Global Terrorism Economy a Tangled Web
by Brian Brennan, Business Edge
Several Canadian aid organizations are operating as fronts to bankroll international terrorism while money from Canadian real estate investments is also being used - unbeknownst to many investors - to finance armed struggles around the globe.
So says Loretta Napoleoni, the London-based author of a new book about a global terrorist economy that is as integral a part of the western market economies as banking or big oil.
But don’t just take her word for it. The Canadian Alliance said much the same thing this past October when it tabled a list of active terrorist fronts in the House of Commons and demanded to know why these organizations were not being outlawed under Ottawa’s anti-terror law.
And the federal government acknowledged a Canadian link to terrorism in December 2001 when it froze the Canadian assets of the Holy Land Foundation for Relief and Development, a Texas-based charity accused of funnelling money to the Islamist Palestinian liberation group Hamas.
But Ottawa didn’t block the flow of cash to Hamas from the Jerusalem Fund for Human Services, an aid organization still operating in Ontario. When asked why not, a spokesperson for former solicitor-general Wayne Easter said Canada had already outlawed 31 terror organizations and was continuing to assess whether more should be added to the list.
Napoleoni, an Italian-born economist and journalist who recently visited Vancouver and Calgary to promote her new book, Modern Jihad: Tracing the Dollars Behind the Terror Networks, says the Canadian government is acting no differently from other administrations in its cautious approach to cutting off the money supply to terrorists.
She points to a United Nations report released last month stating that governments have frozen only $125 million US in terrorist assets since the September 11, 2001 attacks. “This is all across the world, and it’s absolutely nothing.”
By following the international money trail during a decade of research, Napoleoni has estimated that what she calls the “new economy of terror” amounts to a staggering $1.5 trillion US, most of it recycled by western financial institutions.
Viewed another way, this illegal economy amounts to twice the gross domestic product of the United Kingdom or five per cent of world GDP.
The business of terrorism is so large, she says, that if it were taken out of the global economic system, the drop in liquidity would plunge the western economies into a deep recession. Laundered money is integral to the system.
Napoleoni maintains that the roots of terrorism are economic, not political or religious. She came to this conclusion initially during the early 1990s when she interviewed members of the Italian Red Brigades and discovered that their daily lives were ruled by economics, not ideology. “They spent most of their time raising money to buy weapons and carry out their attacks.”
The attacks, in turn, were aimed more at achieving better economic conditions for the people than effecting political regime change for ideological reasons.
Napoleoni reached the same conclusion when she looked at Islamist terrorism. The terrorists want to change the political landscape of the Middle East, she says, but only as a means to an end.
“Again, the driving forces are economic. The need for regime change results from the fact that there’s an emerging middle class or bourgeoisie in these countries that wants to grow economically, but is encountering roadblocks. Their aim is not political power as such, but economic expansion.”
Controlling the terrorist problem from Canada or the United States is difficult, says Napoleoni, especially when the funds sent overseas from here are being raised legitimately through charitable donations.
“There is a danger when you try to fight terrorism domestically that you end up breaking the same laws as the terrorists. We’ve seen this in Italy and Northern Ireland, where the state has ended up using terrorist tactics against the terrorists, and this is a really serious problem.”
The most effective way to counter the terrorist problem, she says, is “to force our allies in the Muslim and Arab worlds to clamp down on terror financing, but this is not happening. We know where the money is ending up, so why doesn’t the Canadian government put pressure upon the various Muslim and Arab countries where this money is actually used? That’s the key question in this fight against terror.”
The same question could be asked about the U.S. government, but Napoleoni concedes that it’s not always easy to obtain full co-operation from friendly Muslim governments. She notes, for example, that when the George W. Bush administration last summer asked Saudi Arabia to block terror financing, it responded by closing just six of 241 suspicious charities,”stopping collections of coins in shopping malls, and discouraging people from giving money without knowing where it was going. In reality, these were only symbolic gestures to appease U.S. public opinion.”
Napoleoni doesn’t think the U.S. will force Saudi Arabia to do more, as long as it depends on that country for much of its oil supply.
However, because oil imports to the U.S. from Canada and Venezuela have been increasing over the past couple of years while supplies from Saudi Arabia have been dropping, she is hopeful that the U.S. will eventually start getting tougher with its Arab ally.
In the meantime, she thinks that western governments have got to find ways to better regulate such activities as offshore banking, international money transfers and money laundering, all of which contribute to the funding of terrorism.
In both Canada and the United States, for example, there is no system to check bank deposits or transfers of less than $10,000, other than a generalized requirement that - in Canada’s case - all “suspicious transactions” be voluntarily reported to an independent monitoring agency called the Financial Transactions and Reports Analysis Centre of Canada.
Napoleoni believes that banks should be checking all forms of deposits, however small. “As long as we allow anyone to walk into a bank in Florida with a suitcase full of cash and deposit it without being questioned as to its origin,” she writes at the conclusion of her book, “we engage in our own destruction.”
Brian Brennan can be reached at brian@businessedge.ca
