As Europe gears up for a full-scale military response to the Paris attacks of 13 November, it is crucial to remember that Isis has an achilles heel that cannot be hurt with bombs: finance.
Isis is funded by a wide range of funding streams, from oil to diversified criminal activity to individual donations. Resolution 2199 of the UN security council, adopted in February 2015, identified at least a dozen types of crime that support the terrorist group, including not only oil sales but kidnapping, metals and antiquities trade, and human trafficking.
To understand Islamic State budget flowcharts, it helps to distinguish between big-budget Isis in the Middle East and low-budget Isis in Europe. Isis in Iraq and Syria has significant expenses as it governs a territory with approximately 8 to 10 million people in addition to supporting a large standing military force and fomenting terrorism. As investigations of the most recent French attacks have shown, some of the attackers were recruited and trained by Isis in the Middle East, and their attack was probably conceived by Isis personnel in Iraq and Syria.
Big-budget Isis therefore bore the following expenses related to the November attack: recruitment, communications, training and planning. This recalls the financial analysis of the costs of the 9/11 attacks, where the larger expenses were born by al-Qaida central, and the hijackers and planners of 9/11 were responsible only for some of their own expenses.
However, Isis has a different funding model to al-Qaida, which transferred money to both the 9/11 attackers and the Bali bombers. The European-born executioners of the Paris attack will have needed local funding. Fortunately for them, the expenses of the attack were limited – a cost estimated at under €10,000 (£7,000). Costs included weapons purchases on the European black market, acquisition of materials to make explosives, car and safe-house rentals, phones, communications and short-distance travel.
It seems likely that the perpetrators funded their attacks through petty crime. Therefore, it is highly improbable that European investigators will find significant financial transfers from the Middle East that enabled the 2015 Paris attacks to be carried out, in the way transfers ahead of 9/11 were subsequently discovered.
So how can governments cut off terrorists’ cash flows? Illicit markets and petty crime flourish in the poor neighbourhoods of Paris and Brussels. In Paris, several northern neighbourhoods close to where some of the November attacks occurred have large-scale markets where illicit products are sold, yet French police choose not to prioritise such small-scale crimes. Indicative of this is that France, according to recent KPMG research, is No 1 in Europe in the illicit cigarette trade, with 9bn counterfeit and contraband cigarettes imported in 2014, placing France far ahead of Germany and UK in both actual and per-capita imports.
One needs only to walk, as I did just prior to the Charlie Hebdo attacks, in the northern open air markets of Paris to see the massive trade in smuggled cigarettes and counterfeit goods, and the availability of stolen phones used to run this trade available in the multiple mobile phone shops lining the adjoining streets. Fake documents and drugs are less visible, but also frequently available.
In markets such as Barbès, the police are barely evident. Gendarmes will ask for the documents of a few random traders, but rarely seek to understand the networks benefiting from this trade. Strict laws exist in France on the documents needed to acquire mobile phones and sim cards. In this hub of illicit activity, almost nothing is done to counter the trade in stolen phones. Yet an abandoned mobile phone belonging to one of the terrorists provided crucial insights into their network.
The links between participation in crime and terrorism are evident in the profiles of the European-born terrorists of 2014 and 2015. A terrorist involved in the attack on Charlie Hebdo had traded in counterfeit trainers and cigarettes. Amedy Coulibaly, who slaughtered people at the kosher supermarket, had an extensive violent criminal record, and the thwarted attacker of the Thalys train was a long-term small-scale drug trafficker.
The Belgian Jewish museum attacker, Mehdi Nemmouche, had been imprisoned for robbery. The November attackers have similar criminal histories: Omar Ismael Mostefai, the first identified terrorist in Paris, had eight convictions for petty crime between 2004 and 2010; and the alleged mastermind of the plot, Abdelhamid Abaaoud had committed similar offences. With this capacity to fund themselves through crime, European terrorism presently is not entirely homegrown, but important elements appear to be locally funded. Therefore, curbing these funding sources is key to counter-terrorism.
Cutting off the funding of Isis in the Middle East may diminish the risk of terrorism in Europe, but that is not sufficient. To effectively counter terrorist financing we must prioritise the illicit markets and small criminal offences that are often overlooked by law enforcement but are the lifeblood of sponsored terrorism in Europe.
Italy has shown it can be done, having identified the criminal funding of terrorism three decades ago. But many continental European countries have yet to adopt the major operational and structural changes needed to address this hybrid threat.