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Cybersecurity Research

VI. Unilateral Economic Sanctions and the Fight Against Terrorism

Despite the increase use of economic sanctions efforts, terrorist organizations continue to use illicit and undercover means to gain access to funds in the global financial system.187 As a result, the U.S., as the lone financial superpower in the world, has used multiple financial measures against its adversaries in an innovative and effective manner.188 In recent years, the internationalization of terrorism has become an undeniable characteristic of the modern world.189 It can be said that non-state actors, including terrorist organizations, will continue to play a more prominent role in global affairs.190 In this regard, the conventional method of viewing terrorism in terms of nation-states is obsolete, and even dangerous.

Traditional norms of war and armed conflict are comprehensive and rich in addressing the actions of state adversaries but are not as well suited to address the actions of non-state adversaries.191 While non-state adversaries, such as terrorist organizations, have existed for decades, most of the legal infrastructure remains best adapted to confronting state rather than nonstate adversaries. Traditional doctrines of war do not meet the new realities

184. Id.

185. Id. at 13.

186. Id.

187. Lin, supra note 36, at 1400, see also J.W. Verret,* Terrorism Finance, Business Associations, and the “Incorporation Transparency Act”*, 70 LA. L. REV. 857, 857-62 (2010).

188. See Zarate, supra note 14, at ix (noting that “[o]ver the past decade, the United States has waged a new brand of financial warfare, unprecedented in its reach and effectiveness.”).

189. Lobsinger, supra note 21, at 116.

190. NAT’L INTELLIGENCE COUNCIL, Mapping the Global Future: Report of the National Intelligence Council’s 2020 Project 111 (Dec. 2004), available at https://www.hsdl.org/?abstract&did=484392.

191. Lin, supra note 32, at 1422, see also Kenneth Anderson, U.S. Counterterrorism Policy and Superpower Compliance with International Human Rights Norms, 30 Fordham Int’l L.J. 455, 472 (2007).

of non-state adversaries who play a more significant role in contemporary warfare.192 For this reason, the lack of “comity, reciprocity, and accountability” amongst non-state adversaries raises new legal challenges.193 Nevertheless, many non-state adversaries reside in places governed by state adversaries or neutral states making it far more difficult to identify who the nonstate actor is.194 Certain actions by non-state adversaries, such as those using cyber financial weapons, recognition is challenging or almost impossible, often making enforcement action unachievable at a reasonable and satisfactory level.195

There are a variety of debates about terrorism and its origins. In one sense, terrorism is an act of political expression that generates public attention to a specific group or cause.196 In another sense, it is a manifestation of desperation and hopelessness for a better way of life.197 Many, however, address the origins of modern terrorism in poverty, religion, and envy.198 If a society is isolated and unable to modernize, expand, and enter the world economy, people will have little opportunity to earn a living, and this in turn will produce waves of resentment against those who profit from the otherwise growing global market.199

Terrorist groups have a common tradition of recruiting members from the poor who have few opportunities to support themselves.200 Terrorist groups recognize that a lack of economic opportunities combined with a lack peaceful alternatives to alleviating hardship allows terrorist ideologies to take root.201 “To pretend that the issue of terrorism is simply a choice

192. Lin, supra note 36 at 1422-23; see also Jason Barkham, Information Warfare and International Law on the Use of Force, 34 N.Y.U. J. INT’L L. & POL. 57, 102 (2001) (“International law focuses on states, but the growing power of nonstate actors, such as insurgent groups, multinational corporations, transnational criminal organizations, and non-governmental organizations, is a challenge for traditional international law.”).

193. Id. at 1423.

194. Id. at 1425; see also Matthew J. Sklerov, Solving the Dilemma of State Responses to Cyberattacks: A Justification for the Use of Active Defenses Against States Who Neglect Their Duty to Prevent, 201 Mil. L. Rev. 1, 38 (2009).

195. Lin, supra note 36, at 1425.

196. Fandl, supra note 4, at 591.

197. Id; see also Sanam F. Vakil, The Great Leap Backward: Review of Barry Rubin: The Tragedy of the Middle East, 27 Fletcher F. World Aff., 209, 209-11 (2003) (book review).

198. Id. at 588-89 (citing Interview by Neal Conan with Edward Walker, President, Middle East Institute (June 3, 2003) NPR, (transcript available at https://legacy.npr.org/programs/totn/transcripts/2003/jun/030603.barsh.html)).

199. Fandl, supra note 4, at 592.

200. Id. at 593-94; see also Rex A. Hudson, WHO BECOMES A TERRORIST AND WHY: THE 1999 GOVERNMENT REPORT ON PROFILING TERRORISTS, 76-77 (1999).

