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by Rachel Ehrenfeld


The economic downturn and instability of the financial markets in the West has battered global economies. Despite the accompanying drop in oil prices, the current financial crisis has actually presented opportunities to expedite the influence and extend the global reach of Islamism in ways Sunni imams and Shiite mullahs could have only fantasized about before.

Saudi & Gulf Funding

The financial tsunami that swept state and local governments, as well as national and international aid organizations, has led to a precipitous decline in services to growing numbers of unemployed or needy citizens, not to mention subsidies to academic institutions and other organizations. This provided petrodollar-loaded Islamist regimes with an opportunity to practice da'wa (Islamic missionary outreach) through donations in the name of Islam. Such donations, including financial bailouts of cash-strapped Western institutions and businesses, have helped directly and indirectly to spread Islamism globally.

The Kingdom of Saudi Arabia is commonly recognized as the primary exporter of Wahhabism, among the more extreme strains of Islamism. In 2008, Saudi Arabia earned $285 billion, up from $201.1 billion in 2007. Indeed, the Saudi Kingdom took the lion's share of the $968 billion total revenue of the Organization of Petroleum Exporting Countries (OPEC).

This year, the decreased demand for oil is expected to generate only $462 billion for OPEC. While the shrinking oil revenues may affect the Gross Domestic Product (GDP) of Saudi Arabia, the expansion of Islamism is unlikely to ebb. For example, since early May 2009, Saudi Arabia and the Gulf states have pledged between $1.646 billion and $1.950 billion to the Palestinians, according to figures published on the website of the Saudi embassy in Washington.

Most of these funds — along with medical aid, food, and building materials — went directly to Hamas, the terrorist organization now in control of the Gaza Strip. These funds were transferred despite international restrictions on providing material support to Hamas. On January 19, 2009, Saudi Arabia's King Abdullah pledged an additional $1 billion "to help rebuild the Gaza Strip."

While the Saudis have pledged nearly $3 billion to the suicide-bombing Hamas organization, they provided a mere 150 tons of dates for more than 500,000 Pakistani refugees fleeing the brutal, Shari'a-enforcing Taliban. This clearly shows where Saudi interests lie.

This is not to say that the Saudis support only Hamas, or that Hamas' only patron is Saudi Arabia. Indeed, Iran's financial and strategic support to Hamas has been widely documented. Still, Saudi Arabia and the Gulf states have historically been the sources responsible for bankrolling the global spread of Islamism through mosques, academic institutions, NGO's, terrorist groups (Shiite as well as Sunni), and all Palestinian terrorist organizations.

It is hard to determine the exact amount of Saudi and Gulf financial support and charitable donations that have been funneled to promote the radical agenda of the Sunni Muslim Brotherhood — the creation of a global caliphate. It is even harder to determine how much of those funds directly supported terrorism under the banner of charity, or zakat, the third pillar of Islam.

Financial Jihad

Analyst Jonathan D. Halevi's excellent study on financial jihad demonstrated that it is "part of Allah's jihad commandment to Muslims." Indeed, jihad can take several forms: jihad of the sword, jihad of the tongue, jihad of the pen, and financial jihad.

"I like to call it jihad with money, because God has ordered us to fight enemies with our lives and our money," Yusuf Qardawi, the Qatar-based spiritual leader of the Muslim Brotherhood, said on BBC in July 2006.

Despite the speed with which Islamism spreads on every continent — including foreign and homegrown varieties — American and European policy makers fail to understand that all methods of financial jihad, both legal and illegal, are deemed permissible by Islamist clerics as a means to bring the Ummah (Muslim world) closer. Indeed, radical imams and Shari'a scholars cite the Quran as well as issue special religious edicts (fatwas) to justify these activities.

Illegal drug trafficking, we are told, is forbidden by the Quran. However, the State Department's Patterns of Global Terrorism 2008 documents the increasing criminal activities of Islamist terrorist groups, sometimes in collaboration with drug traffickers and other criminal organizations. Other crimes include money laundering, human trafficking, arms smuggling, diamond smuggling, counterfeiting, identity theft, and fraud, to name just a few. These operations take place in Latin America, the Caribbean, Europe, Africa, Asia, Australia, and the Middle East.

Economic turmoil simply makes these activities more lucrative. They replace donations and failed "legitimate" enterprises that secretly funneled money to the terrorists. Recently, there have been numerous arrests of financial criminals in the U.S. and elsewhere who used their legitimate businesses to provide material support to al-Qaeda, the Taliban, Hamas, and Hezbollah. These arrests do not necessarily indicate that our law enforcement has gotten better, but that such activities are on the rise.

Shari'a Finance

Another important source of financial support for the spread of Islamism is the rise of financial institutions and financial instruments based on Islamic law — Shari'a. Because Islam prohibits interest payments and investments in "sin" businesses such as alcohol, pornography, tobacco, and gambling, Shari'a compliant products are depicted as "ethical and socially responsible," luring Muslims and many Western investors who were burned in the recent market crash.

This is not just a trend. Indeed, major Western banks such as HSBC, Citibank, and UBS are heavily invested. HSBC, for example, now features a "dedicated brand 'Amana' for its growing range of international Islamic financial products and services. HSBC's Amana is "present in 79 countries and [has] been closely in touch with local communities and their requirements."

