Looking for our new site?

Counterterrorism Strategy Initiative Policy Paper

Financing the Taliban

Tracing the Dollars Behind the Insurgencies in Afghanistan and Pakistan
  • By Catherine Collins with Ashraf Ali
April 19, 2010 |

AAMIR QURESHI/AFP/Getty

Go to 'Battle for Pakistan' home

Insurgent forces in Afghanistan and Pakistan cannot survive on ideology alone, but depend on two inextricable resources -- money and manpower. Unless the United States and its partners can significantly reduce the amount of money available to pay and arm Taliban foot soldiers, there will be little chance of defeating the insurgency and developing the necessary stability to allow Afghanistan to stand on its own and Pakistan to maintain its fragile democracy. Meeting this critical objective demands understanding the broad nature of how the insurgency is financed on both sides of the border to identify the points at which pressure can be applied to reduce the financial resources and ultimately starve the Taliban and its associates of the funds they need to continue the fight.

So far, the record on the financial front has not been encouraging. Interviews with military intelligence officers, U.S. Drug Enforcement Administration officials, international regulators, outside experts, and local officials produced a consensus view that no one really knows how much money is coming into the insurgency’s coffers or precisely where it’s coming from. The drug trade and ancillary crimes like protecting processing labs and collecting payoffs are regarded as the largest source of money, but estimates of the amount generated by these activities vary wildly, from a low of $70 million a year to a high of $500 million. The other significant funding source – donations from outside the countries – is equally murky. The Central Intelligence Agency estimated last year that foreign groups and individuals contributed $106 million.[i] But some federal investigators scoff at that figure, saying that the real total is difficult to determine because monitoring of the flow of money across the region is too lax to support any hard estimate.

The one element of the financial picture on which there is widespread agreement is that reducing the money to the militants is an essential pillar of the counterinsurgency campaign.[ii] The insurgency is not monolithic. Instead, it comprises several factions, each with its own leadership, goals, and means of financing operations.[iii] This factionalization of the insurgency is reflected in the variety of ways its members raise money. Richard Barrett, director of the Taliban and al-Qaeda monitoring team for the United Nations, said the Taliban and related groups should be seen as opportunistic when it comes to finances. “They are involved on a local level in anything that makes money,” he said. “They don’t choose drugs over something else. They just choose what is there.”[iv]

The drug trade is the most obvious example of the regional nature of the Taliban’s fundraising. The group is strongest in southern Afghanistan, its traditional home and the part of the country that produces most of the country’s opium poppies, which provide 90 percent of the world’s heroin.[v] Ties between the Taliban and the traffickers have become close in recent years, which means going after drug trafficking is essential to reducing the money available to the insurgents. The financial picture is different in the eastern part of the country, where poppy production is far smaller. The Haqqani Network, which is allied with both the Taliban and al-Qaeda, relies heavily on income from general criminal activities like extortion and kidnapping. Across the border in western Pakistan, the home base for the Pakistani Taliban and an outpost of the extended Haqqani Network, kidnapping and smuggling are seen as central to financing the militants. Al-Qaeda, whose core leadership is believed to be based in Pakistan’s unregulated tribal belt, receives little money from the drug trade and depends mostly on donors from the Persian Gulf area.[vi]

The United States and its allies have only recently begun to devote the resources required to have a chance of succeeding at disrupting the insurgency’s financing. One example of the new emphasis on the Taliban’s pocketbook is the Afghan Threat Finance Cell, or ATFC, an interagency operation set up in 2009 by the U.S. government to gather intelligence on how the insurgency finances its operations and how to shut down its money supplies. In another signal of the new recognition of the importance of money to the insurgency, the U.S. military last year received permission to go after drug traffickers with proven links to the insurgency, a sharp reversal of the Pentagon’s policy of paying little attention to the upper levels of Afghanistan’s narcotics trade. 

For the policy paper, click here. Collins presented this paper at the New America Foundation on April 19, 2010.

Catherine Collins is the co-author of The Man From Pakistan (2008) and a forthcoming book on nuclear proliferation and the CIA. Ashraf Ali, a Pashtun journalist who used to work with the BBC, is the director of the FATA Research Center, an Islamabad-based think tank.


[i] Craig Whitlock, “Diverse Sources Fund Insurgency In Afghanistan,” Washington Post, September 27, 2009.
[ii] Telephone interview with Kirk Meyer, an official of the U.S. Drug Enforcement Administration, who directs the Afghan Threat Finance Cell, an interagency operation established last year by the United States to gather intelligence on how the insurgency finances its operations and how to shut down its money supplies. The ATFC operates out of Kabul and Bagram Air Base. CC (Catherine Collins)
[iii] Gen. Stanley A. McChrystal, commander, NATO International Security Assistance Force, Afghanistan, “Commander's Initial Assessment,” August 30, 2009, p. 2-8.
[iv] Telephone interview with Richard Barrett. CC
[v] United Nations Office on Drugs and Crime, “Afghanistan: Opium Survey 2009,” December, 2009.
[vi] Eric Schmidt, “Diverse Sources Pour Cash Into Taliban’s War Chest,” New York Times, October 19, 2009.
The resurgence of the Taliban and affiliated militant groups has been financed primarily by drug money and related crimes. The Haqqani Network relies heavily on income from general criminal activities like extortion and kidnapping. Across the border in western Pakistan, the home base for the Pakistani Taliban and an outpost of the extended Haqqani Network, kidnapping and smuggling are seen as central to financing the militants. Al-Qaeda receives little money from the drug trade and depends mostly on donors from the Persian Gulf area.

Related Files