Merchant of Death
Money, Guns, Planes, and the Man Who Makes War Possible

Blood from Stones

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Gemstones and the Terrorist Financial Infrastructure
My CTB colleague Animesh Roul has just published an interesting piece on the Taliban's use of gemstones in its financial structure. This has been, as my other CTB colleague Dennis Lormel and I can both attest, from different points of view, a long time subject of debate in the IC and law enforcement communities.

What is striking about the piece is not just the Taliban's use of emeralds, but the use of gemstones going back many years, to the time of the initial jihad against the Soviets. Not only does the Taliban know how to mine, albeit at a rudimentary level, but it knows how to sell the stones on the market.

This is one of the reasons (and there are many, as Dennis and I have debated) I found the information on the use of diamonds credible was precisely that-the Taliban and radical Islamist groups had a long familiarity with the trade, and how to engage in it successfully. It was not something they were dabbling in with no prior experience or expertise.

One thing of significant importance (and which had not developed at the time of my reporting on diamonds and al Qaeda) is the emergence of both Dubai and Ras al Khaimah (two of the seven emirates of the United Arab Emirates, one of only three governments to recognize the Taliban when it was in power the first time) as leading diamond markets and gemstone centers.

This means that Taliban and its friends and allies have a nearby, friendly market for their products, and a way to move them virtually undetected into the world market.

This is no small thing. Prior to this (circa 9/11) the diamonds had to be moved from West Africa to Brussels and, later, Lebanon, in order to be sold. That left more of a traceable trail, and involved intermediaries that were not entirely reliable. Those vulnerabilities are now lessened.

This, to me, one of the greatest dangers of the new world. Self-financing, non-state armed groups that control "honeypots" of resources that make them largely invulnerable to outside influences and pressures.

When a radicalized group becomes financially autonomous it is at is most dangerous. There are no levers of influence that can effectively be pulled. As I often mention in my talks, the Cold War spawned proxy wars, where the superpowers (U.S. and USSR) held considerable sway over the proxies. Why? Because if they did not behave, the superpowers could cut off their weapons, finances, ammunition, uniforms etc.

With the self-financing groups, there is no longer room for more pragmatic or other interests to prevail. The group can do whatever it can afford to pay for. That is the limitation on their actions.

As Roul points out, one of the main strengths of the Taliban in Pakistan (unlike the Taliban in Afghanistan) is that the Pakistani group has a reliable and diversified portfolio of income generating commodities and practices.

If the Taliban in Afghanistan were to lose its heroin/opium production or market (not likely, but it could be squeezed), the financial options, aside from donations from the outside world, would be limited.

But if one is able to exploit emeralds, timber, marble etc., as Roul documents, then the vulnerabilities to enforcement action are greatly lessened. Commodities are notoriously unregulated or under-regulated. Moving products there is one of the least costly and least risky ways of doing business. And the Taliban knows that.

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