Usually, we mark the anniversary of the events of 9/11 with some reflections on that fateful day.  The attacks on American soil were the most profound since the Japanese bombing of Pearl Harbor, and caused the Bush administration to turn full stop.  Candidate George W. Bush campaigned against nation-building.  As president, after 9/11, he found himself engaged in nation-building in Afghanistan and eventually in Iraq.  In the aftermath of these wars and the continuing operations against jihadist terrorists, the debate on methods and success continues.

In the past, we have discussed lessons learned from 9/11 by the U.S. and the West.  However, on this 11^th anniversary, we will turn the tables and discuss lessons that could be taken away by terrorists.  Simply put, various terrorists groups are watching how al Qaeda has fared since 2001 and can draw lessons from that outcome.  In theory, they could use these lessons to determine future paths to success. 

In this report, we will outline potential lessons learned over the past 11 years by terrorist groups.  By doing this, we hope to outline how terrorists might act in the future.  As always, we will conclude with potential market ramifications.

#1.  Grand geopolitical goals don’t work.

One of the major goals that al Qaeda wanted to fulfill from the operations on 9/11 was to create a situation where the Arab monarchies and authoritarian regimes would be removed from power and replaced with Islamist governments.  Osama bin Laden anticipated two outcomes.  Either the U.S. would not react strongly because American leaders feared a conflict, or the U.S. would lash out and be perceived as attacking the Islamic world.  If the first outcome occurred, it would prove that America was weak; thus, the Arab governments that relied on the U.S. for protection would be vulnerable.  Al Qaeda would thus argue that it was safe to rise up against these Arab governments because the U.S. wouldn’t come to their aid.

In fact, the second outcome is what occurred.  Although there were demonstrations against the U.S. for attacking Afghanistan, the governments in the region remained secure.  Al Qaeda was able to establish franchise operations on the Arabian Peninsula but these were eventually destroyed by the Saudi security services.  An al Qaeda operation also developed in Iraq during the war, but eventually the U.S. was able to enlist local Sunnis to end that threat. 

Interestingly enough, an uprising against these regimes did occur last year.  The “Arab Spring” led to the ouster of governments in Libya, Egypt, Tunisia and, perhaps, in Syria.  These movements were less focused than al Qaeda and much more democratic.  It is still unclear what the outcome will be in these nations, but the Arab Spring had little to do with bin Laden’s   unified, global vision for change. 

   

Instead, the Arab Spring movement was more organic, focused on individual nations and was fueled by social media. 

 

Being focused on a specific local goal appears to be more successful.  The Taliban was ousted from power in Afghanistan because they refused to turn over Osama bin Laden and his leadership to the U.S. in 2001.  The Taliban simply wants to create an Islamic state in Afghanistan.  While al Qaeda’s leadership is in shambles, the Taliban remains intact.  After NATO troops leave Afghanistan in the coming years, there is a good chance that the Taliban will emerge as a power center in the country.  The Taliban has shown little interest in bringing the Islamic cause outside of its country of interest and it appears that this strategy is more successful.

#2.  A tight organizational structure ensures operational security but leaves a group vulnerable to attrition.

A key reason for al Qaeda’s success was the fact that it wasn’t penetrated by Western intelligence agencies.  These agencies knew of the group and perceived them as dangerous, but without anyone on the inside they were left to react to al Qaeda’s planning.  Although the CIA and FBI were criticized for missing clues to al Qaeda’s plans, in reality, it would have been nearly impossible to connect all these dots without knowledge of the plans.  For example, if the FBI’s chain of command would have passed on the information that Arab flight students were showing no interest in learning how to land aircraft, it would have signaled some sort of problem.  However, connecting that information to commandeering aircraft to fly into the Pentagon and the World Trade Center would have been a stretch.  In fact, not wanting to learn how to land isn’t a crime; it was one of the few mistakes al Qaeda made in its conspiracy.

The problem for intelligence agencies isn’t the lack of information, it’s the overwhelming amount of it.  Without the guidance of specific intelligence from an insider, it is hard to determine which intelligence is useful and which is noise. 

Osama bin Laden and his comrades had firsthand knowledge of how Western intelligence agencies operated during their contact with them in Afghanistan.  Al Qaeda was unusually careful about who was allowed to join the group.  Because they weren’t penetrated, the attacks on 9/11 took place. 

In the aftermath, as the U.S. attacked al Qaeda’s stronghold in Afghanistan and, with the cooperation of other nation’s intelligence agencies, was able to detain other members, al Qaeda suffered serious losses of personnel.  Their vetting process didn’t allow them to rebuild and slowly their operational capacity deteriorated.  The assassination of Osama bin Laden last year has clearly weakened the group. 

On the other hand, other franchise groups have adopted the al Qaeda moniker.  They have attempted a number of attacks; a few in Europe have been successful but, over time, they have become increasingly less of a threat.  Intelligence agencies have been able to penetrate virtually all of these groups since 2005.  In addition, many of these groups have become more aspirational than effective.  A number have been downright amateurish in their planning and execution; they have practiced assaults at paintball facilities and created bombs that had little chance of detonating.

