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You are here: Home / Archives for Finance

Finance

Sinews of War: Financing French Resistance

June 17, 2022 by David Foulk

Objects Linked to the Occupation of France, 1944. Source: Adobe Stock Images, provided by the author under license.

‘If money be the sinews of war, it may be said to be the framework of Resistance and the punctual despatch of the very large sums needed to keep an Underground Movement, or Secret Army, in being was one of the greatest and, in every sense of the word, heaviest, preoccupations of the Sub-Section.’[i]

When thinking about French resistance during the Second World War, sabotage missions, intelligence gathering and the creation of escape lines for downed Allied pilots are likely to be at the forefront of any reflections. However, according to the 1944 official history of Section ‘RF’ of the British Special Operations Executive, the transportation of money was one of the most pressing concerns for those engaged in the underground war against German occupation. Operating under the aegis of the Ministry of Economic Warfare, ‘RF’ were one of the groups tasked with setting France ablaze. Working alongside the Gaullist Bureau Centrale de Renseignement et d’Action, they organised some of the most audacious special operations undertaken during the conflict. However, these missions risked being impossible to undertake were it not for the increasingly regular injections of cash it provided. Yet, historians have largely ignored the financial aspect of this irregular warfare. The importance of international fundraising, the logistical difficulties experienced when transporting money and the successful use of banditry in a martial context should be highlighted.

Importance of International Fundraising

The internationalised nature of French resistance funding is important to underline. Acquiring funds from within France was an exercise fraught with danger.[ii] In the context of the French economy under occupation, it was difficult for the heads of networks to procure the large amounts of cash needed to support those who were eking out their wartime existence on the black market.

Funds came primarily from the British government, but it was not the only source. From the earliest days of General de Gaulle’s Free French movement, private donations found their way to his London headquarters in Carlton Gardens. However, these gifts were sporadic and often in small amounts. Supporters of the Free French would send precious objects to be sold, including diamonds, with the proceeds being put towards the financing of the external resistance movement.[iii]

As the conflict progressed, financial support increased from further afield. Delegations were founded by French émigrés and Francophiles in Allied and non-belligerent nations. The largest of these groups were established in South America, notably in Argentina, Mexico, Uruguay and Chile. They organised dances and conferences designed to foster the movement’s soft power and fundraise on their behalf[iv].

At the end of 1943, a funding drive in the rallied French colonies sought to raise money for the Gaullist movement. This led to the greatest increase in money available to French resistance groups since the beginning of the conflict. Of the 4.3 million francs sent from New Caledonia, in the Pacific, 1.8 million francs were donated by the French expatriate community, companies gifted 1.2 million, fêtes and dances raised nearly 750,000 francs and 325,000 francs came from the indigenous Kanaks and the Asian community.[v] The islands’ inhabitants donated 61 francs per capita to the ‘Subscription to Help the French Resistance’. To put this into context, the New Caledonian contribution was a mere two percent of the total subscription received. The largest donation, of 141 million francs, came from French West Africa, which was raised over only three months.

Logistical Difficulties

However, the problems that arose when delivering the funding into occupied France continued to trouble mission planners outside of France. One of the main obstacles to providing funds was the weather. Inclement forecasts in December 1943 led directly to a halving in sorties attempted by the R.A.F.’s 161 Squadron. As the squadron’s pilots were involved in flying special operations missions, including money deliveries into occupied France, any meteorological impediments inevitably caused funding shortages in France.[vi]

The difficulties were not over when funds finally arrived in the country, whether transported by an incoming agent or within an airdropped container. The risks of holding money were greatly multiplied due to the unavoidable centralisation that clandestine operations required. Daniel Cordier, the secretary of Jean Moulin, who was de Gaulle’s representative in occupied France, nearly lost the entirety of his monthly delivery, as a thief stole his bicycle from outside a black-market café.[vii] To put this loss into perspective, bicycles cost around 7,500 francs or nearly double the monthly expenditure of an average Parisian family[viii]. Fortunately, Cordier had the presence of mind to take the contents of his side-bags with him into the meeting, but the episode highlights the inherent risks involved when keeping large quantities of illicit funding in the hands of one person.