201. Id. at 594.

between good and evil is to know nothing of human psychology.”202 Public despair and political and social humiliation provide fertile ground for terrorist to exploit and more easily manipulate the minds of desperate individuals, not always in the name of religion but sometimes in the name of revenge or as an act of political empowerment. 203 One of the mentioned objectives of Al Qaeda is revenge for the alleged historical mistreatment of Muslims around the world.204For some of these individuals, terrorist actions are empowering because the act does not rely on their government taking action against perceived wrongs and the act gives voice to their frustration against an enemy state with superior strength. 205

In his final speech in the U.K., President Bill Clinton acknowledged “how abject poverty accelerates conflict, how it creates recruits for terrorists and those who incite ethnic and religious hatred, [and] how it fuels a violent rejection of the economic and social order on which our future depends.”206 The Bush Administration expressed a similar sentiment when it indicated that it “is aware of the link between desperate economic circumstances and terrorism.”207 The Middle East is the main target for terrorist recruiters due to its exceptionally high unemployment rate, the absence of GDP growth, and lack of free markets and stable financial institutions.208 However, international and state counter-terrorism initiatives have generally ignored the root causes of terrorism. Although the 1999 U.S. government profile on terrorism acknowledged this point, its post September 11 agendas have largely overlooked it.209 As such, most terrorism prevention effort focused on stopping terrorism via nation-wide economic sanctions is not effective.

202. Shibley Telhami, Conflicting Views of Terrorism, 35 CORNELL INT’L L.J. 581, 587 (2002).

203. Id at 597 (“In the end, it should be clear that the issues of political violence broadly and terrorism specifically are not about religion and theology.”).

204. Id. at 597 (citing Lucien J. Dhooge, A Previously Unimaginable Risk Potential: September 11 and the Insurance Industry, 40 AM. BUS. L.J. 687, 697-98 (2003)).

205. Shibley, supra note 202 at 597 (“Whatever the aims of the attacks on the United States, they succeeded in sending an empowering message to those in the Middle East who are frustrated but are seemingly resigned to their fate because of the superior strength of their enemies and their apparent helplessness.”).

206. President William Jefferson Clinton,* Remarks at the Dimbleby Lecture* (Dec. 14, 2001), available at https://australianpolitics.com/2001/12/14/bill-clinton-struggle-for-thesoul-of-the-21st-century.html.

207. Fandl, supra note 4, Id. at 598 (quoting Hale E. Sheppard, Revamping the ExportImport Bank In 2002: The Impact of This Interim Solution on the United States and Latin America, 6 N.Y.U. J. Legis. & Pub. Pol’y 89, 121 (2002-2003)).

208. Id. at 599-600 (citing Edward Gardner, IMF, Creating Employment in the Middle East and North Africa (2003) http://www.imf.org/external/pubs/ft/med/2003/eng/gardner/ (last visited Apr. 04, 2021)).

209. Fandl, supra note 4, at 602.

Economic sanctions do have a significant impact on the economy of a developing nation.210 But the negative effects of an increased unemployment rate, reduced opportunities to export goods, and the inability to receive substantial international aid are felt more severely by the population than by the intended governmental targets.211 Even when the population is struggling to establish an adequate living environment under a powerless government, these governments find ways to finance or support extremist groups.212 Moreover, when people encounter poverty and lack of resources due to economic sanctions, this further encourages western hostility.213 The sanctions may establish a setting for dissatisfaction and hostility which foster ideological extremism and terrorism.214

Effective antiterrorism policies need to address the central issues that promote terrorism. As Representative J.C. Watts of Oklahoma explained: “[O]ur national security improves when global stability prevails.”215 As such, global stability may require sanction imposing countries to consider alternatives to nation-wide sanctions. A nation without diplomatic relations is almost isolated, which precludes the improvement of social changes and results in defensive governmental actions. 216 Therefore diplomatic relations and negations between sanction imposing governments and sanctioned countries prevents isolation and enhances social development, thus facilitating human rights and economic integration.217

As terrorism becomes more internationalized, non-state terrorism has adapted to exists on the fringe of economic activity or completely outside the ordinary economy.218 Consequently, the economy of non-state terrorist organization is less impacted by nation-wide sanctions, in contrast to statesponsored terrorism.219 Increasing evidence shows the degree to which

210. Id. at 603.

211. Id. at 604, see also citing Joseph Bradica, Havana Club Rum: One Step Back for U.S. International Trademark Policy, 16 Temp. Int’l & Comp. L.J. 147, 172 (2002).

212. See Douglas Farah, Al Qaeda’s Finances Ample, Say Probes; Worldwide Failure to Enforce Sanctions Cited, WASH. POST, Dec. 14, 2003, at A01).

