Infrastructure and resources are the legs of any terror group if it wishes to operate; be it to buy arms and ammunitions, train its recruits or carry out terror attacks. This is where finances play a crucial role.

When it comes to global Islamic funding of militancy in Kashmir, the list runs deep. Foremost on the list is Pakistan. Journalist Stephen Schwartz has noted that several terrorist groups are “backed by senior officers in the Pakistani army, the country’s Inter-Services Intelligence (ISI) establishment and other armed bodies of the state.”  The ISI gets its funds from the sale of drugs that its own agents sell abroad and those acquired from the Taliban. In fact, the unholy nexus between the ISI and the Afghan Taliban holds a place of pride.

The Taliban is the proxy of the Pakistan Deep State. The Afghan President, Ashraf Ghani, in 2018 declared that the “centre of Taliban terrorism is in Pakistan.” In other words, the Taliban serves as the ISI’s handle through which it sponsors terrorism. “Opium, taxes and extortion” are the chief instruments through which the Taliban makes money- $200m a year as of 2019. Poppy in Afghanistan grows mostly in lands controlled by the Taliban which earns money via taxes it imposes on its production. It collects 10% “cultivation tax” from opium farmers, a significant chunk from laboratories which cook opium into heroin, and another hefty sum from traffickers who smuggle the drugs to Europe and the US. The profits earned is then channeled through Pakistan and routed through various Islamic philanthropic groups to various Indian Islamic terror organizations. ISI has sleeper cells in various parts of the country which on receiving these funds hand it over to terror groups to carry out their militant activities in Kashmir. Money is also routed through hawala channels to terrorist organizations for carrying out their operations.

It is believed that the yearly expenditure of the ISI towards terrorist organizations stands between $125-250 million, and includes “salaries, cash incentives for high-risk operations and retainers for guides, porters and informers.”

Another major source of funding separatist and militant activities in J&K is the sophisticated network between terrorists and organised crime. Money made from diverting exploits through trafficking of arms and ammunition, drugs and counterfeiting, ends up with terrorist groups. Under the ISI’s bidding, Khalistani terror outfits, based out of Pakistan, regularly smuggle weapons and drugs into India’s Punjab to support Kashmiri extremists.[1] Narcotics are smuggled into India from Pakistan in various ways; sometimes by hiding it in sacks of rock salt. The process is carried out through a network of ‘importers, customs agents, and transporters’ while the operation is financed by international hawala channels.

Charities are another important source of terror funding. For instance, Lashkar-e-Taiba (LeT) and its Pakistan-based political wing, the Jamaat-ud-Dawa, use funds collected by their charity outfit, the Falah-e-Insaniat Foundation, to carry out their missions. The Pakistani diaspora in the Middle East, England and elsewhere around the world and even Pakistani businessmen contribute in millions to charities seeking to fund jihad. There are collection tills in shops around Pakistan for the ordinary man to contribute money to the “freedom cause” in Kashmir.

In recent times, both Saudi Arabia and the UAE have endorsed India on the Kashmir issue. In fact, it was recently revealed that terror mastermind, Masood Azhar, during his trip to the UK to collect funds for Kashmiri militants (he collected Rs 15 lakhs in Pakistani currency from various mosques) got a “very poor response” from Saudi Arabia and other Arab nations who were not sympathetic to the “Kashmir cause.” That said, it is untrue that both these nations are not keen on Kashmir. [2]

On the contrary, there appears to be a new kind of religious proxy war taking place which has raised hackles among military officials in Kashmir: the worrisome rise in the number of opulent mosques and madrassas controlled by Wahhabi groups in Kashmir; all funded by oil money from Saudi and the Gulf nations. The number of Wahhabi-controlled mosques has increased by leaps and bounds in the last 10-15 years, almost doubling from about 1,000 to about 2,000. 

These mosques and seminaries promote Wahhabism in the Valley, which has been Saudi Arabia’s practiced faith for over 200 years. It “insists on a literal interpretation of the Quran” and considers all those who don’t believe and practice it, as infidels. As a result of this influence, young Kashmiris instead of seeking ‘azadi’ are now fighting for the establishment of an Islamic Caliphate in Kashmir.

“If a traditional mosque comes up in two to three years, the funding for these Wahhabi controlled mosques is such that they are completed within six months and with lot of investment to attract the youngsters who can be potential recruits for terrorists in the future,” the sources said. [3]

Ahle Hadith mosques are considered to be more radical than Sufi shrines. Its followers grow beards, wear skull caps and don pants which end slightly above the ankle.

As opposed to Saudi Arabia, Turkey and Iran view the Kashmiri cause as nationalist instead of religious. Turkey’s President, Erdogan, who seeks to emerge as a Pan-Islamic leader and build closer ties with Pakistan, has made it his political agenda  “to claim our righteous causes, especially Palestine, Cyprus and Kashmir.” He recently likened Kashmir to the Turkish struggle for Gallipoli during World War I, when he said, “It was Canakkale yesterday, and it is Kashmir today. There is no difference.”

Iran has always stayed away from the proxy war waged by Pakistan in India. However, in a rare departure, its Supreme leader Ayatollah Khamenei recently tweeted, “We’re concerned about Muslims’ situation in Kashmir. We have good relations with India, but we expect the Indian government to adopt a just policy towards the noble people of Kashmir and prevent the oppression & bullying of Muslims in this region.”[4]

In 2017, Khamenei had compared Kashmir to Bahrain and Yemen, asking the Muslim world to “support people of these regions.” Iran’s government also believes that “Muslims of Kashmir must be able to use their legal rights and interests to be able to live in peace.” This is not surprising given the strong religious connect between Shias in J&K and Kargil with Iran. Many Shia Muslims in Kashmir regard the Ayatollah as “their boss.” Shia leaders in Srinagar have long confirmed that people and institutions in Iran fund activities in Kashmir. To them it is “not Iran’s money,” but “religious money distributed for religious purposes.” With Iran’s help, the Shias of Kargil have instituted the Imam Khomeini Memorial Trust, a “politically influential” outfit, which keeps Indian officials worried.

Malaysia too continues to ally with Pakistan, having provided shelter to Zakir Naik (the extremist Indian Islamic preacher alleged to be the mastermind behind the Sri Lanka Easter blasts in 2019) on Pakistan’s request. Pakistan channels funds for Naik through Qatar and Turkey, while Naik continues to operate multiple Qatari accounts to collect the same. But with improving trade ties between Malaysia and Delhi in recent times, it remains to be seen what the final equation between the two nations will be.

Kashmir is thus the epicentre for a “global race for influence.” It remains to be seen how this plays out: either as armed proxy conflicts or arming of separatists in the region.

Meanwhile, the latest edition of Nawai Afghan Jihad, the online publication of al-Qaeda in the Indian Subcontinent (AQIS), stated that it plans to rename itself Nawai Ghazwa-e-Hind, asserting the terrorist group’s decision to focus on India, especially Kashmir.


[1] Zee News Exclusive: How drugs and Khalistan movement are intermingled; Germany new base for ISI-sponsored Khalistan operations

[2] India Today article “Masood Azhar travelled to UK, Gulf, Africa to collect funds for Kashmiri militants

[3] India Today article by Ajit Kumar Dubey “Jammu and Kashmir: Wahabi-controlled mosques on the rise, security forces tightening vigil

[4] Article in The Week by Mandira Nayar “Iran’s Ayatollah Khamenei says India should stop ‘massacre of Muslims’

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