Banditry Works…

With the chaos wrought by the Normandy landings of June 1944, aerial sorties to supply and fund French resistance groups became a vital lifeline for the estimated 300,000 to 500,000 people living in clandestine conditions.[ix] Moreover, banditry also became more common. In southern France, branches of the Banque de France were robbed of 4.4 billion francs by members of resistance groups. The largest of these raids occurred at Neuvic, in Dordogne. On 26th July, a group of resistance members hijacked a train heading towards Bordeaux and made away with 2.28 billion francs.[x] Unsurprisingly, news of the robbery was withheld from the press, and by June 1945, there were no attempts made to locate the lost money. Elsewhere, in Annonay (Ardèche), the local branch of the Banque de France was robbed on six separate occasions, from July to September 1944, losing a total of 44 million francs.[xi] Armed men forced their way into the branch and, after a ‘lively’ discussion and upon receiving the money, handed a receipt over to the manager in return[xii]. When it is considered that the financial cost of supporting a member of the resistance was estimated to be between 1,000 and 1,500 francs[xiii], these Annonay hauls could have funded around 30,000 to 40,000 resistance members for a month.

To conclude, French resistance funding was international and reliant upon the efforts of those outside of France. Both foreseen and unforeseen problems were experienced with the transportation of money and equipment into areas under enemy occupation. Finally, following the chaos generated by the Allied invasion, banditry became a means by which these groups acquired funding for themselves. While financial constraints may not immediately be associated with global conflict, they certainly proved a driving force behind significant French resistance activity during the Second World War.

[i] The National Archives, Kew, HS7 124, Appendix A, p.9

[ii] Henri Frenay, La nuit finira, (Paris, Éditions Robert Laffont, 1973), p.35-36

[iii] Pierre Denis, Souvenirs de la France Libre, (Paris, Éditions Berger-Levraut, 1947), p.35

[iv] Archives nationales (AN), Pierrefitte-sur-Seine, 3 AG 1 305, France Libre de Gaulle – 1 – Comptes 1940-1943

[v] Archives nationales d’Outre-mer, Aix-en-Provence, 1AFF-POL 879, Résultat complet et détaillé de la souscription du 20 septembre 1943 au 11 novembre 1943 pour venir en aide aux Combattants et Patriotes de France, 22/12/1943

[vi] David Foulk, ‘Homeward Bound: Mapping Clandestine Transportation into France during the Second World War’, War in History, November 2021

[vii] Daniel Cordier, Alias Caracalla, (Paris, Gallimard, 2009), p.531

[viii] Jean-Marc Binot, Bernard Boyer, L’Argent de la Résistance, (Paris, Larousse, 2010), p.17-18

[ix] Olivier Wieviorka, L’histoire de la Résistance, (Paris, Perrin, 2013), (Ebook) Chap. 15, Para. 58

[x] Banque de France (BdF), Paris, 1069199410 1 Prélèvements – Généralités

[xi] BdF, 1069199410 2 Prélèvements irréguliers, Prélèvements effectués à nos Caisses par les FFI, 16/10/1944

[xii] BdF, 1069199410 2 Prélèvements irréguliers, Compte rendu annexe à ma lettre du 2 août 1944 relative aux réquisitions à main armée du 1er août 1944, 09/08/1944

[xiii] AN, AG 3 (2) 276 – 171 MI 108 BCRA, Letter from Colonel ‘Vernon’ to Commandant Lejeune, 04/07/1944

Filed Under: Blog Article, Feature, Series Tagged With: David Foulk, Finance, French Resistance, second world war

Strife Interview – Tom Keatinge (RUSI) on Financial Intelligence

December 18, 2017 by Strife Staff

 

The issue of terrorism financing has become a major international concern in the past few years. For instance, in the aftermath of the 9/11 attacks, the US President George W. Bush decided to target finances, and therefore issued Executive Order 13224. Similarly, the November 2015 Paris Attacks have resulted in further efforts to targeting terrorism financing, such as the UNSCR Resolution 2253.

Strife’s William Moray discusses these issues, and others related to financial crime, with Tom Keatinge. Mr Keatinge is the Director of the Centre for Financial Crime and Security Studies at RUSI, and an Alumnus of King’s College London, where he read an MA in Intelligence & International Security. He advocates the importance of Financial Intelligence (FININT) and argues in favour of shifting the international community’s approach from solely focusing on ‘attempting to stop terrorists’ finances’ to ‘using finance to stop terrorists’.

All enquiries as to this article’s content should be sent to Strife Blog.

 

Tom Keatinge is the Director of the Centre for Financial Crime and Security Studies at RUSI

WM – What is financial intelligence? What purpose does it hold?

TK – The financial sector produces a vast amount of data. This information is owned by the private sector, and is generally not shared with the public sector, i.e. the security authorities. There are mechanisms, such as suspicious transaction reporting, that require the private sector to share this information with governmental authorities. However, a considerable amount of financial information is never used by the authorities, because it was never shared with them in the first place, and so effectively, it is thrown away.

