Terrorism, Inc.: The Financing of Terrorism, Insurgency, and Irregular Warfare

by Colin P. Clarke Ph. d.

  Kidnapping for Ransom (KFR)

  The Taliban’s reliance on kidnapping for ransom as a form of revenue generation can be traced back to early 2008 when the group officially altered its code of conduct to allow for the practice. The code of conduct states that with the permission of Taliban leadership, fighters can kidnap individuals and seek money for the release of government, non-government organization (NGO), and private sector staff working on government projects (this was extended to include truck drivers affiliated with Coalition forces or the Afghan government).28 The Taliban’s reliance on KFR includes several high-profile incidents, including the kidnappings of Italian journalist Gabriele Torsello in 2006, Italian-Swiss journalist Daniele Mastrogiacomo in 2007, and 19 South Korean missionaries that same year. The Italian government has refused to confirm reports that a $2.8 million ransom was paid for the release of Torsello and a $2 million ransom paid for Mastrogiacomo, though the Taliban acknowledged shortly after those crimes that the group had been handsomely remunerated for kidnapping.29 Because the kidnapping business has been so lucrative, the Taliban began to “sub-contract” these operations to decentralized kidnapping rings, which would sell the individuals they kidnapped to the Taliban, who would then exchange them for an even greater ransom. Some estimates are that the Taliban makes more than $10 million a year from kidnappings.30 In 2010, Kandahar City and other locations experienced a major increase in kidnappings, prompting the Taliban to reconsider how this tactic was affecting the group’s popular support throughout Afghanistan.31

  Armed Robbery and Theft

  The Taliban ascended to power in part for its ability to curb the behavior of rogue warlords and highway bandits that preyed upon Afghans as they traveled throughout the country. Yet, after the U.S. invasion in 2001, as the Taliban sought to consolidate all possible streams of revenue, the insurgents turned to this very behavior themselves in order to finance their activities. As detailed in the section on extortion and protection payments, trucking convoys that hope to avoid being attacked by the insurgents pay a steep fee.32 Those that eschew these payments, however, are considered “fair game,” and their convoys are attacked, pillaged, and plundered by Taliban insurgents. During these attacks, not only are the goods stolen, but the vehicles are burned and the personnel are often killed or kidnapped. By planting IEDs along transportation routes, those vehicles that are not destroyed are disabled, making robbery and theft an even easier chore for the insurgents turned bandits.

  Smuggling, Trafficking, and Counterfeiting

  The Taliban has knowingly (and skillfully) suppressed the cultivation of poppy in Afghanistan in order to manipulate the international market price. At one point, a Taliban ban on poppy cultivation suppressed the supply by 90 percent, thus increasing the value of the group’s stocks by ten times the price.33 Besides deriving significant financial profits from the drug trade in Afghanistan, the Taliban also gains political capital from its sponsorship of the illicit economy.34 The Taliban’s involvement with the narcotics trade has increased steadily over time. In 2004, the group was sending small teams to attack checkpoints or make diversionary strikes in order to protect opium cultivation. Three years later, by 2007,insurgent commanders were operating mobile laboratories to process heroin.35 Some reports have also indicated that the Taliban has engaged in heroin-for-arms trades with members of Russian organized crime.36

  On narcotics, the Taliban’s position has evolved considerably throughout the years. As described above, the Taliban flip flopped back and forth on its stance toward narcotics between 1994 and 2001. Keeping in line with its renewed offensive to win “hearts and minds,” the Taliban now actively promotes the growing of poppy and provides protection to farmers growing the crop.37 As Coalition forces continue to target the nexus between narcotics and the insurgency, the Taliban portrays itself as a defender of Afghans’ livelihoods, while attempting to paint Coalition forces as an occupying force intent on destroying the crop most important to the Afghan economy. More recently, a report in May 2012 surfaced suggesting that Taliban fighters destroyed fields of opium poppies in eastern Afghanistan, the first time since 2001.38

