Archive for the ‘Columns, essays, & pure opinion’ Category

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Treasury hopes ISIS will go broke on its own

October 28, 2014

In remarks last week (hat tip to @HSPI), Treasury official David Cohen confirmed that the Islamic State of Iraq and Syria makes $1 million a day from oil sales, that it has made $20 million this year in ransoms, and that it makes millions a month from extortion. Cohen laid out plans to counter each facet of ISIS’s funding.

Cohen also acknowledged that some of Treasury’s tools aren’t well suited to the task of bankrupting ISIS, but noted with some optimism that “Attempting to govern the cities, towns and sprawling territory in Iraq and Syria where it currently operates, much less delivering some modicum of services to the millions of people it seeks to subjugate, is expensive,” and that ISIS would ultimately be unable “to meet the cost of governing.”

To support his argument, Cohen cited a journalist with the Carnegie Endowment for International Peace who reckons that, although ISIS is well funded, the budgetary demands of controlling such a large territory exceed even their financial resources. ISIS’s revenues may be $1.5 billion annually, but prior Iraqi budgets for the provinces under ISIS’s control exceeded $2.5 billion per year.

ISIS’s potential budget deficits become even starker when one considers that most of its money isn’t spent on public services. Die Welt has reported (hat tip to Puneet) that just one-third of ISIS’s money is spent on providing basic utilities and social services to the population within its territory, while one-third go to salaries for fighters and employees, and one-third is spent on weapons.

So there is hope that ISIS could be taken down a peg financially, but it won’t be through sanctions and monitoring suspicious financial activity: it could come through diplomacy, military action, and by the harsh realities of governance.

(Thanks to Terrorism Watch, El Grillo, and Red Team Red Queen for sending in news coverage of Cohen’s remarks.)

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Socialists urge West to arm the PKK

October 27, 2014

Leading Marxist voices are calling on the EU and U.S. to ship weapons to the terrorist-designated Kurdistan Workers’ Party (PKK).

Morning Star, the flagship newspaper of British communists, has editorialized that “Nato member states, including the US, have to rethink previous self-defeating positions, drop their sanctions against the anti-Isis alliance and send arms to those in the front line of this epic struggle,” referring to the PKK and their Syrian Kurd counterparts known as the Kurdish People’s Protection Units (YPG).

The leading American socialist newspaper The Militant also bemoaned in a recent front page headline that the PKK and YPG are “low on arms.” The self-described anarchist think tank Center for a Stateless Society says that “Supporting the PKK would arguably be far more effective” than current Obama administration policies against the Islamic State of Iraq and Syria. A petition is also being circulated for submission to the White House for the U.S. to arm the YPG.

Leftist intellectuals are normally highly critical of arms manufacturers and weapons shipments to conflict zones, but are making an exception in this case because they would like to see the formation of a socialist Kurdish state carved out of portions of Syria, Turkey, Iraq, and Iran.

Such aid to the PKK, in addition to threatening existing regional borders, would violate current U.S. and EU sanctions. The PKK is designated as a foreign terrorist organization by the State Department, and is a specially designated global terrorist group which means that the PKK is subject to sanctions enforced by Treasury’s Office of Foreign Assets Control (OFAC). It is unlikely that these sanctions will be lifted unless it’s part of a grand bargain with Turkish president Recep Erdogan involving peace talks with the PKK and Turkish support for U.S. policies in Iraq and Syria.

For now, even shipments to non-PKK Kurdish forces run the risk of violating sanctions against the PKK. The University of Queensland’s Dr. Tristan Dunning told Australian radio that, “What’s happened in the past is that Peshmerga arms have actually ended up with the PKK. So one of the reasons that I’ve heard that the collapse so quickly at Sinjar is actually because the Peshmerga generals in change of that Yezidi town had actually already sold the heavy weapons to the PKK for personal profit. There’s several Peshmerga generals on trial at the moment for selling the weapons for profit.”