So, the question is, can a more intelligent use of that broad information collected by the financial institutions be used? Can we create mechanisms that can allow the security authorities to access such data, as they can for example with mobile phone companies? If you just think about your own use of your ATM card, or you credit card, and so on, it tells you a huge amount about yourself. It generates a huge amount of information, and arguably intelligence about who you are, what you do, or who are you connected with.

We feel very strongly, here at the Centre for Financial Crime and Security Studies, that we need to do more to use this vast amount of bulk information that financial institutions generate, just as we use the bulk information that internet service providers and mobile companies produce.

 

WM – How could this information be used in counter-terrorism (CT)?

TK – In a CT effort, financial intelligence has proven to be very effective at accelerating the ability of the security authorities to develop networks. There tends to be a reason for people paying money to one another, as they tend to be subsequently connected. That can help you identify not just who is connected to whom, but also how the balance of power lies, who might be the leader, or where have these people travelled together. The point is that the vast quantity of situational information that can be generated from financial transactions opens a similarly significant number of networks and facilitates generating further leads to investigate.

From a CT perspective, we obviously want to have every opportunity to identify actors who are planning attacks. For example, regarding the London Bridge attack: who are the perpetrators connected to? Of course, not everyone they have financial relations with will be terrorists or terrorist-related. However, there might be more people worth watching more closely, and those connections are sometimes easier to identify in this day and age through financial means than through communication means – communications data is often encrypted nowadays, whereas financial connections are not encrypted, because at the beginning and the end are banks, and banks are legally required to share their suspicions and to share data when requested with the authorities.

 

Eight people were killed and 48 injured during the June 2017 London Bridge attack (Credit Image: Dominic Lipinski / PA Wire)

 

WM – So financial intelligence would not just help in a terrorist investigation, it might also help in the prevention of attacks?

TK – I am very cautious to say that financial intelligence is somehow a silver bullet. I would not suggest that. What I would suggest is that it adds an additional, extremely valuable dimension to the picture that the authorities can create, when undertaking CT operations. There may well be information, as well as connections and activities that are not exposed by CCTV cameras or by communications data, but that are revealed by financial intelligence.

 

WM – Isn’t there a risk here to data privacy / data collection?

TK – Historically, the relationship between the authorities and banks was founded inbank secrecy and privacy. For instance, the authorities told the banks ‘We trust you to manage your data, to look after your data. If you see anything suspicious, please let us know’. In other words, the authorities respected bank secrecy. Yet, over the years, this trust has declined; banks have proven – either wittingly or otherwise – to facilitate money laundering, tax evasion, and so on. Therefore, bank secrecy is perhaps not as sacrosanct as it used to be. What we clearly need to be cognisant of is that banks hold a huge amount of personal data on all of us, and that data needs to be used responsibly. People got very concerned about the kind of access that the authorities might have to communications data over recent years; consider amongst other things, the reaction to the Snowden leaks. We need to make sure that we do not fall into the same trap with financial data, that privacy is protected, and subsequently that there are the right protections on access that the authorities can have to our financial data.

In an extreme situation, just like the case of Apple with the iPhone and the San Bernardino shooting, you may find that some banks might say ‘You customers can trust me, I am going to be the Apple bank, I will only provide the authorities with the information I am legally required to. And I am not going to allow access to any additional information on a voluntary basis’.

So I think there is an important need for a debate about privacy and financial intelligence to be taking place now, before we end up in a situation where people discover their data is being used for CT purposes without them really realising what is going on.

 

WM – I suppose that you are in touch with various institutions such as banks to discuss financial intelligence. What is their reaction?

TK – When dealing with a financial institution, I think it is important to divide it into two parts.

On the one hand, you have those who are responsible for financial crime and compliance, who often have a law enforcement or a security background, and completely understand the power of data, and indeed perhaps even that of financial intelligence.

On the other hand, you have staff who are doing the business on the trading floor, in the branches and so on; they of course can feel a long way away from the financial crime compliance department and thus are less likely to understand the value of financial intelligence; it’s not part of their job

There is also a public relations issue in all of this: the banks obviously have had very bad press and PR in recent years; and thus, demonstrating that you as a financial institution are either contributing to the disruption of human trafficking, of wildlife trade, or contributing to CT efforts, is obviously a positive message to deliver to your customers.

I do not want to sound completely cynical, the financial institutions clearly do see the importance of doing this from a social and security perspective. But there is also an obvious desire to show that they are, as one of the banks has it as its tagline, ‘here for good’, and that they are not just here for profit.

 

WM – Moving on to the state perspective, who is more likely to be involved? The intelligence community and/or law-enforcement agencies?

TK – There are different forms of information sharing models around the world.

