Chapter 3

Babette Protz

University of South Carolina

Lancaster

THE ORGANIZATION AND FINANCING OF

TERRORISM

Summarize rural, urban, and insurgent models of terrorism.

Trace the evolution of terrorist organizational structures.

Discuss the challenges involved in leading a terrorist group.

Describe the issues involved in terrorist financing.

Describe legal and illegal sources of income.

LEARNING OBJECTIVES: CHAPTER 3

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Explain the ways funds are disbursed in an underground economy.

Describe the hawala system. Summarize views on the political

economy of terrorism. Outline the manners in which drugs and

terrorism overlap.

LEARNING OBJECTIVES: CHAPTER 3

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Three models represent general trends from 1945 to the present: (1) Rural, (2) Urban (3) Insurrection

Models help to explain the evolution and practice of contemporary terrorism

They embody the philosophy behind particular types of terrorist movements

MODELS OF TERRORISM

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The Cuban Revolution popularized guerrilla warfare throughout the world

Guerrilla revolutions based on the Cuban experience are typified by three phases Phase one begins with isolated groups Phase two merges groups into guerrilla columns Phase three brings columns together in a

conventional army.

GUERRILLA WARFARE

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http://www.youtube.com/watch?v=Qb_mhiRJBcc&feature=related

Discussion: This video looked at U.S. Army Special Forces.

Do you agree with the premise that guerilla warfare will become the face of modern war? Support your position.

What was your overall view of the video?

GUERRILLA WARFARE

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The model for modern urban terrorism was intellectually championed by Frantz Fanon

He produced two works as a result of his Algerian experiences: The Wretched of the Earth (1982) A Dying Colonialism (1965)

URBAN TERRORISM

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Western powers have dehumanized non-Western people by destroying their cultures and replacing them with Western values

Decolonization was destined to be a violent process

Achieving freedom was inherently violent

FRANTZ FANON

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Guerrilla warfare and individual acts of terrorism as tools of revolution

Fanon argued that terrorism should not be used against the native population in general

His proposed two targets for terrorism: White settlers Native middle class

FRANTZ FANON

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Brazilian legislator Nationalistic Communist Party leader Revolutionary terrorist Designed practical guides for terrorism

that have been employed for more than 40 years

Wanted to move violence from the countryside to the city

CARLOS MARIGHELLA

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Focus on insurgency due to a small group of officers who began looking at military failures during the Vietnam War

Impossible to fight insurgencies with military tactics designed for terrorism or guerilla war

INSURGENCY

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At the end of the Cold War, various insurgencies began growing in the vacuums left by the superpowers

Technology and weapons helped many insurgencies grow

New political atmosphere made the rise of organizations like al Qaeda possible

INSURGENCY

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Top of the pyramid Group responsible for command

Second level Active cadre or the people responsible for

carrying out the mission of the organization Third level

Active supporters; critical to terrorist campaigns Last level

Passive supports; difficult to identify and characterize

THE EVOLUTION OF CELLS

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The Cell Composed of four to six people Usually has a specialty; may be a tactical unit

or an intelligence section

The Column Semiautonomous conglomerations of cells with

a variety of specialties and a single command structure

THE EVOLUTION OF CELLS

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Several small pyramids gather under a sheltering group that manages supplies, obtains resources, creates support structures, and gathers intelligence

Northern Ireland Unionists & Republicans Maintain legitimate political organizations Violent paramilitary groups have operated

under the umbrella of legitimate organizations

UMBRELLA ORGANIZATIONS

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http://www.youtube.com/watch?v=6KYIpuBSn9E - Part I

http://www.youtube.com/watch?NR=1&v=IgJq8XkoROY&feature=endscreen - Part II

Discussion Questions: How did the videos impact your understanding of

modern piracy? Are piracy and terrorist acts on land comparable?

How so? What are the international ramifications of piracy?

NATO CHRONICLES – HORN OF AFRICA: PIRACY

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Today’s pirates are armed with global positioning systems, satellite phones, machine guns, rockets, and grenades

Horn of Africa Gripped by internal and external struggles Piracy caused by the multifaceted conflict in

Somalia accompanied by the breakup of legal authority and social systems

MODERN PIRACY

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http://www.marad.dot.gov/news_room_landing_page/horn_of_africa_piracy/horn_of_africa_piracy.htm - Horn of Africa Piracy

http://topics.nytimes.com/top/reference/timestopics/subjects/p/piracy_at_sea/index.html - Piracy at Sea

MODERN PIRACY

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It is possible to chart the structure of any organization

Terrorist leaders have special organizational problems

Terrorism demands secrecy Secrecy prevents effective communication

MANAGING TERRORIST ORGANIZATIONS

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Decentralization offers relative security Very few people know many other members of

the organization. Decentralization paves the way for potential

splintering or misunderstandings

MANAGING TERRORIST ORGANIZATIONS

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Another problem of terrorist management is that of gaining immediate tactical support for operations. There is a need for active supporters

Consequently, the majority of time is spent creating networks of active supporters, not launching headline-grabbing operations.

