Archive for July, 2013

h1

Money Jihad on summer break

July 19, 2013

This blog will be on hiatus for a couple weeks.  Thanks to readers and subscribers for your patience!

Fresh tweets at @MoneyJihad should continue as usual.

Advertisements
h1

Government shares wealth with MILF

July 18, 2013

The central government of the Philippines has brokered a deal with the radical Moro Islamic Liberation Front to split revenues generated in the breakaway southern island of Mindanao.  The MILF (or “Bangsamoro”) will receive 75 percent of tax revenues, 75 percent of mining revenues, and 50 percent of fossil fuel revenues, with the central government retaining the balance.  The “crown jewel” of the agreement is that the MILF will receive their whopping cut through an automatic, annual, haggle-free grant from the central government.

It remains to be seen which taxes, such as zakat, jizya, or kharaj, the MILF may seek to impose on Mindanao residents.  The agreement is reminiscent of a truce between the government of Pakistan and militants in the tribal belt that resulted in the imposition of jizya against Sikhs in that country in 2009.

From the Philippine Star on Tuesday:

MANILA, Philippines – A wealth-sharing deal with the Moro Islamic Liberation Front (MILF) is advantageous to the country and “will stand the test of legality and constitutionality,” the chief of the government panel negotiating peace with Muslim rebels said yesterday.

In a press briefing at Malacañang, chief negotiator Miriam Coronel-Ferrer said a wealth-sharing scheme approved on Saturday was justified as it would make the envisioned Bangsamoro entity self-sustaining and progressive.

The Bangsamoro is also entitled to automatic appropriation from the central government.

Based on the agreement, the Bangsamoro entity gets 75 percent share in taxes and revenues from natural resources and metallic minerals and 50 percent from energy and other mineral resources.

Ferrer said that of all the provisions in the wealth-sharing annex, “the jewel in the crown” was the provision entitling Bangsamoro to automatic appropriation and regular release of budget.

The allocation will be in the form of an annual “block grant” from the central government similar to the internal revenue allotment (IRA) received by local government units.

“The formula for the automatic appropriation of block grant will be provided in the basic law. Many of us have not focused on this detail because much of the reporting on media have concentrated on the sharing arrangements with regard to natural resources but, as I said, this is the jewel in the crown,” Ferrer said.

At the same time, Ferrer said the agreement provided that revenues collected by the Bangsamoro from additional taxes and their share in government income from natural resources would be deducted from the annual block grants on the fourth year of the operation of the regular Bangsamoro government.

“This provision came from the MILF. It indicated that behind the haggling for more share is the intent to be less and less dependent on the national government,” Ferrer said.

“It indicated that the intention is not to get the ‘lion’s share’ for its own sake but to be able, in the future, to stand tall as a progressive and peaceful region; an equal partner of the central government in an equally peaceful and progressive country,” she said.

“This, indeed, is the true meaning of partnership – a partnership that is not based on dependency and patronage, but on the strength and capacities introduced by both for the benefit of the whole,” she added.

Ferrer said this was a unique provision because there would be automatic appropriation that would spare the region from the constraints of central budgeting process.

“I would like to say that this is a structural difference. This is not just an add-on in terms of additional percentage or whatever but this, basically, redefines the whole structure with regard to the financing of the Bangsamoro government,” Ferrer said…

h1

Al-Shabaab’s new quartermaster? Iran.

July 17, 2013

In addition to imposing zakat on commodities such as charcoal and sugar, and extorting funds from Dahabshiil wire service, al-Shabaab may be receiving support from Iran, a designated state sponsor of terrorism.  Perhaps Iranian aid helps make up for al-Shabaab’s financial setback when it lost control of Kismayo and the lucrative harbor taxes it imposed there.

This eyebrow-raising revelation comes from a UN report disclosed to Reuters:

Exclusive – Arms ship seized by Yemen may have been Somalia-bound: U.N.

By Louis Charbonneau and Michelle Nichols

UNITED NATIONS | Tue Jul 2, 2013

(Reuters) – An Iranian ship laden with arms seized by Yemeni authorities in January may also have been bound for Somalia, according to a confidential U.N. report seen by Reuters on Monday.

Yemeni forces intercepted the ship, the Jihan 1, off Yemen’s coast on January 23. U.S. and Yemeni officials said it was carrying a large cache of weapons, including surface-to-air missiles, being smuggled from Iran to insurgents in Yemen.

