Understanding Terrorist Finance Timothy Wittig Understanding Terrorist Finance This page intentionally left blank Understanding Terrorist Finance Timothy Wittig Palgrave macmillan ©TimothyWittig2011 Softcoverreprintofthehardcover1stedition2011978-0-230-29184-3 Allrightsreserved.Noreproduction,copyortransmissionofthis publicationmaybemadewithoutwrittenpermission. Noportionofthispublicationmaybereproduced,copiedortransmitted savewithwrittenpermissionorinaccordancewiththeprovisionsofthe Copyright,DesignsandPatentsAct1988,orunderthetermsofanylicence permittinglimitedcopyingissuedbytheCopyrightLicensingAgency, SaffronHouse,6-10KirbyStreet,LondonEC1N8TS. Anypersonwhodoesanyunauthorizedactinrelationtothispublication maybeliabletocriminalprosecutionandcivilclaimsfordamages. Theauthorhasassertedhisrighttobeidentified astheauthorofthisworkinaccordancewiththeCopyright, DesignsandPatentsAct1988. Firstpublished2011by PALGRAVEMACMILLAN PalgraveMacmillanintheUKisanimprintofMacmillanPublishersLimited, registeredinEngland,companynumber785998,ofHoundmills,Basingstoke, HampshireRG216XS. PalgraveMacmillanintheUSisadivisionofStMartin’sPressLLC, 175FifthAvenue,NewYork,NY10010. PalgraveMacmillanistheglobalacademicimprintoftheabovecompanies andhascompaniesandrepresentativesthroughouttheworld. Palgrave®andMacmillan®areregisteredtrademarksintheUnitedStates, theUnitedKingdom,Europeandothercountries. ISBN978-1-349-33212-0 ISBN978-0-230-31693-5(eBook) DOI10.1057/9780230316935 Thisbookisprintedonpapersuitableforrecyclingandmadefromfully managedandsustainedforestsources.Logging,pulpingandmanufacturing processesareexpectedtoconformtotheenvironmentalregulationsofthe countryoforigin. AcataloguerecordforthisbookisavailablefromtheBritishLibrary. LibraryofCongressCataloging-in-PublicationData Wittig,Timothy. Understandingterroristfinance/TimothyWittig. p. cm. Includesindex. 1. Terrorism—Finance. I. Title. HV6431.W56642011 363.325—dc22 2011013819 10 9 8 7 6 5 4 3 2 1 20 19 18 17 16 15 14 13 12 11 To Sarah This page intentionally left blank Contents ListofTablesandFigures viii Acknowledgments ix ListofAbbreviations x 1 UnderstandingTerroristFinance:ChallengesandIssues 1 2 TerroristFinance:MythandReality 43 3 AskingtheRightQuestionsaboutTerroristFinance 97 4 UnderstandingTerroristFinanceasInteractionwith ValueChains 112 5 UnderstandingTerroristFinanceasaContinuumof MaterialSupport 141 6 TerroristFinanceandInternationalRelations 159 Conclusion 188 Notes 192 Bibliography 220 Index 230 vii List of Tables and Figures Tables 1.1 Whofinancesterrorism?Actorsandactortypesinvolved infinancingChechenterrorism,Georgian–Chechen border,1999–2002 18 1.2 Howisterrorismfinanced?Activitiesinvolvedin financingChechenterrorism,Georgian–Chechenborder, 1999–2002 24 1.3 Thecounter-terroristfinancingcommunityofpractice (USgovernment) 34 2.1 Estimatedrelevanceofthecounter-terroristfinancing regimetotheeconomicactivitiesofForeignTerrorist Organizations 48 2.2 Howcheapisterrorism?Estimatedtotalcostsofselected majoral-Qa’idaterroristoperations 63 2.3 Apreliminarylexiconofcriticalresourcesusedby terrorists 66 4.1 LocalpricesofvehiclesinregularusebythePakistani Taliban,2009 125 Figures 1.1 ValuetransferinPankisiGorge,Georgia1999–2002 12 2.1 Therelationshipbetweeneconomicsuccessandterrorism (notional) 68 viii Acknowledgments Iwouldliketoexpressmyappreciationtothemanypeoplewhohelped make this book possible, beginning with my academic colleagues in ScotlandandtheNetherlandsfortheirsupportandassistance,especially Ali Watson, John Anderson, Ian Taylor, Michael Wintle, and Maaike Waarnar. I owe debts of gratitude to Adham Saouli, Brandon Gentry, Chris Zambelis, Amanda Shandor, Matt Conway, and Aleko Kupatadze fortheirvaluableinsightsregardingparticularsectionsofthebook;and toChrisLamont,NeilCarrier,andMariekedeGoedefortheirthought- ful comments and feedback. In addition, my sincere thanks go to Joe Hanvey,JohnCassara,MikeMoore,KimoQuaintance,IanConway,and MarissaFenechforsharingtheirprofessionalknowledgeandexperience aswellastheirencouragementtothinkaboutthistopicoriginallyand creatively. Thanks also to my editors at Palgrave, Alexandra Webster, RenéeTakken,andChristinaMBrian,fortheirconfidenceinandassis- tance throughout this project. I wish to thank my mother, father, and sister, who have given me so much unconditional support throughout mylifeandcareer.Andtomyweeson,whoisareminderofallthatis goodintheworld,thankyou.Finally,mygreatestanddeepestgratitude is due to my wife, Sarah. For her wisdom, strength, and confidence in me, I dedicate to her this effort: a humble token of my enduring love andgratitude. ThisbookcontainsmaterialadaptedfromtwoscholarlyarticlesIhave previously published, in Chapter 1 (“Financing terrorism along the Chechnya–Georgia border, 1999–2002,” Global Crime 10, no. 3 (2009): 248–260)andChapter3(“Terroristfinance:askingtherightquestions,” Politics29,no.2(2009):145–153).Thismaterialisreprinted,courtesyof TaylorandFrancisLtdandJohnWileyandSons,respectively. ix