The Funding of Terrorism (Part IV) – A Trust Deficit is Undermining the Investigation of Terrorist Financing across MENA

by Jack Watling

10 August 2019

Grand Ayatollah Seyyed Ali Khamenei (Image credit: Ayatollah.ir/Wikimedia)

 

The Kingdom of Bahrain sentenced 139 people to prison in April 2019, alleging they were part of a terrorist cell, which the authorities refer to as ‘Bahraini Hezbollah’. The charges in the mass trial ranged from plotting to conduct attacks and the smuggling of arms, to terrorist financing. Specifics however were not revealed, and point to a damaging trend: the use of ‘terrorism’ as a politically acceptable charge with which to implement repression. The consequences of this policy are not just unjust, but in pushing communities to avoid cooperation with the authorities sustains avenues for actual terrorists to finance and carry out their operations.

There are armed groups active in Bahrain, just as there are non-state armed actors, many of which have carried out terrorist attacks, in Iraq, Syria, the Palestinian Territories and Lebanon. Many of these groups are directly supported by Iran in these activities. While sanctions on Iran can be effective in reducing the country’s available resources for financing clandestine activities, limited progress has been made in restricting the routes by which money reaches armed groups. To understand why, it is necessary to appreciate how the Shia community manages its tithes. Although a minority of Shia Muslims are followers of Ayatollah Khamenei, Iran’s religious leadership has ties across the Shia community, and the Iranian government is consequently able to leverage these networks.

Each Twelver Shia Muslim selects an Ayatollah – or religious jurist – as their spiritual guide. They are obligated to follow the scholar who they believe to be most theologically knowledgeable. A follower must pay a fifth of their profits each year to their Ayatollah. The khums is supposed to support the Ayatollah in his research, and to provide subsistence for the Howza: the seminary he oversees. Many Shia give more than the required khums and, in discussion with the cleric or their representatives, make additional donations for him to spend in support of an agreed cause.

The Shia financial system was developed in small communities. Between the collapse of distance brought about by international finance, and a rapidly expanding global population, it now sees donations made by a community of around 220 million people. The volume of money is therefore vast, and far exceeds the immediate needs of the Ayatollahs and the Howza. A far higher proportion of the money is therefore used to support charitable ventures, and to help Shia communities.

What constitutes ‘help’ is contextual. It may mean educational scholarships to students in Mali, or aid to flood victims in Pakistan. It could also mean supporting military activity. When Islamic State seized Mosul in 2014 Grand Ayatollah Sistani declared the fight to defend Iraq a ‘sacred defense’ and large amounts of money from the Marjaiy’ah – the Shia clerical authority – went to the Popular Mobilization Forces, and their families, to support the war effort. The use of religious funds to support the war effort was understandable. It also highlighted how the Shia financial system can support a wide range of political causes, and military efforts.

The capacity for Shia clerics to inject political and financial capital into causes was lamented by the British in the early twentieth century.[1] It has been viewed with hostility by Arab governments since, especially in the wake of the Iranian revolution of 1979. Following the Arab Spring uprisings of 2011 for instance Grand Ayatollah Sistani decided that Bahraini Shia should use their khums locally.[2] Done for humanitarian reasons, this act gave the protest movement both a large amount of money, and the infrastructure for managing it.

Much of that infrastructure is entirely opaque, with local religious representatives receiving cash, and conveying or dispersing it as a matter of trust. The Shia community has a good reason for keeping their finances away from the banking system. In 1991 for instance Saddam Hussein looted the Shrines of Karbala, and actively attempted to seize khums revenues.  The fear that opening the process to scrutiny will see predatory seizures by hostile governments is both persistent within the Marjai’yah, and understandable.

From the point of view of Arab governments like Bahrain or Saudi Arabia however this architecture provides a highly suspicious and invisible flow of funds that goes to both legitimate charity, and to subversive political activities. It is exploited by Iran. The problem is that because it is opaque, finding the evidence trail of the small amount of terrorist financing in the large flow of legitimate funding is hard, especially when those conducting legitimate charity have no incentive to cooperate with the authorities.

Bahraini officials have repeatedly sought to have US counterterrorism investigators endorse their actions against what they see as Iranian subversion in their country. The problem, as a former senior US Treasury official noted in interview, is that ‘they present us with suspicious unknowns – and the opacity of Shia finance certainly represents a threat vector – but they claim it is evidence of terrorist financing. It is not.’[3]

If Bahrain – and other Gulf monarchies – intend to clamp down on the financing of terrorism they need to avoid mass trials and vague charges. They must conduct diligent investigative work, and present detailed cases. Charging five people with specific, evidenced crimes, would be infinitely more credible. It would require a shift from attempting to rule by law, to supporting the rule of law. But until governments across the region are able to build trust with the Shia community, they can expect Shia finance to remain opaque, and so long as it is opaque, it will remain a vector for the financing of subversion from Iran.


Jack Watling is Research Fellow for Land Warfare in the Department of Military Sciences at RUSI. He holds a PhD in history examining the evolution of UK policy responses to civil war. Jack has worked in Iraq, Mali, Rwanda and further afield and has contributed to the RUSI Journal, RUSI Defence Systems, Reuters, The Atlantic, Foreign Policy, The Guardian, Jane’s Intelligence Review, Haaretz and others. He was shortlisted for the European Press Prize in 2016, and won the Breakaway Award at the International Media Awards in 2017. This report was supported with funding from the Pulitzer Centre.


[1] TNA, FO 800/70: Cecil Spring Rice to Edward Grey, 18 July 1907.

[2] Author interviews with officials from Iraq’s clerical establishment, held in October 2017 in Najaf.

[3] Author interview, a former senior treasury official, Washington DC, April 2019.

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