13 Feb 2010

Al Qaeda’s Finances

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Forbes reports that US success in disrupting al Qaeda’s financing has forced the organization to decentralize and caused it to turn to kidnapping and the drug trade to finance its terrorist activities. Al Qaeda’s Indian subcontinent affiliate Lashkar-e-Taiba is still proving very effective at fund raising and delivery, and the US has yet to secure strong cooperation in suppressing contributions to jihadism in Kuwait and other Gulf states.

Al Qaeda is much less of a top-down organization than it once was, when it called the shots and funded terrorist operations from Afghanistan. Then, it told operatives to focus on assignments and not to worry about how to subsidize them. Today it’s a much looser organization of affiliates–more of a McDonald’s, if you will, than a General Motors. Its decentralized partners and cells around the world pick their own targets, concoct their own strategies and raise their own funds. They may draw inspiration from al Qaeda headquarters somewhere in the Chitral region of northwest Pakistan, even kick back money to the leadership. But, like franchisees, they are largely on their own.

The change, U.S. officials like Cohen say, is a direct result of the pressures the U.S. government has placed on terrorist money men. That has forced al Qaeda to go underground. While it still relies on individual donations from the Persian Gulf region, these contributions now move outside the formal financial system, through cash couriers and informal money transfer shops known as hawalas. In addition, the network seems to be turning to organized crimes like kidnapping and drug running. The shipment of cocaine from Latin America to Europe is a source of funding.

Fundraising efforts have also embraced new technologies–like the bit of telemarketing by Ayman al Zawahiri, al Qaeda’s second-in-command, who solicited donations through cell phone recordings that were distributed in 2008. Last June Abu al Yazid, a former al Qaeda money man who now runs its Afghan operations, made his pitch on a Web site controlled by al Qaeda leaders: “If a holy fighter does not have the money to get weapons, food, drink and the materials for jihad, he cannot fight jihad.” The Internet, of course, is a terrorist’s best friend when it comes to recruiting. Not that they’ve given up on old-school methods like extortion. “A broader trend that shows their financial troubles is they are shaking down recruits for money,” says Michael Jacobson, a fellow at the Washington Institute for Near East Policy, who specializes in terror financing. A handful of people, arrested in 2008 by French and Belgian authorities, had traveled to Pakistan for al Qaeda training–and were forced to cough up euros for courses, a room and weapons.

Clearly the money hasn’t stopped; it is coming in smaller dollops via other channels. …

With al Qaeda’s home office no longer able to subsidize operations, affiliates and cells have turned more frequently to crime. On what scale? No one knows. Still, law enforcement is taking the issue very seriously. In January the U.S. Attorney in Manhattan merged its narcotics and terrorism units. A few weeks earlier the Drug Enforcement Administration pulled off a sting operation in Ghana, snatching three men–Oumar Issa, Harouna Touré and Idriss Abdelrahman–and shipping them to New York City to face charges of narco-terror conspiracy and providing material support to al Qaeda.

According to the DEA the three men were connected to al Qaeda’s most hardened criminal element, its North African affiliate. Known as al Qaeda in the Islamic Maghreb, the group appears to be involved in the trafficking of Latin American cocaine through Africa to Spain. The indictment accuses the men of agreeing to transport a series of 1,000-kilogram loads of cocaine for $2,000 a kilogram–a portion of which was to be turned over to Islamic Maghreb in return for protection along the route. The court filings claim that Islamic Maghreb had worked with Touré to move two tons of hashish to Tunisia and also smuggled human beings–undocumented workers, it seems–from Bangladesh, Pakistan and India into Spain.

The criminal filings also indicate that al Qaeda in the Islamic Maghreb had recently nabbed Belgian citizens and collected a big ransom. Richard Barrett, who keeps an eye on al Qaeda for the U.N., says kidnapping has been the biggest moneymaker for Islamic Maghreb. “Hostage taking has proved lucrative for them,” he says, adding the group is currently holding seven foreigners and ransomed others for $3 million each. “You can keep going for a long time down there with that kind of money.”

