Eco-Terrorism? How al-Shabaab Is Making, Losing Money

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Written by Dana Sanchez

The brutality of al-Shabaab’s September attack on an upscale shopping mall in Kenya may turn ordinary Somalis against the militant Islamist group who might otherwise have supported them, according to a report in AlArabiya.

Al-Shabaab has multiple revenue sources. It makes money by extortion, taxing transportation and exporting charcoal to the wider Arab region, AlArabiya reports. Charcoal is its largest revenue source and takes a toll on the environment because it involves deforestation, the report said.

But any group with a steady supply of money and manpower can lose these due to anarchy and lack of government, the report said.

Al-Shabaab may lose support from many Somalis, said Laura Hammond, a senior lecturer at the London-based School of Oriental and African Studies. It’s very hard to see how the attack could have a positive impact for the group, Hammond told AlArabiya.

A U.N. report estimated in July that al-Shabaab earned more than $25 million a year from the charcoal business

“The largest part of their finances actually came from the charcoal trade,” said J. Peter Pham, director of the Africa Center at the Atlantic Council, a Washington, D.C.-based think-tank.

The immense size of al-Shabaab’s charcoal trade has resulted in an environmental impact, leaving Somalia’s forests decimated, Pham said.

“Somalia was at one time 15 percent forested. Al-Shabaab has probably reduced that by two thirds,” he said.

Before the Westgate Mall attack in Nairobi, al-Shabaab’s finances were already in a poor state due to Kenyan intervention, said Ed Blanche, a Beirut-based insurgency and counter-terrorism analyst. The Islamist group had lost the strategic port city of Kismayo to Somali government and African Union troops in 2012.

Al-Shabaab used the port to control the export of charcoal, which was their main source of revenue and “quite lucrative,” Blanche told AlArabiya.

“It’s probably the loss of funding that helped drive them to attack the Kenyans,” Blanche said. “The Kenyans took away Kismayo which was their main source of revenue.”

Stig Jarle Hansen, author of the book “Al-Shabaab in Somalia: The History and Ideology of a Militant Islamist Group, 2005-2012,” agrees that losing Kismayo led to the Nairobi attack.

“The fall of Kismayo was very important symbolically. This was maybe one of the largest defeats of al-Shabaab ever,” Hansen told Al Arabiya.

Copying the mafia, al-Shabaab also taxes small businesses and sets up money laundering companies to channel income its way.

Taxing small shops such as car repair or mobile-phone chargers also serves to form a network of messengers and informants.

Shopkeepers who don’t go along with al-Shabaab are usually pursuaded when faced with the threat of having an arm or leg amputated by a not-so-friendly local al-Shabaab representative, the report said.

Al-Shabaab generates up to $100 million in revenue per year, with much of it likely from selling contraband over the Kenyan border, according to a 2011 U.N. report.

Other income sources include support from sympathetic Somali communities in the U.S.

Earlier this year, two Somali-born U.S. citizens were sentenced by a federal court for soliciting donations for al-Shabaab in Somali neighborhoods in the U.S. and Canada, and sending the money to the group, CNN reported.

Al-Shabaab could likely be receiving donations closer to home with large Somali communities, such as Nairobi’s Eastleigh neighborhood, which has numerous money-transfer outlets, according to a report on Globalecco.org.

Somali piracy has been cited as a possible lucrative revenue stream for the group, but piracy is no longer lucrative in Somalia, said Peter Lehr, who teaches terrorism studies at the Scotland-based University of St. Andrews.

“Sea piracy is at the moment dead in the water,” he told Al Arabiya. “The pirates are most definitely not making money, so that’s a source of income that’s most definitely dried up for al-Shabaab.”

Somalia’s growing economy may pose a threat to al-Shabaab. Rising gross domestic product is likely to lower the motivation of gunmen paid between $100 and $500 a month.

Decreasing sources of income from a Kenyan military backlash against rebel-controlled areas of the country could also result in al-Shabaab no longer being able to pay monthly salaries to its militiamen, many of whom are not sufficiently tempted by the prospect of the nationwide implementation of sharia law.

“Somalis by and large aren’t jihadists, but they’re certainly one of the most entrepreneurial people around in the world, and if they can extract a better deal from, let’s say, the government or private sector or something like that, they will,” said Mark Schroeder, an expert on African political and security affairs with Stratfor, a global intelligence firm.

Most Somalis are not restricted by devotion to a single movement or cause, he added.

“If al-Shabaab is willing to pay them some money to become a foot solider, they’ll take it, but allegiances and loyalties don’t go very far in a place like Somalia,” Schroeder told Al Arabiya.

Although weakened financially, al-Shabaab “probably has enough (funds) to remain lethal,” said John Campbell, a senior fellow at the Council on Foreign Relations, a New York-based international affairs and foreign policy think-tank.

Hansen believes the group may be undergoing a dramatic structural change that could result in future funding sources being changed.

“Al-Shabaab is becoming more of a regional phenomenon,” Hansen told Al Arabiya.

The Nairobi attack points to a possible shift away from Somali-based activities towards more al-Qaeda-style terrorism outside the country, which would render existing methods of earning revenue through holding Somali territory obsolete.

“I see it (al-Shabaab) going from insurgency-style operations to more emphasis on terrorism,” Hansen said.

Pham also believes that the group may mutate into a global terror network with a more clandestine presence.

“Al-Shabaab as an insurgency is largely defeated, although I wouldn’t pronounce them dead,” said Pham, adding that the group remains “very much a threat,” with high-profile attacks aiding the group’s “greater sense of identity and cohesion.”