Al Qaeda's supporters are "aware of the cracks in the Western financial system as they are aware of the lines in their own hands."
– Osama bin Laden, in a 2001 interview with a Pakistani Journalist http://www.odl.state.ok.us/usinfo/terrorism/ideologies.pdf
We have provided a good deal of coverage on the Chinese doctrine of Unrestricted Warfare. With the news of the death of bin Laden, however, it is instructive to look back at the role he played in economic warfare.
First, be aware that bin Laden most likely read Unrestricted Warfare and followed its methodologies. This is likely because he is mentioned frequently in the book and thus it would have been brought to his attention. Also, the Al Qaeda approach mirrors the suggested approach in the book.
At a minimum, we are certain that bin Laden desired to destroy the U.S. economy by destroying Western Finance. He was surrounded by financiers who controlled billions of dollars and understood the inherent vulnerabilities of the system. This is painfully obvious and explained in the current issue of The Atlantic:
A key facet of bin Laden's anti-American warfare has always been economic. It's a lesson he drew from the Afghan-Soviet war, in which he first served as a financier of mujahidin efforts and then as a fighter. He watched the Soviet Union withdraw from Afghanistan in defeat and then dissolve altogether in 1991. Bin Laden asserted on multiple occasions that the mujahidin were responsible for destroying the Soviet empire. Whether or not he's right, he clearly believed that the high costs imposed by the Afghan-Soviet war prevented the Soviet Union from adapting to other challenges, such as grain shortages and a collapse in world oil prices.
After declaring war on America, bin Laden compared the U.S. to the Soviet Union on multiple occasions, arguing that al-Qaeda would undermine America in the same way the mujahidin undermined the Soviet economy. His strategy of economic warfare went through several iterations over time, as al-Qaeda responded to external events, seized upon opportunities provided to it, and incorporated lessons learned by the group over time.
So, who are the supporters of Al Qaeda that bin Laden was referencing? Do they have ties to the global financial system? Do they understand the role of short selling and credit default swaps and how they could be used in bear raids against firms like Lehman Brothers?
An interesting discussion on this very point is provided at the following posting:
The Miscreants' Global Bust Out (Chapter Two): The "Money Weapon" and a Jihad Bigger than Bin Laden (Posting no longer active)
Here are some quotes:
When the financial crisis hit in 2008, Hamas leaders reacted with glee and issued an official statement proclaiming that the economic cataclysm marked the "End of the American Empire." Meanwhile, outfits like the Muslim Brotherhood regularly preach the glory of Al Jihad bi-al-Mal, or the "Financial Jihad."
Government investigators generally interpret Financial Jihad as "contributing money to jihadi groups like Hamas." But as was noted by the authors of the report commissioned by the Defense Department's Irregular Warfare Support Program, there are good reasons to believe that an important component of the Financial Jihad is attacking the Western financial markets.
In another typical manifesto, Osama bin Laden and his deputy wrote that "it is very important to concentrate on hitting the U.S. economy through all possible means." In 2007, bin Laden released a video on which he taunted the U.S. for having too much mortgage debt.
As early as 2003, the Department of Homeland Security warned that Al Qaeda was interested in infiltrating American financial institutions, and that Al Qaeda operatives possibly had already obtained jobs at American brokerage houses and banks. Said DHS spokesman David Wray: "There is new intelligence that indicates specific interest [on the part of Al Qaeda] in financial services and indirect indication…that led us to believe that threats could come from within as well as without."
Osama bin Laden, meanwhile, liked to brag (as he did in the statement with which I opened this chapter) that his supporters understand the weaknesses in the American financial system. In another statement, he was even more explicit, saying not only that his supporters knew how to "exploit" the "cracks inside the Western financial system", but also that the "faults and weaknesses are like a sliding noose strangling the [American economy]."
Although Osama bin Laden is dead, his words remain important. Indeed, among jihadis, the words of the fallen "martyr" might have more resonance than ever. And, again,the jihad is bigger than bin Laden. It is a global movement that has clearly articulated its goals, and remains intent upon achieving them.
