US experts see financing at the core of terrorist groups’ resilience

Hezbollah has expanded operations across Africa and into South America, where it is involved in the international drug trade.
Sunday 09/09/2018
Financially viable. A safe at a cash collection centre that belonged to ISIS in Turkman Bareh village, in northern Aleppo.(Reuters)
Financially viable. A safe at a cash collection centre that belonged to ISIS in Turkman Bareh village, in northern Aleppo.(Reuters)

WASHINGTON - Terrorist networks in the Middle East have robust financial networks enabling the groups to remain a worldwide threat even as they face military defeats, terror-financing experts told the US Congress.

The Islamic State (ISIS), even after losing almost all its territory in Iraq and Syria, retains a significant financial power because it accumulated so much cash in the early part of the decade and has a network of international donors, the experts and former US government officials said.

Al-Qaeda in the Arabian Peninsula (AQAP) also has substantial cash reserves and Hezbollah has expanded across Africa and to South America due in part to the hundreds of millions of dollars it gets from Iran.

“Many terrorist organisations appear better-resourced than ever before,” Katherine Bauer, a former US Treasury Department official who worked in the Middle East, said at a congressional hearing September 7.

Terrorist groups raise money through an array of schemes: taxing and extorting people and businesses, selling oil, kidnapping for ransom, transporting drugs, committing petty crimes and appealing to donors worldwide. With their ability to generate billions of dollars and move money around the world undetected, Middle East terrorist groups have defied more than a decade of efforts to stop terror financing and remain a major global security threat.

“It’s been spectacularly unsuccessful strategically,” said US Representative Jim Himes, a Democrat from Connecticut, referring to efforts to stop terror finance. “Ten years have gone by and we have more terrorist groups in more places and more ungoverned space, particularly with respect to radical Sunni groups.”

ISIS was a watershed in terrorism financing because the group sustained itself and avoided international donations by controlling parts of Iraq and Syria nearly the size of the United Kingdom. At its peak in 2014, ISIS took in more than $1 billion by taxing and extorting citizens under its control, selling oil and looting banks, said RAND Corporation analyst Colin Clarke.

“ISIS is unique in recent history as one of the few terrorist groups to generate most of its funding from territory it held,” Clarke said. “This could be the model for the future.”

ISIS’s ability to generate its own funding makes it difficult for international authorities to monitor its finances.

As ISIS lost territory, smaller cells emerged to raise money, recruit members and commit petty crimes, such as robberies and drug sales, that can pay travel costs for an attack. The group has a broad ideological appeal with its anti-US, pro-Islam message, the experts said.

“ISIS remains well-resourced, able to pay salaries and send funds abroad to its affiliates, as well as to mount attacks,” Bauer said. “Counterterrorism financing alone will not defeat the threat of terrorism. It must proceed alongside efforts to counter extremist ideologies.”

Ali Soufan, a former FBI agent, said US President Donald Trump had given credibility to the anti-US narrative by cutting off aid to the Palestinian Authority and to a UN agency charged with helping Palestinian refugees and by moving the US Embassy from Tel Aviv to Jerusalem.

“There is a conspiracy narrative in the Muslim world that the US and the West are against Islam,” Soufan said. “That narrative is becoming more and more popular in the Middle East.”

AQAP remains financially viable from the money it generated in 2016-17 when it controlled the Port of Mukalla in Yemen. The group collected $2 million a day in port fees and raised another $100 million by robbing a branch of the Central Bank of Yemen, Bauer said. “They have been well-resourced at this point,” Bauer added.

Hezbollah, with hundreds of millions of dollars in support from Iran, has expanded operations across Africa and into South America, where it is involved in the international drug trade, said Yaya Fanusie, a former economic and counterterrorism analyst for the CIA. The group uses Africa as an intermediary point for moving drugs from South America around the world, Fanusie said.

Fanusie warned about efforts by Iran and Russia to create cryptocurrency systems that terrorists could use to store and transfer money. “The potential for these states to coordinate and create an alternative financial system is a risk,” Fanusie said. “It would be an alternative method of financing and transacting that’s global.”

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