Chapter Five:Chapter Five:

Financing TerrorismFinancing Terrorism

The Importance of FundingThe Importance of Funding

The Importance of FundingThe Importance of Funding

James AdamsJames Adams Another method for attacking terrorism was Another method for attacking terrorism was

that governments needed to stop the flow of that governments needed to stop the flow of moneymoney

Financing of TerrorFinancing of Terror: Terrorism changed : Terrorism changed between the 1960s and the 1980s and most between the 1960s and the 1980s and most Western Defense policies failed to account for Western Defense policies failed to account for the changethe change

PLOPLO Established an economic wing called Samed in Established an economic wing called Samed in

19701970 Samed developed into a rational business Samed developed into a rational business

structurestructure

Provisional IRA- “Capone Discovery”Provisional IRA- “Capone Discovery” The Provisional IRA found it could The Provisional IRA found it could

raise vast sums of money by raise vast sums of money by frightening shopkeepers and frightening shopkeepers and business owners into paying business owners into paying protection moneyprotection money

Counterterrorism should concentrate Counterterrorism should concentrate on cutting off the financial source of on cutting off the financial source of terrorism. Behind every large terrorist terrorism. Behind every large terrorist group lies a financial networkgroup lies a financial network

The Importance of FundingThe Importance of Funding

Crime PaysCrime Pays

Crime PaysCrime Pays Terrorist financingTerrorist financing

Terrorist operations do not cost a lot of Terrorist operations do not cost a lot of money, but the overall budget is quite money, but the overall budget is quite highhigh

Individual operations are inexpensive, Individual operations are inexpensive, but organizations are costlybut organizations are costly

The problem of the costs of terrorismThe problem of the costs of terrorism Terrorists find it difficult to participate in Terrorists find it difficult to participate in

the economic system, so they are forced the economic system, so they are forced to join an underground economyto join an underground economy

Crime PaysCrime Pays The Hawala systemThe Hawala system

A Hawala dealer accepts a credit A Hawala dealer accepts a credit promise from a dealer in another promise from a dealer in another country and delivers money to a country and delivers money to a client on the basis of the promiseclient on the basis of the promise

If police forces can follow the If police forces can follow the money through an organization, money through an organization, they can eventually take an they can eventually take an organization apartorganization apart

Crime PaysCrime Pays Other forms of terrorist fundingOther forms of terrorist funding

Smuggle stolen goods and Smuggle stolen goods and contrabandcontraband

CharitiesCharities Small marketsSmall markets Counterfeiting and fraudCounterfeiting and fraud Extortion and protection racketsExtortion and protection rackets

A Macroeconomic Theory A Macroeconomic Theory of the New Terrorist of the New Terrorist

EconomyEconomy

A Macroeconomic Theory of the A Macroeconomic Theory of the New Terrorist EconomyNew Terrorist Economy

GlobalismGlobalism Some countries prospered, but Some countries prospered, but

other countries grew weaker and other countries grew weaker and poorerpoorer

Terrorism took hold in some of the Terrorism took hold in some of the areas left behind in the rush areas left behind in the rush toward globalism, and this toward globalism, and this changed the nature of terrorist changed the nature of terrorist financingfinancing

A Macroeconomic Theory of the A Macroeconomic Theory of the New Terrorist EconomyNew Terrorist Economy

Loretta NapeoleoniLoretta Napeoleoni New economy of terrorismNew economy of terrorism

Origins of the new economy of terrorism Origins of the new economy of terrorism grew from the Cold Wargrew from the Cold War

The macroeconomic shift began at the end of The macroeconomic shift began at the end of World War II with the colonial revoltsWorld War II with the colonial revolts

Desire for autonomy led terrorists to join Desire for autonomy led terrorists to join criminals in an underground economycriminals in an underground economy The Shining PathThe Shining Path The Popular Armed Forces of Colombia The Popular Armed Forces of Colombia

(FARC)(FARC) Militant PalestiniansMilitant Palestinians The IRAThe IRA

A Macroeconomic Theory of the A Macroeconomic Theory of the New Terrorist EconomyNew Terrorist Economy The new terrorist economy and the ETAThe new terrorist economy and the ETA

Globalization has created pockets in the world where Globalization has created pockets in the world where failed or weak states are left to govern with little failed or weak states are left to govern with little economic and political powereconomic and political power

