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Money and terrorism

By Loretta Napoleoni (07/01/2005) Other publications

US Secretary of Defense Colin Powell acknowledged that the life-line of terrorism is money. Three years since 9/11 it has become apparent that economics, not politics or ideology, is the engine of the armed struggle.

This is the unexpected and disconcerting truth unveiled by an economic analysis of five decades of modern terrorism.

During the period of decolonization after WWII, armed organizations were economically dependent from rich sponsors, i.e. former colonial powers. In 1949 in Indochina, France trained and bankrolled the Maquis, a guerrilla army whose aim was to contain Soviet expansion in the French colonies.

State sponsored terrorism became a familiar feature of the Cold War. The United States and the Soviet Union funded terror groups to fight wars by proxy on the periphery of their own spheres of influence. The high cost of this type of wars, coupled with its unpopularity at home, forced Western powers to resort to a mixture of legal and illegal revenues to channel money overseas.

In 1984, amid widespread opposition to America’s involvement in Nicaragua, the Reagan administration managed to get Congressional approval for a financial aid package of million, which was used to arm 2,000 Contras.

Although this figure was increased every year thereafter until the Iran Contras scandal erupted, it was insufficient to meet the high costs of bankrolling the Contras. To bridge the gap, several covert operations were put in place.

Oliver North set up a scheme to defraud US insurance firms and banks, generating close to billion per year for the Contras.

In another illegal project, US weapons acquired by the CIA were sold to the Islamic Republic of Iran, using Israeli and Saudis businessmen, who charged handsome fees, as brokers. Iranian payments were then channeled through numbered Swiss accounts controlled by the Contra leadership.

Unsurprisingly, American taxpayers ended up paying for the cost of both legal and illegal funding; the full economic burden of state sponsored terrorism always falls on the domestic economy of the sponsor.

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Dear Friends and Colleagues,

FRIDE ceased its think tank activities on 31st December 2015 for economic reasons. The Board of Trustees had to take this difficult decision since, despite many efforts to diversify its funding sources, FRIDE cannot sustain its think tank operations with a view to 2016 and beyond.

Established in 1999, FRIDE has made a major contribution to shape debate on Europe’s external activities in an increasingly challenging international environment. It has covered issues ranging from democracy and human rights to sustainable development, new approaches to multilateral cooperation and security affairs. FRIDE’s long-standing focus on the extended neighbourhood of the European Union proves today all the more relevant given widespread turbulence in the region. FRIDE’s emphasis on the importance of the values framing Europe’s external activities is central to current political debates in Europe and beyond. This shows the need for continued engagement in the pursuit of a common European foreign policy that is both effective and informed by the core values of European integration.

The Board wishes to thank Diego Hidalgo, FRIDE’s founder, for his tireless commitment and very generous support for many years. The Board also wishes to thank FRIDE’s dedicated staff, the members of the Board and the Advisory Committee for their contribution in making FRIDE one of the top foreign policy think tanks in Europe. We are very grateful to all those who have supported FRIDE’s work and projects over the years and we thank the many partners from all parts of the world who have worked with FRIDE on joint initiatives. We hope that FRIDE’s extensive input to the debate on Europe in the world will continue to inform thinking and action at a very critical time for Europe’s future.

The President of the Board


FRIDE cesó sus actividades como think tank el 31 de diciembre de 2015 por razones económicas. El Patronato tuvo que adoptar esta difícil decisión dado que, a pesar de los intensos esfuerzos realizados para diversificar sus fuentes de financiación, FRIDE no puede sostener sus operaciones como think tank a partir de 2016.

Establecido en 1999, FRIDE ha realizado una gran contribución al debate sobre las actividades exteriores de Europa en un ambiente internacional cada vez más complejo. Ha trabajado en temas que van desde la democracia y los derechos humanos al desarrollo sostenible, los nuevos enfoques en la cooperación multilateral y las cuestiones de seguridad. La atención prestada por FRIDE a la vecindad extendida de la Unión Europea durante mucho tiempo prueba ser hoy aún más relevante debido a la turbulencia que azota a la región. El énfasis de FRIDE en la importancia de los valores que enmarcan las actividades exteriores europeas es central en los debates en Europa y más allá. Esto muestra la necesidad de un compromiso continuo con la búsqueda de una política exterior europea común que sea eficaz y esté basada en los principios fundamentales de la integración europea.

El Patronato desea agradecer a Diego Hidalgo, fundador de FRIDE, por su incansable compromiso y muy generoso apoyo a lo largo de tantos años. También quiere expresar su gratitud a la dedicada plantilla, a los propios miembros del Patronato y del Comité Asesor por sus contribuciones para hacer de FRIDE uno de los principales think tanks de Europa en cuestiones de política exterior. Estamos muy agradecidos con todos aquellos que han apoyado el trabajo y los proyectos de FRIDE a través de los años y también damos las gracias a los numerosos socios de todas partes del mundo que han colaborado con FRIDE en iniciativas conjuntas. Esperamos que las extensas aportaciones de FRIDE al debate sobre Europa en el mundo continuará informando el pensamiento y la acción en un momento muy crítico para el futuro de Europa.

El Presidente del Patronato

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