Some Thoughts on the Relevance of Terrorist Financing

One of the striking aspects of the current policy debate, such as it is, over how to combat the terrorist threat, is the pervasive idea that terrorists don't need much money to operate. This conventional wisdom, a part of the 9-11 Commission Report and other prominent writings, is based on the assumption that, once bin Laden and al Qaeda were driven from Afghanistan, their operational costs decreased significantly because they no longer have to pay for camps or help keep the Taliban afloat. That, I believe, was true for a period after the U.S. occupation of Afghanistan. Certainly al Qaeda scattered, its financial structure was damaged and the ground shifted considerably. However, that assessment is outdated, although the official (and much of the unofficial) line has not kept up. The tone of the 9-11 Monograph on terror financing was that the amounts are so small it is hardly worth the effort to trace it. The AQ 2.0 conference, while extremely enlightening in some aspects, also essentially relegated the financial side to irrelevance because it is too hard to crack and the amounts, again, were said to be negligable.

The primary reason this assessment is wrong is Iraq. The "Arabs" fighting there, that is the foreign, radicalized Muslim jihadees, have grown in number, sophistication and access to weapons. While the real relationship between al Qaeda and Zarqawi is not clear, Zarqawi and bin Laden seem to have at least worked out a tactical alliance for the present time, and bin Laden has publicly recognized Zarqawi as the leader of the radical Islamist movement there. This movement now seems to be part of an insurgency, rather than a scattering of isolated groups. This means expenses for logistics, recruitment, movement, arms, communications, support networks outside Iraq, have grown enormously. The intelligence community believes much of the money is coming from Syria, where Saddam loyalists have accesss to part of his fortune. But those with whom I have talked are not convinced that the Baathists are willing to fully fund and share their logistical network with outsiders who are neither secular nor moderate. Money for the Zarqawi organization is often separate, channeled through more conventional AQ means (couriers, charities) and raised in the Gulf region from not only the traditional AQ donors, but thousands or millions of people who want to support the Jihad. This is an entirely new pipeline that did not exist prior to the Iraq war, and there are no indications that money is lacking. Rather, the rapid expansion of the jihad in Iraq indicates a rapid growth in the organization's funding and logistical capabilities.

U.S. intelligence estimates were that bin Laden's annual budget while in Afghanistan--including support for the Taliban and other groups, camps, etc.--was $50 million to $100 million a year. Clearly that is not the order of magnitude the Salafists need now. It is hard to determine how much is needed because so little is known about how the money is moving. But the financial architecture is strong and growing. As that money flows into to those in Iraq, it is also likely that some will be diverted to alleviate whatever shortfalls, if any, exist in the structure of the core AQ organization.

I don't believe such a shortfall exists, because of my own research and because of the widely-ignored but excellent work of of the UN Monitoring Group, until it was disbanded last year. The move was taken largely because the Group, led by Brit Michael Chandler, did such un-UN like things such as name names and carry out serious investigations around the globe. In 2003 the group traced some of the AQ front companies being set up in different parts of the world and estimated the value of AQ's portfolio of seemingly legitimate businesses at $30 million.

While occassional cash flow problems may arise, it seems unlikely that there is, ultimately, a shortage of resources. Despite digging up many solid leads in its field work by financial experts and former intelligence officers, the Group's work was seldom looked at seriously by the U.S. intelligence community. One U.S. government leader of the terrorist financial efforts told me recently that those reports contained so much information, delving into them would have forced him to divert resources to look into the issues raised. So, instead, he simply ignored them. A rather interesting way to look at all the information available!

My point is that while, for a brief snapshot in time the assessment of the strength of the Salafist/terrorist/al Qaeda financial network may have been correct, that time is past. There is still little work being done on kinship networks and other issues vital to understanding how money is raised and moved. Pretending there is not a huge financial component to what we are seeing now in the emerging terrorist structure is both wrong and dangerous.