Why Do Firms Fund Terrorism?

• In Event: Political Economy of Conflict

Abstract

Why do mainstream actors choose to support violent extremist movements? This question is critical for understanding wartime mobilization and fighting against global violent extremism. This study
provides an answer by examining the behavior of private sector firms, particularly their financial backing of radical Islamic militant groups, which
are among the most significant violent global movements. Our comprehensive analyses evaluate hypotheses related to ideological alignment, economic strategic considerations, and the coercion by militant groups.
We collected extensive data on firms from Afghanistan, Iran, Iraq, Kuwait, Mali, Pakistan, Palestinian Territories, Saudi Arabia, Sudan, Syria, Turkey, and the United Arab Emirates, using the Orbis database. We examined these companies' public records to determine who funded radical Islamic
groups and when, referencing the OFAC sanction list from the U.S. Department of Treasury. By applying advanced geospatial techniques, we correlated firm behavior with highly localized factors such as ethno-religious compositions, sector-specific resources, stakeholder networks, and local government regulations. These factors were then mapped against the territorial control and violent attacks of extremist groups to infer the motivations and incentives behind the financial support provided by the firms.
This study enhances the academic comprehension of wartime mobilization and the incentives for mainstream entities to support extremist actors. It
pioneers the use of large-scale quantitative data to decipher the financial networks of violent extremists, a topic previously limited to qualitative analysis. Consequently, this research offers significant insights for global counter-insurgency and counter-terrorism strategies, emphasizing the importance of severing material support channels to combat extremism.

Authors

• Sadaf Vafa, University of California, Los Angeles (UCLA)

• Luwei Ying, University of California, Los Angeles