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
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