THE POLITICAL ECONOMY OF MIDDLE EAST TERRORISM by Matthew A. Levitt*
Political terrorism has long been a key feature of Middle Eastern politics given the high degree of conflict, relative ineffectiveness of direct military means, ideological rationalizations, and willingness of states to sponsor such activities. The aftermath of the September 11, 2001 attacks on the United States and the subsequent American war against terrorism have focused attention on the financing of such movements and operations. The lines of political influence follow those of economic assistance. This article analyzes the state of knowledge regarding this issue.
Political terrorism, often sponsored by admitted that the terrorists were unable to states, has long been a major factor in purchase sufficient material to build as Middle East politics. Terrorist groups' large a bomb as they had intended because ability to act more frequently and they lacked cash. In fact, the operation effectively is closely linked to financing. itself was rushed and carried out earlier Such patronage today, however, is than planned because the cell simply ran proportionately less in the hands of state out of money. In the end, the terrorists' sponsors. While Iran and Syria continue to attempt to reclaim the deposit fee on the back international terrorism, groups rental truck used to transport the bomb increasingly finance their own activities provided a key break in the case.(3) through a network of charitable and The al-Qa'ida suicide hijackings humanitarian organizations, criminal underscored the post-blast, investigative enterprises, front companies, illicit and utility of tracking the money trail, but they unregulated banking systems, and the also drove home the critical need to personal wealth of individual militant preemptively deny terrorists the funds they Islamists. This article highlights the need to conduct their attacks. Early network of sub-state actors that, on their financial leads in the September 11 own and in concert with state and other investigation established direct links sponsors, finance such movements and between the hijackers of the four flights activities.(1) and identified co-conspirators, leading The synchronized suicide attacks of investigators to logistical and financial September 11 highlighted the critical role support cells in Germany and elsewhere in financial and logistical support networks Europe as well as in the Gulf. Financial play in the operations of international leads led investigators to key al-Qa'ida terrorist organizations. According to the operatives and moneymen such as Ramzi FBI, the attacks cost between $303,672 and Bin al-Shibh in Germany and Mustafa $500,000.(2) In contrast, after his capture Ahmed al-Hasnawi in the United Arab in 1995, Ramzi Yusif, the convicted Emirates. Financial analysis provided mastermind behind the 1993 bombing of some of the earliest evidence proving the the World Trade Center and other attacks, synchronized suicide hijackings were an al-
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Qa'ida operation, and linked the German funds to and among terrorist groups. cell, the hijackers, and Zakarias Mussawi. Combined with the unprecedented law Wire transfers between Mussawi and Bin enforcement and intelligence effort to al-Shibh played a crucial role leading to apprehend terrorist operatives worldwide, Mussawi's indictment for his role in the which constricts the space in which attacks. Financial investigation also terrorists can operate, cracking down on established links between Mussawi and terrorist financing denies terrorists the members of the al-Qa’ida associated cell of means to travel, communicate, procure Jama'a al-Islamiyya terrorists arrested in equipment, and conduct attacks. Malaysia.(4) Effective though it may be, stemming THE MATRIX OF INTERNATIONAL the flow of terrorist financing will not TERRORISM stamp out terrorism. In fact, unlike Polio Contrary to conventional wisdom-- or Small Pox, terrorism cannot be which pigeon-holes al-Qa'ida in one box eradicated. There will always be and Hizballah, Hamas, Iran and Syria in grievances, causes, conditions that, coupled boxes of their own--militant Islamic groups with a healthy dose of evil, will lead people from al-Qa'ida to Hamas interact and to target civilian noncombatants for support one another in a matrix of political purposes or even as a means in international logistical, financial and itself. The primary responsibility of all sometimes operational terrorist activity. states, however, is to protect their citizenry, State sponsors of terrorism, particularly and to that end it is incumbent upon all Iran and Syria, are similarly woven into the states to employ the full range of fabric of militant Islamist terrorism. For protective, deterrent, and preventive example, many of the patrons of al-Qa'ida counter-terrorism measures available in an fund the suicide bombings and Qassam effort to provide for the security of its rockets of Hamas as well. International populace. The fact that terrorism cannot be terrorist groups do not operate in solitude. eliminated does not absolve states of the A task force on terrorist financing, responsibility to fight it as much as sponsored by the Council on Foreign possible. Relations, recently highlighted this In this regard, tackling terrorist interaction, noting: "Other Islamic terrorist financing represents a critical and effective organizations, Hamas and Hizballah tool both in reacting to terrorist attacks and specifically, often use the very same engaging in preemptive disruption efforts methods-and even the same institutions-[as to prevent future attacks. Often, as was the al-Qa'ida] to raise and move their money. case in the investigation of the September And more recently, published reports 11 attacks, financial transactions provide suggest that al-Qa'ida has formed the first and most concrete leads for additional tactical, ad-hoc alliances with investigators seeking to flush out the full these terrorist organizations to cooperate scope of a terrorist attack, including the on money laundering and other unlawful identities of the perpetrators, their logistical activities."(5) In fact, while there is no and financial support networks, and al- shortage of examples of operational and Qa'ida links to other terrorists, groups and logistical links between disparate militant accomplices. Since September, the U.S. Islamist groups, these interactions are most government has spearheaded a pervasive in the realm of financing. groundbreaking and comprehensive disruption operation to stem the flow of