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Al-Bayoumi’s aid to 9/11 hijackers revisited

September 22, 2014

To recap published evidence on whether money from Saudi officials was given to 9/11 hijackers Nawaf al-Hazmi and Khalid al-Mihdhar, the 9/11 Commission reported that Omar al-Bayoumi (a Saudi intelligence agent) helped al-Hazmi and al-Mihdhar get established upon their arrival in San Diego, to include a one-time transfer of $9,900 that was reportedly refunded immediately. However, Congress’s joint inquiry into 9/11 found that an alternate assessment of bank records by the FBI found no evidence of a refund to al-Bayoumi. Some FBI agents believed that al-Bayoumi continued paying al-Hazmi and al-Mihdhar’s rent, but the 9/11 Commission contradicts them. In either case, former U.S. Senator Bob Graham has indicated that al-Bayoumi played a broader role in the facilitation of al-Hazmi and al-Mihdhar’s activities in San Diego than official published reports revealed.

Quotations from each source follow:

The 9/11 Commission Report:

We thus do not know when or how Hazmi and Mihdhar first came to San Diego. We do know that on February 4 [2000], they went to the Islamic Center of San Diego to find Omar al Bayoumi and take him up on his offer of help. Bayoumi obliged by not only locating an apartment but also helping them fill out the lease application, co-signing the lease and, when the real estate agent refused to take cash for a deposit, helping them open a bank account (which they did with a $9,900 deposit); he then provided a certified check from his own account for which the al Qaeda operatives reimbursed him on the spot for the deposit.

Congressional Joint Inquiry into Intelligence Community Activities before and after the Terrorist Attacks of September 11, 2001:

However, another FBI document appears to reach a different conclusion: ‘a review of Khalid al-Mihdhar and Nawaf al-Hazmi’s bank records indicate [sic] there is no bank documentation that supports the reimbursement of [the rent money], or any monies to Omar al-Bayoumi from al-Hazmi or al-Midhar.’

The 9/11 Commission Monograph on Terrorist Financing:

A number of internal FBI documents state without reservation that Bayoumi paid rent on behalf of Mihdhar and Hazmi, a claim reflecting the initial view of some FBI agents. More thorough investigation, however, has determined that Bayoumi did not pay rent or provide any funding to the hijackers.

Former U.S. Sen. Bob Graham:

In San Diego, there was a man [Omar al-Bayoumi] and a circle of his friends. The man was described by the FBI as being a Saudi agent. His purpose in San Diego was to monitor Saudi students to assure that they weren’t plotting to overthrow the monarchy. But in January of 2000 he got a second assignment which was to provide protection for two Saudis [Nawaf al-Hazmi and Khalid al-Mihdhar] who had just entered the country. He was encouraged to invite them to come to San Diego—they did. He provided them money, a place to live, flight lessons, and an infrastructure of Muslims in San Diego to give them protection and anonymity. These two individuals were on the plane that flew into the Pentagon.

The official story is that al-Bayoumi could never be prosecuted for providing material support to terrorism since the evidence of giving money to the 9/11 hijackers is unclear, and he allegedly had no knowledge of what they would use the money for. However, the material support clause of 18 US Code § 2339 includes more types of support than just money, and paying somebody’s first month rent and security deposit, in a scenario where a landlord would otherwise not have offered a lease, could qualify as support, regardless of whether or not he was refunded. Whether al-Bayoumi knew what the San Diego-based hijackers were planning is a different question, but he was not thoroughly questioned by law enforcement.

As Money Jihad has noted, al-Hazmi and al-Mihdhar seemed to have received disproportionately less financial assistance from Khalid Sheikh Muhammad and his financial intermediary Ali Abdul Aziz Ali than other 9/11 hijackers, even though they lived in the U.S. for a longer period of time and presumably had higher total living expenses. A full accounting of their potential alternate sources of income has never been made available.

In light of the somewhat conflicting accounts of the scope of al-Bayoumi’s interactions with al-Hazmi and al-Mihdhar, it would be appropriate to declassify the 28-page section of Congress’s joint inquiry into 9/11 that dealt with this subject to clear the air.

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Al-Shabaab profits from Somali telecom sector

August 18, 2014

Without a stable central government, Somalia’s telecommunications network has been unregulated for decades.  This has allowed for tremendous growth and fairly low prices for phone and Internet access in Somalia compared to neighboring countries.

However, this has also created a Wild West atmosphere of clan elders and businessmen in Mogadishu cutting deals with international—often Saudi-backed—telecommunications providers like Arabsat.  Arabsat is based in Saudi Arabia and is owned by the Arab League.  In addition to providing phone coverage, Arabsat’s satellites host television broadcasts by well-known hate channels Al Manar and Al-Aqsa.

