The U.S. approach to curtail money flow to terrorists is inadequate," an Independent Task Force on Terrorist Financing, sponsored by the Council on Foreign Relations, concluded earlier this month. The verdict came on the heels of Finance Committee Chairman Sen. Max Baucus's statement: "I'm getting the feeling that we really don't know the magnitude of the problem."
The fight to stop terrorist financing worldwide can benefit immeasurably from a close look at how these operations have evolved. The model used by today's terrorist groups is, after all, hardly new. In fact, it dates back more than three decades to what was to become the prototype for many of today's terrorist organizations: the Palestine Liberation Organization (PLO).
From its inception in 1964 until the 1993 Oslo Accords, the PLO was classified as a terrorist organization with connections to international criminal organizations, drug cartels, other terrorist groups, and rogue states. Yet, throughout that entire time, it continued to receive financial and political support from the Soviet Union and its satellites in Europe, Latin America, and Africa; from members of the Arab League; and from other third-world countries.
This legitimization — which was accompanied by financial backing — allowed the PLO not only to continue its terrorism and criminal activities with impunity, but also to fund a worldwide propaganda campaign, win great popularity, and increase its influence.
Nor did the PLO's transformation into the Palestinian Authority (PA) in 1993, as a result of the Oslo Accords, impede the organization's illegal activities. On the contrary, it enhanced them. Now granted legitimacy by the entire world, the PA abused this status to expand its illegal activities.
With the current intifada, the PA has undergone another change, incorporating religion into its political rhetoric and adding jihad to its agenda. As a result, like al Qaeda, the PA has gained even more support, both financially and politically, from the Arab/Muslim world. In fact, in the first year of the current intifada alone, the amount of money officially donated to the PA jumped by 80 percent, from $555 million to $1,002 billion.
A well-oiled system that often had other political priorities, in combination with corruption and hypocrisy all over the world, have made illicit funds — including funds for terrorism — easy to launder and to hide. Offshore banking centers from Monaco, Nauru, and Cyprus to Hong Kong and the Bahamas, as well as major international financial organizations, were used not only to launder the money, but also to invest it. At the forefront of the money-laundering activities was the PLO. Similar money-laundering techniques — including the misuse of charitable organizations — are now employed by al Qaeda, and many of the countries that support the PLO seem to be accommodating bin Laden's organization, too.
The use of the illegal drug trade as a weapon was developed by the former Soviet Union as part of its unconventional warfare doctrine. The PLO simply added illicit drugs to its arsenal as another excellent source of funding. Other terrorist organizations — such as the IRA, the Basque ETA, Colombia's FARC, and radical Muslim organizations like Hamas, Hezbollah, and al Qaeda — have understandably followed suit.
The official decision to use the drug trade for funding was made in 1983, under the chairmanship of Yasser Arafat, six months after the PLO was expelled from Lebanon, at a secret emergency session of the Finance Committee in Algiers. Sallah Dabbagh, the PLO's then-treasury chief, declared at the time: "...the entire future of the PLO operation for liberation may hinge on our exporting more drugs throughout the world."
For decades, the West has turned a blind eye to the PLO's fundraising endeavors, allowing it to continue operating both legitimate and illegitimate businesses. These ventures, in turn, laundered money for the organization that used the revenues to further the PLO's terrorist agenda. Their example surely did not escape bin Laden when he set out to create the financial infrastructure of al Qaeda. Indeed, U.S. and British law-enforcement agencies have by now detailed how al Qaeda has also been reaping huge profits from the illicit drug trade and other criminal activities. Last September, U.S. authorities presented evidence that illegal drugs operations in America were funding a host of Middle East terror organizations linked to both Palestinian groups and al Qaeda.
Like the PLO, al Qaeda also has large investments in legitimate businesses from construction to honey production, and heavy investments with international financial institutions. Since money is fungible, the excuses are easy and ready. And — like the PLO — al Qaeda, too, has large investments in illegal businesses, though theirs are more international in scope and include prostitution as well as gold, diamond, and cigarette smuggling.
Clearly, the PLO and its successor, the PA, have played an indispensable role in creating the financial model for today's terrorist organizations. A closer examination of the methods and institutions that made possible the PLO's financial success can help us to better track how al Qaeda and other terrorist organizations operate financially. More importantly, it can ensure that history will not repeat itself.
— Rachel Ehrenfeld is the director of the N.Y.-based Center for the Study of Corruption and the Rule of Law,
and the author of the forthcoming book Funding Evil.
©2002 - National Review