Financial Transparency Coalition

In November, when the U.S. embarrassingly discovered it had been conducting months of secret negotiations with an imposter, posing as a high level Taliban leader, it was yet again underscored how little the NATO allies understand of the terrorist organization.  In a massive and deadly version of “Where’s Waldo,” the U.S. is not even certain where Taliban leaders are hiding, though it is suspected they are somewhere in Pakistan, perhaps under the aid of the Pakistani government.

Even less is understood of Taliban’s financing, though recent developments have answered the question of “what” more completely than “where.”  Taliban has a seemingly bottomless trove of funding.  Recently leaked documents show the group has used mobile surface-to-air missiles against American aircraft, a technologically significant and expensive departure from small arms, improvised explosive devices (IEDs) and rocket propelled grenades.  In fact, the leaked war logs from earlier this year show that the American military kept secret an instance in 2007 when the Taliban used these heat seeking missiles to bring down a Chinook helicopter, claiming it was the work of small arms or a rocket powered grenade.

Taliban also understands the economics of loyalty and has the money to back it.  According to defense analyst Christopher Langton, on a daily basis, the Taliban pays their fighters more than the Afghan National Police pays their police. As Langton notes, “In an area where loyalties may be divided, it might be a better deal, if you want to make money just to feed your family, to do a couple of days’ fighting for Taliban, or even a bit more.”

One primary source of all this cash is heroin.  In 2008, General Khodaidad, the former Counter-Narcotics Minister of Afghanistan, warned the Taliban was attempting to use proceeds from the heroin trade to purchase surface-to-air missiles.  Recent disclosures would suggest General Khodaidad’s fear was on the mark.

But, as with knowledge of the whereabouts of Taliban’s leadership, the U.S. knows precious little of the organization’s finances.  Taliban earns the bulk of its revenue from a few sources: charities and other private donors; kidnappings and extortion; and, perhaps most importantly, the drug trade in heroin and opium.  Analysts estimate that of this last category,  Taliban earns as much as a $500 million per year.  And the organization is spreading into other forms of drugs, opening drug labs and processing centers and establishing smuggling networks.

While NATO forces spends significant efforts to clamp down on the physical fields and labs where drugs’ are grown and produced, less effort is expended on following the trail of money.  This is difficult for a variety of reasons.  The country has extremely limited ability to systematically track even national accounts because public institutions which would normally conduct those tasks are either weak or nonexistent.  Gretchen Peters, a scholar who studies organized crime and insurgency in Afghanistan and Pakistan, also notes that the U.S. needs to figure out where the money is going if they are going to clamp down on the funding.

“Instead of sending a surge of more troops to Afghanistan, we really need to send a surge of accountants,” Peters said.

One answer to this puzzle is transparency in international banking.  Unfortunately, the linkage between the drug trade, terrorism, and the international banking sector is poorly understood and even less frequently explored as a counterterrorism measure.

As the situation stands now, financing is important, but not critical.  With the way Taliban currently operates, massive financial resources aren’t necessary because committing acts of terrorism is relatively cheap.  But that could change.  If the Taliban has access to significant funds and develops a relationship with a state funder, for example North Korea, which has already sold the Taliban missiles, the terrorist group might be empowered to significantly alter its scale of attacks on NATO forces.  That would be a dangerous conclusion for the entire world’s security.