The government of Somalia has made attempts recently to begin taxing and regulating the telecommunications industry, but the bigger factors at play are the taxes you don’t see.  Some evidence suggests that informal licenses are granted by warlords or businessmen in exchange for bribes paid behind the scenes.

Reporting from the Gulf News earlier this year went even farther, suggesting that the warlords allow the telecoms to over-charge customers so they can pocket the difference or pay off al-Shabaab too:

…By persuading other telcos worldwide to clip the ticket for them, these [Somali telecommunications providers] groups has [sic] become wealthy enough to avoid attempts by government and the regulatory International Telecommunication Union (ITU) to rein them in.

Not only do these groups exploit vulnerable customers charging them often beyond their means and disproportionate to costs, there are also suspicions that some sponsor the terrorist scourge, Al Shabaab.

By negotiating with foreign companies to charge above the usual rates and to put money collected into overseas funds, these “companies” avoid tax — and have sufficient clout to offer deals to favoured factions, or fund groups they believe will deliver a government suited to their economic or ideological aims…

There are also rumors of relationships between, or at least pressure exerted by, al-Shabaab on several specific Somali telecommunications companies including Hormuud Telecom.  RBC Radio reported this year that, “Al Shabab has closed down Hormuud Telecom Company’s branch in Jilib town, Middle Jubba region after the company failed to pay $50,000 which Al Shabab demanded from local companies,” and added that, “Extorting money from private business companies and aid agencies operating in Somalia is seen as the biggest source of investment for Al Shabab’s war with the government.”  Some sources have gone further, describing Hormuud as “al-Shabaab’s messenger” or “the phone of death” taking its cues from al-Shabaab.

In October 2011, Hormuud was allowed to remain in operation while two rival companies were closed by al-Shabaab.  One of those rivals, Nationlink Telecom, eventually reopened after allegedly paying $30,000 to al-Shabaab to resume operations.  An al-Shabaab member told the Somalia Report that non-cooperative companies would be forced to close “until their managers agree to pay taxation for the war against the infidels as well as the crusaders.”

While it is possible that some of the claims about the telecommunications business in Somalia have been exaggerated due to clan or business rivalries, former al-Shabaab commander Mohamed Farah Al-Ansari confirmed the role of extortion against Somali telecommunications companies in funding al-Shabaab in an interview with Voice of America last year.

There are enough grounds for concern that international investors and corporations would do well to examine any business deals with Somali telecommunications companies with the utmost caution.  Similar to the risks of doing business with the money transfer company Dahabshiil, the taint of al-Shabaab is simply too strong to ignore.

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Muslim leaders decry bank account closures

August 15, 2014

Outraged by the decision of HSBC to close the accounts of clients who may be at risk of laundering money, evading sanctions, or financing terrorism, one of the trustees of the Ummah Welfare Trust (UWT) has called for a boycott by “Muslim brothers and sisters” and “their contacts” against the British bank.

The Federation of Student Islamic Societies also condemned the closure, saying it sets the precedent that such accounts can be “closed, without reason, at any time.” The Daily Mail notes that several Muslim Britons have taken to social media outlets to call HSBC’s decision “racist,” while the targets of the closures have blamed “Islamophobia.”

These knee-jerk and vitriolic responses are similar to the reaction of prominent individuals like Olympic medalist Mo Farah, who claimed that an attempt by Barclays to end a business relationship with one remittance company last year could mean “death to millions of Somalis,” and from U.S. Congressman Keith Ellison (D-MN) who screamed, “It’s wrong to close off the lifeline!” during a protest against banks in Minnesota that ceased remittance services to Somalia in late 2011.

Can we not have a civil and intelligent conversation about why the accounts have been closed, and what regulatory pressures brought this to bear, without spoiling for a confrontation and casting HSBC’s leaders as a bunch of ignorant bigots?

The targets of the closures purport to be upset that they were not given an adequate explanation for the account closures. But that’s a catch-22. If HSBC had disclosed the reasons for its suspicions—if hypothetically it had said that UWT operates two programs in Gaza that are administered by Hamas operatives—then UWT would probably claim that the disclosure was baseless and defamatory, and that the matter should have been handled in private.