Al Qaeda and many other outfits have repeated over and over that jihadis should wage economic warfare any way they can. They don't mean knocking down buildings – they mean wiping out the markets. As Al Qaeda operative Monin Khawaja wrote in 2003, "We have to come up with a way that we can drain their economy of all its resources, cripple their industries, and bankrupt their systems…"
Despite the death of Osama bin Laden, the jihad's sophisticated financial operation remains entirely in place. Moreover, it is doubtful that the Securities and Exchange Commission is monitoring the activities of the billionaire financial wizards who are members of Al Qaeda's Golden Chain. Certainly, it has never charged any member of the Golden Chain for engaging in financial schemes (such as self-destruct CDOs and "death spiral" finance) that have done damage to the U.S. economy.
And it is probably safe to assume that the Dubai royals who went on hunting expeditions in Afghanistan with Osama bin Laden may be (at least to some extent) sympathetic to the jihad. That is, they have, to a degree, been possessed by a subversive notion – that "the system", as epitomized by the United States, can be undermined.
Unfortunately, the billionaire sheikhs of the Middle East – whether they be members of ruling families, members of the SAAR Network, or members of Al Qaeda's Golden Chain – are not the only potential threats to America's economic well-being. As I mentioned at the outset of this story, there is nexus between jihadi groups and organized crime, and there is a network of financial operators that illustrates this nexus nicely.
The leaders of the jihad are often portrayed as primitive bumpkins who live in caves and are armed with nothing more dangerous than a few maniacs willing to blow themselves up. This is to ignore the power of the jihadi ideology, which is articulated with great eloquence by countless people who are eminently learned scholars of both Islam and global politics.
It is also to ignore the jihad's fighting capabilities. The jihadis have done much more than dispatch a few terrorists here and there. They have organized and commanded insurgent armies with thousands of soldiers. And these armies have fought, with considerable success, two all-out wars (Afghanistan and Iraq) against the world's most powerful military.
Perhaps even more importantly, the notion that jihadis are backward thinkers right out of the seventh century grossly underestimates the jihad's sophistication as a modern-day global financial operation. And it is not just sophisticated; it is a massive criminal undertaking that has, according the United Nations, laundered more than $1 trillion through the global banking system in the last five years alone.
As one report prepared for the French Directorate of Military Intelligence explains, "the financial network of [Osama] bin Laden, as well as his network of investments, is similar to the network put in place in the 1980s by BCCI [Bank of Credit and Commerce International] for its fraudulent operations, often with the same people…The dominant trait of bin Laden's operations is that of a terrorist network backed up by a vast financial structure."
These excerpts are from chapter two in a 20-chapter series. It directly relates to the DoD report as noted in these quotes from Chapter One:
While America's media and financial regulators seem largely uninterested in that question, some in the national security community are devoting a lot of attention to it. A 110 page report commissioned by the Department of Defense Irregular Warfare Support Program even goes so far as to state that there is a reasonably high likelihood that the economic cataclysm of 2008 was worsened by politically motivated "financial terrorists intent on wiping out the American financial system."
The report (a copy of which can be found at DeepCapture.com) states with good reason that the weapons most likely to be used by prospective financial terrorists are so-called "naked" short selling and other forms of short-side market manipulation.
As the report commissioned by the Defense Department correctly points out, foreign governments or terrorist groups wishing to manipulate the markets would not have to do the dirty work themselves. They would need only to invest in one among the multitude of American hedge funds that have ties to organized crime and that have demonstrated that they are willing to deploy financial weapons of mass destruction for fun and profit.
Under one scenario described in the Defense Department report, "a terror group could direct investments to a feeder hedge fund. The feeder fund would locate a Cayman Islands based hedge fund on their behalf that was predisposed to sell short financial shares. With sufficient new money, the hedge fund would expand its short selling activity (naked and traditional) and trade through dark pools or with sponsored access. At the same time, the same terror group might invest heavily in [credit default swaps] of the targeted short sales…"
Hopefully, the hard drives obtained from bin Laden's computer will shed some light on how the global financial jihad was structured. Regardless, though, we know that Al Qaeda and other terror groups were aware of our financial system vulnerabilities and actively sought to exploit them.
All posts Copyright (c) 2011 Kevin Freeman, All Rights Reserved