In May, a Russian programmer was sentenced to more than 5 years in prison in the Netherlands for creating the crypto mixer Tornado Cash. According to the court, the platform helped launder a staggering $12 billion for terrorist purposes. In recent years, cryptocurrency has emerged as a key financial tool for terrorist groups, and terrorism itself increasingly resembles a business project, complete with sponsors, earnings strategies, quasi-tax systems, investments, and a global financial network. Contrary to stereotypes, terrorists are not impoverished savages — university-educated individuals are in high demand within these organizations.
Main expenses: weapons, salaries, and pensions
Hundreds of millions, sometimes billions, of dollars flow through terrorist organizations annually. These sums might seem excessive for relatively small extremist groups, but terrorism is far from an inexpensive enterprise. Apart from the obvious — expenses on equipment and weaponry, which cost millions of dollars each year — the largest expenditure for terrorist groups is the salaries of their members. In addition to regular compensation, terrorists may also receive various benefits, including bonuses and pensions. For instance, the Palestinian Authority’s “Martyrs Fund,” associated with terrorist groups like Hamas, provides monthly payments to “all who were imprisoned due to their participation in the struggle against the occupation,” and it does so both during incarceration and after release. It also makes payments to the families of those killed in the “struggle against the occupation.”
In addition to salaries, terrorists receive also receive various benefits, including bonuses and pensions
Hamas terrorists earn an average of $375 per month during imprisonment, comparable to the official average salary in Gaza. However, they can earn up to $3,000 per month, depending on the duration of imprisonment and the severity of the crime. Annually, the Palestinian Authority spends hundreds of millions of dollars on these payments, sometimes nearly 10% of its total budget.
In Hezbollah, terrorists can earn around $1,000 a month, while the median monthly income in Lebanon is only $120. A similar pattern is observed in territories controlled by the Islamic State (ISIS), where rank-and-file fighters earn twice as much as soldiers in the Syrian army. Doctors who pledge allegiance to (and then go to work for) the terrorists earn nearly $1,000 a month, seven times the income of state doctors. Overall, ISIS’s monthly salary expenses are estimated at $5–$10 million.
In Hezbollah, terrorists can earn around $1,000 a month, while the median monthly income in Lebanon is only $120
The high salaries are justified not only by the significant risks “employees” take, but also by the overall qualifications of the terrorists. Researchers from Princeton University found that 87% of terrorists were middle class or above in their country of origin, 96% had at least a secondary education, and more than half were university graduates.
The flag of the Islamic State over the customs office at the Syrian border crossing of Jarablus, August 1, 2015.
Source: Murad Sezer / Reuters
Economist Alan Krueger explains that terrorism could be seen as an extremely radical and violent form of political engagement. More educated individuals from privileged backgrounds are more likely to engage in politics, which requires a minimal level of interest, experience, and concern for social issues.
Moreover, terrorist groups prefer to recruit more educated, mature, and experienced people, as they make for more effective killers and are better able to blend into foreign environments in order to carry out terrorist acts.
Voluntary (and not so voluntary) sponsors
According to researchers, governments are the main sponsors of terrorists, secretly allocating hundreds of millions of dollars to support such organizations for political purposes. By backing proxy forces, these countries can pursue their agendas indirectly, maintaining plausible deniability when these groups engage in violence.
Some states have openly admitted to supporting terrorists, later calling it a mistake. For example, the Pakistani government acknowledged creating and fostering terrorist groups as a tool to achieve tactical goals, such as waging a proxy war with India over the strategically important territory of Kashmir. Iran is particularly active in this area, using mercenaries to intervene in civil wars in Syria and Iraq in an effort to counter American interests. Alongside Hamas, the Palestinian Islamic Jihad, and the Lebanese group Hezbollah, Iran forms a self-described “axis of resistance” against Israel.