In the UK, the information sharing partnership is called the Joint Money Laundering Intelligence Task Force. It is a partnership between the private sector and the public sector that is effectively run by the National Crime Agency. So here, we are not talking about security authorities, but law enforcement. There is a working group which looks specifically at terrorism financing but again, these initiatives are run by law enforcement, not by the security authorities.

But clearly information sharing goes beyond CT alone.  The process of sharing information aims to identify and disrupt a range of different kinds of financial crimes, not just terrorist financing. Different countries have different priorities: in the UK, these are human trafficking, trade based money laundering, corruption, terrorism financing. In Hong-Kong, they have a Fraud and Money Laundering Intelligence Taskforce, as fraud is one of their big focuses.

In other words, the sharing of information underpins tackling threats that are particular to each individual country, not just terrorism.

 

WM – What are your views on the impact financial intelligence, information sharing might have on intelligence cooperation?

TK – One of the great frustrations a financial institution has is that it holds information in different countries, and yet it is often legally unable to get the benefit of bringing that information together and looking at it holistically. And even in the cases banks can do that, if they succeed in creating a complete picture out of all this information, the law often restricts them to only give a slice of the picture to the relevant country. For instance, if they draw on information from the UAE, from Singapore, from the UK, and from Mexico, they cannot give the whole picture to each country, they have to give just the Mexican slice to the Mexicans, the UAE slice to the Emiratis, and so on.

The financial sector has tremendous difficulties with cross-border information sharing. At the same time, I have to say that the financial sector has more ability to get a transnational global picture with its analysis than countries do. Therefore, I think there is an opportunity for financial institutions to facilitate the creation of global threat pictures, where sometimes governments are more restricted on what they can and cannot share. I am thinking about cases where banks simultaneously operate in Five Eye countries and in African or South-East Asian states, such countries where information sharing with Five Eyes is probably zero. Whereas the banks have a pretty good picture of the financial flows and thus potentially have a pretty good picture of some of the emerging threats that might be developing. The question then is how do they use that information? Can they help governments overcome some of these cross-border information-sharing challenges? Again, that brings us back to the issues of data privacy, data collection; we should not be using the financial sector as a back door to circumvent the protections and procedures imposed on the ability of states to share information.

 


Image Source: 

Featured Image: https://dg8r3imuwhpev.cloudfront.net/wp-content/uploads/Best-Internet-Concept-of-global-business-from-concepts-series.jpg

Image 1: https://terrordiaries.files.wordpress.com/2015/03/tom-keatinge.jpg

Image 2: https://www.independent.ie/world-news/europe/britain/terror-attacks-in-london-leave-at-least-two-dead-35786080.html

Filed Under: Interview Tagged With: feature, Finance, RUSI, terrorism

Find the money-pot: Interagency budgetpolitik and American foreign policy

August 10, 2016 by Jackson Oliver Webster

By Jackson Webster

Washington_Monument_Rainbow

Gee, I wonder how much partner capacity we can build with the gold at the end of that rainbow!

 

In policymaking, as in politics, it’s usually wisest to ‘follow the money.’ This famous tagline of All the President’s Men was of course referring to corruption within the Nixon administration, but the key role played by money-matters in policymaking nonetheless finds its way into the conduct of American foreign policy.

The White House has three main tools at its disposal when dealing with the outside world: The Department of State (DoS), USAID, and the Department of Defense (DoD). Traditionally, State deals in diplomacy, USAID deals in development, and Defense deals in war, however these roles are becoming increasingly intertwined in today’s dynamic environment abroad.

Since the authorization of military assistance to Greece and Turkey in 1948, a process which has come to be known generally as ‘security cooperation’ has, through both accident and design become a mainstay of America’s presence abroad. This ‘security cooperation’ has been authorized by Congress on a piecemeal basis over the decades, and it currently consists of over 80 separate legal ‘authorities’ for delivering assistance to various parts of foreign countries’ security services. Each of these authorities has a separate pot of money from which it receives funding, and the amount of congressional control over each operation varies greatly. Over the past two administrations, this set of programmes has been included in a broader diplomatic initiative which has become a cornerstone of American foreign policy: ‘building partner capacity,’ or BPC. This process is intended to allow “like-minded regional partners” to share the burden of international security in an era of fiscal tightening in the United States.

What these trends amount to is a marked difference in the character of American foreign policy, particularly in terms of the agencies involved in its execution. Immediately following the Second World War, and well into the 1950s, the focus of American foreign policy outside of Korea was the reconstruction of Europe and the extension of Washington’s trade influence through strong Bretton Woods institutions (IMF, World Bank, etc.). Much of this was a ways-and-means issue. The Department of State had a great deal of money in its pockets due to the implementation of the Marshall Plan, as well as the burden of postwar diplomatic initiatives, and had a great degree of federal —especially congressional— attention paid to it as a result.

