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Funding the Pakistani Taliban

Poppies, tobacco and the "timber mafia." But that's not all.

But following this money across borders is especially difficult because much of it moves through the hawala system, which transfers money through unofficial money lending networks. In the hawal system, drug money is thrown in to the same pile as legal expat remittances, making it impossible to fully trace.

The tactics of the Pakistani Taliban suggest though that its needs go beyond a cut from the Afghan poppy industry, which the State Department estimated at $4 billion in 2007. The Pakistani Taliban shares a name with the Afghan group, but when it comes to the
money, Sherpao said the rule is: "live off the land."

Back in 2005, television camera crews in Swat, Pakistan, captured for the first time images of Taliban collecting donations from locals. Then, wooden carts with mounds of cash were parked on the street sides as women were seen dropping their jewelry into bags for masked young men
carrying AK47s.

The Pashtun militancy first grew in the tribal areas of Pakistan when the Pakistan military ventured to the Afghan border for the first time in history. At the time, the American military said that the Taliban had moved its bases into Pakistan and major high profile
ex-Afghan-mujahedeen leaders were traveling freely across the porous Af-Pak border.

But by 2005 groups claiming to be part of the umbrella Taliban Movement of Pakistan (TTP) had started popping up in places like the Swat Valley, which has no border with Afghanistan. In Swat, the leadership of the major Taliban group came from the remnants of an old secessionist movement in the region that dates back to the 1970s, decades before the Taliban existed.

As the Pakistan army moved deeper into the steep green valley to battle these new groups, the Taliban couldn't just rely on the dwindling goodwill of a few poor ideological supporters. Like any good business, it diversified.

A report by the Center for Public Integrity in Washington published in June claims that millions of dollars are also ending up in Pakistani Taliban coffers from its control of the trade in counterfeit cigarettes. The report estimates that profits from the illicit cigarette trade may account for as much as 20 percent of total funding for these terrorist groups.

“After poppy, tobacco is probably the biggest revenue generator,” for the Taliban, said Ikram Sehgal, a former major-general in the Pakistan army who now runs one of the largest private security firms in the country.

Plus, officials constantly identify new Taliban revenue streams. The environmental protection agencies in Pakistan are blaming the “timber mafia” — illegal loggers — for funding the militancy. Last year the Taliban took over a dormant marble mine near the Afghan border, which then reportedly generated tens of thousands of dollars for it every month.

Aftab Sherpao, the former interior minister, said the Taliban also would have made hundreds of thousands of dollars in the past from emerald mining in the Swat Valley.

But nothing, it seems, pays better than good old crime. Rackets, extortion, kidnapping and banks heists are all helping the Pakistani Taliban pay the bills. Earlier this year the Taliban reportedly demanded nearly $1 million from Sikh minorities in their areas as jizya, or “tax.”

A thousand miles away, five men were arrested in June in the city of Karachi, the country's financial hub, for funding Taliban groups. The men were “involved in robbing banks and trailers on highways” and “different crimes” to provide funding to the Pakistani Taliban,
according the city’s police chief. The police also said the suspects were planning to kidnap businessmen in Karachi. 

“Kidnapping is a major revenue source for them,” said Gen. Athar Abbas, the central spokesman for the Pakistan Army. “Sometimes we don’t even know how much has been paid to get people released so it’s hard to keep track,” he said. While the official stories mostly recount escapes, ransom is usually paid — “sometimes in the millions of dollars,” said Abbas.