TerrorismCentral Newsletter
-- For the week ending January 12, 2002 --
AUTHOR:
TerrorismCentral Editorial Staff
TITLE:
TerrorismCentral Newsletter - January 12, 2002
SOURCE:
TerrorismCentral, January 12, 2002
TEXT:
This issue features the first in a three-part series on the financing of terrorism. Part 1 provides a historical context, Part 2, next week, reviews current activities, and Part 3 will review related technologies.
The second half of the newsletter provides a review of the past week.
For more background on the material covered in this newsletter, click on the links herein. All linked additional information is from the TerrorismCentral Library.
Financing of Terrorism Part One: Historical Context
Without funding, the span of influence of a terrorist organization is severely limited. Those organizations that have achieved ongoing financial stability have been able to undertake their activities for decades. Those who have not have disappeared in a few years.
Terrorism is no longer the private activity of a few dedicated individuals. It is big business. This evolution in the nature of terrorism has occurred over time within changes in the general political and economic climate. Fortunes may rise and fall on a change of government, or a change in climate.
The earliest examples of terrorist activities and those of political and religious violence were sponsored by emerging states and wealthy traders. The Assassins of the 12th century were funded by agriculture, drugs, and international trade.
At this time, and until recently, funding for violent actions was usually localized. Small groups with common interests and their sympathizers combined to take limited political action in the forms of assassinations, arson, and local crimes.
As the world became international, supported by evolving technology of communications, transportation, and weapons, political violence began to spread and has become a companion to other global forces.
The twentieth century saw the first acts of modern, internationally organized terrorism. The Spanish Civil War drew combatants from all over the world. It's battles were fought between local groups and those sponsored by international combatants in a global war.
More recently, oil wealth in the Middle East gave countries like Saudi Arabia and Libya enormous resources to help fund the Palestinian and other Islamic causes. Similarly, American strategies during the cold war led to funding of anti-Khomeini guerillas in Iran, UNITA rebels in Angola, and the Mujahedeen in Afghanistan. (The Soviet Union, on the other hand, usually demanded cash for its arms.)
Although riding high on new-found wealth or short-term political goals, these groups quickly discovered that state sponsorship was unreliable, shifting with political goals and the economy. Terrorist groups needed other ways to stay in business -- so they went into business.
While continuing to attract significant funding from sympathizers and state sponsors, terrorist groups have discovered that commerce is the most reliable way to remain solvent. Their fundraising now involves combinations of political participation, media-grabbing attacks, and the quiet conduct of lucrative criminal activities.
By investing wisely, the PLO and its successor organizations have been able to sustain levels of economic independence that fund both charitable work and the expenses associated with terrorist activities. This is a pattern seen in other long-lived organizations such as the IRA, ETA, and FARC. Most recently, alliances among terrorist groups, even those with different aims, have helped both to escalate terrorist activity and to expand financing options.
These groups have built up organizations that combine legitimate commercial and community service with an enormous underground financial enterprise. Funding is made up partly of contributions from sympathizers, partly from legitimate business, and partly from foreign aid or other forms of state sponsorship. But by far the greatest source of capital is raised through the profits of illegal activities that include hijacking and kidnapping for ransom, narcotics trading, smuggling, extortion, and fraud.
Hijacking and kidnapping for ransom began in the 1960s. In 1974, the Monteneros of Argentina kidnapped the Born brothers, owners of a large grain exporter, and were paid $60 million ransom. The company also distributed food and clothing worth another million dollars, and installed busts of the Perons in their factories. Kidnapping became such a widespread problem that insurance to cover it became commonplace.
More recently, kidnapping and banditry have helped to finance groups such as Abu Sayyaf, which has raised an estimated $25 million through ransoms. With only about 800 members, this provides quite a war chest. In Colombia, more than 3,700 kidnappings occurred in 2000, an average of 10 per day. These offer FARC and the ELN a source of revenue that helps protect their finances against the vagaries of the drug trade.
Extortion provides a low level of continuous funding. Many organizations have moved beyond simple beatings. The IRA established public security firms that handled their protection rackets. Appeals to nationalism have also been used. Last year, ETA tried to extort money from Basque football players who played for French and Spanish national teams. ETA claimed the players were betraying their ethnic identity and demanded a "revolutionary tax" in compensation.
Smuggling is a widespread problem. Trade between the Taliban of Afghanistan and its neighbors gave the regime both money and fuel, as they bypassed international sanctions and trade controls, as well as the stiff customs duties and taxes in Pakistan and other markets. In Africa, Liberia's sponsorship of Sierra Leone's RUF rebels extended to helping them smuggle diamonds.
Manipulating customs arrangements, taxes, and subsidies between Northern Ireland and the Republic has been an egregious - and highly profitable - problem. As one loophole is closed, the smugglers quickly find another. One smuggler active in the 1970s was the legendary Thomas "Slab" Murphy. Taking advantage of Common Market subsidies, he moved the same pigs back and forth across the border so often, one official investigator said the animals knew the way by themselves.
Narcotics provides one of the most profitable and troublesome sources of income for terrorists throughout the world, especially in South America and the Middle East. The drug trade is so pervasive that its impact spans all reaches of society, and influences and controls even those who are supposed to combat it.
The history of FARC stands out. First established in 1966 it had little impact and only a 200 or so adherents. For the first ten years of its existence it had little impact -- then it discovered narcotics. Financed by the drug trade, its influence grew and today FARC has 17,000 members and controls a region of Colombia the size of Switzerland. FARC's economic strength presents the greatest obstacle to government efforts to control it.
Organizations like FARC, IRA, ETA and others have survived because they have moved beyond small revolutionary roots to sophisticated organizations managing distributed financial activities across the globe. Trying to rip out the financial roots of these empires is no small task. Next week, we will discuss some of the current efforts underway, and the third part of this series will discuss technology that supports these efforts.
Note: Bibliographic citations for this article can be found in the Finance section of the TerrorismCentral Library.
Europe
Riots erupted in Northern Ireland as a second Catholic girls' school was caught up by intimidation and abuse from Protestant picketers. Police stated that 500 rioters were involved, hurling at least 20 petrol bombs and numerous acts of vandalism. Security patrols are being set up to help prevent rioting in Belfast.
Scotland Yard reported that Britain was home to substantially more than 100 terrorism suspects. Police are investigating whether a prosecution can be launched against British Islamic militant Hassan Butt, who is calling from his home in Pakistan for more terrorist strikes.
Financing of Terror Part 2: Current Events and watch for news on the TerrorismCentral subscription service.
Please contact us with your questions or comments by sending email to . We look forward to hearing from you.
Editorial Team
TerrorismCentral
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PUBLICATION DATE:
January 12, 2002
DATE:
20020112