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Why al Qaeda Needs Donations More Than Ransoms

Why al Qaeda Needs Donations More Than Ransoms

Posted by Clint Watts

For several months up to the recent French intervention in Mali, al Qaeda in the Islamic Maghreb (AQIM) has been able to gain, control, and govern large swathes of the Sahel.  Towns such as Kidal and Timbuktu fell under the rule of strict forms of Sharia law and many perceived al Qaeda as resurgent.  Many rightly noted the collapse of Qaddafi's Libyan regime provided operational space and caches of weapons emboldening AQIM's push into Northern Mali.  

However, other analysts of the Sahel and terrorism have suggested AQIM's growth and the proliferation of its offshoots (Ansar Dine and Movement for the Unity of Jihad in West Africa (MUJWA)) comes equally as much from the network's ability to acquire resources through illicit schemes such as drug/cigarette trafficking and most importantly kidnapping.  Over the past several years, AQIM, more than any other al Qaeda affiliate, has been able to effectively kidnap travelers to the region (mostly Europeans) and then successfully extract multi-million dollar ransoms.  Serge Daniel in his book, "AQMI, l'industrie de l'enlèvement" (AQIM the kidnapping industry)" tried to account for the ransoms paid to AQIM in recent years:

Daniel says two French companies paid a total of 13 million euros (a little over $17 million) for the release of the hostages, Austria paid three million euros, Spain nine million and Canada three to five million. Source: Global Post

Essentially, France indirectly funded AQIM for years building up the terror affiliate to only now commit further blood and treasure to defeat the group.  Unforunately, France is not alone in falling into a vicious fund-then-fight cycle with a terrorist group.  

On the surface, kidnapping and smuggling appears an ideal financial engine for terror groups like al Qaeda and its affiliates. This assertion, however, ignores the inherent challenges encountered when any organization, whether terrorist group to criminal enterprise, undertakes illicit funding schemes.  Kidnapping and ransom operations introduce significant transaction costs which significantly devalue the gross sum of revenues.  Kidnapping operations create a series of internal costs for terror groups:

  • Networks Of Intermediaries -  Negotiations and payments for kidnapping operations require layers of middlemen with each network extracting a percentage of the overall take.
  • Transaction Time - The time between hostage taking and ransom payments can be significant requiring the terror group to maintain a solid reserve of capital to sustain its operations between transactions.  Essentially, time is money, and in the case of kidnapping operations, a cost to the terror group.
  • Hostage Deaths - The trauma of kidnapping and the harsh environments in which terrorist groups operate often result in the death of hostages.  The death of a hostage hurts the terror group directly in terms of loss revenues. But, even more damage occurs indirectly as the hostage death erodes trust for future ransom negotiations.
  • Infighting - In any business, transactions often lead to conflict.  This is particularly true in illicit industries where trust is constantly being questioned.  Kidnapping negotiations naturally generate friction between intermediaries and when negotiations become protracted parties may turn to open conflict.
  • Declines in Hostage Availability - As groups like AQIM continue to kidnap hostages, the availability of hostages naturally declines requiring the terror group to operate at longer distances to acquire captives.  This distance imposes significant logistical costs.  
  • Undermines Terror Group's Ideology - Inevitably, in illicit schemes and even licit enterprises, business gets messy and the terror group must make choices with regards to sustaining its resource flow.  Often times, these choices result in alienation of a terror group's local base of popular support or hypocritical conflicts of interest between the terror group's deeds and its words.  The recent accusations of Omar Hammami, an American foreign fighter who has fallen out of favor with al Shabaab, demonstrate how al Shabaab's turning a blind eye to Qat distribution in Somalia for the purpose of taxation has called into question the group's committment to al Qaeda's ideology and Sharia law.
  • Opportunity Costs - When al Qaeda is dedicating more time, manpower and resources to illicit fund generation, they are spending less time recruiting and training new operatives, planning operations and executing attacks.

All al Qaeda affiliates and terror group's in general must participate and rely on illicit and licit funding schemes to some degree.  But what really separated al Qaeda from other terror group's was its ability to garner donor revenues from wealthy supporters.  As Gregory Johnsen accurately noted in his recently published book on al Qaeda in the Arabian Peninsula (AQAP) entitled the The Last Refuge, what separated al Qaeda from other Sunni extremist groups was Bin Laden, his understanding of business and his command of resources. 

 “Bin Laden talked less than others, but he planned more.  And he had something no one else had: money.”

Donor resources provide essential support to global terrorist groups.  Al Qaeda or one of its affiliates, when sustained by donor contributions, can dedicate more manpower to planning and executing attacks as operatives are freed from the burdens of illicit/licit fund generation. Likewise, a donor empowered al Qaeda can more easily build local support by granting funds that embolden their ability to govern locally.  Most importantly, donor funds prevent al Qaeda groups from undermining their ideology to sustain their short-run resource needs.  As seen in this graphic, I estimate that each donor dollar equals roughly five dollars in illicit fund generation. 

Today, while there remain many ideological challenges to al Qaeda after Bin Laden's death, the terror group and its affiliates face equally large obstacles securing donor resources to allow for significant operational expansion.  al Qaeda's efforts to expand operations in Egypt after the fall of Mubarak have been frustrated by resource generation.  Thomas Joscelyn notes in a recent article that Muhammad Jamal al Kashef: 

"complains that he "received an amount of money from our brothers in Yemen," a reference to al Qaeda in the Arabian Peninsula (AQAP), "but it was much less than what is required." Zawahiri is "aware" of the "huge amounts of money" needed to purchase arms, set up training camps, move vehicles into the Sinai Peninsula, and "provide for the families of the brothers who work with us."  Source: The Long War Journal

As I noted last summer, today al Qaeda and its affilaites are one of many rather than the only Salafi-Jihadi extremist group operating throughout the Middle East, Africa, and Asia.  The uprisings of the Arab Spring have created a plethora of ideological and financial competitors to al Qaeda.  For a terror group to break out and begin securing donor resources at a pace greater than its competitors, they must do one thing better and faster than other groups: successfully execute high profile attacks on Western targets.  Donors, like good investors, like supporting winners.  Therefore, those al Qaeda affiliates or new upstarts that pull off the most impressive attacks may find themselves more able to garner important donor revenues.  Only Mokhtar Belmokhtar has grabbed international media attention in recent years.  Will his actions garner him and "Those Who Sign With Blood" more donations in the future?  Only time will tell...

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AQIMal QaedaAQAPterrorismTerrorism financeClint Watts