Kidnapping: Why Al Qaeda Needs Donations More Than Ransoms

Yesterday, the Foreign Policy Research Institute provided me another opportunity to post on their blog Geopoliticus.  For this post, I did an extended discussion and update to a series of posts I did with Alex Thurston several years back regarding AQIM’s use of kidnapping in the Sahel.  For the old discussions of AQIM & others’ kidnapping operations see these posts and Alex’s excellent insights at these posts –  #1, #2, #3, #4 and #5.

In this new post, entitled “Why al Qaeda Needs Donations More Than Ransoms,” I discuss the trade offs and disadvantages for al Qaeda affiliates such as AQIM that are dependent on illicit funding schemes, namely kidnapping, to sustain their operations.  I conclude with the opinion that al Qaeda needs donations more than ransoms if they intend to orchestrate a comeback.  Here’s an excerpt of the post below and for the entire post, visit this link at FPRI.

“On the surface, kidnapping and smuggling appears an ideal financial engine for terror groups like al Qaeda and its affiliates. This assertion, however, ignores the inherent challenges encountered when any organization, whether terrorist group to criminal enterprise, undertakes illicit funding schemes.  Kidnapping and ransom operations introduce significant transaction costs which significantly devalue the gross sum of revenues.  Kidnapping operations create a series of internal costs for terror groups:

  • Networks Of Intermediaries –  Negotiations and payments for kidnapping operations require layers of middlemen with each network extracting a percentage of the overall take.

  • Transaction Time – The time between hostage taking and ransom payments can be significant requiring the terror group to maintain a solid reserve of capital to sustain its operations between transactions.  Essentially, time is money, and in the case of kidnapping operations, a cost to the terror group.

  • Hostage Deaths – The trauma of kidnapping and the harsh environments in which terrorist groups operate often result in the death of hostages.  The death of a hostage hurts the terror group directly in terms of loss revenues. But, even more damage occurs indirectly as the hostage death erodes trust for future ransom negotiations.

  • Infighting – In any business, transactions often lead to conflict.  This is particularly true in illicit industries where trust is constantly being questioned.  Kidnapping negotiations naturally generate friction between intermediaries and when negotiations become protracted parties may turn to open conflict.

  • Declines in Hostage Availability – As groups like AQIM continue to kidnap hostages, the availability of hostages naturally declines requiring the terror group to operate at longer distances to acquire captives.  This distance imposes significant logistical costs.

  • Undermines Terror Group’s Ideology – Inevitably, in illicit schemes and even licit enterprises, business gets messy and the terror group must make choices with regards to sustaining its resource flow.  Often times, these choices result in alienation of a terror group’s local base of popular support or hypocritical conflicts of interest between the terror group’s deeds and its words.  The recent accusations of Omar Hammami, an American foreign fighter who has fallen out of favor with al Shabaab, demonstrate how al Shabaab’s turning a blind eye to Qat distribution in Somalia for the purpose of taxation has called into question the group’s committment to al Qaeda’s ideology and Sharia law.

  • Opportunity Costs – When al Qaeda is dedicating more time, manpower and resources to illicit fund generation, they are spending less time recruiting and training new operatives, planning operations and executing attacks.”

Also, @el_Grillo1 made a point which I overlooked in the FPRI post.  Another detractor of illicit revenue generation for al Qaeda groups is the scrutiny brought on terrorists by law enforcement and the military when they conduct illegal activities like kidnapping and drug smuggling. An important point that I overlooked in the FPRI post.  Here is a quick chart I put together showing the relative value of illicit funds to donor provided dollars.



Al Qaeda: Where’s the money? – Not Dead, but Dying, Part 2

Newsweek recently published an update from their al Qaeda source, Hafiz Hanif, an intermittent al Qaeda cell member who recently tried to rejoin his group North Waziristan.  The article entitled, “Al Qaeda on the Ropes, One Fighter’s Inside Story” is a followup to a previous 2010 interview with Hanif entitled “Inside al Qaeda“.  A great read for those interested in AQ’s demise.  There’s so much in this article that I could write about but today I’m just going to focus on one thing – MONEY.

