Terror financing unabated from Arab countries

Nine years after the United States vowed to shut down the money pipeline that finances terrorism, senior Obama administration officials say they believe that many millions of dollars are flowing largely unimpeded to extremist groups worldwide, and they have grown frustrated by frequent resistance from allies in the Middle East, according to secret diplomatic dispatches.

The government cables, sent by secretary of state Hillary  Clinton and senior state department officials, catalog a list of methods that American officials suspect terrorist financiers are using, including a brazen bank robbery in Yemen last year, kidnappings for ransom, the harvesting of drug proceeds in Afghanistan and fund-raising at religious pilgrimages to Mecca, where millions of riyals or other forms of currency change hands.

While American officials have publicly been relatively upbeat about their progress in disrupting terrorist financing, the internal state department cables, obtained by WikiLeaks and made available to several news organisations, offer a more pessimistic account, with blunt assessments of the threats to the US from money flowing to militants affiliated with Al Qaeda, the Taliban, Hamas, Lashkar-e-Taiba and other groups.

A classified memo sent by Hillary Clinton last December made it clear that residents of Saudi Arabia and its neighbours, all allies of the US, are the chief financial supporters of many extremist activities. “It has been an ongoing challenge to persuade Saudi officials to treat terrorist financing emanating from Saudi Arabia as a strategic priority,” the cable said, concluding that “donors in Saudi Arabia constitute the most significant source of funding to Sunni terrorist groups worldwide.”

The dispatch and others offered similarly grim views about the United Arab Emirates (‘a strategic gap’ that terrorists can exploit), Qatar (‘the worst in the region’ on counterterrorism) and Kuwait (‘a key transit point’). The cable stressed the need to ‘generate the political will necessary’ to block money to terrorist networks — groups that she said were ‘threatening stability in Pakistan and Afghanistan and targeting coalition soldiers.’

While President George W Bush frequently vowed to cut off financing for militants and pledged to make financiers as culpable as terrorists who carried out plots, President Obama has been far less vocal on the issue publicly as he has sought to adopt a more conciliatory tone with Arab nations. But his administration has used many of the same covert diplomatic, intelligence and law enforcement tools as his predecessor and set up a special task force in the summer of 2009 to deal with the growing problem.

While federal officials can point to some successes — prosecutions, seizures of money and tightened money-laundering regulations in foreign countries , the results have often been frustrating, the cables show. As the US has pushed for more aggressive crackdowns on suspected supporters of terrorism, foreign leaders have pushed back. In private meetings, they have accused American officials of heavy-handedness and of presenting thin evidence of wrongdoing by Arab charities or individuals, according to numerous cables.

The documents are filled with government intelligence on possible terrorist-financing plots, like the case of a Somali preacher who was reportedly touring Sweden, Finland and Norway last year to look for money and recruits for the Shabab, a militant group in Somalia, or that of a Pakistani driver caught with about $240,000 worth of Saudi riyals stuffed behind his seat.

One episode that set off particular concern occurred in August 2009 in Yemen, when armed robbers stormed a bank truck on a busy downtown street in Aden during daylight hours and stole 100 million Yemeni riyals, or about $500,000. American diplomats said the sophistication of the robbery and other indicators had all the markings of a Qaeda mission. “This bold, unusual operation” could provide Al Qaeda “with a substantial financing infusion at a time when it is thought to be short of cash,” a dispatch summarising the episode said.

American officials appear to have divided views on the bin Laden group’s fund-raising abilities. A February cable to Richard C Holbrooke, the administration’s special representative for Afghanistan and Pakistan, said that “sensitive reporting indicates that al-Qaida’s ability to raise funds has deteriorated substantially, and that it is now in its weakest state since 9/11.”

But many other cables draw the opposite conclusion and cite the group’s ability to generate money almost at will from wealthy individuals and sympathetic groups throughout the Middle East while often staying a step ahead of counterterrorism officials.

“Terrorists avoid money transfer controls by transferring amounts below reporting thresholds and using reliable cash couriers, hawala, and money grams,” a recent cable warned. “Emerging trends include mobile banking, pre-paid cards, and Internet banking.”

“U.K. financing is important, but the real money is in the Gulf,” a senior British counterterrorism official told a Treasury Department official, according to a cable last year from the American Embassy in London.

Unregulated charities

In hundreds of cables focusing on terrorist financing, the problem takes on an air of intractability, as American officials speak of the seeming ease with which terrorists are able to move money, the low cost of carrying out deadly attacks, and the difficulty of stopping it. Interdictions are few, and resistance is frequent.

In Kuwait, for instance, American officials have voiced repeated concerns that Islamic charities are largely unregulated by the government there and are using philanthropic donations to finance terrorism abroad. But a Kuwaiti minister, in a meeting last year with the United States ambassador, “was as frank and pessimistic as ever when it came to the subject of apprehending and detaining terror financiers and facilitators under Kuwait’s current legal and political framework,” a memo summarising the meeting said.

Saudi Arabia, a critical military and diplomatic ally, emerges in the cables as the most vexing of problems. Intelligence officials there have stepped up their spying on militants in neighbouring Yemen, and they provided the tip that helped uncover the recent parcel bombs. But while the Saudis have made some progress, “terrorist funding emanating from Saudi Arabia remains a serious concern,” according to a cable in February.

Behind the scenes at diplomatic encounters, tensions have occasionally flared. In 2007, a senior Bush administration official, Frances Fragos Townsend, told her Saudi counterparts in Riyadh that Bush was ‘quite concerned’ about the level of cooperation from the Saudis, and she brought a personal letter on the subject from the president to King Abdullah, according to a cable summarising the exchange.

Ms. Townsend questioned whether the kingdom’s ambassador to the Philippines, Mohammed Ameen Wali, might be involved in supporting terrorism because of his involvement with two people suspected of being financiers, the summary said.

Prince Saud al-Faisal, the Saudi foreign minister, challenged the assertion, however, saying the ambassador might be guilty of “bad judgment rather than intentional support for terrorism.” Saudi leaders appear equally resigned to the situation, according to the cables. “We are trying to do our best,” Prince Mohammed bin Nayef, who leads the Saudis’ anti-terrorism activities, was quoted as telling Holbrooke, the special representative to the region, in a May 2009 meeting.