Financing Jihad via Petrodollars – by Farooq Sulehria

According to several estimates, Islamic organisations, many of which are linked to armed groups, can draw from a pool of money ranging from $5 billion to $16 billion, the Saudi government alone donates $10 billion via the ministry of Religious Works every year,
Italian journalist Loretta Napoleoni claims in her book”Modern Jihad”.

The liberal distribution of petro-dollars by Saudis can be gauged from the fact that more than 1500 mosques were built around the world in the second half of the last century. Sounds exaggerated? Not really if we look at the mushroom growth of Saudi-funded madrassas, mosques and charities in Pakistan.

LeT for instance, a major beneficiary of Saudi largesse, through its front-organisation Jamaat- ud- Dawa (JuD) ”runs a huge network of social services, including 20 Islamic institutions, 140 secondary schools, eight madrassas and a $300,000- plus medical mission that includes mobile clinics, ambulance service and blood banks”.

The LeT/JuD headquarters close to Lahore, built at the cost of Rs.50 million, houses ” a garment factory, an iron-foundry, a wood-works factory, a swimming pool and three residential colonies”. Who foot the bill? The LeT chief, Hafiz Saeed says” the funds came from a group of affluent traders”, a ”Saudi trader, Ahmed, contributed Rs. 10 million” while ”another Saudi Sheikh, donated more millions for the construction of Dawa Model school” at LeT headquarters.

A recently published book reveals: ” Some insiders believe that the Jamaat has raised so much money, mostly from sympathetic Wahabis in Saudi Arabia that it now plans to open its own bank”.

Saudi rulers and citizens are not alone in lavishing money abroad on sustaining Islamist groups. Iran’s support for Hezbollah has been documented in detail. Kuwait only in 1990 contributed $ 60 million to Hamas kitty, at a time when Hamas was being pampered to counter PLO. Hamas, in a way is novel organisation. It has benefited from Saudi largesse as well as their rival Iranian regime.’

The petro-dollars also translate into jobs for millions of workers from across the Muslim world. Take, for instance, the case of Pakistan.”The fact that Pakistan had lost its captive market in East Bengal compelled the new regime to look elsewhere: the oil-rich Gulf kingdoms proved the obvious choice for the shell-shocked confessional state. Accordingly, from 1970-75 Pakistan’s economy underwent a major shift of emphasis,” Tariq Ali points out. ” The share of nine major Muslim trade partners, namely Iran, Iraq, Abu Dhabi, Dubai, Kuwait, Oman, Saudi Arabia, Libya and Indonesia, in Pakistan ‘s total exports increased from 6.6 percent in 1969-70 to 24.8 percent in 1973-74. ” The Gulf remittance remain an important source of income for cash-strapped Pakistan. Through this process, as Dilip Hiro points out, millions of men ”had during their short-term contractual employment in Saudi Arabia, been exposed to conservative Islamic views as on

-women’s role ( ”They should stay home and serve men”)

-limits of artistic expression (”Art must keep away from religion”)

-relations between Muslims and Christians (”to be treated as second-class citizens”) and

-West’s impact on Islamic civilisation (” Political and social innovations coming from West are incompatible with Islamic values”) .

Though these jobs offer a temporary relief for regimes threatened by fast growing populations but this relief has strings attached. The countries exporting work force to Gulf have to open their gates to Salafi ideas that arrive disguised as mosque, madrassa, blood banks and charities as well as investment companies and banks. Saudi- funded mosques-madrassa-charity networks help produce and sustain a devout class that wants interest-free ”Islamic banking”.

As a matter of fact, in certain countries like Malaysia, Sudan and Egypt, ”Islamic banking” emanating from Gulf has greatly contributed to fundamentalism’s rise. The Faisal Islamic Bank of Egypt, founded in 1977, is a typical case. Its managing director was a Saudi prince, Muhammad al-Faisal, a son of King Faisal. Though Faisal’s name was sufficient to inspire trust in devout investors and depositors yet favourable-fatwas by the Egyptian religious establishment and Islamist groups greatly benefited the bank.

