Counterterrorism Blog

Here is something you do not often hear: countries that have joined the U.N. Convention for the Suppression of Terrorist Financing (sponsored by France) have an obligation under international law to prosecute terrorist financing they uncover in their territories. That means that every U.S. terrorist financing prosecution is compelled by our multilateral commitments. In other words, these cases cannot be explained as a function of an ideological Executive Branch or wrong-headed American unilateralism. Terrorist financing prosecutions will occur irrespective of which party is in the White House, assuming the incumbent takes international commitments seriously. Currently, in terms of terrorist financing-related international obligations, we are the most compliant country in the world. If you are a multilateralist, you should not complain.

There’s also this little fact: enforcing the legal consequences of economic sanctions is an example of “soft power.” It is an excellent alternative to military action, since it does not result in body bags. Why should targeted economic sanctions not be considered an option of first resort? Relatively speaking, they are humane. It seems strange that some of the most outspoken critics of American terrorist financing efforts are people who most aggressively oppose the U.S. military. These critics should be careful about what they wish for. If we scrap economic sanctions, military operations will be more likely, for the U.S. would be deprived of tools that are soft and non-lethal in nature. Imagine if the opponents of the U.S. invasion of Iraq did not have sanctions to promote as an alternative.

Unfortunately, book-length attacks on soft power by multilateralists have apparently become an annual rite of passage. This time last year, I wrote a review of R.T. Naylor’s Satanic Purses, in which I argued that if his allegations were even partially accurate, I and my Department of Justice colleagues should almost certainly be disbarred. I welcomed this scrutiny, published my State Bar of California license number, and invited the misconduct inquiry. Naylor never responded to my challenge, which is probably not surprising. After all, he believes that al Qaida was not responsible for 9/11, and is a figment of American prosecutors’ imagination, just like the Italian Mafia was a fictitious creation of our professional predecessors. Naylor has apparently never watched “The Sopranos.” Perhaps the History Channel remains unavailable in Canada. Neither Usama Bin Laden and John Gotti, it seems, are Santa Claus.

Now comes Ibrahim Warde’s The Price of Fear: The Truth Behind The Financial War on Terror (University of California Press, 2007). It is not as bizarre as Naylor’s book, but that’s small solace. It is rather disturbing that credible academic publishers are willing to roll out such error-laden analysis.

Warde is very proud of himself. In an “aha” moment early in The Price of Fear, he argues that money laundering is a different phenomenon from terrorist financing. He writes in the Introduction:

The mistake of financial warriors is to look at terrorist financing as a subfield of criminology - a self-contained, free-standing field insulated from politics. They like to consider the financial war as a technical matter, best left to experts, where official proclamations are taken at face value: frozen amounts are to be subtracted from the terrorists’ stash of money , and the terrorist threat is assumed to be reduced accordingly. In their parallel universe, the principal building block is the money laundering template, which grew out of the law enforcement agencies’ battle against organized crime and drug trafficking. Although money laundering is fundamentally different from terrorist financing, the two have become virtually indistinguishable following the September 11 attacks. Money laundering is about ‘hiding and legitimizing proceeds derived from illegal activities.’ Terrorist financing, in contrast, is not driven be a crime-for-profit logic and has seldom anything to do with dirty money.

Warde does not recognize that this is a classic distinction without a difference. Treating terrorist financing as a type of money laundering allows our banks to get into the game of ferreting out suspected terrorism-related crimes and reporting them to the government, which is the big advantage for everyone. Warde views this is a useless exercise, because terrorism is not based on greed and does not involve high dollar amount like the proceeds of narcotics trafficking, and is therefore is not subject to much Bank Secrecy Act reporting. Of course, Elliot Spitzer’s conduct was uncovered by alert bank officials. Was it based on greed?

The Price of Fear is essentially a regurgitation of the 9/11 Commission Monograph on Terrorist Financing, while reaching the exact opposite of the Commission's bottom-line. Warde does not credit the fact that this aspect of the U.S. counterterrorism was the only one the Commission awarded an outstanding grade. He mentions it, only to argue it was wrong. He does accept the Commission's factual finding, however. Bin Laden, we now know, did not have access to his family wealth, and much of al Qaida’s pre-9/11 funding came from Persian Gulf charities. That means charities are worthy of scrutiny, rather than not, as Warde maintains.

This is exactly what has happened. Every U.S. charity that has been designated as terrorist-affiliated (like Holy Land Foundation, Benevolence International Foundation, Global Relief, Islamic American Relief Agency, al Haramain) have challenged their designations in American judicial proceedings. That means that they sort of had the right to challenge it, under a procedure we built into the law. How many have succeeded? Zero. In these cases, the United States is batting 1.000.

Of course, it is also true that some non-charitable entities, like those affiliated with the Al Barakat network, have managed to get de-designated. Which way does this cut? De-designations are fully expected, and why “asset freezes” are not the same as asset forfeitures. Our designation regime involves due process. Just as there are de-designations, we can expect some acquittals in terrorist financing prosecutions. In means that the system works, and is not stacked against the accused. So much for that unfairness argument. How many people have been convicted of terrorist financing-related crimes in the U.S. since 9/11? Over 100. How many have been acquitted? 16. No matter how you cut it, that’s pretty damn good.

The problem may be that the U.S. has been too successful, which bugs people who think a certain amount of lawlessness should be part of the American experience. Here’s Warde again:

Finance is subject to detailed and arcane regulations, and different rules of evidence make financial crimes easier to prosecute. From a law enforcement standpoint, ‘fishing expeditions’ hold the tantalizing prospects of nailing the bad guys for minor regulatory infractions - even better, of using such infractions as a way of hooking bigger fish. [Of] ‘Al Caponing’ a suspect …The main problem with the use of the money weapon to ‘frame the guilty’ is that it hinges on the designation of public nemies.

