Chapter Five: Financing Terrorism

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Chapter FiveFinancing Terrorism
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The Importance of Funding
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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

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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

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Crime Pays
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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

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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

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Crime Pays

• Other forms of terrorist funding
• Smuggle stolen goods and contraband
• Charities
• Small markets
• Counterfeiting and fraud
• Extortion and protection rackets

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A Macroeconomic Theory of the New
Terrorist Economy
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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

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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

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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

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A Macroeconomic Theory of the New Terrorist
Economy

• Mario Ferrero
• Modern radical Islamic groups use violent
  activity as a means of providing economic
  stability

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A Macroeconomic Theory of the New Terrorist
Economy

• Macroeconomic theory and counterterrorism
• Macroeconomic theory suggests that
  counterterrorism policies should be aimed at
  providing the worlds 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

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The Narcoterrorism Debate
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The Narcoterrorism Debate

• Narcoterrorism
• 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

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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

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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

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Narcoterrorism Another View
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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

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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