Oneof the features of Shariah-Compliant Finance is that financial institutions whoparticipate in it may well be helping to finance terrorism through moniescontributed to Islamic charities. As the article below reveals, some of theseso-called “legitimate” charities have been funding and continue to fundterrorism.
by Phil Leggiere
Thursday, 06 November 2008
New paper examines how Al Qaeda uses moderate Muslims to ‘microfinance”terror.
Terrorist networks and organizations have many “underground” means of financingthemselves, from drug smuggling to cybercrime. As challenging as theseclandestine methods are to globally eradicate, an equally vexing problem is howto shut-off jihadist funding siphoned off from so-called “legitimate”charities.
Addressing that problem, according to Tolga Koker Department of Economics andCarlos Yordan Department of Political Science Drew University, means addressingthe question of why tens of thousands of Muslims who are not terrorists andoften opposed themselves to terrorism nonetheless support the work of charitiesthat support jihadist operations. Their new paper,titled Microfinancing Terrorism: A Study in Al Qaeda Financing Strategy,published Tuesday by the Social Science Research Network, tries to do justthat.
Although new banking and financial regulations may have made it difficult forterrorist groups to move funds around the world, the authors argue, thesegroups have be quite resourceful in finding ways to adapt to the new regulatoryenvironment and to undermine it.
“For terrorist networks,” they write, “especially those informed by jihadistideologies, one source of finance is Muslims’ religious donations to Islamiccharities. Although Al Qaeda and its affiliates have employed other fundingmechanisms, individual donations are a key source of financing because it is asteady flow of funds.
Charities, according to the report, have been a fundamental part of Al Qaeda’sfinancial Infrastructure, not only helping Al Qaeda raise funds, but allowingit to move funds across national boundaries and hide the transfers fromfinancial regulators.
Though some charities, according to the authors knowingly and activelysupported Al Qaeda’s efforts, “most were not aware that al Qaeda operativesworking for these charities or that they were siphoning off thousands ofdollars to fund terrorist activities and to build Al Qaeda’s global network,which supported jihadist struggles in Chechnya, the Balkans, Kashmir,Afghanistan, Central Asia, and Southeast Asia.”
"Given that Al Qaeda and other groups fund most of their activitiesthrough donations, collected by Islamic charities, why would Muslims providefunds to these organizations," the authors ask.
The answer, the authors conclude, is that "social pressure forces moderateMuslims to publicly support the work of charities that may provide assistanceto Al Qaeda or groups inspired by a jihadist worldview."
As they explain it, an individual will comply with social pressures and donatefunds to a charity that may supports jihadi causes if he perceives it ascritical to his reputation and public recognition as a “practicing” Muslim.Given the primacy of charitable donations in the culture and status system ofMuslim communities the need to maintain reputation in this sphere is a powerfulforce, one that Al Qaeda has been able to tap.
“Microfinancing jihadi charities has a snowballing effect,” they write. “AMuslim who previously refrained from donating to Islamic charities is likely tofind himself in a position to provide some funds to religious organizations ifhe constantly observes his fellow acquaintances’ donations. As a bigger portionof Muslims are yielding to social pressures to contribute extra monies tojihadi charities, al Qaeda and other groups informed by jihadi goals willsecure more funds to run their violent operations.”
The reputational model of charitable behavior, the authors believe, has strongimplications for policy and counter-terror strategy.
“The model implies,” they say, “that identifying first and then publiclyexposing such charities may help pious Muslims, especially those with highexpressive drive to sincerely voice their concern among their communities.Encouraging individual donors with high threshold to voice their opinionagainst violence may create a snowballing effect deterring others fromcontributing to possible jihadi charities.”
“More importantly,” they conclude, “finding ways to decrease reputationalbenefits is crucial in curbing the financial resources flowing terroristnetworks. However, this is not an easy task. It needs the involvement of secularcharities to provide several basic services that were considerably diminishedwith the neo-liberal polices since the 1980s in Muslim countries and elsewhere.Strictly regulated foreign aid to secular charities may help in this regard.”
The ultimate goal of this campaign of cultural outreach will be “makingcontribution to jihadi charities unpopular, and hence, changing the directionof social pressure from donating monies to such charities to avoiding suchorganization will have a paramount effect in the fight against terrorism. Thisis a long-term goal which is not feasible in the very short run since it asksfor major revisions in world politics of which the jihadi charities areby-products.”