Warde does not explain how “Al Caponing” terrorist financiers is such a bad thing. Instead, he counts on the reader to blithely conclude that there is something wrong with prosecuting someone for less than the full extent of what we know about their conduct, if this decision to undercharge is based on a rational calculus of what would be discloseable during the litigation. Bobby Kennedy seemed to understand the value of this strategy when it came to Jimmy Hoffa. Different rules of evidence? I have no idea what Warde is talking about. Federal prosecutors are governed by only one set of principles. They are called the Federal Rules of Evidence. They are fully applicable to financial prosecutions. We would not have it any other way.

The Price of Fear makes some of the classic errors in his attacks. On the question of meaningful metrics, Warde notes that terrorism has continued despite our efforts to attack its financial underpinnings. Inexplicably, the illogic of this argument escapes him. Empirically, the proper question is not whether terrorism has been eliminated. Rather, the effectiveness of any counterterrorism tool requires us to compare how many terrorist attacks have occurred, compared to how many would have occurred but for the exercise of the tool.

Although this is tricky, it is not impossible. Dennis Lormel, the former head of the FBI Terrorist Financing Operations Sections, has publicly stated that American financial investigations uncovered six separate terrorist plots that were stopped. Is it possible that this is not true, that Dennis is lying? Warde makes much of the fact that American financial investigators working under my direction failed to uncover any foreknowledge of the 9/11 attacks by analyzing trading patterns in the capital markets. It means that we call a spade a spade, and are not about to fudge the data for the sake of our professional careers. We are not lying. Really, Ibrahim, we’re not.

In the end, Warde’s book it typical of so many critiques about American counterterrorism, arguing that we stand to lose by our soft power tools turning off the Muslim world. What is the evidence that terrorist financing measures are being abused? Warde acknowledges that it is virtually impossible to challenge the victories, which makes the financial front of the war on terrorism immune from criticism. He refers to the cases of Ptech and Arab Bank as if these were government set-backs (they most certainly were not). Amazingly, he bemoans the fact that most Middle Eastern Studies departments at American universities are too politicized (which is true), apparently without realizing that this politicization translates into the exact opposite problem of what he describes: mass apologia for the Arab World and more people like him. He ridicules that fact that the private 9/11 plaintiffs’ lawsuit seeks trillions of dollars in damages, without realizing that American civil actions customarily allege large damages and pursue more finite amounts through discovery. Warde’s arguments do not look so good when you dig deeper.

Like so many commentators, Warde is not deterred. He pushes on, saying that the real problem is not reality but the “perception” that we are being too rough with the Muslim world. That is an easy out, since it makes facts irrelevant.

The problem when commentators talk about “Muslim perceptions” as the basis to attack Western anti-terrorism measures: there is nothing we can do to avoid this problem. No soft power, it seems, is non-hard enough to avoid problems of Muslim perception. After all, what could be more soft than diplomacy and civilized demarches (ideally, if these critics had their way, without being backed up by the the threat of military action of economic sanctions, which are too harsh)? How about something truly soft, like artistic expression? No one dies at the hand of art. Surely, no one can argue that abstract depictions of violent Islam should be off the table, right? Guess again. When the Danish cartoons were published, people like Bill Clinton and Kofi Annan were quick to express outrage. It seems that even art, the softest of all soft power tools, is too hard when dealing with radical Islam. If art is off the table, what exactly is left?

Here is my “aha” moment or, more precisely, my “yes, but” argument to The Price of Fear: even if Warde is absolutely right in his critique and his recommendations, his points suffer when you consider the impact of his analysis. Why should the U.S. not be involved in fighting terrorist financing? After all, it is an international obligation. Moreover, if we were to eliminate the soft power tools in our arsenal, it would make harder tools like military operations more likely, not less. This is the big problem with books like The Price of Fear. The purveyors of these views are generally the harshest critics of American military power. Warde is no exception:

Martial finance was perpetrated by the emergence of a powerful military-industrial complex, driven by unprecedented defense and homeland security spending, a growing militaristic culture, and last, but not least, the vested interests of many cheerleaders of omni-directional belligerence.

Sure, but if the U.S. internalizes the criticisms and ignores terrorist financing, there would be even fewer soft power options. The U.S. would fall out of compliance with its international commitments, and could be accused of greater unilaterism, not something you have heard advocated much from the Clinton or Obama campaigns. More ominously, American military actions will become more likely, rather than less.

Still, I do not expect books like this to slow down anytime soon, judging from what I increasingly hear as a travel to academic conferences at American law schools. That’s fine, since they are good for business, and allow me to avoid boredom. I will continue to review them, pointing out their fallacies and unintended consequences.

About The Price of Fear and other books that take up the impossible of challenge of showing that international terrorist financing regime is inhumane and the cause of too many externalities, I have this humble suggestion: these authors should be careful about what they ask for. If responsible people somehow start believing them, soft power itself will be the casualty. If I am wrong, and Warde is arguing that we should “mend it, not end it,” it is far from clear from The Price of Fear. He can talk about the need for more empirical work, but what is its worth if we cannot agree on empirical methods, and empirical conclusions are muted out by the fear of antagonizing the Muslim world? It really seems that, when it comes to economic sanctions and the law enforcement approach to terrorism, R.T. Naylor and Ibrahim Warde would rather end it. Keep it up. There are plenty of conservatives, both in uniform and not, who would like to do exactly what they suggest..

The view is this article do not necessarily reflect those of the Department of Justice.