Taking Hand-Outs or Going It Alone: Nationalization versus Privatization in the Funding of Islamist Terrorist Groups

Abstract

This article explores the consequences for the funding of Islamist terrorist groups of nationalization, in the form of state sponsorship, versus privatization, in the form of autonomous financing. The article begins by examining the evolution in terrorist groups’ sources of funding from state sponsorship to autonomous activity, then turns to the benefits and costs to terrorist groups of relying on state sponsors. The article then analyzes the benefits and costs of procuring funding autonomously. Finally, the article weighs those benefits and costs in relation to a terrorist group's emphasis on enhancing its constituency versus pursuing its agenda. The article's central conclusion is that nationalization tends to boost a terrorist group's constituency while privatization tends to bolster a group's agenda. Determining which advantage takes priority depends on the relative importance to a given terrorist group at a particular time of enhancing its constituency versus advancing its agenda.