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The Price of Fear: The Truth behind the Financial War on Terror

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Much has been written about the current war on terror that tends to be polemical rather than analytical. Entrenched opposition to one political view or another usually mars most academic or popular writing on the matter. It is thus refreshing to read a book which takes a very strong position but only after careful and dispassionate scrutiny of the facts. Ibrahim Warde is eminently suited to write this monograph on the financial aspects of the war on terror and its ramifications, given his experience in working on business transactions and Islamic finance across the Middle East. Warde is fluent in Arabic, English and French and has worked on this theme for over a decade as a consultant and a researcher at MIT and Tufts. The book shows how well the author can craft a narrative for an academic audience as well as for a business clientele or for the general public. Each chapter is preceded with insightful quotations and the text is peppered with substantiated anecdotes and examples.

The Price of Fear makes a clear case for how policy-makers can very easily be led astray by fear in their scrutiny of financial assets. Money becomes the focus of attention because there is an implicit assumption that war is expensive and numbers give the false allure of accuracy. What the analysts fail to appreciate is that only organized military warfare is expensive and much of the informal militancy that characterizes Al Qaeda is cheap and hence financing is hardly consequential. For example, the London bombings of 2005 that killed 52 civilians cost less than $1,000; the Madrid train bombings that killed almost 200 people cost less than $10,000; and even a devastating attack like September 11, cost less than half a million dollars in total planning and implementation expenditure.

Why then was so much of the attention after this national tragedy focused on Islamic financial networks? Starting with the usually quoted figure for the total assets of Osama bin Laden, the frequently cited estimate of $300 million Warde deconstructs the process by which this estimate was achieved and proves how it is wildly exaggerated. He then lays out a detailed ethnography of how a sense of panic spurred by individual politicians and influential analysts led to so many dead-end trails on the hunt for Al-Qaeda's finances. Warde also holds journalists culpable for this march to no avail. For example, he documents how Washington Post journalist Douglas Farah hypothesized with scant evidence that gold and diamonds were a supposed mechanism for money laundering by Al-Qaeda and the 9/11 commission had to eventually admit that this was a highly unlikely source of revenues for the organization.

Such actions could be exonerated as precautionary strategies if they did not adversely impact community relations or have a major adverse financial impact. But unfortunately the analysis suggests that the financial war on terror met with "catastrophic success" in terms of paralyzing genuine charities, souring relations between the West and the Muslim world and reducing the efficiency of our law enforcement. It is important to note however, that Warde recognizes that the finances of countries such as Iran or Iraq do merit scrutiny because they have the potential to finance much larger scale military expenditures. However, his analysis focuses on the micro-level financial war that was waged after 9/11. As the author concludes: "the formidable array of forces, combined with a near total absence of scrutiny, explains why financial warriors have generally chosen to err on the side of recklessness."