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Terrorism and its money

Modern jihad has created its own economy of terror. A new book by Loretta Napoleoni researches the facts.

Loretta Napoleoni: Die Ökonomie des Terrors - Auf den Spuren des Dollars hinter dem Terrorismus
(The Economy of terrorism)
Antje Kunstmann Publishers, Munich
ISBN 3888973546
Munich 2004, 320 p.

Reviewed by Jürgen Turek
Translated by Angelika Stieglbauer

24.02.2005 · Reviewed by Jürgen Turek

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The financing and the economic bases of terrorism are still largely undetected. The Italian economist Loretta Napoleoni picks up at this point with an interesting and clearly written book. She tries to verify the thesis that the modern jihad has created its own economy of terror, which is in many ways entwined with the regular economy. Napoleoni estimates the potential of this economy at 5 per cent of world GDP with an estimated annual volume of 1.5 billion dollars. Rebel groups that were supported by the great powers during the Cold War have developed into economically autonomous, internationally operating terrorist organizations. Nowadays, terrorist networks use globalization and the decline of state power in crisis areas to establish mafia-like shadow states; the money made in the arms or drug trade is washed clean via Saudi Arabian and American banks and then flows back into the legal economy, which is thereby undermined. According to Napoleoni, the mutual dependencies and economic effects within this dynamic are astonishingly high. The West takes a large part of the drugs and delivers arms in return. Western financial institutes thereby launder the lion's share of the profit that flows forth from the illegal economy. This would be especially problematic if this tuned into a source of economic growth, without which western economies would fall into a tailspin.

Napoleoni's conclusions are clear: financial transactions need to be made transparent and illegal channels need to be eliminated in order to cut off the lifeblood of terrorism.

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