Many perpetuated the notion immediately after 9/11 that terrorism and al Qaeda’s brand in particular costs very little.  Common analysis peddled via TV news based this measure on the fact that the 9/11 attacks cost only a few hundred thousand dollars to execute yet caused such tremendous damage.  The mistake of this argument arises from analysts confusing the production costs of one attack (9/11/2001) representing the total cost of all al Qaeda operations.  Not so! While the individual attack appears cost effective on a case-by-case basis, operating al Qaeda’s global infrastructure requires millions of dollars every year.  Al Qaeda, throughout their history, has struggled at times to maintain financial support and distribute funding equitably (See Harmony & Disharmony and AQ’s (Mis)Adventures for examples).

No one likes having a friend/guest sleep on your couch and eat all your food for ten years without chipping in on the bill – especially when your friend brings drone missile attacks on your house.  Al Qaeda has likely spent hundreds of millions of dollars over the past decade maintaining its safe haven and routinely shifts large amounts of resources to Taliban groups for protection.  These funds came predominately from wealthy Gulf donors and hinged largely on the connections, image and reputation of Bin Laden – a leader from the Arabian Peninsula.

The recent Newsweek article paints a sad picture of al Qaeda Central’s state in Pakistan and more importantly their financial state.  Here’s an updated report from Hanif related to al Qaeda’s financial situation:

New recruits have stopped coming, Hanif says. “When new people came they brought new blood, enthusiasm, and money. All that has been lost.” The money may be a bigger problem than the manpower, he (Hanif) says. Al Qaeda used to receive millions of dollars a year from Arabian Gulf contributors, but Hanif’s uncle says his contacts tell him the donations have dried up. Instead, he believes, the money is going to the more productive and generally nonviolent Arab Spring movements in North Africa, Syria, and Yemen. “I think Arab people now think the fight should be political at home and not terrorism aimed at the West,” says the uncle. “The peaceful struggle on Arab streets has accomplished more than bin Laden and Zawahiri ever have.”


Hanif recalls how al Qaeda logistics operatives used to visit his unit to ask what the men needed in terms of weapons, medicine, food, and money. And he used to love making supply runs to the bazaar in North Waziristan’s capital, Miran Shah, with pockets full of cash for sweets and tea and to use the Internet. The town is still thronged with Pakistani and Afghan Taliban, shopping side by side with Pakistani soldiers, but now the Arabs have mostly vanished, and the shops specializing in olive oil, Arabian dates, and other Arab favorites are deserted or closed. Fighters subsist on minimal rations—if they aren’t left to fend for them-selves. That’s not easy, since al Qaeda has few friends in the area. Villagers fear that bin Laden’s men could bring drone strikes and the danger of civilian casualties, and al Qaeda has nothing left to offer local militants. The group is broke, and most of its best explosives and technical specialists have either died or left the vicinity. There aren’t even enough fighters left to act as reinforcements

During the AQ Strategy poll and Post-UBL poll in April/May 2011, I asked where will Gulf donor contributions go after UBL’s death.  Most thought donor support to AQ Central in AFPAK would be sustained.  However, ‘Private Sector’ respondents indicated that Islamist groups amongst the Arab uprisings would be the new investment priority.  It appears the ‘Private Sector’ voters may have been the most accurate in their prediction and suggests that if you want to know who will invest and where – ask the private sector as their success or failure hinges on picking winners.

As for me, for now, I’m sticking with my assessment from almost one year ago today – January 16, 2011 – entitled “Thoughts against Zawahiri’s ascension”:

1) Resources

However, UBL’s greatest strength in AQ (since its inception) is distributing money and providing an architecture (The Base) from which to pursue global jihad.  I refer back to page 197 of The Looming Tower where Larry Wright discusses how, “the camaraderie that sustained the men of al-Qaeda rested on the financial security that bin Laden provided,”  In the beginning, UBL used his own wealth to support AQ.  Today, UBL’s presence in AQ brings donations from the Gulf, fund transfers from affiliates like AQIM who divert kidnapping revenues (seen reports to this but can’t confirm it), and the benevolence of the Haqqani network.  We should also remember that Zawahiri came to UBL because of his resources.  When UBL dies, Zawahiri may take control but he will not be able to secure these three resource pipelines.