French scholar Giles Kepel says: ”In Egypt, these institutions were at first encouraged by those in power who saw in them an opportunity to win backing of devout middle class. They reasoned that if that class placed its money in Islamic banks and made substantial profits, it would be unlikely to join the radical opposition led by Islamists”.
However, ”in 1988 the Egyptian state called a halt to this process, fearing that it would allow the Islamist movement to build up a war chest and hand the Brothers financial independence”.

The impact of petro-dollars on Egyptian society is best explained by the proliferation of Islamic investment houses Loans are conditional on strict adherence to Islamic laws and traditions. One of these organisations, al-Rayan, paid female students 15 Egyptian pounds a month pocket money to take the veil.
In neighbouring Sudan, it was in the fall of 1977 that Faisal Islamic Bank opened a branch. By mid 80’s, the Faisal Bank was the country’s second richest concern in terms of money it held in deposits. The bank was run by Islamists some of whom had lived in Saudi Arabia in early 1970 ‘s as exiles. One of bank’s director was to later become an important figure in Turabi’s regime.

In 1980-85 , Islamic investment throughout the Muslim world underwent a spectacular expansion, leading to creation of hundreds or so Islamic investment companies offering annual returns of around 25 percent. One such development was seen in Malaysia when Anwar Ibrahim, a founding father of Malaysian Islamism, became minister of finance. He created Bank Islam in 1983. The then prime minister Mahatir Muhammad inaugurated the Islamic banking system by opening the bank’s first account. The banking system even provided jobs for graduates in religious studies: they were given places on the Sharia boards which made sure that transactions and investments were untainted by charging interest.

Loretta Napoleoni points out two other banks: ”al- Barakaat is a Somali-based international financial conglomerate with branches in 40 countries, including the U.S. Every year, until September 2001 when its funds were frozen by the U.S. Authorities , the US office wired at least $ 500 million in international profits to the central exchange office located in United Arab Emirates. Of these revenues, bin Laden’s network received a flat 5 percent, equivalent to about $25 million.

Al-Taqwa is a bank with strong ties with Islamist groups. It was set up in Nassau in 1987 with $50 million as capital, of which two-thirds came from Islamist fundamentalist organisations, one of the most important share holder was the Muslim brotherhood al-Islah of Kuwait. Among other activities, it has financed the political campaigns of Islamist candidates in the municipal elections in Egypt. The bank operatives in more than 30 countries”.

The deep nexus between banks and Islamism is best epitomised by, now defunct, BCCI, or Bank of Credit and Commerce International. Though BCCI did not claim to be Islamic yet it was fathered by petro-dollars and it served the joint US-Saudi Jihad venture in Afghanistan. The BCCI founder, Agha Hassan Abidi, was a Pakistani. The BCCI was a financial al-Qaida with the only difference that demobilising al-Qaida did not prove as simple as shutting BCCI down. Nevertheless, both al-Qaida and BCCI were US-approved, Saudi-sponsored projects to fight infidel Soviets in Afghanistan. The BCCI was owned by Arab capital: 20% was controlled by Khalid bin Mahfouz while another leading shareholder was Kamal Adham. Once head of the Saudi intelligence, Adham’s business partner was Raymond Close, former CIA station chief in Saudi Arabia. It was through ” highly liquid” BCCI channels, the Kingdom of Saudi Arab was able to fund Contras in Nicaragua and Unita in Angola. At times, even Noreiga in Panama became a fan of Pakistan’s banking legend and made use of our strikingly notable bank. Many US institutions including National Security Council and CIA utilised the BCCI accounts. The infamous $17 million no-more-secret arms sale to Iran by Uncle Sam, through Israel, would not have been possible without BCCI branch at Monte Carlo. Besides this excellent track record, the fact that BCCI had an overwhelming Pakistani management and was driven by Gulf dollars, the then CIA boss William Casey thought BCCI had the perfect pedigree for Afghan ‘Jihad’. After all, laundering drug money and purchase as well as shipment of illegal arms was pivotal in sustaining Afghan ‘Jihad’.

To dispel any doubts, former CIA director Richard Kerr admitted that the CIA had secret BCCI accounts in Pakistan in order to distribute funds to khakis and Afghan ‘Mujahideen’ .



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