Last week in San Jose, Attorney General Michael Mukasey made the claim that piracy is funding terrorism. “Counterfeiting and piracy generate huge profits, much of it flowing to organized crime” he said at the Tech Museum of Innovation. “Criminal syndicates, and in some cases even terrorist groups, view IP crime as a lucrative business, and see it as a low-risk way to fund other activities.”

Mukasey was widely criticized for this statement, partly because everyone is so bored of this administration using terrorism as an excuse for all kinds of ass-hattery, but mostly because he didn’t have any evidence to back up his claim. But he’s not the first person to say this, and he’s probably right, at least in part.

The revenue streams that fund terrorist organizations are both legitimate and dishonest, not to mention diverse, and trickle through complex financial networks that make Bear Stearns hedge funds look as sophisticated as a lemonade stands. Along with drugs, prostitution, slavery, identity theft, smuggling and all other forms of organized crime, it’s very likely that organized for-profit piracy is a source of funding for a number of terrorist outfits. Piracy is a low-risk illicit activity that can help all kinds of shady businesses save money. Why wouldn’t the terrrists be getting into it?

So ignoring, for a second, the poppy fields of Afghanistan, the flow of money from the oil industry, state sponsorship of terror, blood diamonds, the diversion of funds from suspect charities and all the other vastly more significant capers that fund terrorism, let’s assume piracy is the most threatening of all freedom-hating cash cows. If pirated software, DVDs and CDs are such a grave threat to Western civilization, then what Mukasey is really saying, without actually saying it, is that in the interests of national security and the American economy, not to mention freedom, peace and justice for all, we need to legalize file-sharing right now.

As Nate Anderson notes over at Ars Technica, General Mukasey “managed to make it through an entire speech on crime and intellectual property without suggesting that noncommercial P2P file-swappers are somehow equivalent to criminal gangs running huge Asian stamping operations.” Read between the lines people. What I think Mukasey is trying to tell us, without upsetting the RIAA, is that file-sharers are the good guys here. Freedom fighters. What he’s insinuating is that rendering pirate goods irrelevant by monetizing and legitimizing digital distribution in all its forms is a way to quash terrorist threats.

If we can use digital distribution legally the way we are using it anyway, who needs $5 DVDs and bootleg copies of XP? (no one wants to pirate Vista, which isn’t something Microsoft should be too excited about) Prohibition style wars don’t work, this we know. Repealing prohibition got rid of the racketeers in the 1930s, so by Mukasey’s logic, monetizing file-sharing should take care of the terrorists right?

I feel safer already.