The Boston Marathon Bombing

On April 15th, two bombs exploded near the finish line of the Boston Marathon. Three people died and 282 were injured. The bombings occurred about two hours after the winner crossed the finish line; at that point, approximately 5,700 runners were still in the race. The first bomb detonated on Boylston Street near Copley Square; a second device about a block away exploded approximately 13 seconds later. The bombs were improvised explosive devices loaded with bbs and small nails, designed to maim.

A massive manhunt ensued. Within three days, the two bombers were identified. Dzhokhar and Tamerlan Tsarnaev, brothers, were accused of the attack. Both were immigrants from Kyrgyzstan and ethnic Chechens. Dzhokhar was an American citizen and Tamerlan was a permanent resident. On the evening of April 18th, after the two had killed an MIT police officer, a car chase and gun battle ensued and the older brother, Tamerlan, was killed. Dzhokhar was captured late the following day after eluding a tight dragnet that had been in place for most of the 19th.

The attack horrified the nation and dominated the news media. There was a scramble to determine who was involved and their motivations. This was the first terrorist bombing in the U.S. since 9/11 and the first with widespread social media and smart phones. There was a virtual round-the-clock flow of information, speculation and video. In the end, though it required a massive manhunt, the two bombers were no longer at large.

In this report, given the extensive media coverage of the event, we will not go into much detail on the attack itself except to illustrate points about the origins of the act. Instead, we will attempt to put this attack into context, focusing on al Qaeda and the evolution of Islamic-inspired terrorism. We will discuss why we think the Boston Marathon Bombing was the work of grassroots amateurs and what that means for the nation’s security. We will touch on how humans become radicalized and how managing that condition challenges democracies. As always, we will examine the ramifications of this event on the financial and commodity markets.

The Classes of al Qaeda

We believe there are three classes of al Qaeda/Islamic-inspired terrorism. This classification excludes clearly state-sponsored groups, such as Hezbollah. The first class is core al Qaeda. This group represents “professional” transnational terrorist operatives. These are the best trained, most vetted members of al Qaeda. In its prime, al Qaeda was training thousands of would-be Islamic terrorists in Afghanistan. Only a few dozen or so would be included in this group.

The core developed during the Soviet occupation of Afghanistan. Osama bin Laden and his cohorts became familiar with the CIA, ISI and other national intelligence groups. They were taught their tradecraft by these intelligence professionals.

They learned that these intelligence agencies regularly penetrated groups; core al Qaeda worked hard to maintain operational security by only allowing completely devoted and secure members into this select group. This is how al Qaeda was able to pull off the attacks of 9/11. The key leaders were not well known by the intelligence agencies and the operatives that conducted the operation were able to assemble their teams and ensure that if a cell was compromised, then the entire operation would not be lost. The “muscle” in the attacks likely had no idea who was ultimately in charge.

The problem for core al Qaeda is that it is hard to rebuild a group and maintain operational security. After the U.S. invaded Afghanistan and began to systematically eliminate or detain members, the core shrank and could not rebuild. In addition, the persistence of drone attacks and the monitoring of electronic communication have rendered the remaining parts of the core mostly harmless. Osama bin Laden is dead and his replacement, Ayman al-Zawahiri, is likely holed up in the lawless region between Pakistan and Afghanistan, occasionally publishing videotapes, trying to avoid detection and becoming irrelevant.

The second group is regional al Qaeda. Currently, there are al Qaeda groups in North Africa and the Arabian Peninsula, and perhaps an emerging group in western Iraq and eastern Syria. Although these regional groups have adopted the name al Qaeda, there is no operational allegiance with core al Qaeda. They are not as well trained as the core. Regional al Qaeda tends to be a loose affiliation of tribal groups, religious leaders and fellow travelers. Although they appear to be able to produce sophisticated communications (the group on the Arabian Peninsula published the online magazine Inspire which was allegedly used by Tamerlan Tsarnaev), the regional groups have less operational security and are not as potent as the core. This doesn’t mean they cannot be deadly. The recent attacks in Algeria and Mali came from groups allegedly affiliated with al Qaeda in the Maghreb. For the most part, however, these regional groups are much less transnational. Instead, they tend to focus on regional concerns.

