Term Paper on "Financing Al-Qaeda Identifying & Attempting to Slow"

Term Paper 10 pages (3449 words) Sources: 15 Style: Harvard

[EXCERPT] . . . .

Financing Al-Qaeda

Identifying & Attempting to Slow Al-Qaeda's Operational Cash Sources

There is no consensus among experts in and outside the U.S. government about the magnitude of the threat to U.S. national interests posed by the Al Qaeda organization. Virtually all experts agree that Al Qaeda and its sympathizers retain the intention to conduct major attacks in the United States, against U.S. interests abroad, and against Western countries."

Kenneth Katzman, Specialist in Middle Eastern Affairs, U.S. State Department

How do individuals associated with the terrorist group al-Qaeda fund their activities? And what is the global community doing about stopping of those funds that support al-Qaeda? This paper reviews funding sources - some creative and some traditional - for al-Qaeda's terrorist activities, past and current. The paper also reports ways in which governments are attempting to block funds for terrorists, and also reviews suggestions on how that effort might be enhanced and improved.

FINANCING AL-QAEDA: It is known that the founder and "godfather" and acknowledged founder of al-Qaeda, Osama bin Laden, is the wealthy son of a rich family in Saudi Arabia. It is widely known that bin Laden and has poured a substantial portion of his personal fortune into terrorist activities. Indeed, according to an article in the Bulletin of the Atomic Scientists (Dishman 2004, p. 60) bin Laden has "...created a redundant, multi-layered, global financial network that sustains thousands of radical Muslim." Terrorist groups linked to al-Qaeda "...view bin Laden as a central bank" (Dishman p. 60).



The article by Dishman reviews a book by economic scholar Loretta Napoleoni (Modern Jihad: Tracing the Dollars Behind the Terror Networks), in which Napoleoni asserts that today's terrorist groups such as al-Qaeda "are entrepreneurs who keep their organizations financially healthy and effective - more Donald Trump than Che Guevara" (Dishman, 61). In the same article, Dishman reviews a second book (Funding Evil: How Terrorism is Financed - and How to Stop it) in which author Rachel Ehrenfeld "...unravels an astonishing list of activities in which Al Qaeda has been involved" (Dishman, 61).

That list includes "taxing Afghanistan poppy growers and heroin refiners; laundering money for the Taliban; purchasing poppy crops directly; distributing refined heroin through all the Balkans to Europe," Dishman reports. In addition, al-Qaeda smuggles arms and uranium; and according to Ehrenfeld's account, al-Qaeda has seized partial control of "...most of the diamond markets of Sierra Leone and Liberia" by paying cash to "unemployed Revolutionary United Front rebels" (Dishman, 62).

In the Bulletin of the Atomic Scientists article, Dishman - a defense department analyst - asserts that when the U.S. In 2004 froze the assets of four lucrative Islamic foundation offices, groups that allegedly funneled cash to terrorists, it was "...the equivalent of a pinprick on bin Laden's financial network" (Dishman, 62). As long as the Saudi "pipeline continues to flow," Dishman concludes, "thousands of other charities, Islamic schools, and banks will divert money" to terrorist groups like al-Qaeda.

Meanwhile, in an article in Contemporary Southeast Asia (Abuza 2003), the author explains that al-Qaeda's financial network is "very sophisticated and complex, dating back to the late-1980s to early 1990s" (Abuza 2003, p. 170). Bin Laden of course is a highly intelligent individual and when he set up his organization - based on a decentralized model that would keep funds moving into the hands of geographically diverse yet ideologically united Islamic radicals - he built it on "layers and redundancies" and planned to have it "self-sustaining" (Abuza p. 170).

Bin Laden build those "layers and redundancies" on a backbone of Islamic charities, non-governmental organizations, "mosques, websites, fund-raisers, intermediaries, facilitators, and banks and other financial institutions..." (Abuza p. 170). [the issue of charities as conduits and shell organizations for bin Laden will be addressed later in this paper.] the writer, Zachary Abuza, a Senior Fellow at the United States Institute of Peace (USIP) and an associate professor of political science at Simmons College, asserts that over the past few years bin Laden and his lieutenants have been funding al-Qaeda activities (using the group Hambali, that has launched attacks in Bali and elsewhere in Asia) in Southeast Asia using the following sources:

a) Bundles of cash brought into Asia; b) funds "skimmed from Islamic charities"; c) come corporate entities; d) "proceeds from hawala [an informal value transfer system] shops and gold sales"; e) member and sympathetic outsider contributions; f) investments in Islamic banks in Southeast Asia; and g) "petty crime, racketeering, extortion, gun-running and kidnapping."

