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Terrorists Using Derivatives?

No, not financial derivatives but rather terrorist derivatives—using forms of terrorism to raise capital to fund terrorist activity. Terrorist organizations have used kidnappings for ransom for some time now, but have recently turned to kidnappings to fund a significant portion of their activity. The activity of kidnapping itself can have a dual-pronged motive: first, the kidnapping themselves will terrorize the people in an area in which they occur; second, if the kidnapping is successful, the terrorist organization will have raised funds for other activities.

In fact, during an April 27, 2010 U.N. Security Council Meeting on terrorism, Britain’s Foreign Secretary discussed how the council might want to curb the practice of ransom as funding before the trend grows any more. As it would seem, the countries fighting terrorism have done too good a job in cutting off sources of funding, and terrorist organizations are now having to use alternative and less often used sources to raise capital.

This type of funding is by no means new—the Revolutionary Armed Forced of Columbia (FARC), is notorious for using kidnapping as one of their primary sources of funding. Kidnapping itself is still usually seen as a unique problem to the respective area. For FARC, it was highly successful because FARC was (1) a guerrila “people’s army” and (2) operated in the vast farmland, and undeveloped forest land where Columbia’s drug trade flourished. (As an aside – FARC, the oldest insurgency group in the Americas, is still alive and well)

Kamel Rezag Bar, Advisor to the President of Algeria, gave a speech during the U.N. Global Counter-Terrorism Strategy which specifically focused on kidnapping as a source of funding, and signaled the rise of kidnapping as a source of revenue. While terrorism has seemed to clutch a few African countries in “merciless struggle,” it is interesting to note that this method of funding is now growing, and is not one that can easily be frozen by counter-terrorism financial units operating far from the battlefield.

This problem is less abstract than wire transferring, and if the problem keeps growing, it might need a new initiative in the countries where this “derivative” of terrorist funding is on the rise.


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