Amateur al Qaeda is the third level of the group. These are also called “grassroots” terrorists. They are often radicalized citizens of developed countries. As the intelligence agencies have improved their surveillance, it has become increasingly difficult for core al Qaeda to send professional operatives into developed nations. Given how long it takes to train a core al Qaeda member and how hard they are to replace, it makes little sense to risk travel to the U.S. or Europe unless the need and payoff were very great. At the same time, the regional al Qaeda groups have little interest in attacking the developed world. First, they tend not to view those attacks as important to their regional goals, and second, they have observed what happened to the core leadership in Afghanistan and have likely concluded that triggering an attack from a developed Western nation makes little sense.

Thus, the best avenue for al Qeada is to create “home grown” terrorists. To foster this development, potential attackers must be radicalized in place. This means finding young men (it’s almost always young men), getting them in touch with radical religious beliefs, and encouraging them to take action.

This shift by al Qaeda makes sense, as it adapts to Western security changes. The shift does change the nature of the terrorist threat. The Mershon Center for International Security at Ohio State indicates there have been 52 documented cases of Islamic-inspired amateur plots since 9/11 (the Boston Marathon Bombing is the 53rd). Of these 52, only one was successful. Major Nidal Malik Hasan went on a shooting rampage in November 2009 at Fort Hood, Texas. He killed 13 and wounded 29 in the worst shooting to occur on a U.S. military base.

The other 51 cases have failed for a variety of reasons. The majority of these failed attempts were planning attacks that wildly exceeded the capabilities of the conspirators. They were hoping to cause massive damage similar to the 9/11 attack and simply didn’t have the manpower, means or planning to execute their goals. In many cases, law enforcement or antiterrorist officers were able to penetrate the group and render it harmless. In several cases, law enforcement provided the “bomb” which was, of course, a dud. They were often painfully inept, building bombs that could not explode or reaching out to fellow “jihadists” who turned out to be either informants or government agents masquerading as terrorists. Simply put, their operational security was poor.

Essentially, the U.S. has not suffered an earlier attack because of good police and counterterrorism work and due to the lack of skill, training and mental capacity of the perpetrators. Most Americans have not been aware of the constant nature of these attacks because of their persistent lack of success.

Why the Tsarnaevs’ Plan Worked

The Tsarnaevs’ plan worked for two reasons. First, they picked a target and plan that matched their rather meager resources and talents. Although the media has painstakingly tried to trace the elder brother’s spiral into radical jihadism, especially looking for ties to either core or regional al Qaeda, we suspect the Tsarnaevs were amateurs and their jihadist mentors were for inspiration and not hands-on instruction. Although the bombs they built were semi-sophisticated (it appears they used remote control car guidance toys to detonate the IEDs), “recipes” for such weapons are readily available. Assuming they tested their bombs, they did so in such a way as to not be detected. Or, it is quite possible the actual bombing was the first time the brothers had actually exploded an IED. They knew their target; by waiting two hours after the winner finished, they avoided two sweeps of bomb-sniffing dogs that would have thwarted their plans. The bombs they built were designed to terrorize, not kill. The high number of wounded to killed suggests the bombs were created to frighten people by causing a high number of wounded. And, perhaps most importantly, it appears that no one outside of the two brothers knew of the plan (or, if someone did, they clearly didn’t talk). Unlike nearly all previous amateur events since 9/11, the Tsarnaevs maintained operational security. In summary, the keys to the Tsarnaevs’ success were a plot equal to their skills, a reasonably well planned attack, and operational security.

