Is Al Qaeda Bankrupt? Authorities Cripple Group by Cutting Off Money Supply

For much of the past decade, Western governments have waged war against al Qaeda, trying to find a way to undermine the terrorist organization and its infamous head, Osama bin Laden. Yet, for all their work on the Internet or in the field, the most successful battleground may well be in the bank. As international efforts to track down and close off the organization's flow of money have borne fruit, al Qaeda's central leadership has increasingly found itself cut off from a source of power.A big part of al Qaeda's troubles lies with Abd al Hamid al Mujil, a major figure in the group's fund-raising activities. As executive director of the International Islamic Relief Organization (IIRO), Mujil traveled around the world, collecting donations for various Islamic groups, one of which was al Qaeda.

Since 2006, the U.S. Treasury and United Nations Security Council have singled him out as a major funding source for international terrorism, and have prohibited U.S. firms and U.N. member states from working with him. In the process, they have cut off a large financial stream to the terrorist group.

Terrorism Costs Money

Al Qaeda's money problem is very common: Terrorism is an expensive business, and many famous terrorists -- including the Baader Meinhof gang and Josef Stalin -- even resorted to old-fashioned bank robberies to fund their attacks. While some supporters romanticize this behavior by invoking visions of Bonnie and Clyde or Robin Hood, plebian robberies tend to tarnish the revolutionary image. For example, famed terrorist/revolutionary Carlos the Jackal is still dogged by claims that he kept $30 million in ransom for his own personal use.

The most successful terrorists tend to search out deep-pocketed patrons to foot the bill. During the Cold War, this was a lot easier, as both the U.S. and the Soviet Union used terrorists to harass the other side. While the Soviet Union trained and funded members of the Palestinian Liberation Organization (PLO), Peru's Shining Path guerrillas and other groups, the U.S. gave money to warriors in Afghanistan -- including Osama bin Laden.

It also didn't hurt that bin Laden was independently wealthy, having inherited an estimated $7 million from his father. In 1984, he used some of these funds to start up Maktab al-Khidamat, a group that funneled $600 million in charity donations and CIA funds into Afghanistan.

Bin Laden Switched Focus

Later, when bin Laden switched his focus to the West, he folded Maktab al-Khidamat into Al Qaeda. By then, he had established a money-raising network that drew from charities, opium manufacturers and various governments. In fact, much of his funding came from the U.S., either through charitable fund-raising, or in the form of gas revenues that trickled down through the Saudi government and various charities.

But moving charitable donations to al Qaeda's central leadership and back out to its cells requires a bank. The financial attacks on the terrorist group have wreaked havoc on its ability to move money. This has caused the original organization to fragment from a strongly centralized group to a much more diffuse collection of individual cells. With funding cutbacks, the main al Qaeda leadership has lost much of its power to direct the focus and activities of the group.

In the absence of a strong central authority, al Qaeda cells have had to find their own sources of funding; in many cases, they have done so by resorting to crime. A North African group, al Qaeda in the Islamic Maghreb, smuggles cocaine from South America to Europe, via North Africa. Another affiliate has been running narcotics through New York City. Afghan heroin remains a strong source of income, as does kidnapping, and some elements in the group have discussed the possibility of moving into piracy.

But, as Carlos the Jackal learned, common crime tends to dilute one's ideological purity. According to Forbes, many al Qaeda decision-makers are concerned that "criminal activity creates bad p.r. and erodes the brand within Muslim communities."
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