  Extortion and Protection

  In Afghanistan the Taliban has extorted truck convoys through the imposition of transit taxes.39 Its ally, the Haqqani Network (HQN) “collects regular security payments from local, regional, and international businesses that operate in its zone of influence, effectively selling insurance against itself.40 The Haqqanis are extremely opportunistic, appearing to collect money from small local shopkeepers up to large international firms.”41 The Haqqani network is also a major player in the Afghan insurgency. Although the network is part of the insurgency, it also functions like a mafia, motivated by profits but also by issues such as honor, revenge, and ideology.42 An in-depth analysis of HQN funding is beyond the scope of this chapter, but it is worth noting that recent assessments suggest that high levels of violence, rampant criminality, and indiscriminate brutality could mean that the group has descended into more of a criminal operation than an insurgent group. It is believed that the Taliban collects approximately $100 million per year from ushr, which is an Islamic tax, or tithe, levied on local businesses and farms. Kharaj, an Islamic land tax, also provides funding to the insurgency.43 As Gordon and Conway recognize, Taliban taxation of the poppy harvest is not merely an issue of either counter-narcotics or COIN but rather “a threat finance and counterinsurgency issue—it both funds the Taliban and establishes the Taliban as the legitimate source of governance for the people.”44 The Taliban also targets Afghanistan’s telecommunications firms, wrong placement receiving payments in exchange for not attacking cell phone towers and kidnapping the firms’ employees.

  External State Support

  Historically, Taliban fighters received support from several states, chief among them Pakistan and Saudi Arabia. This support has come in the form of weapons, ideological support, safe haven, and funding; in the case of the Saudis, much of this money was provided for mosques and madrassas in Pakistan, the students of which served as “an important military reserve” for the Taliban.45 More recently, the U.S. Treasury Department has accused Iran of supporting the insurgents, providing them with small arms and ammunition, RPGs, mortar rounds, 107mm rockets, plastic explosives and most likely MANPADs.46 But even more extensive (and important) support to the Taliban has come from Pakistan. Logistical support and military training provided by Pakistan have been critical to the Taliban’s longevity.47

  Exactly what type of insurgency the Taliban is waging in Afghanistan in 2012 is still a matter of debate. While some would term the conflict an example of a “local-global” insurgency, because of the Taliban’s links to Al-Qaida (which are now acknowledged to be quite limited, at least within Afghanistan proper), others, like Peter Dahl Thruelsen, argue that the Taliban is a localized insurgency with a local objective. Perhaps the most accurate characterization would be a “local-regional” insurgency encompassing various parts of South Asia. The majority of the Taliban’s military operations are conducted by insurgents operating within their home provinces.48 Still, the influence of Siraj Haqqani and his links to both Al-Qaida and the TTP, or Pakistani Taliban, indicate that as the conflict continues, the Afghan Taliban could be influenced by actors with more regional and even global ambitions.49 As of late 2014, Afghan government officials were openly accusing Pakistan of supporting the Taliban with money, fighters, and technical expertise.50

  WHAT THE TALIBAN ACHIEVED WITH THESE FUNDS

  Funding has been valuable because it has allowed the Taliban to sustain the insurgency for over a decade. Giustozzi estimates that the Taliban retains an annual surplus of between $110 and $130 million.51 Gretchen Peters does a comprehensive job mapping out the Taliban’s funding streams in southern, southeastern, northern, and northeastern Afghanistan.52 Money generated through crime, extortion, and fund-raising is devoted to paying Taliban insurgents and obtaining weapons for the group’s fighters. At various times, particu
larly when relations between the two groups were more cordial, the Afghan Taliban siphoned funds off for Baitullah Mehsud and the Pakistani Taliban over the border.53

  Operational Capabilities

  The impetus to maintain the ability to conduct attacks, including raids and bombings, is the driving force behind the funding that bolsters the Taliban’s operational capabilities. The more effectively the counterinsurgents target the Taliban’s supply lines, the more the International Security Assistance Force (ISAF) is able to disrupt crucial tangible support to the insurgents. This makes access to weapons, intelligence, sanctuary, and training even that much more valuable. A group that cannot fight, cannot win. The Taliban’s operational capabilities are key to the group’s momentum on the battlefield, as well as its ability to delegitimize the Afghan government and Afghan security forces.

