Reuters Edge

Qaeda struggling with slump in donations

LONDON (Reuters) - A recession-driven income slide? Or a brand in terminal decline? Whatever the origin of its money worries, al Qaeda’s latest appeal for funds reveals a group struggling with a fall in donations for its attacks on the West.

In an audio message posted in militant web forums on Wednesday, the group’s leader in Afghanistan Mustafa Abu al-Yazid said militants were short of food, weapons and other supplies needed to fight foreign forces there.

The complaint, the latest appeal by Qaeda leaders in the past 18 months, echoes a June 3 request from Osama bin Laden for supporters’ “charity and support” for the militant network’s operations in Pakistan and Afghanistan.

So little is known about current al Qaeda operations that analysts can only speculate about the reasons for the troubles in its fund-raising, which provided an estimated annual budget of $30 million at the time of the 2001 attacks on U.S. targets.

But most agree it is a combination of tighter curbs on charities in the Arab world, a drop in lucrative al Qaeda kidnapping and extortion campaigns in Iraq and the wallet-thinning effect of recession on donors and sympathizers.


Some speculate it also shows a drop in ideological support.

“Money’s in short supply. It’s a real issue,” said Sajjan Gohel of the Asia-Pacific Foundation security think-tank.

Cash shortages are nothing new for al Qaeda, but this is its first in a deep global recession, and some suspect a period of penny-pinching may see the group rely more on local affiliates better able to tap funds in their own communities and economies.

Like-minded militants in Pakistan, Somalia and Yemen appear to have little difficulty in soliciting or extorting donations both at home and in the West and the Gulf, experts say.

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“Al-Qaeda leaders, unlike their Taliban hosts who are heavily involved in the lucrative drug trade, do not currently have significant financial resources,” wrote Richard Barrett, coordinator of the U.N.’s al Qaeda-Taliban monitoring team.

He said al Qaeda was now routinely telling followers that donating was a perfectly acceptable alternative to fighting.

While the direct operational costs of al Qaeda attacks usually run only to the tens of thousands of dollars, other activities such as training, recruitment, travel and communications impose substantially greater burdens.

“Even the group’s leadership in the Afghan-Pakistani border area must pay for food, living quarters, accommodations for families of fallen comrades, and security, both in terms of hiring guards and in buying the silence of their neighbors,” Barrett wrote in a March article for the Washington Institute for Near East Policy.

The decline of al Qaeda in Iraq appears to have been a serious blow because it had sometimes provided funds for the group’s leadership in the Pakistan/Afghanistan border region.

“Iraq was very important for them. The fact that they are doing less kidnapping, extortion and smuggling in Iraq means less money in circulation,” said Paul Cruickshank, a Fellow at New York University’s Center on Law and Security.

In a 2005 letter attributed by the United States to al Qaeda second in command Ayman al-Zawahri, the group’s leaders sought $100,000 from Abu Musab al-Zarqawi, then al Qaeda head in Iraq.

Al Qaeda has denied the letter’s authenticity but the intelligence community consensus is that it was genuine.

Without substantial funds, al Qaeda’s clout is muted.


Robert Grenier, managing director of the Kroll corporate security company, said he suspected al Qaeda was still able to provide training, expertise and religious teaching to any “home-grown” cells in the West that sought such support.

“But if al Qaeda central is not in a position to provide financial support as well, that makes their support much less potent and effective than it otherwise might be,” he said.

The group has long garnered lesser amounts from aspiring militants who travel to northwest Pakistan to train.

In a study of al Qaeda recruitment, Cruickshank reported that a group of European recruits in 2008 were required to pay their Arab trainers 400 euros ($563) a head, plus 900 euros for equipment and weapons, for a two-week paramilitary course.

They also had to pay 2,000 euros each to smugglers for transportation to the remote mountain refuge.

But the flow of donations from some charities and individuals in the oil-rich Gulf have traditionally been regarded as the largest single source of al Qaeda funding.

European Union anti-terrorism chief Gilles de Kerchove told Reuters in May that more needed to be done to combat money laundering that could benefit militants.

But Mustafa Alani, an analyst at Dubai’s Gulf Research Center, said big improvements had been made. He said: “People now think twice. They think about legal liability.”

He and other observers said an apparent decline in popular support for al Qaeda among Arabs because of its brutal tactics in Iraq may also be having an effect on donations.

Grenier said he suspected the shift in opinion was taking place not just among the broader community but also among some individual financiers of al Qaeda who constituted a “very informal and highly personalized” source of funds.

Editing by Richard Balmforth