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THE NETWORK OF TERRORIST organization through which wealthy Saudis FINANCING send millions of dollars to al-Qa'ida. Terrorism in the Middle East is financed In another example, Israeli authorities by an array of states, groups, fronts, arrested Usama Zuhadi Hamid Karika, a individuals, businesses, banks, criminal Hamas operative, as he attempted to leave enterprises and nominally humanitarian Gaza via the Rafah border crossing in organizations. December 2001. Karika was found with Terrorist Groups. Realistically, terrorist documents detailing the development of groups tend not to open bank accounts the Qassam rockets, and admitted that he under their organization's name, especially was on his way to Saudi Arabia to brief in the West. Nonetheless, there are in fact people on the development of the rockets cases, such as Hizballah in Lebanon, where and to obtain their funding for the project. groups operate openly and have accounts in Before his arrest, Karika had already made their own or other known names. Other one successful trip to Saudi Arabia where groups may boast of their links to such he secured initial funding for Hamas' groups. The Islamic Action Front (IAF) in Qassam rocket program.(7) In an Jordan and the Muslim Brotherhood in indication of the significant role played by Egypt openly state their support for Hamas, individual wealthy financiers in sponsoring and the IAF called for Arabs and Muslims terrorist operations, Treasury Department to donate funds to finance Hamas suicide Undersecretary for Enforcement Jimmy operations.(6) As such, they could be Gurule traveled to Europe in October 2002 subject to U.S. financial penalties with a list of about a dozen of al-Qa'ida's themselves despite the fact that they are not principal financial backers, mostly wealthy listed in any of the terrorist lists published Saudis, to persuade European counterparts by the United States or others. to designate them financiers of terrorism Individuals. A few wealthy individuals and block their assets."(8) are able to sponsor much terror. For Legitimate Business. Investigation into example, Mustafa Ahmad al-Hasnawi, a al-Qa'ida sleeper cells in Europe in the Saudi national and Bin Ladin moneyman, wake of September 11 revealed the sent the September 11 hijackers operational widespread use of legitimate businesses funds and received at least $15,000 in and employment by al-Qa'ida operatives to unspent funds before leaving the UAE for derive income to support both themselves Pakistan on September 11. U.S. officials and their activities. According to say that Yasin al-Qadi, a prominent Jidda congressional testimony by a senior FBI businessman and head of the Muwafaq official, a construction and plumbing Foundation, has supported a variety of company run by members of an al-Qa'ida terrorist groups from al-Qa'ida to Hamas. cell in Europe hired mujahadin (holy According to U.S. court documents, in warriors) arriving from places like Bosnia 1992 al-Qadi provided $27,000 to U.S.- where they had fought what they based Hamas leader Muhammad Salah and considered a Jihad (holy war). Cell lent $820,000 to a Hamas front members ran another business buying, organization in Chicago, the Quranic fixing and reselling used cars, and in these Literacy Institute (QLI). Based on their and other examples cell members deposited connection to Hamas, the U.S. government their legitimate salaries, government has frozen the assets of both Salah and subsidies, supplemental income from QLI. Similarly, U.S. officials maintain that family members, and terrorist funds the Muwafaq Foundation is a front received by cash or wire transfer into the
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same one or two accounts.(9) According to transferred between $40,000 and $50,000 the Lebanese state prosecutor, members of for weapons, expenses, and bomb-making an al-Qa'ida cell broken up there had materials to the Arab Bank account of funded their activities by buying and Nasser Aweis, a senior Fatah figure. In selling cars in Germany and discussed return, al-Maqda instructed Aweis to report establishing other business interests to back by telephone on the success of his cover the cell's activities.(10) attacks, such as the assault on the Hadera Legitimate employment offers terrorists banquet hall that resulted in the deaths of cover, livelihood, and, sometimes, useful six Israeli civilians.(16) international contacts. Muhammad Haydar The Arab Bank's links to terrorist Zammar, the Syrian-born German national financing, however, extend beyond the who recruited a number of the September Middle East. According to court 11 hijackers, worked at Tatex Trading. documents filed in Spain, an al-Qa'ida cell Tatex's director, Abd al-Matin Tatari, was charged with helping prepare the reportedly a member of the Syrian Muslim September 11 attacks and serving as a Brotherhood and one of its principal logistics hub and recruitment center used shareholders is Muhammad Majid Said, the Arab Bank to wire money from Spain director of Syria's General Intelligence to associates in Pakistan and Yemen.