The new economy of terror

Submitted by on 6 March, 2004 - 12:00

Modern Jihad: Tracing the Dollars Behind the Terror Networks by Loretta Napoleoni

This book looks at the filthy-dirty business of the funding of modern "terror" organisations. If there are differences in the roots of and political outlooks of these groups - between for instance the Tamil Tigers and Islamic Jihad, between the Popular Front for the Liberation of Palestine and al-Qaida, Napoleoni is not much interested in them. She quite explicitly sets out to write an "economic analysis" and to avoid political concepts. This, she says, is a new way of looking at the problem. I don't know about that. I do know that an author who systematically avoids political judgements can be at times very irritating, however interesting and ground-breaking the factual information in her book may be.

Napoleoni starts with an analysis of US policies post-Vietnam. The US governments withdrew from conventional warfare and began to use proxy armies and counter-insurgency techniques - in Afghanistan, Nicaragua, El Salvador. Afghanistan of course became the most important breeding ground for the new terror networks.

This was a world of conflicts into which US counter-insurgency intervened and tried to exploit. But bit by bit the terror groups began to build up their own resources. Napoleoni tries to put this development into an analytical framework. The groups create their own micro-economies.

The example of a micro-economy Napoleoni gives is that created by the PLO in the Lebanon. As a way of gaining independence from foreign sponsorship, the PLO built businesses and organised a levy of the Palestinian diaspora. Loretta looks at how the micro-economy of the PLO was transformed into a state shell when it became the governing body of the Palestinian people in Lebanon. The infrastructure of other "terror groups" have also become state shells, rulers in particular lands or parts of lands: the Taliban in Afghanistan, Sendero Luminoso in Peru, the Colombian FARC, the Islamic Movement of Uzbekhistan.

The growth of these groups, and in some cases their consolidation of territorial power, is helped by the chaotic and fragmented state of countries like the Sudan and the ex-USSR central Asian republics. And the destruction through war of places like Chechnya.

So far so familiar. Around this basic structure Loretta Napoleoni details how the groups have become powerful and rich and global enterprises.

There began to be partnerships between groups and big-time entrepreneurs. And today we see the ultimate global terror group, al-Qaida, whose leader is… a big-time entrepreneur.

There are drugs routes at opposite ends of the world.

There is money laundering on a gigantic scale, aided by the growth of "Islamic" banks.

There is the channelling of money through Islamic "charities" and mosques.

There are credit card frauds.

There are legitimate businesses too.

The west has done business with these new terror economies. Just as the US would have done business with the Taliban to bring about an oil pipeline, they continue to do business with the Saudis today even though they know how much money flows on to the terrorists. The police departments of the west have very little grip on the business of terror and can do very little about it. Billions of dollars every year go around the world in bank transfers and other transaction, finding their way into the pockets of warlords.

What is to be done? Napoleoni finally allows herself a political point of view: "War is not the best option. Ironically, any conflict will boost the New Economy of Terror which feeds on conflicts; so will economic embargoes and any commercial straitjackets imposed upon countries that harbour terror groups… The first step in fighting terror is to identify the channels of interaction with the economies of the West and progressively sever them."

Under what conditions will the banks of Florida stop welcoming men in Armani suits with their suitcases full of $100 notes? That is a question Napoleoni cannot answer.

Score: 6/10
Reviewer: Rosalind Robson

Add new comment

This website uses cookies, you can find out more and set your preferences here.
By continuing to use this website, you agree to our Privacy Policy and Terms & Conditions.