Terrorists and criminal groups grow in such placesTerrorists and criminal groups grow in such places Illegitimate groups form a shell state, an Illegitimate groups form a shell state, an

organization that acts like a government in a place organization that acts like a government in a place where the government is not strong enough to actwhere the government is not strong enough to act

Modern terrorism and shell statesModern terrorism and shell states Modern terrorism is an international force supported Modern terrorism is an international force supported

by groups in shell states that continually change by groups in shell states that continually change both their organizational structures and political both their organizational structures and political goals to maintain income from an international goals to maintain income from an international underground economyunderground economy

The most important objective is to raise fundsThe most important objective is to raise funds

A Macroeconomic Theory of the A Macroeconomic Theory of the New Terrorist EconomyNew Terrorist Economy

Mario FerreroMario Ferrero Modern radical Islamic groups use Modern radical Islamic groups use

violent activity as a means of violent activity as a means of providing economic stabilityproviding economic stability

A Macroeconomic Theory of A Macroeconomic Theory of the New Terrorist Economythe New Terrorist Economy

Macroeconomic theory and counterterrorismMacroeconomic theory and counterterrorism Macroeconomic theory suggests that Macroeconomic theory suggests that

counterterrorism policies should be aimed at counterterrorism policies should be aimed at providing the world’s people with economic providing the world’s people with economic stability, opportunity, and participation in the stability, opportunity, and participation in the mainstream economymainstream economy

Economic policies to counter terrorism Economic policies to counter terrorism supporting states in threat of failuresupporting states in threat of failure providing opportunities for people to providing opportunities for people to

participate and benefit from economic participate and benefit from economic systems systems

eliminating underground economic networkseliminating underground economic networks

The Narcoterrorism DebateThe Narcoterrorism Debate

The Narcoterrorism DebateThe Narcoterrorism Debate NarcoterrorismNarcoterrorism

The term narcoterrorism refers to The term narcoterrorism refers to terrorists using either terrorist tactics terrorists using either terrorist tactics to support drug operations or drug to support drug operations or drug trade profits to finance terrorismtrade profits to finance terrorism

Rachel Ehrenfeld championed the Rachel Ehrenfeld championed the idea of narcoterrorismidea of narcoterrorism

The narcotics trade is one of terrorist The narcotics trade is one of terrorist groups primary source of moneygroups primary source of money

The Narcoterrorism DebateThe Narcoterrorism Debate Steven CasteelSteven Casteel

An executive with the DEA, he told An executive with the DEA, he told a U.S. senate committee that a U.S. senate committee that terrorism and the drug trade are terrorism and the drug trade are intertwinedintertwined

He believes that globalization has He believes that globalization has intensified the relationship intensified the relationship between terrorism and drugsbetween terrorism and drugs

The Narcoterrorism DebateThe Narcoterrorism Debate Joshua KransaJoshua Kransa

If people are willing to expand the If people are willing to expand the definition of national security definition of national security beyond the framework of military beyond the framework of military defense, drugs pose a security defense, drugs pose a security problemproblem

The drug trade threatens political The drug trade threatens political and economic stability while and economic stability while disrupting societydisrupting society

Narcoterrorism: Narcoterrorism: Another ViewAnother View

Narcoterrorism: Another ViewNarcoterrorism: Another View

Reasons for rejecting narcoterrorismReasons for rejecting narcoterrorism Selling drugs is only one method, Selling drugs is only one method,

and the drug problem is not and the drug problem is not caused by terrorismcaused by terrorism

The term “narcoterrorism” is an The term “narcoterrorism” is an attempt to take political attempt to take political advantage of the fear of terrorismadvantage of the fear of terrorism

Combining the drug problem with Combining the drug problem with terrorism confuses two different terrorism confuses two different issuesissues

Narcoterrorism: Another ViewNarcoterrorism: Another View

David KaplanDavid Kaplan Charities are responsible for the bulk of Charities are responsible for the bulk of

terrorist financingterrorist financing Pierre-Arnaud ChouvyPierre-Arnaud Chouvy

Narcoterrorism is a convenient term for Narcoterrorism is a convenient term for appealing to public emotions and giving the appealing to public emotions and giving the police more powerpolice more power

Civil libertariansCivil libertarians If governments link drugs with terrorism, they If governments link drugs with terrorism, they

can reinvent the meaning of crime. Drug can reinvent the meaning of crime. Drug dealers will become terrorists, and a dealers will become terrorists, and a frightened public will grant the government frightened public will grant the government expanded powers to combat drugsexpanded powers to combat drugs