Chapter Five: Financing Terrorism

1. Chapter Five:Financing Terrorism

2. The Importance of Funding

3. 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

4. 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

5. Crime Pays

6. 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

7. 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

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

9. A Macroeconomic Theory of the New Terrorist Economy

10. 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

11. 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

12. 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

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

14. 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

15. The Narcoterrorism Debate

16. 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

17. 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

18. 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

19. Narcoterrorism: Another View

20. 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

21. 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