Since 9/11, the counterterrorism initiatives of the Bush and Obama administrations have caused funding to flow into the Department of Defense. State, on the other hand, has not received an authorization for its operations in 14 years, and thus its budget and responsibilities have remained relatively stagnant. The last time the purse strings for State were examined there was no Facebook, Saddam Hussein was still in power in Iraq, and Donald Trump was only a mediocre businessman without a reality TV show. Broadly speaking, this trend has caused significant mission creep away from the Pentagon’s traditional role and into what the armed forces call “military operations other than war.” The idea of the American arms industry being leveraged as a tool of diplomacy is nothing novel, however what has been a revolutionary change in our foreign policy is the centralization of a major part of our interaction with our allies overseas under the DOD rather than under the diplomatic bureaucracy at Foggy Bottom. While State was once America’s primary instrument abroad, this role has moved across the Potomac into the Pentagon, and DOD has now assumed much of the day-to-day work of maintaining our global network of alliances, in part due to its significantly larger piece of America’s budgetary pie.

The US Senate is currently entertaining a defense authorization bill, sponsored by Senator John McCain (R-AZ), to reform security cooperation and assistance programmes. The reforms contain a near-ludicrous 92 pages of legal jargon which, among other things, diverts a significant amount of money to the direct control of the Secretary of Defense for the purpose of ‘security cooperation’ with our allies. The current estimate is $10 billion for 2017, but during future appropriations and authorizations processes, that number will probably increase.

What this means in terms of US foreign policy is, as noted, an issue of ways-and-means. Should an administration wish to strengthen relations with a given country, solve a diplomatic problem, or confront an adversary, it will use the tool with the most resources at its disposal. In today’s budgetary climate, that’s the DOD, which means the military will continue to be America’s leading method of interaction with the outside world, not State and its civilian foreign service. This disconnect between what the military and its bureaucracy are designed to do and what they’ve recently been asked to accomplish both reinforces and is symptomatic of the funding prioritization of Defense over State. This effects all levels of Defense’s activities, from the Marine asked to “shoot with one hand and pass out aid with the other” to the 4-star combatant commanders asked to accomplish what were once considered diplomatic or development goals with the often blunt instrument of the military. Congress is giving the DOD a lot of money to execute a set of responsibilities of questionable effectiveness for which the military was not designed and which the military itself doesn’t necessarily want to do.

While debate continues inside the Beltway over the strengths and weaknesses of the Senate’s proposed reforms, the most important takeaway from describing this process is the key role played by the congressional appropriations and authorizations process in the conduct of foreign policy. After all, a programme or policy without a large pot of money attached, for all intents and purposes, does not exist. Regardless of whether President Obama chooses to veto this year’s authorization bill or not, the fierce nature of the debate and its eventual consequences for policy are telling of the impact of budgets and bureaucracy on America’s foreign relations. Every programme needs a pot of money, and the politics behind agencies getting their hands on these funds are worthy of study for those wishing to understand why and how the United States does what it does overseas.

 

 

Jackson Webster is a graduate of the Department of War Studies and is currently based in Paris where he is reading for a master’s degree in international security policy from SciencesPo.

 

 

 

Notes:

1) All the Preseident’s Men, Alan J Pakula,1976.  https://www.youtube.com/watch?v=Kq_4Zlhoj4k

2) Aftergood, Steven. “Assessing “Security Cooperation”, 2015. https://fas.org/blogs/secrecy/2016/04/security-cooperation/

3) “What is ‘Building Partner Capacity'”, 2015. https://www.fas.org/sgp/crs/natsec/R44313.pdf

4) De Long, Bradford, and Barry Eichengreen. “The Marshall Plan: History’s Most Successful Structural Adjustment Program,” National Bureau of Economic Research, 1991. http://www.nber.org/papers/w3899

5) Vinik, Danny. “The State Department Hasn’t Been Authorized in 13 Years.” Politico, Sept. 2015.

6) Graham, David. “The Many Scandals of Donald Trump: A Cheat Sheet.” The Atlantic, Jun. 2016.

7) The bill can be accessed here: https://www.congress.gov/bill/114th-congress/senate-bill/2943

8) Schubert, Frank. Other Than War. NSC Joint History Office, Washington, DC, 2013.

Image Credit: https://upload.wikimedia.org/wikipedia/commons/2/2a/Washington_Monument_Rainbow.JPG

 

Filed Under: Blog Article Tagged With: Department of Defense, feature, Finance, Politics, Security Sector Reform, United States

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