  Weapons

  The Taliban’s approach is a mixture of rural-urban insurgency, depending on which regional command of the country is being analyzed. Overall, the insurgency is rural, protracted, and funded through rents acquired from illicit economies.54 Its approach, or fighting strategy, has alternatively been described as asymmetric, “Fourth Generation,” Maoist, and that of the “war of the flea.”55 While there are certainly elements of each of these fighting styles apparent in the Taliban’s approach, the most accurate characterization is probably closest to Maoism.

  In the opening stages of the conflict, insurgents infiltrated the population and gained control over key areas before moving on to consolidate base areas, organize guerilla war, and create rudimentary political structures. Before the Taliban escalated its activities between late 2005 and 2007, its fighters relied mainly on AK-47 assault rifles, RPG-7 rocket launchers, BM-1 field rockets, machine guns, suicide bombers, and improvised explosive devices.56 The fighting is asymmetric and the Taliban function primarily as a guerilla army, relying on sniping and ambushes. The insurgents operate in small units and strike logistical convoys, lightly guarded outposts, and other targets of opportunity.57 At times, the Taliban has relied on human wave attacks, specifically in the south and east of Afghanistan. This kind of “open warfare” is rare and is mostly used to counter the effectiveness of Coalition air strikes.58

  As a fighting force, the Taliban has proved capable of evolution and adaptation, conducting sophisticated attacks which require competency in a wide range of weaponry. As relayed by Thomas Johnson, United States Marine Corps (USMC) After Action Reports from Helmand province detail Taliban tactics including fire control, fire discipline, interlocking fields of fire, combined arms, fire and maneuver, anti-armor tactics, cover and concealment, and defense in depth.59 These kinds of tactics reflect the insurgents’ ability to use RPGs, heavy machine guns, rockets, and mortars. Perhaps even more impressive, the insurgents possess a sober understanding of their own limitations using different weapons systems, which allows them to specialize and tailor their attacks.60

  Between 2010 and 2012, the Taliban began conducting urban attacks in major cities like Kabul, including bombings, drive-by assassinations, and raids.61 The change in tactics by Taliban units throughout Afghanistan was not a coincidence. Rather, it was a deliberate strategic shift driven by a Quetta military commission general order that urged insurgents to rely more on IEDs, sniper attacks, and traditional guerilla warfare tactics.62

  Intelligence

  Even prior to the insurgency, the Afghan Taliban maintained a robust intelligence structure on both sides of the border, cooperating often with the Inter-Services Intelligence (ISI) as well as the Pakistani political party Jamiat Ulema-e-Islam (JUI). In the early stages of the conflict, Taliban intelligence operatives bribed Northern Alliance commanders to infiltrate the ranks of their comrades to conduct assassinations.63 Taliban intelligence networks are strong at the village and neighborhood level, which allows the insurgents to control large segments of the Pashtun population in the south and east.64 Over the past several years, both the Taliban and the Haqqani Network have placed spies inside the ranks of the Afghan Ministry of Interior (MoI) and Ministry of Defense (MoD), which has allowed the insurgents to strike at the heart of the Afghan security services.

  The Taliban rely on intelligence and counterintelligence to mitigate the overwhelming U.S. firepower and technological advantage. Intelligence has been used in several capacities, from intelligence preparation of the battlefield (IPB) to military deception (MILDEC) to high value-targeting (HVT).65 The Taliban intelligence network is also largely responsible for the successful jail break in Kandahar city in the spring of 2011. Although it is impossible to know how many fighters went directly back to the battlefield, the spate of attacks immediately following the incident indicated an increased capability for Taliban units operating in the area.66

  The removal of key leaders in the Taliban’s intelligence apparatus—Khairullah Khairkhwa, Qari Ahmadullah, and Abdul Haq Wasiq have all been captured or killed since the conflict began—has enervated the insurgents, but overall the network has proved resilient.67 ISAF operations in Afghanistan and U.S. drone strikes in Pakistan have kept the insurgents off balance. Evidence suggests that the Taliban’s attempt to share intelligence has been made more onerous as the network is forced to reorganize and replace its commanders.68 From a COIN perspective, the most alarming trend has been the increase in incidents since early 2009 where coalition troops were executed by Taliban insurgents posing as Afghan security force personnel.