What makes these seemingly crude mafia-style fundraising strategies work so well is partly because of a lack of "political will" and a lack of "political pressure" that can be found in the Southeast Asia region, Abuza continues on page 171 of his essay. Al-Qaeda leadership (called the Jemaah Islamiya) knew this region would be perfect for raising money because of "the network of Islamic charities, the spread of poorly regulated Islamic banks, business-friendly environments" (Abuza 171-72) and economies that have histories of "extensive money laundering." It appears, according to Abuza's report, that Southeast Asia has "long been a center for transnational criminal activities," and as of this article's date of publication, 2003, money laundering has not been identified as "...a criminal offence in all Southeast Asian states" (Abuza, 172).

Most of the money raised by al-Qaeda in Southeast Asia arrives in "deliveries of cash by personal couriers," which, the author asserts, is "literally impossible to stop" (172). The other main source of funding for al-Qaeda terrorist actions is through Islamic charities; an estimated "15 to 20% of Islamic charity funds are diverted" to groups with political agendas, Abuza continues (173), and of course al-Qaeda is among those groups. Muslims are expected to donate 2.5% of their "net revenue" to charitable activities, Abuza writes. That 2.5% is known as "zakat"; indeed, with hundreds of thousands of Saudi Arabia's oil-rich citizens contributing zakats to 300 private charities alone, that adds up in a hurry. Abuza claims that Saudi charities send "upwards of $6 billion a year to Islamic causes abroad" (173). And "more disturbing" is the fact that according to a Canadian intelligence report, Saudi charities donated up to $2 million annually to al-Qaeda's "coffers" (Abuza 173).

Loretta Napoleoni has written an investigative essay in Strategic Insights (Napoleoni 2004), a monthly journal produced by the Center for Contemporary Conflict at the Naval Postgraduate School in Monterey, California. In the essay, Napoleoni offers a little history lesson into the reality of terrorism's funding sources and strategies. In the 1990s, Napoleoni writes, when financial markets were being deregulated, violent groups were able to raise money "across borders" and diversify their assets. There was a growing dependency between traditional economies and "The New Economy of Terror," which is the international economic system run by armed groups "to self finance the armed struggle," Napoleoni continues.

And while on the subject of market deregulation, one way in which Islamist armed groups arm themselves is thanks to the "merging of the New Economy of Terror with the international illegal and criminal economy," writes Napoleoni. Those two economies amount to over $1.5 trillion, which is higher than the GDP of England, she explains.

In his book Inside Al Qaeda: Global Network of Terror, author Rohan Gunaratna writes that bin Laden invested a substantial portion of what he inherited from his wealthy father overseas. But how much did he inherit? How much money is Osama bin Laden worth, in terms of his ability to fund terrorism worldwide? The Swiss sources Gunaratna used (Gunaratna 2002, p. 26) estimate bin Laden's investments run between $250 and $500 million. The Australian government uses a figure of $250 million while the British officials place his investment at between $280 to $300 million. The author Gunaratna suggests it is more like $25 to $30 million, "which through prudent investment" soon generated a "very healthy annual return" (Gunaratna p. 26). Meanwhile, bin Laden's contribution to the Afghanistan resistance to the Soviet invasion, and his philanthropy, made friends for him throughout the Muslim international community. Yes, he came from a wealthy background, but his commitment to "the jihad," along with his "humility and simplicity and his ability to befriend and communicate with fighters on the ground" appealed to the mujahidin (those Islamic fighters who are part of jihad) (Gunaratna p. 27). The author quotes one of the mujahidin:

He not only gave us his money, but he also gave himself. He came down from his palace to live with the Afghan peasants and the Arab fighters. He cooked with them, ate with them, dug trenches with them. This is bin Laden's way" (Gunaratna p. 27).

On page 82, Gunaratna writes that al-Qaeda's annual budget is less than $50 million, and most of this money does not come from bin Laden's investments, but rather from "a range of sources." Those include "wealthy Arab benefactors in the Middle East" (some of them "respected individuals in the UAE, Kuwait, Saudi Arabia and Qatar), who are financial "mainstays," Gunaratna explains. The way these funds flow from wealthy sources to al-Qaeda… READ MORE

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