On February 28, 2007, representatives from the US and India met under the auspices of the Indo-US joint working group on counter-terrorism to discuss various cooperative strategies related to global terrorism. Terrorist financing was amongst the key issues addressed. While countering terrorist financing is a prominent subject for both countries, recent events have contributed to the issue’s increasing profile in India. Specifically, these meetings took place two weeks after militants bombed the Samjhuta Express (link forthcoming); it is believed the blasts were meant to derail peace talks with Pakistan. In addition, the government recently announced there was evidence of terrorists manipulating India’s stock markets. These issues have contributed to the growing importance of anti-terrorist financing measures in India.
Post-Cold War Cooperative Framework
The joint working group on counter-terrorism was established in 2000 and meets regularly. It is representative of the continued normalization of U.S.-India relations since the end of the Cold War. Following the September 2001 terrorist attacks , for example, India immediately offered the United States full cooperation and the use of India’s bases for counterterrorism operations. Presently, the Bush administration vows to “help India become a world power in the 21st century.” U.S.-India relations are conducted under the rubric of three major “dialogue” areas: strategic, economic and energy.
Tracking terrorist financing, both legitimate and unlawful, has been an important task since the decline of state sponsorship of terrorist groups following the end of the Cold War. Moreover, it has become an increasingly urgent endeavor since the events of 9/11. Countering terrorist financing is a complex undertaking rife with challenges, one of which is the coordination of international efforts. The Financial Action Task Force specifies international cooperation as an essential pillar to countering terrorist financing. As such, the Indo-US Working Group is a significant manifestation of this recommendation.
Legitimate Funds, Unlawful Means: Financing Terror in India
Recent events in India have underscored the importance of anti-terrorist financing measures. The government recently announced that terrorist groups had a part in manipulating the stock markets, revealing the country’s weak market surveillance system. National Security Adviser M.K. Narayanana stated, “Isolated instances of terrorist outfits manipulating the stock market to raise funds for their operations have been reported.” Such financial manipulation is particularly perilous in a country where the per capita GDP is less than $800.
In addition, Narayanana raised the issue of terrorist groups like the Liberation Tamil Tigers of Eelam (LTTE) using legitimate businesses in India to fund their activities. Jihadi terrorist organizations have begun to do so as well. Islamic militants (Previous Report) who have launched attacks in India have funded activities through legitimate businesses, such as restaurants, real estate and shopping. In addition to domestic means, violent non-state groups acting within India’s borders are supported by external funds, as well. India’s counter-terrorist agencies have detected money transfers directed to terrorist groups from so-called safe locations, such as the United Arab Emirates (UAE).
India is taking steps to curtail the challenge of terrorist financing. In addition to its cooperative approach with the US, India is also a party to the International Convention for the Suppression of the Financing of Terrorism. Nevertheless, important obstacles temper the efficacy of these measures. Namely, India believes these measures can only be effective if certain states “refrain from organizing, instigating, facilitating, participating in, financing, encouraging or tolerating terrorist activities.” It is likely this statement is a thinly veiled reference to neighboring Pakistan, which has been known to harbor militants such as the Taliban. This indicates, quite tellingly, that terrorist financing in India is not simply a domestic problem; it is also entwined with regional geopolitics and rivalries.
Looking Ahead
Recent cooperation between India and the United States to address terrorist financing is encouraging. Terrorist financing has both direct and indirect consequences both for the US and its international allies. While criminal means of terrorist financing—drug trafficking and illicit trade in precious commodities—are often the focus of international attention, it is necessary to address the continuing problem of non-state violent actors manipulating legitimate financial sources. Recent events in India underscore the consequences such actions can have on a country’s domestic economic infrastructure and regional affairs.
