{"id":65380,"date":"2017-04-20T15:33:26","date_gmt":"2017-04-20T22:33:26","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=65380"},"modified":"2017-04-20T15:34:52","modified_gmt":"2017-04-20T22:34:52","slug":"no-terrorist-group-can-survive-unless-some-govt-finances-it-terror-economy-expert","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2017\/04\/20\/no-terrorist-group-can-survive-unless-some-govt-finances-it-terror-economy-expert\/","title":{"rendered":"No terrorist group can survive unless some govt finances it – terror economy expert"},"content":{"rendered":"

\u00a0Loretta Napoleoni Courtesy RT\u00a0<\/em><\/span><\/h2>\n
\n

In many ways terrorism works just like a business, and a costly one – the organization needs arms, supplies, and each recruit needs to be fed and equipped; it all costs money. But where do terrorists get their money? How are the atrocities financed? Is jihad even possible when you have no-one to back it with a hefty sum? And can a terror group become independent? We ask these questions to economist and expert of the terrorist financial world, Loretta Napoleoni, on Sophie&Co today.<\/p>\n

Full Report<\/p>\n

https:\/\/www.rt.com\/shows\/sophieco\/214403-terrorism-business-money-jihad\/<\/a><\/p>\n

Follow<\/strong> @SophieCo_RT<\/a><\/p>\n

Sophie Shevarnadze: <\/strong>Loretta Napoleoni, economist, author, expert on the financing of terrorism, welcome to the show, it\u2019s great to have you with us. Now, I\u2019ve heard you speak in one of your speeches, you\u2019ve said a parallel economic system exists today, and you called it the economy of terror\u201d. You said it\u2019s worth $1.5 trln \u2013 and that was before 9\/11. So, I\u2019m just wondering, how big is this terror economy today.<\/em><\/p>\n

Loretta Napoleoni:<\/strong>It\u2019s about, I would say, 5% bigger than it was before 9\/11. But of course, distribution of the money is completely different. There is much more activity in the muslim world that there was before, most of the money moves in cash from place to place, when before it moved through normal international banking system. So there are few changes that have taken place.<\/p>\n

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SS: <\/strong>Okay, we\u2019re going to go through those changes in details in just a bit, but I\u2019m just trying to understand a bigger picture at this point \u2013 apart from drugs and arms sales, diamond smuggling as well, does terror invest in normal business enterprises?<\/em><\/p>\n

LN: <\/strong>Yes. About one third of this economy is actually linked to the legitimate economy. So, they do business with each other. I\u2019ll give you an example \u2013 what is happening now in Iraq in the wheat industry. The Islamic State controls about 40% of the production of wheat in Iraq. The government buys all the wheat and controls price of wheat because it is very important to keep it under certain level. So, they actually bought the wheat from the regions controlled by Islamic State. This is a good example of how a legitimate government actually does business with terrorist organization.<\/p>\n

SS: <\/strong>We\u2019re going to speak just in a bit about how government funding and terrorism are inter-related, but I want to give you another example before that. I spoke not long ago with HSBC whistleblower, who uncovered widespread money-laundering practices that in the end were used to fund terrorist organizations \u2013 maybe you even heard the story, because it was huge in the press. Now, do businessmen who deal with this cash not care where it is coming from?<\/em><\/p>\n

LN: <\/strong>Oh, absolutely. I think we are in a sort of contraction of the world\u2019s economy, most countries are in recession, some countries are actually heading for a deflation. If somebody comes and gives you an opportunity to do an investment in cash \u2013 you\u2019re not going to ask where the money comes from. So, the cash economy actually has increased tremendously since 2008, and I would say that the black market economy also has increased tremendously since 2008.<\/p>\n

SS: <\/strong>You\u2019ve also said that after the Patriot Act the business funded from terror activities moved from the U.S. to Europe, basically from dollar to euro. What exactly does that mean? And where do terror groups hide and keep their money at this point?<\/em><\/p>\n

LN: <\/strong>What\u2019s happened after 9\/11, the introduction of the Patriot Act which makes every single transaction in U.S. dollars monitored by the U.S. authorities \u2013 so all of a sudden, people that did not want the U.S. authorities to know how much money they had or what they were doing with that money \u2013 not necessarily people that were funding terrorists organization \u2013 they decided to move out of the U.S. dollar into the euro. That explains why the euro has appreciated tremendously from 2001 up to 2005, and then of course we had the crisis of 2007-8 which hit both dollar and euro. Today, I would say that very little of the terrorist financing is taking place within the euro area or even the dollar area, the traditional dollar area. Everything is in cash and is outside, absolutely outside the international banking system. So we don\u2019t know how to trace it.<\/p>\n

