Will Osama’s Death Bankrupt al-Qaeda?

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If Osama bin Laden wasn’t a terrorist, criminal and, you know, all around worst dude on earth, he might have made a pretty good executive. Terror analysts and economists say al-Qaeda is well financed and profitable. Perhaps the worse news to emanate from the death of bin Laden: The end of the man is unlikely to be the end of terrorist network he leaves behind. It probably won’t even deliver that big of a financial blow.

In fact, in financing al-Qaeda, bin Laden used a model that is probably familiar to most entrepreneurs. And like many well established companies, the terrorist network has long had the financial fortitude to survive its founder’s demise. Over the years, al Qaeda appears to have morphed the ways it raising money, from since angel investor to multiple investors. It has since diversified its business model and is now most likely a self-sustaining enterprise. There is a possibility that bin Laden’s death might hurt al Qaeda in its ability to raise money with large donors, fearful that the organization might now lack leadership or that the Americans might be better able to figure out who they are. But even that probably won’t stop the terrorist network. “al Qaeda has numerous funding streams,” says Howard Shatz, a senior economist at the Rand Corporation, of the organization’s impressive diversification. So while it probably will never say this in any of his obits, “Worse Person, Impressive Entrepreneur,” it is a pretty accurate description of Osama. Here’s why:

While it’s generally believed that the terror network lived on Osama bin Laden’s family fortune, or at least what Osama was able to stash away, it has been years since al Qaeda was reliant on Osama’s money. Osama was a son of a Saudi billionaire. In the 1980s, he used his money to get al Qaeda started. But like any good entrepreneur he quickly brought in other “investors.” But it has been years since al Qaeda relied on bin Laden alone or even for the bulk of its money. Fortune finds this in the 9/11 commission report:

But by 2004, al Qaeda financed itself by raising money from “witting and unwitting donors, mosques and sympathetic imams, and nongovernment organizations such as charities,” says the report. Intelligence reports reveal a financial web that is nearly impossible to track, as the money is distributed as fast as it is raised by a network of couriers. Each strand in the web is taken down and distributed as fast as it is woven. There is no war chest to discover and no bank from which al Qaeda draws funds.

But even that is probably an out-dated description of its business model. According to Shatz, the real reason Osama’s death, and the American pressure on the organization, is unlikely to put al Qaeda out of business is because the terrorist network gets most of its funding these days from extortion and robbery. “These days al Qaeda does a lot of things that make them look like a criminal exercise,” says Shatz. Surprisingly, al Qaeda gets almost none of its money from drugs. Instead, the number one revenue generator is selling stolen goods. Shatz says stealing oil tankers is a common money maker for al Qaeda. But he says al Qaeda is not discriminate in what it steals. He says he once saw a report of a successful al Qaeda operation where they stole and resold a large shipment of pajamas. After theft, al Qaeda is able to generate a fair amount of funds in forcing local businesses to pay for protection.

There is one way in which bin Laden’s death could slow al Qaeda. In recent years, bin Laden’s chief role was to call on large donors when the organization was undertaking a big venture. And al Qaeda probably would still need large backers if it wants to launch another large scale attack. Shatz says there is a very small chance that al Qaeda’s donors will lose confidence in the organization and switch to other terror networks, or stop funding terrorism all together. Let’s hope.


Bin Laden’s Gone, but What About al Qaeda’s Finances? (Fortune)

Al Qaeda’s Post-bin Laden Cash Crunch? (TIME)