Al Qaeda kidnapping markets in everything

by on July 29, 2014 at 6:33 pm in Current Affairs, Economics, Law, Political Science, Uncategorized | Permalink

While European governments deny paying ransoms, an investigation by The New York Times found that Al Qaeda and its direct affiliates have earned at least $125 million in revenue from kidnappings since 2008, of which $66 million was paid just in the past year.

In various news releases and statements, the United States Treasury Department has cited ransom amounts that, taken together, put the total at around $165 million over the same period.

These payments were made almost exclusively by European governments, who funnel the money through a network of proxies, sometimes masking it as development aid, according to interviews conducted for this article with former hostages, negotiators, diplomats and government officials in 10 countries in Europe, Africa and the Middle East. The inner workings of the kidnapping business were also revealed in thousands of pages of internal Qaeda documents found by this reporter while on assignment for The Associated Press in northern Mali last year.

In its early years Al Qaeda received most of its money from deep-pocketed donors, but counterterrorism officials now believe the group finances the bulk of its recruitment, training and arms purchases from ransoms paid to free Europeans.

The full story is here. by Rukmini Callimachi.  Oh, and don’t forget this:

Negotiators take a reported 10 percent of the ransom, creating an incentive on both sides of the Mediterranean to increase the overall payout, according to former hostages and senior counterterrorism officials.

It turns out that Al Qaeda hardly ever executes prisoners any more.

For the pointer I thank Michael Rosenwald.

1 Bill July 29, 2014 at 7:06 pm

Can you buy ransom insurance?

2 Ian G July 29, 2014 at 7:27 pm

Yes, it is reasonably common. Google it, and there are numerous results including AIG

3 Dan Weber July 29, 2014 at 8:00 pm

Google says there are at least 4 MR posts about kidnapping and insurance.

4 Bill July 29, 2014 at 9:42 pm

See how closely I read, or how quickly I forget.

5 Mark Thorson July 29, 2014 at 11:56 pm

Perhaps you should look into dementia insurance.

6 Willitts July 29, 2014 at 10:10 pm

Yes. Kidnapping insurance has been around for a long time. Common in Latin America.

7 Vivian Darkbloom July 30, 2014 at 2:24 am

If you want less of something, tax it. If you want more of something, insure it.

8 Thomas July 30, 2014 at 5:45 am

Yes. Ransom insurance databases are lays of people willing and able to pay ransom. Not sure I’d want my name on one even if the insurance was free.

9 msgkings July 30, 2014 at 2:27 pm

So get a ton of life insurance, and live forever! 🙂

10 Vivian Darkbloom July 30, 2014 at 5:10 pm

It is (apparently) a common misconception that “life insurance” insures against “life”. In fact, it insures against death.

11 msgkings July 30, 2014 at 9:19 pm

It is not so apparent that you have a sense of humor, though. Not even the smiley clued you in. Oh well.

12 msgkings July 30, 2014 at 9:21 pm

But now it occurs to me…raise death taxes to 100%…and live forever! 🙂

13 corinth July 29, 2014 at 7:30 pm

not to worry.

the 3 trillion bucks spent by U.S. on anti-terrorism has completely neutralized Al Qaeda.

plus that U.S. money was raised totally by voluntary contributions with no coercion.
U.S. can’t lose against such pitiful fund raising efforts by Al Qaeda

14 thomas July 31, 2014 at 3:19 am

Held hostage at risk of imprisonment or death for failure to pay the fees set forth by the functional governing body of your current location? Al Qaeda has figured out a solution for repatriation of foreign assets – someone get Obama on the phone.

15 Go Kings Go July 29, 2014 at 7:42 pm

Strange that EuroGovs haven’t been prosecuted for providing material support to a terrorist org (like all those poor suckers who thought they’d made contributions to charities)

16 Donald Pretari July 29, 2014 at 8:09 pm

They sound like the Barbary Corsairs. Wasn’t Algeria mentioned as an early practitioner? I’m all for paying the ransom. What if Cervantes hadn’t been ransomed?

17 Thor July 30, 2014 at 1:19 am

Don’t forget Julius Caesar (and, in the realm of fictional characters, Hamlet).

18 A.B Prosper July 30, 2014 at 2:26 am

This is happening in places like Algeria not Europe. Its not quite Barbary Corsair level bad yet. It suggests to me the moral of this story ought to be “don’t travel to unstable countries with lots of terrorists in them.”

19 dead serious July 30, 2014 at 7:51 am

Isn’t that where the oil and diamonds are?

20 Stephen July 29, 2014 at 8:38 pm

Respectable revenue. Perhaps not quite ready for their IPO though.

21 NathanP July 29, 2014 at 9:55 pm

Great time for an overvaluation! Just plop your HQ in the heart of Silicon Valley and they will be good to go!

