Nonprofits concerned with the impact of counterterrorism programs on charities were briefed on the larger context of the "financial war on terror" by Professor Ibrahim Warde, author of the new book The Price of Fear, at an Oct. 19 luncheon in Washington, DC. Warde argued that the series of financial crackdowns initiated by the U.S. government since the attacks of Sept. 11, 2001, have had virtually no impact on terrorism because they are based on a fundamental misconception of how terrorism works. He proposed reforms that would avoid collateral damage, including the negative impact on charitable programs. Warde opened his presentation with a history of how U.S. financial sanctions programs were expanded by President Bush after 9/11 to first target Al Qaeda, then Hamas and Hezbollah, followed by remittance networks (hawalas) and mainstream Islamic charities in the U.S. These sanctions were often used indiscriminately, causing collateral damage with "political, social and economic consequences that have nothing to do with terrorism, but which may endanger American's national interests and the security of the world in the long term." As an example, Warde cited the November 2001 closure of Al-Barakaat, an international remittance and telecommunications company, which was accused of sending $15-25 million a year to Al Qaeda. The closure was announced with great fanfare by President Bush, but the accusations were later disproved, and the company was exonerated. Warde also said closure of charities has been counterproductive, as it has been perceived as attacking Islam or picking on the poor and defenseless; Warde said this kind of collateral damage only increases terrorist support networks. Addressing the role of money in spreading terrorism, Warde said U.S. policy is driven by the false assumption that "money is the lifeblood of terror." He said, "If money is the oxygen of terror, and if the financial war on terror is such a success, how could we explain that since 9/11, international terrorist attacks have increased substantially (+56% in 2003, +300% in 2004, +400% in 2005, +40% in 2006), and that the main targets of the financial war (Al-Qaeda, Hamas and Hezbollah) have proven so resilient?" Warde said the actual cost of carrying out terrorist attacks is low, citing Scotland Yard estimates that the 2005 London subway bombings cost less than $1,000. The assumption that there is a finite stash of terrorist money is unfounded, he said, noting the myth that Osama bin Laden has $300 million has been proven to be false (bin Laden had been disinherited by his family and his assets in Sudan were seized by the government prior to 9/11). Instead, "money will appear whenever there is support for terror," making the battle for hearts and minds the right priority. The political aspects of the economic sanctions system are also criticized by Warde, who says sanctions appear to be a costless way of impacting other governments without military intervention, but their use has escalated to the point of diminishing returns. Often, action is the result of frustration. However, the collateral damage is rarely considered, where average people suffer but rulers are strengthened. The bureaucratic factor is another overlooked aspect of the financial war on terror. Use of the flawed "crime for profit" template in the ideologically-driven terrorist context has built anti-money laundering bureaucracies and led to cultural and linguistic dysfunctions when strategies applied to Latin American drug lords are applied to Islamic terrorists. Instead, Warde said the sanctions system should differentiate between money laundering (dirty money being "cleaned") and money soiling (clean money given to terrorists). Warde told the group reforms are possible if false assumptions can be addressed and there is a better understanding of different financial cultures. He proposed more emphasis on winning hearts and minds and better integration of terrorist financing policies with overall foreign policy goals. Quoting the 9/11 Commission report, Warde said, "There was almost no intersection between those who understood financial issues and those who understood terrorism."