The confidential U.N. report, by the U.N. Monitoring Group on Somalia and Eritrea, cited Yemeni officials as saying that it was possible diesel carried aboard the ship could have been intended for shipment to Somalia.

The group, which tracks compliance with Security Council sanctions, raised concerns in the report about the flow of weapons to Islamist al-Shabaab militants since the U.N. Security Council eased an arms embargo on Somalia’s fragile Western-backed government earlier this year…

h1

Sanction-busting smugglers flock to Oman

July 16, 2013

Barack Obama has said, “We’ve imposed the toughest sanctions in history.”  But with respect to Iran, the sanctions regime looks more like a game of whac-a-mole where, as one sanctions loophole pops up and is beaten down, another loophole or workaround pops up somewhere else.  In the latest illustration of this, the UAE has been pressured to clamp down on smuggling to Iran, and an island off the coast of Oman has begun picking up the slack.

From France 24 on Jul. 11 (h/t latlongpacific):

Iranian smugglers set up shop in coastal Oman

Iranian sanctions evasion via Oman

Due to the ramping up of international sanctions, many Iranian merchants who were working legally in Dubai are leaving and heading to Khasab, a small coastal town in Oman, where smuggling is rife.

Khasab, in the southern part of the Hormuz Strait, is conveniently located just 45 kilometres from the Iranian island of Qeshm. Many Iranian merchants who previously worked in the UAE are now establishing themselves in Khasab, where they rely on “shooties” – a local term for smugglers – to take their goods to Qeshm and from there to the rest of Iran.

According to our Observers, as well as other reports, both Omani and Iranian police appear to turn a blind eye to this practice. A photographer who recently travelled to the region told FRANCE 24 that the Omani authorities try to prevent this from making the news. He said that after taking photos of the smugglers, he was repeatedly interrogated, made to erase almost all his photos, and warned to stay away from Iranians working in Khasab.

Many Iranian businessmen have quit Dubai in the past couple of years because UAE authorities — under pressure from the United States — have made it increasingly difficult for them to work there. Many Iranian businessmen’s bank accounts have been frozen; they no longer enjoy banking facilities such as loans; and work permits are increasingly difficult to obtain. According to one veteran Iranian businessman FRANCE 24 spoke to, such measures have pushed Iranians who were previously working in the UAE legally to go to Oman, and smuggle their goods to Iran via Khasab: “They simply could no longer compete with non-Iranian merchants and were incurring loses. Doing business here in Dubai has now become almost impossible for Iranians”…

h1

The ratlines of Hamas

July 15, 2013

Hamas and tunnel owners are making millions of dollars a year from Gaza Strip smuggling.  A nice little summary of the long-known situation comes to us from a new, scholarly article entitled “Terrorist Use of Smuggling Tunnels” in the latest edition of the International Journal of Criminology and Sociology:

…The amount of money made by Hamas off taxing contraband smuggled through Gaza Strip tunnels, as well as the political advantage of Hamas controlling both absolute and conditional contraband tunnel smuggling, has been addressed in the business management popular press. For example, one source reported that “the tunnels generate $188 million in tax revenues on things like cigarettes, gas and building materials” (Topol, 2013, para. 13).

Palestinians estimate that 25% of the Hamas government’s budget comes from taxes imposed on the owners of the underground tunnels. For example, Hamas has imposed a 25% tax and a $2,000 fee on every car that is smuggled into the Gaza Strip. Hamas also charges $15 for each ton of cement, eight cents for a pack of cigarettes, and 50 cents for each liter of fuel smuggled through the tunnels (Toameh, 2012).

The political advantage the smuggling tunnels provided to Hamas included that while the tunnels are essential for transporting absolute contraband and materials into Gaza, they are also critical for maintaining the goodwill of Gazans by providing them with cut-price commodities even with surcharges added by Hamas officials (Alster, 2013). The financial rewards of engaging in criminal smuggling of contraband between Egypt and the Gaza Strip are an important part of transnational tunnel analysis because the Gaza Strip is a site of an estimated 600 millionaires (Toameh, 2012)…

h1

Lessons in extortion by El Salvador’s gangs

July 14, 2013

Although the gangs may not be using the proceeds to fund international terrorism, the shakedowns of local businessmen are very reminiscent of terrorist fundraising activity by ETA in Spain and by Islamist militants in Afghanistan, Pakistan, Somalia, and Iraq.

