Countering the Financing of Terrorism

Thomas J. Biersteker, Sue E. Eckert

• Publisher: Routledge
• Year: 2007
• ISBN:
  9781134155361
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Groups committing acts of terrorism have adapted their means of financing to elude detection since the 9/11 attacks in the United States. Surveying the global community's multi-year effort to cut off terrorist funding, this volume offers a much-needed analysis of a complex, widely discussed, yet poorly understood subject. While books on terrorism have touched upon the topic, this is the first comprehensive, balanced, and scholarly overview of terrorist financing, its methods, and efforts to counter it.

Bringing together leading analysts of terrorism, international relations, global finance, law, and criminology, Countering the Financing of Terrorism provides a critical assessment of the international effort to restrict terrorist financing. It evaluates the costs and benefits and offers recommendations for more effective policies for the future.

Part I
The social organization of terrorism

2
Producing terror

Organizational dynamics of survival

Jessica Stern and Amit Modi¹

In this chapter we use an organizational approach to explore terrorism as a definable and distinctive product rendered by groups or “firms.” This approach allows us to analyze the production and “purchase” of terrorism, the evolution of groups, and the types of behaviors, shapes, and attributes that make groups more or less effective and resilient. Here we ask, what are the inputs of terrorism? How does resource scarcity or abundance affect organizational dynamics, such as competition and splintering? Why do terrorist organizations change their missions, and what factors affect their mission flexibility? What strategies do terrorist organizations choose in order to survive under changing environmental conditions? Under what set of conditions are the various organizational forms most efficient? By analyzing the organizational structures used for creating the “terrorist product,” we can hypothesize how terrorist groups adapt in response to changes in their environment, in particular, to governmental counter-terrorism policies that limit a terrorist groups’ access to funds.

The behavior of terrorist firms has always been responsive to and a reflection of the internal dynamics of the organization. Today, however, terrorist groups face extraordinary evolutionary pressures to adapt and evolve in the midst of the global war on terrorism. The argument presented here is that these internal and external dynamics encourage the development of terrorist organizations along a recognizable trajectory from creation to dissolution. Over time, groups that survive tend to evolve from the cause-maximizing end of the spectrum to the incentive-maximizing end. In this chapter we are primarily interested in groups that simultaneously pursue maintenance goals (providing incentives for labor) and collective goals. These groups, situated in the middle of the spectrum, are neither purely mission-driven (devoted to achieving the stated mission of the organization) nor incentive driven (devoted to securing the financial or emotional well-being of participants). By understanding this trajectory of development, we may create policies and strategies that are better poised to combat terrorism.

Analytical approach

Employing a slightly different method than that of the majority of scholars in the field, this chapter takes the internal dynamics of the terrorist organization as its starting point, and then proceeds to define the terms and outline the structure of the life cycle of a terrorist organization, with special emphasis on the professional or mature group. We have developed this organizational model attentive to the two dominant models that exist in the literature – the instrumental and expressive approaches – with the exclusion of all other models.

The instrumental model, which sees terrorism as a form of violent coercion and tacit bargaining, flows out of Thomas Schelling’s Strategy of Conflict and subsequent works by Schelling and others.² The instrumental paradigm assumes that terrorists are rational actors who select strategies to maximize a clearly defined set of political objectives. Exhibiting a collective rationality, terrorists act in response to external stimuli, particularly actions by nation-states. Bruce Hoffman, a proponent of this view, argues that “the terrorist is fundamentally a violent intellectual” who uses force to attain goals that are “ineluctably political.”³ The instrumental model posits that the costs and benefits of a given attack can be calculated using measures based on the explicit mission of the organization rather than implicit group goals.⁴ Therefore, an increase in the costs or a decrease in the benefits of violence will make terrorist attacks less likely.⁵

The expressive model, in contrast, assumes that terrorists are communicating with an audience – their supporters, the group itself, an enemy government, or a deity – but they are not primarily trying to alter the world outside the group. This focus on the internal dynamic of the group runs counter to the assumptions of the instrumental model. While the instrumental model assumes that terrorists may hope to attract attention and air grievances, in Schelling’s words, these expressive acts serve only as an “an intermediate means toward political objectives.”⁶ The expressive model allows for the possibility that some individuals enjoy violence for its own sake or enjoy belonging to a group that employs violence. For instance, in her interviews of terrorists, Jessica Stern found that operatives are often more interested in the expression of a collective identity than they are in the group’s stated goals.⁷ According to psychiatrist Jerry Post, who is a proponent of this model, terrorists may feel “psychologically compelled” to commit violent acts and the political objectives they espouse are only a rationalization for their actions.⁸