22 John Smith July 29, 2014 at 11:28 pm

The market is look frothy – now would be the time for a capital raise. I do agree that they should at least move out of the Middle East. The increased turmoil is going to drive a discount.

23 John Smith July 29, 2014 at 11:28 pm


24 Thomas July 30, 2014 at 5:48 am

They should maintain operations in the middle east but invert to Britain or Ireland.

25 B Cole July 29, 2014 at 8:39 pm

I hope the bills are marked to help in tracing.

26 Brett July 29, 2014 at 8:57 pm

Moral hazard aside, it’s better than them getting their heads chopped off on camera.

27 Bill July 29, 2014 at 9:45 pm

This post focuses on the supply side, getting cash to buy weapons, but isn’t the issue arms trafficking.

If you can restrict the supply of arms, or raise their price, isn’t that equivalent to reducing the value of cash held by terrorist organizations.

Maybe money is better spent more to restrict arms shipments, or perhaps placing ID tags in foreign arms to track terrorists or disable weapons.

28 Willitts July 29, 2014 at 10:14 pm

Arms proliferation is beyond anyone’s ability to stop it. Aside from the big four suppliers – Russia, US, France, China – the flow of weapons from Cuba and North Korea is large. Most of the illicit weapons are commie block.

29 J July 29, 2014 at 10:59 pm

I keep seeing this so I feel compelled to say; it’s bloc.

30 Willitts July 29, 2014 at 10:19 pm

Flooding the markets with unreliable, booby trapped, or tracked weapons is not new. Fast and Furious was just such an operation. It wasnt the first but it may be the last, at least coming from our territory.

These techniques are not without success stories, but the effectiveness is short lived. Small arms are small enough and simple enough to completely disassemble, inspect, and replace parts.

You can build a rifle at home and only one part needs to be purchased through a firearms dealer. And that part can also be fabricated. One could make a working Kalashnikov from spare parts.

31 The Other Jim July 30, 2014 at 2:28 pm

>Fast and Furious was just such an operation.

Well, there’s an unrepentant lie.

Unless by “tracked” you mean that the weapon would go to the Mexican border, completely disappear for months or years, and then show up at a mass murder scene whereupon Obama’s ATF would say “Oh lookie, here it is again!”

32 mpowell July 30, 2014 at 6:44 pm

When I first heard about that story it was a Republican blaming Obama for it. Then I learned the full story and it turned out the blame was almost completely backwards. That was a little jarring. Then I got used to that sort of thing happening.

33 Dan Lavatan July 29, 2014 at 11:18 pm

Interesting report. As it stands, giving money to any European government would be a felony offense for aiding and abetting terrorism and result in extraordinary rendition. It will be interesting to see who gets rendered for this.

34 ChrisA July 29, 2014 at 11:35 pm

Maybe as the terrorists associations get more money they will attract more rent seekers and less fanatics, and thus become more moderate. Let’s put it this way, I would rather not have any kidnapping at all, but kidnapping is better than murder, so maybe this is a good trend.

Also, any organisation that gets money this way does become a little easier to trace and monitor. You can easily hide a few thousand dollars. But hiding millions starts to become more difficult. And as organisations get bigger they start to get more leakier and also attract more rivals.

We can look to the drug cartels as a possible model. If you are going to have drug cartels you want one dominant cartel, not lots of equal sized ones.

35 Scoop July 30, 2014 at 11:09 am

And people wondered why U.S. security services monitor our good friends, the Germans.

36 Peter Schaeffer July 30, 2014 at 2:03 pm

There is a long history of political and religious movements degenerating into criminal gangs. The criminal gangs tend to remain a material threat measured in terms of their capacity for violence, but they become politically meaningless. If Al Qaeda has chosen to follow this path, its days as a religious / political force are numbered. It may still kill a lot of people, but it wont be leading any revolutionary movements.

A few historical examples of political movements that sank into criminality include

The Chinese Triads – The Triads were founded by Shaolin Monks fleeing the new Qing dynasty. This story may be partially (or totally) a myth, but is the standard history of the Triads. They fought the Manchus for centuries but ended up as criminal organizations (and still are).

The Mafia – By some accounts (but not all), the Italian (notably Sicilian) Mafia began in opposition to French and Spanish rule.

The IRA – Numerous accounts indicate that factions of the IRA have become common criminals engaging in drug trafficking, murder for hire, extortion, etc.

FARC – FARC in Columbia has become a criminal gang to some (apparently significant) degree

Sharbahara – There are suggestions that the Sharbahara (Maoist) movement in Bengaldesh has degenerated into a criminal gang

Assuming that the current accounts of Al Qaeda kidnapping for profit are correct, Al Qaeda may remain dangerous for a long time to come. However, no one will credit it with any legitimacy.

37 Peter Schaeffer July 30, 2014 at 2:15 pm

As an addendum to the above, a well known TV show, “Sons of Anarchy”, delves into the (partial) transformation of the IRA into a criminal organization

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