SS: <\/em><\/strong>When you say that sometimes taxpayers unknowingly fund terrorism \u2013 what exactly do you mean? Could I be sponsoring terrorism? Or can you give a precise example of what that means?<\/em><\/p>\n

LN: <\/strong>Well, one of the examples that I used in one of my books is what happened Northern Ireland during the time of IRA. The IRA controlled every single transportation system, which was private, privately-owned; so each time you went into a taxi, without knowing you were actually funding the IRA. Another example could be taxpayers in countries that are bankrolling armed organisations. For example, in the U.S. today we have an involvement, and even in Europe we have an involvement with certain groups who are fighting the Islamic State in Syria and in Iraq \u2013 so money are going in that direction to buy weapons, or to help them in their effort to fight the Islamic State. Some of these groups, for example the PKK, is still considered a terrorist organization, by the U.S. and also by Turkey. There is this kind of really surreal situation taking place, because the war has changed tremendously since the end of the cold war.<\/p>\n

SS: <\/em><\/strong>But if you take a terror group \u2013 any terror group \u2013 at this point, what would you say is the number one problem for it? Finding cash or the ideology? What is it that they care for the most?<\/em><\/p>\n

LN: <\/strong>Finding cash is the number one priority, because without the money you can\u2019t do anything. The ideology is always in the background. The ideology is important for recruitment \u2013 again, the Islamic State is a very good example of the ideology which is very modern, very pragmatic approach to state building. It\u2019s attracting people from everywhere \u2013 but it is not what is keeping the business of terrorism, the business of fighting in order to conquer territories. What is keeping this business is actually the economic production, the GDP let\u2019s call it, of the area \u2013 which is controlled by this organization.<\/p>\n

SS: <\/strong>What I am asking is that the money that they are raising, the cash that they are raising \u2013 is it for business purposes, or is it really to keep the ideology going?<\/em><\/p>\n

LN: <\/strong>Oh it\u2019s for business purposes. The way the ideology is maintained is actually through the running of the state. For example, we have Islamic courts where people can go and bring their own complaints, we have administration, a bureaucracy which people can use in order to carry on their businesses. This people, they are doing businesses and paying taxes, and this money goes to the Islamic State. So, it is run very much like a normal state. This is where the money is coming from. At the same time, by doing this service for the people under the umbrella of Salafism, under the umbrella of Islam, they are actually maintaining the ideology.<\/p>\n

SS: <\/strong>But could that be said about everyone? Because I just spoke with a journalist who embedded himself with Islamist militants in Syria, and he didn\u2019t talk about running around raising cash \u2013 he talked about a bunch of people, rank and file, looking to establish Islamic law and he seemed pretty genuine by that.<\/em><\/p>\n

LN: <\/strong>Yes. I think the people that are joining this organization today, they are not joining this organization because they want to make money. We\u2019re not talking about mercenaries at all. We\u2019re actually talking about people that are lured into joining, who are seduced \u2013 we are talking about true seduction, because you\u2019re young, you are living in the West, you\u2019re muslim, you don\u2019t belong anywhere, and then all of a sudden the message comes from the Islamic state and says come and help us build the new state, come and help us implement the muslim political utopia\u201d \u2013 something that for generations, for centuries, the muslims have tried to establish and they have always failed, so these people are not motivated by money, this people are actually motivated by ideology. But in order to get to this level, the Islamic State had to build itself and it did it through finance.<\/p>\n

SS: <\/strong>What about the state sponsorship? For instance, the Taliban have been supported by Pakistan, and contras in Nicaragua have been supported by the U.S. Gulf states\u2019 money is going to Syria, Iran is friends with Hezbollah \u2013 so can terrorism really exist without state sponsorship?<\/em><\/p>\n

LN: <\/strong>Very difficult to exist without state sponsorship. Generally what happens is that an armed organisation is bankrolled by a state or very wealthy organization or individual. In the case of Mujahedin we know that the CIA was involved but so was Saudi Arabia \u2013 so you can have more than one sponsor. Then, once the group has established itself, if it is good enough, it can actually privatize the business of terrorism, to find a way to fund itself. This is exactly what happened to Islamic State. From 2011 to 2013 it was bankrolled by various countries, for example Saudi Arabia, Kuwait and Qatar \u2013 and then, once it has established itself in the region, it wanted to control and privatize the business of terrorism, so it started running strategic resources together with a lot of population and it didn\u2019t need the money anymore. And this is when the terrorist organization can actually act independently and do whatever it wants.<\/p>\n