InSight Crime has the analysis, which may provide some useful lessons for counter-terror finance analysts:

2 Businesses Per Week Shut Down by Extortion in El Salvador

Around 70 percent of the 11,730 businesses registered with the National Council for Small Businesses (Conapes) reported being extorted by gangs, according to the group’s director Ernesto Vilanova.

The head of El Salvador’s Chamber of Commerce, Federico Hernandez, confirmed the practice is widespread and said extortion, along with the government failing to pay contractors on time, is the main factor behind an increase in closures of small and micro-businesses — classified as businesses employing between one and 50 people.

Hernandez said the Chamber had registered a rapid acceleration in the number of businesses forced to close over the last five months and that the situation was worse now than at any point in his four-year stint at the head of the organization.

According to Vilanova, despite the truce between the two street gangs behind most of the extortion, the Mara Salvatrucha (MS-13) and Barrio 18, there is little optimism in the business community that the situation will improve. “This is never going to end,” he said. “They arrest three, but there are thousands more out there.”

InSight Crime Analysis

The comments made by the two Salvadoran business organizations highlight the crippling economic impact of extortion, especially in developing economies where most opportunities for employment are with small and micro-businesses.

Worryingly, they also add weight to reports that the since the gang truce, far from leading to a reduction has actually seen an increase in extortion…

This ongoing problem illustrates that gang war truces may not be as effective as everybody hoped for, especially when the underlying reason for the conflict isn’t addressed.  Will this be a lesson for those seeking to broker a truce with the Taliban?  Or will we look back months after a “peace deal” is signed and wonder why ordinary Afghan businessmen and farmers are being ripped off once again by the tax men of the Taliban?

h1

Kuwaiti donors arm Syrian mujahideen

July 12, 2013

Not to be outdone by their Saudi and Qatari neighbors, Kuwaitis are raising money to fund and arm the rebels in Syria.  This is being done through private donations, and officials claim that safeguards are in place to ensure that aid goes to the “right” people.  But this claim is unconvincing, especially given Kuwait’s record of allowing the Revival of Islamic Heritage Society to operate and fund terrorism abroad.

From Reuters:

Insight: Kuwaitis campaign privately to arm Syrian rebels

By Sylvia Westall and Mahmoud Harby

KUWAIT | Thu Jun 27

(Reuters) – At a traditional evening meeting known as a “diwaniya”, Kuwaiti men drop banknotes into a box, opening a campaign to arm up to 12,000 anti-government fighters in Syria. A new Mercedes is parked outside to be auctioned off for cash.

They are Sunni Muslim and mainly Islamist like many Syrian rebels who have been trying for two years to overthrow President Bashar al-Assad, a member of the minority Alawite sect that is a branch of Shi’ite Islam.

Syria’s war has widened a faultline in the Middle East, with Shi’ite Iran and Lebanese militia Hezbollah backing Assad and Sunni-ruled Gulf Arab nations supporting his opponents.

“The world has abandoned the Syrian people and the Syrian revolution so it is normal that people start to give money to people who are fighting,” said Falah al-Sawagh, a former opposition member of Kuwait’s parliament, surrounded by friends drinking sweet tea and eating cakes.

In just four hours the campaign collected 80,000 dinars ($282,500). The box moves to a new house each day for a week. Sawagh estimates this type of campaign in Kuwait, one of the world’s richest countries per capita, raised several million dollars during the last Ramadan religious holiday.

Sunni-ruled Kuwait has denounced the Syrian army’s actions and sent $300 million in humanitarian aid to help the millions displaced by the conflict in which more than 90,000 have died.

Unlike Saudi Arabia and Qatar, Kuwaiti government policy is against arming the rebels. But the U.S. ally allows more public debate than other Gulf states and has tolerated campaigns in private houses or on social media that are difficult to control.

Kuwaiti authorities are nevertheless worried that the fundraising for Syria could stir sectarian tensions – Kuwait has its own Shi’ite minority. The West is concerned that support will bolster al Qaeda militants among the rebels.

Some opposition Islamist politicians and Sunni clerics have openly campaigned to arm rebel fighters, using social media and posters with telephone hotlines in public places. Former MP Waleed al-Tabtabie, a conservative Salafi Islamist, posted pictures of himself on Twitter clad in combat gear in Syria…