It’s the Petrodollars Stupid

You need money or someone else with money, i.e., a charity, to get a weapon. Understanding terrorism is that simple. Yet cabinet member and UN czar Susan Rice, who is advising the president, is wrong in thinking that poverty is the cause. In real life, terrorism begins with petrodollars and charities and the most fundamental Islamic faith, Wahhabism.

After 9/11, U.S. News & World Report did a five-month investigation into terrorism financing. “Over the past 25 years, the desert kingdom [of Saudi Arabia] has been the single greatest force in spreading Islamic fundamentalism, while its huge, unregulated charities funneled hundreds of millions of dollars to jihad groups and al Qaeda cells around the world.” The report continues: “Key to this evangelical tour de force were charities closely tied to Saudi Arabia’s ruling elite and top clerics. With names like the Muslim World League and its affiliate, the International Islamic Relief Organization, the funds spent billions more to spread Wahhabism.”

The report notes that “from 1975 through last year [2002], the kingdom spent over $70 billion on overseas aid, according to a study of official sources by the Center for Security Policy, a Washington think tank. More than two thirds of that amount went to ‘Islamic activities’-building mosques, religious schools, and Wahhabi religious centers, says the CSP’s Alex Alexiev, a former CIA consultant on ethnic and religious conflict. The Saudi funding program, Alexiev says, is ‘the largest worldwide propaganda campaign ever mounted’-dwarfing the Soviets’ propaganda efforts at the height of the Cold War. The Saudi weekly Ain al-Yaqeen last year reported the cost as ‘astronomical’ and boasted of the results: some 1,500 mosques, 210 Islamic centers, 202 colleges, and nearly 2,000 schools in non-Islamic countries.”

Global consumption of oil has increased 40% since the 1970s. In 2008, Saudi Arabia’s petrodollars increased to $285 billion, or one third of OPEC receipts. And 70% of our oil demand is for transportation. We can put a major dent in terrorism by replacing foreign oil with the likes of natural gas or fuel cells.

Money makes terrorism tick. Al Qaeda is going to move on to wherever it can wreak havoc and fight the holy wars. Countries with dysfunctional governments are a haven. Intelligence officials say al Qaeda fighters fled to Yemen this summer from Afghanistan and Pakistan. Terrorist activity is picking up in Somalia; on October 28, Islamic militants linked to al Qaeda fired mortars into the airport as the country’s president was boarding a plane, killing 24 people.

President Obama, in a speech this summer in Cairo, failed to make the link between oil and terrorism. Instead, Washington continues to look the other way, following the policy of the Bush administration and those before it. We can take terrorism head on by eliminating foreign oil and essentially mopping up billions in petrodollars a year. We have the resources to survive without foreign oil, but we need a government that understands the relationship between petrodollars and terrorism.

E.J. Smith is Managing Director of Richard C. Young & Co., Ltd. an investment advisory firm managing portfolios for investors with over $1,000,000 in investable assets

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E.J. Smith is the Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH, where he completed course-work in Practical and Defensive Handgun, Conceal Carry Pistol, Shotguns, Precision Scope Rifle and Kidnapping Prevention. E.J. plays a Yamaha Recording Custom drum set with Zilldjian cymbals. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com. Sign up here to receive all the best content from Richardcyoung.com each week.