Transcript Financing Terrorism

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
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
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
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The IRA
A Macroeconomic Theory of the
New Terrorist Economy
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The new terrorist economy and the ETA
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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

Narcoterrorism
 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
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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
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
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