While kidnapping is probably as old as warfare, its latest incarnation owes much to al Qaeda in Iraq, a now largely defanged affiliate. It made piles of cash grabbing foreigners a few years ago and supplemented that income with extortion rackets and black market oil sales. The group became so rich that its leader at one point got a letter from al Qaeda’s number two, Zawahiri, requesting a substantial sum. …

Officials across the U.S. government insist they have no proof that al Qaeda’s leadership is involved in the drug trade. But Michael Braun, chief of operations at the DEA until 2008, says they are in denial. “There is more clear evidence showing al Qaeda’s growing involvement in the Afghan heroin trade on the Pakistan side of the border–al Qaeda proper,” says Braun, now a managing partner at Spectre Group International, a security firm in Alexandria, Va. “There are growing numbers of investigative leads headed in that direction.”

Al Qaeda’s association with big-time criminal groups is undeniable. Dawood Ibrahim is one of the world’s most infamous gangsters, operating a 5,000-member criminal syndicate that engages in everything from narcotics to contract killing, working mostly in Pakistan, India and the United Arab Emirates. Ibrahim shares smuggling routes with al Qaeda, says the U.S. government, and has collaborated with both al Qaeda and its South Asian affiliate, Lashkar-e-Taiba, which pulled off the November 2008 Mumbai attacks, possibly with Ibrahim’s help.

The $3.4 billion Afghan heroin trade is a critical source for the well-financed Taliban, which has also developed a rich donor network. The Taliban encourages and taxes poppy farmers and collects transit and protection fees related to the drug trade. How does al Qaeda benefit? At the very least the drug trade helps the Taliban create safe havens for al Qaeda fighters.

Some counterterror officials see an opportunity in the convergence of crime and terrorism. They point out that police in most countries are mobilized to tackle the drug trade, making it more likely that a terrorist who also runs narcotics will get caught by the cops. But the flip side is that crime, particularly the rich drug trade, could help sustain terror groups for years. …

Yemen is an epicenter of what is brewing. The affiliate there, al Qaeda in the Arabian Peninsula, claimed responsibility for the botched Christmas Day plane attack. Not particularly well financed, according to a U.S. official, the group is resorting to crime. Some al Qaeda members there reportedly tried their hand at bank robberies and considered going into the kidnapping business. For now its chief source of funds is cash contributions from donors in Yemen and the Arabian Gulf. Couriers are still able to move easily in much of the area–in one example last September agents carrying tens of thousands of dollars for al Qaeda were stopped in Kuwait, says the U.N.’s Barrett.

Yet, to the dismay of the U.S., Kuwait has done little to crack down on such donations, even resisting basic terror finance laws. In 2008 the U.S. highlighted the role the Revival of Islamic Heritage Society, a prominent Kuwaiti charity, played in funding al Qaeda’s network. The group has denied any terror ties and continues to operate. Couriers carry as much as $100,000 per trip between Afghanistan and the Gulf, the funds coming from legitimate commerce as well as from heroin trafficking. Hawalas also rely on couriers to settle up paper transactions with fellow money transmitters. It is easy for al Qaeda or Taliban donations to get mixed in. “The difficulty is trying to identify the part of that which is illicit,” says Treasury’s Cohen. …

Al Qaeda has reaped direct benefits from Lashkar’s ability to raise and move funds. As recently as 2008 Fazeel-A-Tul Ameen al Peshawari, a Lashkar fundraiser and recruiter, was providing financial aid to al Qaeda, says the U.S. government. Arif Qasmani, a chief Lashkar coordinator who has raised funds from crime boss Ibrahim, has been providing al Qaeda with supplies and weapons. In return al Qaeda loaned to Lashkar operatives who helped carry out the 2006 train bombings in Mumbai. Raising funds was so easy for Lashkar that in 2004 its finance chief, Haji Ashraf, traveled to the Middle East to collect donations and manage financial networks in Saudi Arabia.

But Ashraf probably isn’t collecting as many frequent-flier miles these days. The Saudi government finally cracked down on terrorist financiers after it became alarmed by homegrown insurgents and those arising next door in Iraq. In 2007 the Grand Mufti of Saudi Arabia urged citizens not to finance terrorism and to be mindful of how their charitable contributions were being distributed. A 130-man Saudi financial investigative unit has been set up, and 96 suspected terrorist financiers have been arrested. Getting Saudi officials on board is a big victory. But the kingdom’s charities are another matter. “There continues to exist a pool of donors who are ready, willing and able to contribute to al Qaeda,” says Treasury’s Cohen. “We have at least temporarily disrupted some” of them.

2:50 video

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