213. See Fandl, supra note 4, at 588-89.

214. Id. at 602-03.

215. See 148 CONG. REC. 1773, at H1785 (daily ed. May 1, 2002) (statement of Rep. J.C. Watts Jr.).

216. See Morten B. Pedersen, PROMOTING HUMAN RIGHTS IN BURMA 267 (2008).

217. See Wendy Zeldin, Burma: New Human Rights Commission, LIBR. OF CONG. (Sept. 9, 2011), https://loc.gov/law/foreign-news/article/burma-new-human-rights-commission/ (last visited Apr. 4, 2021).

218. See M. Cherif Bassiouni, Legal Control of International Terrorism: A Policy-Oriented Assessment, 43 HARV. INT’L L.J. 83, 88 (2002).

219. Lobsinger, supra note 21, at 120-21 (“Since many terrorist organizations today are not conveniently located or funded within neat political borders, but rather exist as shadowy entities spanning across nations and even continents, it must logically follow that trade sanctions imposed on nations put very little pressure on these non-state terrorist organizations.”).

terrorist organizations, especially non-state organizations, receive funds through the illegal trade on drugs.220 The U.S. government has evidence that Hezbollah and terrorist groups in Yemen and Lebanon have earned direct profits from the selling of methamphetamine in Chicago, Detroit, and other U.S. cities.221 Among Islamic terrorist organizations, no organization has been more involved in illegal drug trade than the Taliban in Afghanistan.222 The U.S. Drug Enforcement Agency (DEA) has proposed that Osama binLaden may have directly supported the trade of heroin from Afghanistan to fund terrorist activities.223

The modern financial infrastructure is the new sphere of war.224 This new sphere provides a special fighting space for adversaries since they may be able to steal large amounts of money through cyberterrorist activities to fund other terrorist activities while also causing widespread financial crisis and damage.225 “Unlike previous wartime theaters, the financial theater of war is less defined by geography and more by its critical functions, assets, and liabilities” which “presents new risks, threats and vulnerabilities for modern warfare posed by a cast of familiar and unfamiliar antagonists.”

226 The new mechanisms of terrorist financing freezing and confiscations of assets, has led to systematic cooperation between governments and international organizations to fight against terrorist financing.227 Although, the FATF has established sanctions as a critical step to prevent terrorist funding, it may not be enough to just freeze suspected assets, the FATF must rely on foreign governments to police bank records to prevent the financing of terrorism.228 Furthermore, as a result of terrorists’ access to technology, the current terrorist threat is worrying because of the significant impact it could have on financial markets and a country’s development.229 Terrorist organizations have also founded non-governmental organizations (NGOs) to recruit members and spread information of terrorist targets; to receive official recognition from governments and international organizations, such as the U.N.; for their humanitarian activities; and to collect donations.230 One of the

220. Id. at 127.

221. Id. at 119. (citing Don Barnard, Narco-Terrorism Realities: The Connection Between Drugs and Terror 9:1 J. COUNTERTERRORISM & SEC. INT’L 31 (2003)).

222. Id. at 118.

223. Id.

224. Lin, supra note 36, at 1381.

225. Id.

226. Lin, supra note 36, at 1381.

227. Lobsinger, supra note 21, at 121; see also FATF Recommendations 2012, supra note 13, at 7.

228. Id. at 121.

229. Lin, supra note 36, 1405-412.

230. Lobsinger, supra note 21, at 119.

nine modern terrorism-related dangers identified by the FATF is the creation of terrorist front organizations as legitimate NGOs.231

Despite the apparent weakness and ineffectiveness of economic sanctions, they remain an excellent alternative to military force. When properly collaborated, nation-wide sanctions can be an effective deterrent policy, as seen when sanction dissuaded both South Korea and Taiwan from their pursuit of nuclear weaponry in the 1970s and reversed a coup in Paraguay in 1996. 232

Although sanctions may be an effective policy choice, sometimes they are not given enough time to be successful. 233 Moreover, as shown by sanctions against Russia and Cuba, even when sanctions are given time, they are not always effective in achieving the desired policy goals. Despite the poor track record of sanctions, they remain popular because they are a “powerful expression of disagreement” with the target country’s policies and allow government leaders to show the electorate that they are taking action rather than doing nothing.234

There is an ideological rift between those who see unilateral economic sanctions as efficient and helpful in achieving foreign policy goals and those who find sanctions to be ineffective or counterproductive. 235 According to an analysis of the 54 U.S. unilateral economic sanction cases between 1970 and 2014, success was only achieved in eleven cases.236

Overall, only a third of economic sanctions are estimated to be successful, with success defined as making a significant contribution to substantial achievement of foreign policy outcomes sought by the sanction imposing country. 237

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