In contrast, the organizational approach used here is most akin to that of Martha Crenshaw, who, in several articles published in the 1980s, emphasizes the internal politics of terrorist groups, concluding that “terrorist behavior represents the outcome of the internal dynamics of the organization rather than strategic action.” She argues further that some terrorist groups can best be understood as self-sustaining organizations whose fundamental purpose is to survive.⁹ The organizational approach assumes that making progress (or at least appearing to make progress) towards stated goals is an important consideration for terrorists, but rejects the assumption that the terrorists’ principal aim is necessarily to achieve those goals.

Unlike the instrumental model, this organizational approach takes the terrorist group’s mission as endogenous and assumes that it is not necessarily static. We reject the assumption that terrorist groups can most profitably be categorized according to their ideology or mission. On the contrary, our approach assumes that the group’s ideology is just one of many variables that a group can control in order to enhance its survivability. Indeed, one of the requirements for long-term survival is a flexible mission. In keeping with the expressive model, the organizational approach assumes that terrorist organizations are made up of individuals with psychological and physical needs. However, even as we incorporate individuals into this organizational approach and relax the assumptions of the instrumental model, we nonetheless aim to give primacy to a model that considers the terrorist group’s behavior in its entirety. In addition to drawing upon individual psychology, we also posit that terrorist groups depend on their sociopolitical contexts: the efficacy of behaviors, missions, and organizational forms depends on the terrorist group’s interaction with its environment. Environmental changes act as stressors that may require an adaptive shift in the organization’s strategy or structure.

This argument depends heavily on the definition of terms. In light of the fact that this volume concerns terrorist financing, it is fitting that we define the structure of terrorist organizations in terms commonly associated with business firms. We assess the missions, strategies, consumers, and products of the terrorist group. We also evaluate the conditions that favor networks versus hierarchies, vertical integration versus disaggregation, and pure competition versus network governance. And we consider how different organizational structures influence the long-term effectiveness of terrorist groups in an increasingly complex and polarized global environment.

The terrorist product: expressive and instrumental goals

Terrorists claim to be producing a great variety of things, depending with whom they are speaking and in what context. But the one thing they inevitably produce is violence, or the credible threat of violence. For the purpose of this discussion, we will call the terrorist product violence in the service of a collective goal. This simplification assumes that even those terrorists whose main goal is expressing rage or earning money are trying to affect the world in some way. The amount of terrorist product can be measured by the number of attacks a group produces, the symbolic importance of the targets, or the number of deaths or dollars in property damage per attack. We will use the term “quantity” to refer to the number of attacks an organization carries out in a given time period and “quality” to refer to a variable that combines the symbolic importance of the target, the type of weapons or tactics used, and the average number of deaths or dollars in property damage per attack.

The inputs of the terrorist product are not unlike the inputs of products manufactured by corporate firms in that both include capital, labor, and a branding or “mission.” For terrorist groups, capital includes such things as weapons, camps, equipment, factories, and the physical plants for any businesses run by the terrorist firm. Labor includes the terrorist leaders plus all the personnel employed by the organization, including managers, killers, marketers, financiers, public-relations officers, etc.

Unlike goods produced by corporate firms, the product of terrorism – violence in service of a collective goal – is a public good. Terrorist activity is measured not only by the costs incurred by those who contribute but also by the benefits shared by a broader collective or group.¹⁰ For example, when Jewish extremists attempt to lay a cornerstone for the Third Temple they hope to build, all like-minded messianic Jews (and messianic Christians) benefit. Only the participants pay: when they ascend the Temple Mount, they incur risks to their person, livelihood, freedom, and families. Given this, extremists should be asking themselves, why bother participating? Why not ...

Table of contents

• Contents
• Illustrations
• Contributors
• Preface and acknowledgements
• Abbreviations
• Part I The social organization of terrorism
• Part II The financial organization of terrorism
• Part III Responses to the terrorist financing challenge
• Bibliography
• Index