Terrorism and Oil

Islamic Terrorism and Oil

For over a decade, terrorist groups have focused particularly on the oil industry. In 2004, Osama bin Laden declared energy installations to be a legitimate target for militants, as the resultant increase in oil prices could damage Western economies. Yet the link between terrorism and oil is cyclical: in many cases, the money required to carry out these acts are derived from profits gained from oil sales to the West. In order to understand the cycle, it is necessary to understand the actors and the process.

Understanding Extreme Wahabism

Two centuries ago, a peaceful yet ultra-conservative reformist movement within Sunni Islam began in Saudi Arabia. Known amongst themselves ad dawa lil tawhid (Call to Unity), this faction is more commonly known by its more derogatory name “Wahabi”. The original goal of Wahabists was to abolish cultural practices that have permeated Islamic societies since the 3^rd century.

Since the 1920s, Wahabists have established a new ideology, characterised by extreme views and interpretations of the Quran and Hadith. In the 1970s, the movement began to gather momentum with aid from wealthy benefactors. As the movement grew, factions mutated and splintered, some becoming radicalised in their beliefs. These factions became increasingly confrontational in attempting to impose their ideology around the world.

These extreme sub-sects of Wahabists believe that fundamental Islam can be implemented “by means of the sword”. Today, the Wahabist movement has manifested itself through armed terrorist attacks and insurrections, and has spread beyond Saudi Arabian borders through many parts of the Middle East and North Africa.

The majority of Muslims find the Wahabist use of the world “Islamic” grossly offensive, as these groups selectively misinterpret passages of the Quran and Hadith, and conveniently use the guise of Islamic faith to carry out actions such as fatwas (Islamic religious rulings), terror tactics, or legitimising the use of laundering, drug money, or ransoms to finance their activities.

Financing Wahabi Extremism

While a portion of Wahabi extremism is funded by illicit activities, Wahabi groups such as al-Qaeda have amassed millions of dollars through seemingly legitimate business ventures, including charitable organisations and non-governmental institutions. A great deal of the funding for these groups comes through profits from oil exports to the West.

A good example of this can be found in Saudi Arabia. The oil-rich nation is a rentier state, meaning a substantial portion of the governments profits are generated from the allowing international access to indigenous resources. In Saudi Arabia, 90-95% of total export earnings come from oil revenue. Oil also accounts for around 55% of the country’s gross domestic product (GDP). Saudi Arabian citizens do not pay taxes; rather, they pay zakat, one of the five Islamic pillars, which requires that individuals to give to charity.

Each Saudi citizen is required to give at least 2.5% of his income in zakat. In most instances, the charitable organizations are genuinely dedicated to good causes. However a small portion of these charities are fronts with dubious undertones, serving as money laundering organizations which finance terrorist operations. While many citizens contribute to these charities in good faith, they may not realize that their money is not going toward their intended cause.

In most Islamic nations, the payment of zakat is voluntary, with the exceptions of Libya, Malaysia, Pakistan, Sudan, Yemen, and Saudi Arabia. However, because it is an Islamic pillar, voluntary donations in other countries are high, which allows for similar charitable front organizations to crop up and receive funding from unwitting donors. In some instances however, individuals are fully aware of the funds ultimately land.

A 2010 WikiLeaks cable identified Qatar, Kuwait, the UAE, and Saudi Arabia as nations which are weak in preventing citizens from financing terrorist activities. Saudi Arabia received the harshest assessment, citing the Hajj, a pilgrimage to Mecca that is a pillar of the Islamic faith, as a security loophole. Pilgrims travel with large amounts of cash, and cannot be refused entry for the Hajj. Following the release of the cable, a council of top Saudi clerics issued a fatwa against terrorist funding, and increased financial monitoring, however many terrorist supporters use other means to deliver funds, including Hawala transactions.

The ancient and common Arabic tradition of Hawala-transactions is a record-free system. Money is moved through an honour-system based on verbal agreements, and debts are settled on a personal level, rather than through a traditional banking system. The transactions rely on a password for funds to be delivered. Often, if a recipient has a password, no further information is necessary to receive the funds. Money has historically been distributed this way throughout the Arab world, and through these means, it becomes difficult to assess the initial sources of funding for terrorist activities.

The Cycle of Radicalism and Oil

Oil-rich regimes in the Middle East have historically been oppressive, resisting progress or power-sharing with emerging parties. As tensions increase from radicalised groups, some regimes have given a blind-eye to certain terrorist fundraising activities. In turn, radical organisations may focus on conducting activities away from domestic soil, sometimes targeting nations with weaker governments or lax security. The intention for the extremists is two-fold: to increase Wahabi influence, and disrupt profit sectors which benefit Western nations; specifically the oil and energy industries.

In war-weakened Libya, security analysts have issued elevated warnings about possible threats to oil installations, similar to those that occurred in Algeria. Libyan oil and natural gas makes up nearly all of the nation’s export revenues, and account for 80% of government revenues.

Despite Algeria’s strong government and security infrastructures, weakened security around the gas complex allowed an opportunity for the January attack at Ain Amenas gas complex. The normally secluded nation became victim to an international terrorist incident because the Algerian government granted airspace permissions to French forces as they fight separatists in Northern Mali. Algeria’s hydrocarbon sector accounts for 98% of the nation’s exports.

In rare instances, regimes may provide direct yet concealed assistance to these groups if there is an opportunity for profit. For instance, in January, French officials accused Qatar of providing material support to Islamists in northern Mali. If successful, Qatar would benefit from supporting separatist allies in Mail because the African nation has huge oil and gas potential, as well as gold and uranium deposits. A good relationship with an Islamist ruled Northern Mali would provide Qatar the opportunity to develop the infrastructure and gain profit. Analysts believe that the Qatari government is placing itself in a position to act as a mediator, and possible beneficiary, in future negotiations between the rebels and the Malian government. This positioning by Qatar is not unfamiliar to Western Intelligence; in 2012, Washington raised alarms that Qatari arms shipments were being redirected to Libyan Rebels. Should the rebels become installed in powerful political seats; Qatar would find itself in a prime position to negotiate the development of infrastructure for Libya’s newly discovered oil reserves in the Ghadames Basin, about 370 miles southwest of Tripoli.

Increasing Security

Trends from the International Energy Agency estimate that the international demand for oil will continue to grow through 2035. Although nations outside of the Middle East and North Africa have increased oil production, the world is still heavily reliant on oil from the region. Likewise, these oil-rich nations rely on this resource as a primary component of GDP.

Many oil companies are reviewing security arrangements, seeking to tighten restrictions and strengthen weak areas. Sonatrach, the Algerian national oil company has identified the lack of armed guards as a critical weakness which allowed terrorists access to the complex. In Libya, more guards and military personal had been deployed to oil sites, as security patrols intensified around the clock. Similar security estimates are being conducted in Nigeria, Egypt and other nations, however US intelligence has indicated that nations hosting Western companies with significant hydrocarbon reserves may be vulnerable to disruptions in North Africa and sub-Saharan operations. Among those listed are installations in Egypt, Libya, Angola, Nigeria, and DR Congo.