  Sanctuary, Safe Haven, and Operational Space

  The worst kept secret throughout the insurgency has been the Afghan Taliban’s Pakistani safe haven, both in the Federally Administered Tribal Areas (FATA) as well as in major cities like Karachi, Quetta, Lahore, and Peshawar. In more recent years, the Taliban has also enjoyed sanctuary in parts of Iran. Pakistan remains the preferred locale, however, as it is geographically proximate to southern and eastern Afghanistan and is home to approximately 25 million Pashtuns, twice as many as live in Afghanistan. Furthermore, the rugged terrain of the AfPak border region make it ideally suited for avoiding detection.69 At the height of the Taliban’s comeback in 2007, the border provinces between Afghanistan and Pakistan were designated as either “extreme risk/hostile” or “high risk/hostile” environments.70

  Throughout history, insurgents who have enjoyed relatively unfettered access to safe haven, either internal or external, have fared more successful than those insurgents without such access.71 Besides the popular support enjoyed by Taliban insurgents in their Pakistani sanctuary, fighters have been able to plot, recruit, proselytize, fund-raise, and communicate with each other.72 Obviously, the most valuable aspect of the Taliban’s Pakistani sanctuary is that it allows the insurgents to evade ISAF counterinsurgency operations.73 The border stretches for 2,450 km and is almost impossible for Coalition troops to patrol.74 This challenge is compounded by a less capable and mostly reluctant Pakistani military, which deployed its paramilitary Frontier Corps and regular army elements from the Twelfth Corps to the FATA in 2004.75 Pakistan’s FATA have been a generous safe haven to Al-Qaida as well.

  Training

  Between 2004 and 2011, of the 32 “serious” terrorist plots against the West, more than half (53 percent), had operational or training links to established jihadist groups in Pakistan.76 The Taliban has maintained a sanctuary in Pakistan since being chased over the border by U.S. Special Forces on horseback in November 2001. In 2003 and 2004, the ISI operated training camps for Afghan Taliban insurgents in Pakistan, just north of Quetta.77 U.S. drone strikes have limited the ability of insurgents in Pakistan’s Northwest Frontier Province (NWFP) and FATA to operate freely. This is true not only of the Afghan Taliban, but also of the TTP. The issue of Taliban sanctuary in Pakistan has been perhaps the most vexing obstacle facing ISAF in Afghanistan. In what should probably qualify as somewhat of an understatement, former U.S. Director of National Intelligence Dennis C. Blair conceded that the safe haven in Pakistan “is an important Taliban strength.”78 In addition to safe haven provided by
Pakistan, the Taliban has also bolstered its support on the western front by strengthening its ties with the mullahs in Tehran in the past few years.79

  A Department of Defense Report to Congress on Afghanistan from April 2012 states that, “the insurgency’s safe haven in Pakistan, as well as the limited capacity of the Afghan Government, remains the biggest risks to the process of turning security gains into a durable and sustainable Afghanistan. The insurgency benefits from safe havens inside Pakistan with notable operational and regenerative capacity.”80 The continuing ability of the Taliban to use Pakistan as sanctuary provides it with a clear advantage should the insurgency’s goal be to “wait out” the United States before returning to Afghanistan after an American withdrawal to retake the country by force. At the end of the day, there is little the United States can do militarily to force the Pakistanis to eliminate this safe haven. After all, Pakistan is an “ally” with six times the population of Iraq, in addition to a growing arsenal of nuclear weapons.81

  Organizational Capabilities