International Security

How terrorists fund their attacks - and how to stop them

French soldiers patrol the promenade in Nice, France, a year after the fatal July 14 truck attack

French soldiers patrol the promenade in Nice, France, a year after the fatal July 14 truck attack Image: REUTERS/Eric Gaillard

Camilla Schippa
Director, Institute for Economic and Peace
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The Global Terrorism Index 2017 was released this week. The number of terrorism deaths globally has declined for the second consecutive year, reveals the report, which is produced by the Institute for Economics & Peace. But in developed nations, deaths have increased, and terrorism has spread to more countries. In part, this reflects the changing dynamics of terrorism as witnessed in the developed world, from high intensity sophisticated attacks to more low-tech, low-cost and lone actor attacks. Such a shift in tactics mimics the evolutions in terrorism funding and highlights the need to consider longer-term strategies to inhibit the rise of terrorism.

In 2016, ISIL was the world’s wealthiest terrorist group. Its estimated annual revenue, according to the Global Terrorism Index, peaked at US$2billion in 2015, which is the equivalent to the GDP of some small nations. However, as the loss of its self-proclaimed caliphate has shown, the group's strategy of self-funding in controlled territory has left them susceptible to any action that impinges on its territory. During the last year, ISIL’s funding structure has caved following major territorial losses in Iraq and Syria, as half of its funds were sourced from oil smuggling. ISIL was producing up to 75,000 barrels per day and generating revenues of US$1.3 million per day.

In response, the 68-member Global Coalition has targeted ISIL’s revenue sources. By early 2017, the coalition had destroyed more than 2,600 oil extraction, refinement and sale sites. Cash storage sites were also targeted, directly hindering ISIL’s ability to pay fighters and provide basic services. The Iraqi government has also shut down banking systems within ISIL-controlled territory to restrict payments to government workers in these areas. With the continuing loss of territory in 2017, it is estimated ISIL’s revenue has fallen from US$81 million per month in 2015 to US$16 million per month in 2017. It is highly likely its revenue will decline further.

This disruption to ISIL’s fundraising has unquestionably helped thwart the activities of the group, especially in its base countries of Iraq and Syria. However, the global threat posed by the group remains, particularly in light of the trend towards more low-cost attacks.

The September 11 attacks were highly sophisticated in their planning and implementation. Al-Qa’ida planned the attacks over many months and trained multiple perpetrators to carry out specific tasks. The attacks required substantial financing with estimates varying between US$400,000 and $500,000.

In stark contrast, the 2004 Madrid train bombings were estimated to have cost US$10,000. The failed 2007 London car bomb attacks carried an estimated price tag of about US$14,000. The foiled commuter train attack in Germany’s Cologne in 2006 was estimated to have cost only $500. The more recent attacks using vehicles, such as the 2016 Nice truck attack, were similarly inexpensive to conduct.

This shift towards inexpensive attacks reflects a shift in tactics. A study of 40 terrorist cells that plotted or carried out attacks in Western Europe between 1994 and 2013 found that most plots were self-funded. Furthermore, three-quarters of terror attacks in Europe between 1994 and 2013 cost less than US$10,000. This estimate includes all costs associated with the attack such as travel, communication, storage, acquiring of weapons and bomb-making materials.

The United Nations Security Council has long recognised the need to combat the financing of terrorism. Resolution 2178 (2014) and Resolution 2249 (2015) both sought to quell terrorist power. The council has encouraged all member states to ’prevent and suppress the financing of terrorism.’ Yet this shift towards inexpensive and self-funded attacks is cause for concern. Attacks are likely to be funded through legal means, such as an individual’s savings or donations. Their low cost renders them harder to detect during the preparation stage.

This trend shines a light on the need for greater attention to be given to the many complex issues associated with terrorism beyond the more frequently-discussed military and security responses. This includes better understanding the drivers of terrorism recruitment.

A recent analysis of 500 former members of various extremist organisations in Africa found that over half of respondents were motivated to join as they perceived their religion as under attack. Former fighters also cited low levels of trust in government institutions and high levels of animosity towards the police, politicians and the military. Similarly, a study of al-Shabaab members from Kenya found 97% of respondents claimed their religion was under threat and 65% had joined in response to the Kenyan government’s counter-terror strategies.

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Recent studies examining the motivating factors behind an individual’s decision to join a terrorist group have also pointed to relative, rather than absolute, deprivation as an explanatory factor. Individuals whose expectations for social mobility and economic welfare have been frustrated are at a greater risk of radicalisation. Thus countries where a highly educated population remains largely unemployed or underemployed may be breeding grounds for extremist ideology.

In the European Union, where most countries are considered well-off in absolute economic terms, there remain large differences in youth unemployment levels when comparing native and foreign-born citizens. A first-generation young immigrant in Belgium is 64% more likely to be unemployed than a young person born in Belgium. Such differences may be due to other factors such as education or language levels, but importantly these differences contribute to a perceived unfairness.

These studies highlight the need for countries and the global community collectively to develop more long-term strategies for dealing with the spread of terrorism, and to ensure that any counter-terrorism measure does not inadvertently increase the risk of terrorism. This imperative is all the more pressing given the rise in the use of low-cost low-tech attacks.

To access interactive maps on the Global Terrorism Index 2017 and to view the full report go to This article has been published under a Creative Commons Licence and may be republished with attribution.

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