SS: <\/strong>I\u2019m just wondering if it\u2019s possible to pinpoint who is funding\u2026for instance, Gulf Arab states like Saudi Arabia and Qatar are often accused of funding terrorists. However, it\u2019s mostly private funds \u2013 is it even possible to trace those, or it is even fair to blame governments at all, if it is private funds?<\/em><\/p>\n

LN: <\/strong>In the past we did\u2026 for example the Iran contra affairs, we could have traced the money very easily, and the decision to fund the contras through the sale of arms to Iran was taken by the White House. So, we\u2019re talking about 1980s, the Reagan Administration. Today it is very difficult to trace the money because this money is moving in cash from Saudi Arabia to whoever the Islamic State was active with in 2011-2012. So, tracing the money in cash is almost impossible. In the past, it was easier because cash was not used so much.<\/p>\n

SS: <\/strong>So, I\u2019m trying to figure out how to get more money if you\u2019re terrorist? How important is notoriety of the group? For example, for getting donations for individuals? Do you have to be more vicious, or evil than the other, to get attention so that the rich individuals in Gulf States start sending their cash to you?<\/em><\/p>\n

LN: <\/strong>Of course, the more famous you are, the more money you attract. I don\u2019t think you need necessarily to be more vicious or more brutal. I think you have to be more efficient – and this is what has happened with the Islamic State. Their strategy is very interesting, because instead of attacking the army of Assad, the army of Damascus, what they did was actually attacking other jihadist groups – that gave them a sort of notoriety within the jihadist movement, because they looked the strongest, the better organised, the biggest, so everybody wanted to join them, people wanted to move from one group to another. The sponsors thought oh, this is a really good group, this is a better group than the others, so let\u2019s send them money\u201d, and then there is another aspect of notoriety, which is of course through the internet. This organisation was so popular on the internet, because they were so successful they started to get money from all over the world from sympathizers and supporters.<\/p>\n

SS: <\/em><\/strong>When left-wing terror was in fashion in 70s, groups from different countries actually were linked, from Ireland to West Germany, to Palestine and Japan – what about now? Because it does seem terror groups compete with each other, like companies. Is that the case? We witnessed a rift between Al-Qaeda and ISIS. Are the now, what, like rivals on the market?<\/em><\/p>\n

LN: <\/strong>Yeah. Absolutely. I think the situation is completely different from the 1970s, because of course we don\u2019t have a Cold War anymore, so in the 1970s we had all the Marxist organisations – the Red Brigades, for example, the PLO, even the ETA, the IRA – which were fighting against sort of imperialism in the West. These were all linked with each other, they helped each other, they bought weapons together, for example, in order to pay less. Today we have a different situation because today we have profound rivalry within the jihadist movement. Again, this is a product of society today. Everything is multipolar, so everybody is out for himself, including terrorist organisations. Al-Qaeda has always been quite negative vis-a-vis the Islamic State, and even the origins of Islamic State – let\u2019s not forget that this is a group that traces its origins to 2003 Al-Zarqawi group, which was not welcome at all by Al-Qaeda because of the different strategies and policy. But, I would say that today the Islamic State has completely defeated Al-Qaeda in this sort of list of the most important jihadist organisation. I mean, if you\u2019re young today, and you want to join the fight, you don\u2019t go to Al-Qaeda, you go to the Islamic State.<\/p>\n

SS: <\/strong>It just also seems that there is sort of a rebranding going on, from Al-Qaeda in Iraq to ISIL, to ISIS, to the Islamic State – is that part of the marketing strategy? Is all this rebranding part of business strategy as well?<\/em><\/p>\n

