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Arun Kumar, in his book on Black Economy in India, says drug profits have been used to finance terrorism in the South, the North-East, Punjab and Kashmir. Pakistan’s involvement in Narco-Terrorism dates back to the era of Soviet intervention in Afghanistan. President Zia’s involvement in the narcotics trade is an open secret and he diverted some proceeds of this income towards funding the Kashmir ‘Jehad’ which continued even after his death. Narcotic smugglers based in Pakistan and controlled by ISI are reported to have earnings of over US $ 2.5 billion. According to a UNDP report, Pakistan’s heroin industry is estimated to have a turnover of US $ 74 billion. In early 1991, Pakistani Prime Minister Nawaz Sharief is learnt to have said that the Pakistani Army Chief and the ISI Chief proposed a detailed ‘blueprint’ for selling heroin to pay for the country’s covert military operations.
Extortion has emerged as a major source of terrorist funding. Police and Intelligence agencies believe that most businessmen, shopkeepers, government employees, contractors, especially those dealing in timber and persons with the sound financial background are easy targets. They have bought peace by coughing up, as and when extortion demands are made. During 1990-95, Rs. 7.30 crore was looted by terrorists to fund their activities. Needless to say, estimates of extortion funds are impossible but could run into several crores of rupees per year.
This system has been in existence for a long time in India and other Asian countries. In India, it is known as hawala, in Pakistan as hundi, in China fei Qian (flying money), and the Philippines as black-market peso exchange. 23 It is one of the important methods of terrorist funding in Kashmir and is known as the underground or parallel-banking channel.
To be continued.........