Or if HSBC had maintained the accounts, HSBC’s leadership would be hauled before Congress again and asked to explain why it still operated accounts on behalf of controversial entities like the Finsbury Park mosque and UWT.

This is a case of damned if you do, damned if you don’t, and damned for the manner in which you did or didn’t do it.

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Money and the Islamic State of Iraq and Syria

August 11, 2014

In 2007, the Islamic State of Iraq was seen as “the richest of the insurgency groups” in Iraq with $1 billion to 1.5 billion “collected in revenue by the group through foreign donations, enforced taxation and confiscation of the property and funds of Iraqis.” But the U.S. surge and ISI missteps significantly damaged the jihadist group’s ability to raise funds.

Seven years and three names later, ISIS amassed a $2 billion comeback and took control of large swathes of territory in northern Iraq including Mosul and 35 percent of Syria.

ISIS’s financial recovery has been marked by a slight shift away from reliance on local extortion networks (although those are still in effect), improved organizational and financial management by ISIS leader and self-proclaimed caliph Abu Bakr al-Baghdadi, and the departure of U.S. troops in 2011.

The most important elements of ISIS’s funding are sadaqa (voluntary donations) from Arab donors in the Gulf; sales and tolls collected on sales of oil from fields under its control; and increasingly through money made by controlling key infrastructure.

Here’s a rundown of ISIS’s main funding channels:

Sadaqa from private donors

Fundraising is aided by contemporary marketing methods

Oil

  • ISIS controls 60 percent of Syrian oil including the lucrative Omar field
  • In Iraq, ISIS controls Butmah and Ain Zalah oil fields, the refinery in Baiji, and oil and gas resources in Ajeel in northern Iraq
  • ISIS sells or collects a portion on black market sales to Turkey, Iran, and in Syria itself
  • Revenue estimates for ISIS range from $1 million to $3 million daily

Dams

  • In addition to oil, control of key infrastructure such as the dams in Mosul, Fallujah, and Tabqa present increasingly significant revenue potential for ISIS.
  • Professor Ariel Ahram notes this is already occurring at Tabqa, where ISIS is involved in selling electricity.
  • New York Times reporter Tim Arango says that possession of the Mosul dam can enable ISIS to “use it as a method of finance” through extortion schemes to continue their operations.

Other sources

  • Isis has seized arms from Iraqi depots, including U.S. weapons given to Iraqi forces, plus weapons smuggled from Turkey and Croatia
  • The collection of ransom money has sustained ISIS throughout its existence
  • Antiquities smuggling

Incidently, little is being done by the Gulf states to curtail the flow of donations to ISIS because they either want an independent Sunni state carved out of Iraq or to replace Iraq’s Shia-led government with Sunnis. Washington should designate Saudi Arabia and Qatar as state sponsors of terrorism, but it won’t because of diplomatic considerations.

Without interdicting the donations and the contraband oil, U.S. airstrikes will have limited effect on ISIS’s coffers.

This piece is also published at Terror Finance Blog.

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U.S. Bank backs out of Dahabshiil deal

August 3, 2014

Minnesota banks stopped providing remittance services to Somalia in late 2011 over concerns about the risks of terror finance and money laundering. U.S. Bank, a subsidiary of U.S. Bancorp, considered a partnership with Dahabshiil to reinstate money transfer services to Somalia, but cancelled those plans earlier this year.

Minnesotans for a Fair Economy reported in April that:

U.S. Bank officials informed representatives of Minneapolis-based Dahabshiil, a Money Service Business (MSB) that serves the Somali community, that it would not conduct remittances to Somalia…

Community leaders have met with U.S. Bank officials many times since the last Minnesota bank ceased conducting the transactions. Such a meeting took place just two weeks ago.

“On behalf of our community, I am very disappointed by this decision to back out of our agreement,” said Mohamed Nor of Dahabshiil.

U.S. Bancorp explained its decision by saying, “”Unfortunately, because of some items identified in the independent review of Dahabshiil and the inherent risks of doing business in Somalia, we are not able to open an account as we had hoped.”

U.S. Bancorp should be applauded for its sensible decision. There are simply too many questions about the financial relationship between Dahabshiil and the terrorist group al-Shabaab to proceed with business partnerships between Dahabshiil and Western financial institutions.

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