Chapter Five: Financing Terrorism

The Importance of Funding

The Importance of Funding James Adams Another method for attacking terrorism was that governments needed to stop the flow of money Financing of Terror: Terrorism changed between the 1960s and the 1980s and most Western Defense policies failed to account for the change PLO Established an economic wing called Samed in 1970 Samed developed into a rational business structure

The Importance of Funding Provisional IRA- “Capone Discovery” The Provisional IRA found it could raise vast sums of money by frightening shopkeepers and business owners into paying protection money Counterterrorism should concentrate on cutting off the financial source of terrorism. Behind every large terrorist group lies a financial network

Crime Pays

Crime Pays Terrorist financing Terrorist operations do not cost a lot of money, but the overall budget is quite high Individual operations are inexpensive, but organizations are costly The problem of the costs of terrorism Terrorists find it difficult to participate in the economic system, so they are forced to join an underground economy

Crime Pays The Hawala system A Hawala dealer accepts a credit promise from a dealer in another country and delivers money to a client on the basis of the promise If police forces can follow the money through an organization, they can eventually take an organization apart

Crime Pays Other forms of terrorist funding Smuggle stolen goods and contraband Charities Small markets Counterfeiting and fraud Extortion and protection rackets

A Macroeconomic Theory of the New Terrorist Economy

A Macroeconomic Theory of the New Terrorist Economy Globalism Some countries prospered, but other countries grew weaker and poorer Terrorism took hold in some of the areas left behind in the rush toward globalism, and this changed the nature of terrorist financing

A Macroeconomic Theory of the New Terrorist Economy Loretta Napeoleoni New economy of terrorism Origins of the new economy of terrorism grew from the Cold War The macroeconomic shift began at the end of World War II with the colonial revolts Desire for autonomy led terrorists to join criminals in an underground economy The Shining Path The Popular Armed Forces of Colombia (FARC) Militant Palestinians The IRA

A Macroeconomic Theory of the New Terrorist Economy The new terrorist economy and the ETA Globalization has created pockets in the world where failed or weak states are left to govern with little economic and political power Terrorists and criminal groups grow in such places Illegitimate groups form a shell state, an organization that acts like a government in a place where the government is not strong enough to act Modern terrorism and shell states Modern terrorism is an international force supported by groups in shell states that continually change both their organizational structures and political goals to maintain income from an international underground economy The most important objective is to raise funds

A Macroeconomic Theory of the New Terrorist Economy Mario Ferrero Modern radical Islamic groups use violent activity as a means of providing economic stability

A Macroeconomic Theory of the New Terrorist Economy Macroeconomic theory and counterterrorism Macroeconomic theory suggests that counterterrorism policies should be aimed at providing the world’s people with economic stability, opportunity, and participation in the mainstream economy Economic policies to counter terrorism supporting states in threat of failure providing opportunities for people to participate and benefit from economic systems eliminating underground economic networks

The Narcoterrorism Debate

The Narcoterrorism Debate The term narcoterrorism refers to terrorists using either terrorist tactics to support drug operations or drug trade profits to finance terrorism Rachel Ehrenfeld championed the idea of narcoterrorism The narcotics trade is one of terrorist groups primary source of money

The Narcoterrorism Debate Steven Casteel An executive with the DEA, he told a U.S. senate committee that terrorism and the drug trade are intertwined He believes that globalization has intensified the relationship between terrorism and drugs

The Narcoterrorism Debate Joshua Kransa If people are willing to expand the definition of national security beyond the framework of military defense, drugs pose a security problem The drug trade threatens political and economic stability while disrupting society

Narcoterrorism: Another View

Narcoterrorism: Another View Reasons for rejecting narcoterrorism Selling drugs is only one method, and the drug problem is not caused by terrorism The term “narcoterrorism” is an attempt to take political advantage of the fear of terrorism Combining the drug problem with terrorism confuses two different issues

Narcoterrorism: Another View David Kaplan Charities are responsible for the bulk of terrorist financing Pierre-Arnaud Chouvy Narcoterrorism is a convenient term for appealing to public emotions and giving the police more power Civil libertarians If governments link drugs with terrorism, they can reinvent the meaning of crime. Drug dealers will become terrorists, and a frightened public will grant the government expanded powers to combat drugs