Here’s a re-post of the graph from the Gulf donor support question the week prior to Bin Laden’s death (AQ Strategy Poll):


And here’s a graph from the same Gulf donor question the week after Bin Laden’s death (Post UBL Poll):


Financial Impact on AQ post Bin Laden

During January’s first run of the AQ after Bin Laden poll, I selected “AQ loses its chief sponsor, the Haqqani network” as the chief consequence of UBL’s death.  I calculated and still believe that the loss of Haqqani network support will result in AQ losing its Pakistani safe haven.  I predicated my assumption on the belief that the Haqqani’s will not support a Zawahiri-led AQ. (Another follow up poll I ran) But, many disagreed with my interpretation and it appears unclear who will ultimately become AQ’s leader.  (In my January 15, 2011 analysis, I used causal flow diagramming to pick the Haqqani support decision as my chief consequence and to initiate the Zawahiri discussion, see here for my initial calculation.)

Since January, I’ve changed my choice on the “Chief consequence of UBL’s death” question to account for recent uprisings in North Africa and the Middle East.  My selection in the May iteration of the Post UBL Poll is “AQ fundraising decreases”.  Surprisingly, I agree with the ‘Private Sector’ respondents to this question.  The media’s portrayal of AQ terrorism as an inexpensive undertaking are greatly exaggerated.  “Jihad doesn’t run on free”. While individual attacks, like AQAP’s “Printer Cartridge” plot, may only cost a few thousand dollars in supplies, annual AQ operational costs require millions of dollars.  For AQ Central hiding in Pakistan, there are significant expenses in paying group members and supporting their families (see AQ’s employment contract), arming and outfitting terrorists, securing communications and safe havens and then conducting operations.

Here’s my logic for why I think a ‘decrease in AQ fundraising’ will be the chief consequence:

  • AQ’s financial support arrives in three forms: donor support from the Gulf, illicit revenue from criminal enterprises, and sometimes earnings from legal businesses.
  • UBL’s ability to secure donor revenue, more than any other reason, allowed him to initiate, propel and sustain AQ.  Many other terrorist leaders have professed an extremist ideology and planned attacks on the U.S.  However, no other terrorist brought in resources like UBL.
  • AQ Central led by UBL relied heavily on donor support from the Gulf to sustain a Pakistani safe haven.  While a common ideology helped bind AQ and certain tribes, money was critical to cementing a comprehensive alliance with the Taliban.  Without Gulf donations being passed on to Taliban protectors, I believe the ideological bounds between AQ and the Taliban will erode.
  • Donor support is infinitely better for terrorist groups than illicit financing.  Illicit financing is time consuming; requiring terrorist groups to divide their efforts between securing resources and terror plot planning/recruiting/training.  Additionally, the bartering and bickering involved with illicit financing usually results in ideological compromises that undermine AQ’s foundation.  (AQIM is a good example.)  Lastly, pursuit of illicit funding streams weakens AQ’s operational security creating vulnerabilities more easily exploited by Western CT efforts.
  • Securing future donor support for AQ Central will require a capable AQ leader with roots in the Arabian peninsula.  I’m uncertain Zawahiri and the North African AQ members will receive equal donor commitment.  Thus, AQ Central in Pakistan will either 1) move to a more junior Saudi/Yemeni leader that can secure Gulf donor support, 2) fracture into an AQ affiliate led by a Pakistani/Afghan leader more able to secure resources via Taliban groups & illicit financing (this will likely lead to AQ Central shifting focus to guerrilla warfare in South & Central Asia) or 3) remain in the hands of AQ’s old guard (Zawahiri) and eventually be starved into irrelevance.
  • In the future, Gulf donors supporting Islamist/Salafist causes will have to decide where best to invest their money.
  1. Continue supporting AQ Central in Pakistan–  Donors must wonder if AQ Central is worth the investment. With UBL dead, the Pakistani government under pressure to produce, and AQ on the run, what can a donation ultimately achieve?
  2. Shift their donation to AQAP in Yemen– AQAP has steadily increased its recruitment, capability and attacks on the West.  Led by Saudis and Yemenis, embedded in a Yemeni safe haven and close to the Gulf, why would a donor continue supporting an AQ Central on the decline rather than an AQAP on the rise?
  3. Move their donations to Islamist groups competing for political power amongst current uprisings- One of AQ’s long time ideological goals was the overthrow of apostate regimes (near enemy).  AQ never achieved this, but many other Islamist groups currently compete for national power in the wake of Middle Eastern and North African uprisings.  Why donate to an AQ affiliate on the run, when a dollar donated to an Islamist group might result in an Arab regime more in line with Islamist principles?

I’ll post the results of the Post UBL Poll question on donor support in a couple of days.  In the meantime, what are some other dynamics to AQ donor support that I have overlooked?