 percent of global trade!,” the illegal profits of which often go to fund terrorist organizations.

[Jedburgh]

The Joint Staff J-7 published a first version of a Commander's Handbook for Counter Threat Finance on 13 Sep 11.

This handbook provides an understanding of the processes and procedures being employed by joint force commanders (JFCs) and their staffs to plan, execute, and assess counter threat finance (CTF) activities and integrate them into their joint operation/campaign plans. It provides fundamental principles, techniques, and considerations related to CTF that are being employed in the field and are evolving toward incorporation in joint doctrine.

As an aside, I found it interesting, given the current push for putting damn near everything behind CAC access, that this FOUO pub is openly available to the broad 'net public on the Defense Technical Information Center site.

[davidbfpo]

An article by Clint Watts (CWOT) which opens with:

I discuss the trade offs and disadvantages for al Qaeda affiliates such as AQIM that are dependent on illicit funding schemes, namely kidnapping, to sustain their operations. I conclude with the opinion that al Qaeda needs donations more than ransoms if they intend to orchestrate a comeback.

(He ends)...Another detractor of illicit revenue generation for al Qaeda groups is the scrutiny brought on terrorists by law enforcement and the military when they conduct illegal activities like kidnapping and drug smuggling. An important point that I overlooked in the FPRI post.

Link:http://selectedwisdom.com/?p=975

[davidbfpo]

As this is a wider than AQ thread I was puzzled to read Clint's comment and then minutes later on the BBC:

A Newry man is believed to be the first person successfully prosecuted for terrorist fund-raising in Northern Ireland.

Link:http://www.bbc.co.uk/news/uk-northern-ireland-21462050

Yes, the first person successfully prosecuted! 'The Troubles' started in 1969 and much has been made in the UK of having terror finance laws and enforcement. The report has no details and a Google search found little else.