LN: <\/strong>Yes. That\u2019s really-really important. The rebranding is fundamental. Initially, in 2010 when Al-Baghdadi became the leader of what was called Al-Qaeda in Iraq\u201d he immediately changed the name going back to the original name, which was the Islamic State in Iraq\u201d. He did it because he wanted to get distanced from Al-Qaeda which was extremely unpopular in the Sunni area of Iraq, and the same I would say for Syria. So, the fact that they rebranded themselves gave them a new identity. Then, when they merged with Al-Nusra which was the sort of Al-Qaeda organisation, linked to Al-Qaeda anyway in Syria, there was another rebranding, and the name has changed to the Islamic State in Iraq and Al-Sham\u201d, which is of course the Arab name for Syria. Again, they distanced from Al-Qaeda. And then, finally, the last rebranding, which I think is the final one, is the Islamic State\u201d, which is the same name of the original caliphate created by the Prophet in the VII century. Now, they are a state, and it\u2019s the Islamic State. It\u2019s very simple branding, very-very strong and very efficient.<\/p>\n

SS: <\/strong>So when ISIS comes up with flashy PR campaigns to infamous ISIS cats\u201d on Twitter, for instance, and they also have really well-produced videos, they are basically fishing for money and recruits, right?<\/em><\/p>\n

LN: <\/strong>Yes, they\u2019re fishing for money, they\u2019re fishing for recruits, they are also using the media to terrorise – let\u2019s not forget that what terrorist does is scare you, because if you\u2019re scared, then you don\u2019t act rationally, and therefore you think your enemy is much stronger. They are using social media to do that. This is why we see all this executions, barbaric, brutal beheadings on social media, because that scares us.<\/p>\n

SS: <\/strong>Newsweek did an investigation last month, and it said that Islamic State earns up to 2.5 million dollars in oil revenues, oil sales, daily. Who is buying that oil? I asked several experts, but nobody has been able a concrete answer. Is that oil impossible to trace as well?<\/em><\/p>\n

LN: <\/strong>No, we can trace it, we know exactly where the oil is going. The oil goes either to Turkey, or it goes south, to southern Syria. It is sold in small lots, we\u2019re not talking about pipelines or anything like that, but it is true that the revenues are about 2- 2.5. million per day, depending of course, on how easy it is to smuggle it. It is bought by local people that then resell it in small lots and quantities. Again, it is impossible to stop that kind of smuggling, because we don\u2019t control the territory. Now you may say Turkey does control its border\u201d, but the border between Syria, Iraq and Turkey is very-very big border, and most of the smuggling takes place on water, so it takes place on the river. It\u2019s very difficult to trace it. Regarding the south, again, it\u2019s very difficult, again, because the territory is not controlled by a true authority. We are in a state of political anarchy in certain regions, so how can you trace it? How can you stop it?<\/p>\n

SS: <\/strong>Now, you\u2019ve said that ISIS is the new model for nation-building, you\u2019ve mentioned that it controls 40% of the wheat production revenues. ISIS acts like a state. It has a monopoly on violence, it has its own economy. But according to news reports, locals can\u2019t afford food or water or medicine or electricity, while the fighters – they live like kings. Can a terrorist organisation really build a functioning state? What do you think?<\/em><\/p>\n

LN: <\/strong>According to my sources, actually, I do not believe that the fighters live like kings. I think that\u2019s not true. Actually, they pay their fighters much less than Al-Qaeda or Taliban used to pay their own fighters. I think that we are watching something quite scary – a transition of an armed organisation into a true state. This transition is taking place by running this region as a true state – meaning we have administration, bureaucratic section of the caliphate, and then we have the military sector, the two things are separate, are run in different ways. People interact primarily with the administrative and bureaucratic part of the Islamic State. What they do is trying to fix the infrastructure, provide law and order, even vaccinate children against polio. So, they are trying to bring a certain kind of normality in region that has been plagued by war for a very long time, and they\u2019re doing it because they seek consensus – they only way to complete this nation-building process is to achieve consensus, and this is what they are trying to do.<\/p>\n

SS: <\/strong>Alright, very interesting look into the everyday life of terrorism. Thanks a lot for this insight, we were talking to Loretta Napoleoni, expert on the economics of terror. We were talking about how terrorism is funded nowadays and how government funding and business is interrelated with it. That\u2019s it for this edition of Sophie &Co, I will see you next time.<\/em><\/p>\n

 <\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

\u00a0Loretta Napoleoni Courtesy RT\u00a0 In many ways terrorism works just like a business, and a costly one – the organization needs arms, supplies, and each recruit needs to be fed and equipped; it all costs money. But where do terrorists get their money? How are the atrocities financed? Is jihad even possible when you have […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-65380","post","type-post","status-publish","format-standard","hentry","category-world"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/65380","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=65380"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/65380\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=65380"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=65380"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=65380"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}