What al Qaeda’s organizational expertise showed is that a closed system can be very effective for a significant operation, but it usually can’t survive over the long run.  At the same time, not having a closed system lowers the likelihood of success. 

#3.  It’s hard to win a war of attrition against a superpower.

Over the past 11 years, there have been reports of how little al Qaeda expended to attack New York and Washington (around $450k, according to the FBI) compared to the billions spent on the Afghan War and in beefing up domestic security operations.  This led members of al Qaeda to boast that even rumors of attacks caused the West to spend money to counter these fears.  Surely, they figured, the West would eventually go broke trying to counter these threats.

Apparently not.  Although some commentators have argued that the two wars of the last decade precipitated the 2008 financial crash, we think the evidence suggests that, at most, these wars were a minor contributing factor.  In our opinion, the most critical problem is our inability to operate our economy in a fashion consistent with our superpower obligations; the wars over the last decade are a small facet of this issue.  There is no doubt the costs from 9/11 are high, but Western economies are big and dynamic enough to cope.  In addition, through their control of the financial “plumbing,” the West was able to undermine al Qaeda’s funding flows.

An insurgent group that uses terrorism to achieve its goals usually wins if the incumbent power decides the costs of quashing the group are too high.  If an incumbent power believes that any compromise will undermine its hold on power, terrorism usually fails to bring change.  A good example of this is the persistent terrorism of the Kurdistan Workers Party (PKK ) against Turkey.  Since the government believes giving the Kurds autonomy might lead to the dissolution of the state, the Turkish government has dealt harshly with radical Kurds.  In contrast, the Irish Republican Army (IRA) was able to bring the British to the bargaining table mostly because the U.K. government decided that the costs of destroying the IRA exceeded the benefits.  The negotiated settlement kept Northern Ireland in the U.K. and ended the conflict. 

In general, for the incumbent power, it comes down to a cost-benefit analysis.  If the state threatened by a terrorist group is determined enough, it usually has more available resources to prevent the terrorists from winning.  Al Qaeda perceived the U.S. as weak, citing the withdrawal of Marines from Lebanon after the 1983 Beirut Bombing, the exit from Somalia in 1994 and the eventual loss of Vietnam.  In fact, al Qaeda probably overestimated its military prowess after the Afghan-Soviet War, thinking its fighting was more important than the support it received from others.  What Osama bin Laden didn’t expect was that the U.S. would prove to be such a determined opponent.  The key issue is whether or not the U.S. believes a threat is mortal.  If it is perceived as such, the U.S. tends to have staying power (the Cold War is perhaps the best example of this).  But, the U.S. has numerous interests around the world and some of them are simply not critical enough to expend significant resources.  What Osama bin Laden viewed as lack of resolve, in general, was really the U.S. determining the essential issues compared to ancillary ones.

#4.  All politics is local.

Insurgencies exist by drawing resources from the local population.  Unrest usually develops because the government in place is unpopular with the local population.  Although a terrorist group can threaten the locals to support their insurgency, such actions tend to weaken support over the long term.  An insurgency usually develops because citizens aren’t happy with the government, but if the insurgents don’t treat the local population any better than the government, the latter has more resources to woo the locals and isolate the rebels.

In Iraq, al Qaeda treated the local Sunni tribes poorly, insisting on strict Sharia laws which alienated the tribesmen.  The 2008 surge worked because the U.S. was able to sway the local Sunnis away from al Qaeda.  From there, the Sunnis became allies of U.S. troops and al Qaeda in Iraq was annihilated. 

Osama bin Laden had warned against harsh treatment of local citizens but, in their religious ardor, jihadist insurgents have this habit of trying to force their religious views on the locals.  This situation is currently being seen in Africa as well, especially in Nigeria.  Ultimately, such behavior makes unnecessary enemies.

Ramifications

The events of 9/11 have affected both the U.S. and its enemies.  One of the key lessons one should take from any event is not just what you learn but what your adversaries learn as well.  This helps prepare one for the next attack.  Anytime we remove our shoes as we go through security at an airport we are reminded that bureaucrats, like generals, always prepare for the last war. 

Instead, the model of successful insurgencies are those that are locally focused, closed enough to avoid penetration but not so closed as to preclude growth, treat the local population well and avoid any action that really upsets the United States.  Such an insurgency has the chance to gain control of a failed state, assuming it isn’t all that important to U.S. interests.  The fall of al Qaeda suggests that the U.S. should be more concerned with the local branch of the Muslim Brotherhood, the IRA or Kurdish radicals who may undermine an ally.  However, international jihadism is probably less of a threat due to the reaction it brought from the United States.

 

Bill O’Grady                  

September 17, 2012

 

This report was prepared by Bill O’Grady of Confluence Investment Management LLC and reflects the current opinions of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.

 

 

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http://www.confluenceinvestment.com/