MANAGING TERRORIST ORGANIZATIONS

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The size of a terrorist organization affects its ability to operate over time. Large groups last longer than small ones.

Terrorists need to create a large following to conduct a lengthy campaign. However, terrorism almost always involves

violence from an unpopular political fringe movement Terrorists are often unable to form a large constituency

to support the campaign.

GROUP SIZE AND LENGTH OF CAMPAIGN

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A terrorist campaign promises the greatest opportunity for success

Political revolutionary and radical groups, however, do not have the popular appeal needed to gain support for their activities Results in many terrorist activities remaining

isolated – never growing into a campaign

GROUP SIZE AND LENGTH OF CAMPAIGN

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Criminal enterprises

Drug tradeConducting illegal

business activities under a legal cover

Smuggling moneyIdentity theftSecurity fraudExtortion

Charitable contributions

Nongovernmental organizations

BanksWire transfersNormal

employment

FINANCING MODERN TERRORISM

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FBI estimates that the underground economy produces $500 billion per year

Terrorists not only move funds but also smuggle stolen goods and contraband

Gglobalization terrorism has created opportunities for profits in diamond trade

NETWORKS AND SYSTEMS

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Black Market Peso Exchange Drug dealers sell their products in the US and

accumulate large amounts of US currency The drug dealers end up with “clean”

Colombian pesos, and the US currency accumulated from illegal drug sales is hidden from formal audits

HIDDEN TRANSFERS

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Hawala System Caravan leaders would visit merchants and pay

for goods with a promissory note When the caravan reached its destination, the

leader sold goods and the distributors would pay the caravan leader with promissory notes

The leader returned home, presented the note, and the local chit dealer paid the debt

HIDDEN TRANSFERS

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New economy of terrorism produced after the fall of the Soviet Union and subsequent globalization

ETA tried to gain control of the economy They forced Spanish businesses out of the

Basque areas of northern Spain Basque region became a failed state ETA established an illegitimate economy in a

shell state

POLITICAL ECONOMY OF TERRORISM

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Terrorists using either terrorist tactics to support drug operations or drug-trade profits to finance terrorism

Terrorists are involved in the international production and distribution of drugs

Narcotics trade is one of their primary sources of money

NARCOTERRORISM

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Hezbollah and Hamas use the Latin American drug trade to raise funds

Islamic groups get most of their money through the drug trade in central and Southeast Asia

Seven drug trafficking organizations dominate the political landscape in Northern Mexico

Los Zetas uses Hezbollah to launder drug profits while Hezbollah uses the payoffs from Los Zetas to finance terrorist operations

DRUGS AND TERRORISM

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Critics say combining drug problem with terrorism confuses two different issues

The 9/11 Commission dismisses that drugs were linked to al Qaeda’s attack

Saudi money can be traced to violence; spread of militant Islam is not about drugs

al Qaeda’s use of heroin to finance the jihad ranges from believable to fantastic

NARCOTERRORISM CONTROVERSIES

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http://www.youtube.com/watch?v=zJaxpreK0DE

Discussion Questions: Considering the controversies addressed in the

text and the testimony in this video what is your opinion on narcoterrorism? Support your position.

NARCOTERRORISM

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Terrorist organizations are as complex as any other social organization designed to accomplish a mission.

They are hampered in their effectiveness due to the secret nature of their operations.

Most organizations are designed to either support guerrilla movements or to operate as a terrorist movement.

CHAPTER TAKE AWAYS

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The former organizations use terrorism selectively while terrorist groups simply terrorize as a strategy. All groups require funding.

This caused some analyst to focus on the fiscal aspects of terrorism, believing that terrorists used money in the same way as other organized criminals.

CHAPTER TAKE AWAYS

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Investigations revealed that the money trail in terrorism differs from the flow of funds in other criminal enterprises because special structure of terrorist operations. It is important to understand the financing of

terrorism because it is an important intelligence tool.

CHAPTER TAKE AWAYS

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