THE SO-CALLED WAR on terror has dangerous and shifting financial front lines. Since the 9/11 attacks, a series of “anti-terrorism financing laws” have been enacted that allow the government to designate certain charities as “terrorist” organizations or as financing terror. The government can effectively shut down organizations without ever bringing criminal charges or providing evidence against them, according to the ACLU. “As a result,” it reported, “American Muslim organizations and individuals are unfairly targeted.”
In addition to fostering Islamophobia in the larger society and fear within Islamic and other faith communities, overzealous application of these laws can actually inhibit the war on terror. It risks crippling the very Islamic charities that can effectively combat radicalization in places vulnerable to extremists. Stephen Bubb, head of a charity network in Britain, where financial terror laws are similar to those in the U.S., has emphasized “sensible, credible, proportionate regulation” of Islamic charities. “I have witnessed firsthand the difficulties faced by organizations in Pakistan fighting the same battle that we are: for security, for a better way of life, and for a better future for our children,” said Bubb.
Yet defunding terror groups can be an important strategy in combatting violence. A broad spectrum of groups in the U.S. today is finding ways to “divest from terror.”
For example, when Mark Langerman, managing director of the Patriot Fund, found out that companies around the world do business with countries that have been named “state sponsors of terror” by the U.S. Department of State, he was shocked. “I was watching the congressional testimony during the Iraq war,” Langerman told Sojourners, “and learning that the insurgents were using American weaponry with Iranian fingerprints on it. Our American companies were sponsoring this. It spurred me to action.” Langerman developed the Patriot Fund, which he said is the only mandated “terror-free” mutual fund in the U.S.
The Patriot Fund screens for companies with “active, non-humanitarian business ties that can be verified” to Iran, Syria, Sudan, and North Korea. Langerman said he wanted to give “investors the opportunity to participate in the financial war on terror.”
While U.S. companies are forbidden to deal directly with these countries, foreign-owned companies are not. According to Langerman, globally there are 700 companies that in 2014 did business with state sponsors of terrorism. Additionally, it’s not illegal for U.S. companies to do business with these countries if they’ve received government approval to circumvent the sanctions or if their investments fall below a certain threshold. Currently, more than 11 percent of the S&P 500’s market capitalization (approximately $1.4 trillion) maintains business relationships with those states.
“I’m a capitalist to the core,” said Langerman, “but companies don’t have a conscience. Someone has to hold [them] accountable.”
While Langerman focuses on personal divestment, United Against Nuclear Iran works on divestment at the state level. Comprised of former ambassadors and nonproliferation experts, UANI, a watchdog group, seeks “to prevent Iran from fulfilling its ambition to become a regional superpower possessing nuclear weapons.” It has successfully leveled corporate campaigns against General Electric, Caterpillar, Huntsman, and others and introduced model legislation on divesting from Iran in all 50 states and the District of Columbia. Currently, 30 states and D.C. have adopted some form of divestment legislation or policies based on UANI’s model.
Many Jewish organizations, such as the Union for Reform Judaism, the Jewish Council for Public Affairs, and the Central Conference of American Rabbis, also support targeted divestment from Iran to promote human rights and in support of Israel.
In the case of Sudan, sometimes divestment from state sponsors of terrorism corresponds with divestment from fossil- fuel companies. Investors Against Genocide advocates for investment firms to divest from four foreign oil companies that are the largest business partners with Sudan—PetroChina/CNPC, China Petroleum and Chemical Corporation/Sinopec, India’s ONGC, and Malaysia’s Petronas. Many religious organizations have also joined in divesting from Sudan because of human rights abuses in Darfur.
But is divestment effective?
The Patriot Fund only screens for countries on the “state sponsors of terror” list. This approach excludes some of the biggest funders of terrorist groups, such as Kuwait, Qatar, and other Gulf states.
UANI’s state-level legislation has shifted millions of dollars out of the Iranian energy and weapons economy. However, UANI has been critiqued as catering to neoconservative and right-wing nationalists, both in the U.S. and Israel, and having members who may benefit from a destabilized Middle East.
Targeting foreign oil companies operating in Sudan may advance a fossil-fuel shift agenda, as well as constraining the economy of the brutal regime there. However, it’s also a movement vulnerable to political manipulation by U.S. oil companies who are fighting for dominance against competitors in Asia.
Recent research says that the most effective way to cut terrorist financing is to catch the groups early, when they are solely dependent on a few key donors. Most non-state terrorist groups are funded by tax and extortion, kidnap for ransom, and individual donors. Some are financed by a local resource, such as charcoal (al Shabaab in Somalia), oil (the so-called Islamic State in Iraq and Syria), or drug trafficking (the Afghan Taliban and al Qaeda in Algeria).
“For too long, the international community has underestimated the diligence with which terrorist groups manage their finances,” Tom Keatinge, director of the Centre for Financial Crime and Security Studies, told Sojourners. “It is no exaggeration to say that finance is the Achilles’ heel of a terrorist organization as it seeks to grow and establish itself—tackling these finances is perhaps themost effective way of restricting terrorist groups. This is not as dramatic as airstrikes and missiles, but if applied correctly can be just as effective, perhaps more so.”
Got something to say about what you're reading? We value your feedback!