However, once the plot was executed, their amateur status became evident. They had no escape plan; it seems they were relying on a car that was being repaired and wasn’t ready. Apparently, they hadn’t accounted for that circumstance. Their lack of funds meant they couldn’t acquire other means to flee. They made no serious attempt to disguise their identities beyond hats and sunglasses, apparently not realizing that security cameras were in place or taking the ubiquitous smartphone into account. Thus, within a couple of days, their images were everywhere. A professional would have boarded a plane and disappeared.

From there, the Tsarnaevs’ lack of tradecraft brought more problems. They shot Sean Collier, a 26-year-old MIT campus police officer, execution style, apparently to obtain his weapon, not realizing that most police now have locking systems that make it difficult to take a police pistol from an officer. They carjacked and abducted a citizen in an “express kidnapping,” where perpetrators take a person to quickly acquire cash and a vehicle. However, instead of killing the man, they let him go free. They compounded the problem when the abductee left his cell phone in the vehicle. Once he contacted authorities the police were able to use the phone to track the vehicle. Shortly thereafter a gun battle ensued. Tamerlan was killed (the fatal blow may have occurred when Dzhokhar ran over him in the stolen car in an attempt to flee) and Dzhokhar escaped but was wounded.

Over the next day, an intensive manhunt initially missed Dzhokhar but a homeowner noticed blood on his boat; after peeking inside, he discovered Dzhokhar. The police converged and after a short gunfight (which was apparently one-sided as Dzhokhar was unarmed), the second perpetrator was captured.

The Mind of an Amateur Terrorist

What makes a person who has lived in the West for most of his/her life, who has not suffered directly at the hand of an oppressive regime, become radicalized? There are a number of studies that describe the characteristics of such a person. In nearly every case, they are young men in their 20s, an age where many such persons are adrift socially and economically. In many cases, they have not found a career or a romantic partner; too old for school but not old enough to “be a man.”

However, these studies are nothing more than descriptive and are not terribly helpful. After all, society cannot monitor or arrest every person in this category. It appears to us that the problem of terrorism is really part of human nature. We believe all humans, because of consciousness, try to create a sense of meaning to their lives and experiences. This sense of meaning generally builds from a set of first principles which describe a person’s world view. Unfortunately, these first principles are, at their core, positions of faith, meaning they cannot be proven. Prior to the Enlightenment, the West generally believed these first principles were products of revelation; God or some other superior being informed humans of these first principles. The Enlightenment thinkers wanted to subject first principles to reason; however, as David Hume and the British Skeptics showed, reason isn’t up to the task. Essentially, first principles are derived from reason, either inductive or deductive. Inductive reason (observation of a sample to project expressions of general beliefs) fails on two grounds. First, the proposition holds only until a counterexample is discovered (no black swans until a black swan is discovered), and second, that the observer of the observation is biased (humans experience events through the senses and tend to structure these experiences by first principles, leading to circular reasoning). Deduction fails because all deductions are tautologies (A=A statements, true, but inconsequential).

At their heart, first principles are accepted but cannot be easily disproven once accepted. To a truly committed believer, once the first tenet is accepted, the rest that follows is simply logic. Logic flaws that sometimes flow from a believer are quickly encountered and adjusted, but they rarely cause a “loss of faith.” Think of it this way: when Thomas Jefferson wrote, “We hold these truths to be self-evident…,” that is a statement of faith. No truths of consequence are self-evident; they are either accepted or they are not.

Once the mind accepts a first principle, the process begins. Once Tamerlan accepted the idea of radical Islam, the progression started. Can a person change his/her world view? Of course. Unfortunately, it is hard to change a world view because it requires a renunciation of earlier held beliefs.

The Challenge for Democracies

A key part of Western democracies is freedom of thought. The U.S. fosters a free press and, unlike totalitarian societies, allows people to believe all sorts of things as long as they allow others the same freedom. In America, there is a plethora of beliefs; the Constitution did not establish a state religion on purpose. By not establishing a state religion, the U.S. has always had broad religious and intellectual diversification.

