Editor's note: This is the first of a three-part blog series on terrorist finances. In Part 1 we'll look at al Qaeda’s challenging financial situation. In Part 2 we'll examine at the Taliban’s money trail and in Part 3 we'll look at international co-operation (or sometimes the lack-thereof) in tracking terrorist financing. Bookmark our Security Brief section and check back Thursday for Part 2.
The U.S. Treasury Department may not have drones, but don’t underestimate the power of the pen in the battle with al Qaeda. Persistent pressure on the group’s sources of money over the past few years has left it “in significant financial distress,” says US Assistant Treasury Secretary David Cohen. “And we are urgently working to make it worse.”
The Taliban, funded by the multi-billion dollar heroin trade, are a different proposition, admits Cohen. He says they are not experiencing “much financial stress” and have the funding they need to buy allegiance and hold territory – and challenge American objectives in Afghanistan (more on the Taliban in Part 2 of this series.)
Cohen’s job includes choking off the money supply to an array of terror groups. To that end, he spends plenty of time trying to persuade other governments – especially in the Gulf – to tighten their financial controls. Cohen is pleased with the contribution that Saudi Arabia – once the largest source of funds for al Qaeda – has made. For example, the Saudi central bank now has to approve transactions between accounts of more than $15,000. But senior Treasury officials say other Gulf states – such as Kuwait and Qatar – could do more to help.
“We haven’t seen the same level of co-operation there,” the official says.
Another tool against terrorists’ finances is what’s called ‘designation.’ The US Treasury has ‘designated’ some 500 individuals and entities for their alleged financial support for terror groups over the past decade, barring them from using U.S. financial networks.
Cohen says the process encourages other governments to take similar action, and points to successful co-operation with Saudi Arabia in closing down the al Haramain Foundation last year, which was alleged to be funneling money to terror groups.
There’s certainly evidence that al Qaeda is hurting financially.
Last year, one of its commanders in Afghanistan spoke in an audio message of a lack of weapons and food. European recruits who have been detained in the last two years have complained that they had to pay for weapons and been pressed for donations when in the Afghanistan-Pakistan border area.
CNN Terrorism consultant Paul Cruickshank says court documents showed European recruits claiming they had to pay their Arab trainers more than $500 a head, and double that for equipment and weapons, for a two-week paramilitary course with insurgents.
The decline of al Qaeda in Iraq has deprived the ‘core’ al Qaeda of a useful market in kidnapping and extortion, according to terrorism analysts. Not so long ago, al Qaeda’s number two Ayman al Zawahiri appealed to al Qaeda in Iraq to help the organization with its cash crunch. Now al Qaeda in Iraq seems much less capable of delivering such succour to Head Office.
But the battle to reduce al Qaeda to penury is far from over.
Intelligence analysts say the group is supremely adaptive and that its “franchises” in the Horn of Africa and the Sahel for example are autonomous and raise their own funds through extortion and kidnapping. There is little evidence – so far – to link the Somali group Shabab, which is allied with al Qaeda, with piracy in the Gulf of Aden, but there are reports from Somalia that the group “taxes” pirates and even charges them for training.
Then there is al Qaeda in the Islamic Maghreb (AQIM), which is active in parts of Algeria, Niger, Mali and Mauritania. U.N. and U.S. officials are concerned that AQIM – is looking to make money from guarding illicit drugs as they cross North Africa to Europe. AQIM and ‘fellow travelers’ are already involved in kidnapping and extortion. In April, a Frenchman and his driver were kidnapped in Niger; AQIM subsequently said it was holding him. Four European hostages were released last year – for undisclosed sums.
So it would be premature to think of al Qaeda as on the verge of Chapter 11. In addition, while formal financial networks are better monitored today, millions of dollars moves through the Gulf in the way of charitable donations (zakat) and the informal money markets – known as hawala. Plus some of the millions of pilgrims who visit Mecca every year are a potential conduit for moving cash from Saudi Arabia to other states where al Qaeda is active.
And money isn’t everything.
Al Qaeda seems to be veering towards low-tech attacks (such as the attempt to blow up an airliner on Christmas Day as it approached Detroit) rather than more expensive and ambitious projects such as the 9/11 attacks. That may be by choice as western intelligence has improved; or forced upon al Qaeda because of lack of resources. A suicide bombing is a relatively cheap operation; so is trying to detonate a car in Times Square.
Moreover, being able to recruit people living in Europe or North America to carry out attacks (the likes of Najibullah Zazi and Bryant Neal Vinas) is a priceless asset. Zazi admitted to trying to make his own bombs from readily available materials with the aim of carrying out suicide bomb attacks on the New York subway similar to the London 2005 underground attacks. Those attacks cost an estimated $15,000 to mount, but claimed 52 lives. Zazi pled guilty to terrorism changes in March. Bryant Neal Vinas is awaiting sentence after admitting conspiring to cause an explosion on the Long Island Railroad.
But al Qaeda is not the same organization that it was on 9/11, or in the years when it joined the fight against Soviet occupation of Afghanistan. In those days money was not an issue; al Qaeda even had a finance committee. Today, as the arrests and convictions continue, and the drones fly over Pakistan’s tribal territories, so bank accounts will continue to come under scrutiny, in what David Cohen calls a “sophisticated and comprehensive effort to disrupt the terrorists’ financial networks.”