Amana Mutual Funds Zakat Guide was compiled by M. Yaqub Mirza, at the Saturna Capital Corporation, which administers the funds. Mirza is a former business partner of Yassin al-Qadi, a Saudi businessman who was designated by the U.S. Department of the Treasury as a Specially Designated Global Terrorist (SDGT) in 2001. Mirza served on the boards of several Islamic foundations that were also banned by the U.S. Treasury. And though Mirza was not indicted, affiliation with individuals and organizations that funded Hamas and al-Qaeda should have raised some red flags at HSBC and other firms that do business with Amana.

Mirza is just one questionable figure associated with HSBC. Despite having been banned from the U.S. in 1999 and Great Britain in 2008, Qardawi was cited on the Amana Mutual Funds Trust website as a zakat expert. HSBC neglected to cite Qaradawi's 1999 publication, Fiqh az-Zakat, where he wrote, "The most important form of jihad today is serious, purposefully organized work to rebuild Islamic society and state and to implement the Islamic way of life in the political, cultural and economic domains. This is certainly most deserving of zakat."

Qardawi, in other words, seeks to replace the Western financial system with an Islamic one. His sentiments are echoed by HSBC's chief Shari'a advisor, Mohammed Taqi Usmani. "For a non-Muslim state to have more pomp and glory than a Muslim state itself is an obstacle, therefore to shatter this grandeur is among the greater objectives of jihad," claims Usmani, one of the leading Shari'a finance scholars. His 2002 book, Islam and Modernism, is rife with Islamist vitriol. "Killing is to continue until the unbelievers pay jizyah [the subjugation tax] after they are humbled or overpowered," he wrote.

HSBC is not the only financial firm in need of a Shari'a audit. American International Group (AIG), now owned-in-part by the U.S. government, is selling "Takaful" insurance. AIG's Shari'a advisory board is unlikely to invest in Jewish, Israeli, or Christian businesses, which are considered forbidden (haram) according to Shari'a law. Since the U.S. government owns AIG, the question of discrimination was raised in a lawsuit filed last December by the Michigan-based Thomas More Law Center.

To understand the dangers of Islamic banking, one must understand the original intentions of Muslim Brotherhood leaders in Pakistan and Egypt in the 1920s. Their aim was to replace the Western economy with Islamic economy, and for that they needed new mechanisms.

Shari'a scholars who sit on banks' advisory boards ban "un-Islamic" financing and create a mechanism for zakat donations. The destination of those zakat dollars is not transparent, leaving open the possibility for terrorism finance. Indeed, Islamic banks — especially those operating in the West — are at best lacking in their due diligence, transparency, and accountability.

Losses of billions of dollars in Western investments reduced the wealth of many Arab and Muslim banks in the Middle East. But the hundreds of billions of petrodollars they accumulated during the oil boom left them with ample funds to continue the acquisitions of Western businesses that can be used to advance the Islamist agenda through Shari'a finance. Indeed, amidst a credit crunch, when cash is king, Western governments allow Islamic banking to operate freely.


The M-payment is another cause for concern amidst the current global turmoil. Islamic banks in Saudi Arabia and other Gulf states were among the first to use the Mobile Payment System. M-payments were developed initially to help hundreds of millions of international migrant workers, and the poor who do not have bank accounts, to transfer money domestically and internationally. They can also pay bills, give contributions to charities, and purchase prepaid Internet credits.

The M-payment is a growing phenomenon. HSBC — with more than 5,000 offices in 79 countries — offers an m-payment solution through the Monilink WorldWideWeb network and its subsidiary First Direct, a telephone and Internet-based commercial bank.

Terrorists abuse M-payments by exploiting the stored value card, which does not require a bank account or credit card to activate and use. Nor does it require two forms of government-approved identification. The majority of cards only allow low levels of cash to be held on the card, but some allow the transfer of thousands of dollars.

There is hardly a better vehicle available to terrorists to transfer or receive money than the M-payment service with its mobility and anonymity. Terrorist financing is even easier when using this new technology in less-developed countries that lack functioning anti-money laundering and regulatory frameworks.

In March 2008, for example, the Bureau of International Narcotics and Law Enforcement at the State Department released a report about the growing threat of mobile payments. "Unfortunately, there is little financial intelligence on most forms of NPM's [New Payment Methods], including M-payments," the report stated.

Recession Proof

Islamists on a mission to create a global Shari'a empire — armed with billions of petrodollars and a growing network of global criminal enterprises — are cultivating an opaque Islamic banking system that can easily launder terrorists' and criminals' ill-gotten gains, which can then be transferred without detection.

Financial analysts are now on the hunt for "recession-proof" industries. The terrorists have no such worries. Despite the global economic strains, the Islamist terror industry is on the rise, and is unlikely to be hindered.

Rachel Ehrenfeld is director of the American Center for Democracy and author of Funding Evil: How Terrorism is Financed and How to Stop It.

This article appeared in SUMMER 2009, VOLUME III: NUMBER 2 of inFocus. It is archived at the Jewish Policy Center ( 50 F Street, NW, Suite 100, Washington, DC 20001 )


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