Despite wide differences, for the most part, America is mostly peaceful. However, as some philosophers have noted, to attain this degree of harmony, all first principles tend to be held in equal regard. This condition is quite difficult for “true believers” because making all ideas equal means none are superior. Some zealots will rebel against such equality and resort to violence.

Democracies want to foster freedom of thought but have to offer some degree of security from the zealots. Having strong and perhaps unorthodox thoughts are protected; taking those thoughts to cause violence is prohibited. The trick is how much surveillance and other preventive measures must a democracy do to prevent a zealot from crossing the line into terrorism? Or, how much government intrusion can be allowed for security?

Perhaps one of the more disturbing elements of the Boston Marathon Bombing was the “crowd sourcing” part of the investigation. Thousands of would-be investigators were sending comments, pictures and rumors around the internet. At least one case of mistaken identity occurred that may have triggered a suicide. One of the elements of being a state is that its citizens give the official law enforcement a monopoly on violence. Twitter, Reddit, et al., have introduced an element of vigilante justice that may be hard to control and may lead to further government intrusion.

To paraphrase Jesus, “…the terrorists you will always have with you.” The cost of a free society is that some of those who turn from zealots to terrorists will be able to inflict damage. However, such problems plague totalitarian societies as well. China has been trying to squelch the Folon Gong for years with mixed success. To some extent, the oft-derided “war on terrorism” that President Bush incompletely named, has had some success. The real name should have been the “war on professional terrorism.” By containing core al Qaeda, the group is restricted to inspiring wannabe terrorists with limited skills and low odds of success.

However, it would be foolhardy to expect al Qaeda to give up. Media organizations like Inspire are working on two themes for would-be radicals. First, keep your plans and goals aligned with your skills and resources. A random shooting at a mall is more likely to be successful than a grandiose plan to destroy the Gateway Arch. Second, “everyone” should engage in such attacks. What al Qaeda cannot do anymore is the big attack; dozens of small attacks can still terrorize the West. Will many of these plans come to fruition? As recent history has shown, no. Most will fail. But this is all that al Qaeda has left.

And so, the West will need to adjust to this reality. It will mean more counterterrorism activities, closer monitoring of social media and the internet, and some erosion of civil liberties. For most Americans, the occasional indignity of the TSA search is the most significant cost. After reading that one bomber was trying to booby trap a baby carriage, it likely explains why some airport security were so insistent about inspecting carriages for a while. The challenge is to do just enough effective intrusion to keep people safe without creating a less free society. Finding that balance will be quite difficult.

There has been a persistent debate on how best to react to terrorism. Conservatives have tended to lean toward militarizing the response, whereas liberals have sided with law enforcement. We tend to believe neither is appropriate. Militarizing the conflict, especially against domestic targets, has the potential to seriously undermine civil liberties to the point of losing America’s character while trying to save it. Taking a law enforcement approach fails because law enforcement tends to be reactive; it gets involved after the act. Instead, a true counterterrorist effort should be in place, where a specific group monitors domestic activity with the goal of prevention. In the U.K., MI-6 is the group that works against outside threats while MI-5 is given the mandate to protect the domestic population from terrorism. Currently, the FBI and the Department of Homeland Security share the counterterrorism job but both also have other tasks as well. Creating a group solely for counterterrorism would probably make more sense.


In general, financial markets took the Boston Marathon Bombing in stride. There was some equity market weakness but once it was clear that this bombing wasn’t due to a widespread conspiracy, markets recovered. Nations that have faced persistent terrorist acts, like the U.K. from the IRA and Israel from the PLO, Hezbollah and Fatah, learn to adapt. But, the more these occur, the less impact they will have on the markets.

Bill O’Grady

April 29, 2013

This report was prepared by Bill O’Grady of Confluence Investment Management LLC and reflects the current opinion 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.

© Confluence Investment Management

© Confluence Investment Management

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