http://www.guardian.co.uk/media/pda/2009/jul/23/terrorism-mafia
Terrorism is extremely expensive, and economist and journalist
Loretta Napoleoni found unexpected ways that it drives the world economy
by Kevin Anderson
23 July 2009
Like the fall of the Roman Empire, the fall of the Berlin Wall and
the end of Communism brought about surge in the shadow economy, what
economist and journalist Loretta Napoleoni calls the rogue economics
of terror and criminal networks.
Napoleoni's interest this shadowy world of terror networks began
about 15 years ago. She got a call from a friend responsible for
monitoring the political rights of prisoners in Italian jails,
including the Red Brigades, the violent Marxist group who robbed
banks and kidnapped and killed politicians in an attempt force Italy
to leave Nato.
Red Brigades members never spoke to anyone, even the lawyers
defending them. They sat silently in court, only occasionally waving
at friends or relatives.
In 1993, they declared an end to armed struggle, and they drew up a
list of people who they would talk to. Napoleoni's name was on the
list at the request of a woman who had been her childhood friend.
Just having a child, she was hesitant to enter a high security
prison, but with her best friend in the group, she was curious as to
why she was never recruited. She found out that she had failed the
psychological profile. She was too single minded, whereas her friend
was good at following orders and embraced violence.
This began Napoleoni's fascination for how terrorist networks work.
Her friend was reluctant to open up and talk about politics or
ideology because the political vision was decided by the leadership.
Napolieoni discovered that all the other members of the group spent
the majority of their time looking for money.
One of the Red Brigades members she spoke to was a psychologist. He
owned a beautiful boat and spent many of what he described as his
happiest summers running Soviet arms between Lebanon and Sardinia,
where armed groups from across Europe paid the Red Brigades a fee.
They needed the money.
"Contrary to belief, terrorism is a very expensive business," she
said. In the 1970s, the Red Brigades had an annual turnover of $7m.
"It is hard to produce that kind of money living underground."
It was only when she was introduced to one of the leaders of the Red
Brigades that she realised that terrorism was actually a business.
Having lunch with this terrorist leader, she realised he was just
like the bankers she had lunched with in London's financial district.
She wanted to investigate the economics of terrorism, but no one
would fund the research so she sold her company and funded the
research herself.
She discovered an economy running in parallel to the global economy
since the end of World War II. "It followed step-by-step the
evolution of western capitalism through periods of state sponsorship,
privatisation and then globalisation," she said.
With state support, armed groups fought the proxy battles of the Cold
War on the edges of the superpowers' spheres of influence, but in the
late 1970s and 1980s, armed groups went through a period of
privatisation. They gained independence from their sponsors and
funded themselves with a mix of legal and illegal activities. For
instance, the Palestinian Liberation Organisation raised money by
taking a cut of the hashish trade from the Bekaa Valley.
The fall of the Berlin Wall and the end of Communism was a period of
historical transition, like the fall of the Roman Empire and the
Industrial Revolution, when "politics lose control of the economy,"
she said. Rogue economics constantly lurk in the background, but
during these periods of transition, they have space to expand. Even
before the 11 September 2001 attacks, crime terror and illegal and
activity had grown to a $1.5 trillion business. Soon it will eclipse
the size of the UK economy, she predicted.
She explained how this shadow economy helped support the US dollar
but in the past eight years has supported the growth of the
Euro.Looking at the figures since 1960s, the bulk of the money
printed by the Federal Reserve to satisfy the demand for dollars left
the country in suitcases and containers never to return again.
Instead it funded terror groups and feed the criminal economy.
It helped give the US a privilege that no other country shares. With
the dollar as a global reserve currency, the US can borrow against
the total amount of currency in the world, where other countries such
as the UK can only borrow against money inside its own borders.
That changed after 9/11. The United States passed the PATRIOT Act.
Not only does it limit the civil liberties of Americans, she said,
but the act also had a financial section with money laundering
provisions that charged US monetary authorities to monitor dollar
transactions anywhere in the world.
The European Union had no such money laundering laws, and the terror
organisations and criminal elements simply shifted their activities
from the dollar to the newly born Euro. "In six months, Europe became
epi-centre of money laundering centre of the world," she said.
As she found after discovering her childhood friend was a member of
the Red Brigades, terrorism affects us in almost unseen ways even if
we are not the victims of an attack.
"There is a world that goes well beyond the headlines of newspapers
including relationships of friends and family. We must question
everything. It is the only way to step into dark side and take a look at it."
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