(17) Directorate from 1987 to 1994."(11) The cell includes Imad Eddin al-Yarkas Banking Systems. International and (Abu Dahdah), who discussed terrorist unofficial banking systems have also attacks on a telephone line tapped by played a role in terrorist financing. The Spanish intelligence.(18) Arab Bank was a special favorite for Beyond the official international funneling money used by Iran, Syria, and banking system, unofficial banking the Damascus headquarters of Hamas and systems and hawala are of particular PIJ to transfer funds for attacks to concern. The Treasury Department froze operatives in the West Bank.(12) For the assets of 62 organizations and example, Thabet Mardawi and Ali Saffuri, individuals associated with the al-Barakat two captured PIJ activists from the Jenin and al-Taqwa financial networks in area, revealed that they opened several November 2001. Federal agents raided bank accounts, some in their names and these groups' offices across the United others in the name of an elderly woman, States, and subsequently in Europe and the and that PIJ leaders in Damascus Bahamas as well. President Bush stated transferred funds into these accounts via that the two institutions provided the Arab Bank.(13) According to fundraising, financial, communications, Palestinian documents seized by Israel in weapons-procurement, and shipping the West Bank, Saudi organizations services for al-Qa'ida. A few months later, transfer money for organizations linked to Deputy Assistant Secretary of Treasury Hamas and the families of killed Juan C. Zarate told Congress that in 1997 Palestinians-including suicide bombers- $60 million collected for Hamas was through branches of the Arab Bank in the moved to accounts with Bank al- West Bank.(14) Taqwa.(19) Al-Taqwa shareholders In another example, Colonel Munir al- reportedly include known Hamas members Maqda, also known as Abu Hasan, used the and individuals associated with a variety of Arab Bank to funnel Iranian funds to organizations linked to al-Qa'ida. A 1996 Fatah's al-Aqsa Martyrs Brigades.(15) Italian intelligence report linked al-Taqwa Beginning in mid-2001, al-Maqda to Palestinian groups, the Algerian Armed
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Islamic Group (GIA) and the Egyptian Hizballah and other terrorist groups also Jama'at al- Islamiyya.(20) traffic narcotics in North America to fund In August 2002, the United States and their activities back in the Middle East. A Italy, in cooperation with the Bahamas and Drug Enforcement Agency (DEA) Luxembourg, designated 25 individuals investigation into a pseudoephedrine and institutions-including fourteen smuggling scam in the American Midwest businesses owned or controlled by Ahmed led investigators as far as Jordan, Yemen, Idris Nasraddin or Yusif Nada and linked Lebanon, and other Middle Eastern to al-Taqwa-as terrorist entities and countries, including bank accounts tied to blocked their assets.(21) The Treasury Hizballah and Hamas. DEA chief Asa Department announced that Bank al-Taqwa Hutchinson confirmed, "a significant "was established in 1988 with significant portion of some of the sales are sent to the backing from the Muslim Brotherhood" Middle East to benefit terrorist and financed groups such as Hamas, organizations."(27) A senior U.S. law Algeria's Islamic Salvation Front and enforcement official added, "There is a Armed Islamic Group, Tunisia's An- significant amount of money moved out of Nahda, and Usama Bin Ladin and his al- the United States attributed to fraud that Qa'ida organization.(22) goes to terrorism." Groups like al-Qa'ida Criminal Activity. Criminal enterprises and Hizballah also capitalize on black have also serviced the spread of terrorism market gold and diamond markets. One financing. Ahmad Omar Sayid al-Shaykh, official noted the "influx of hard-core convicted of the abduction and murder of Islamist extremists" in the Congo, Wall Street Journal Reporter Daniel Pearl, including those from Hizballah and other linked up with Aftab Ansari, a prominent groups, involved in diamond figure in the Indian mafia, to provide al- smuggling.(28) Qa'ida with recruits, false documents, safe- Smuggling, kidnapping and extortion houses and proceeds from kidnappings, are also well-established techniques drug trafficking, prostitution and other employed by terrorist groups. For crime.(23) Authorities in Belgium issued example, in June 2002, Muhammad and an arrest warrant for Victor Bout, a Chawki Hamud, two brothers involved in a notorious arms trafficker suspected of Hizballah support cell in Charlotte, North supplying weapons to the Taliban and al- Carolina, were found guilty of a variety of Qa'ida as well as warring factions charges including funding Hizballah throughout Africa in an elaborate guns-for- activities from the proceeds of an interstate diamonds scheme.(24) cigarette smuggling ring. Seven other Al-Qa'ida and Hizballah also raise defendants pled guilty to a variety of millions of dollars in drug money to charges stemming from this case, including support their operations. By one account, conspiracy to provide material support to al-Qa'ida raised as much as 35 percent of terrorists, cigarette smuggling, money its operating funds from the drug trade.(25) laundering and immigration violations. In Hizballah benefits from the drug business South America, Hizballah operatives in Lebanon, much as al-Qa'ida did from the engage in a wide range of criminal drug business in Afghanistan. Hizballah enterprises to raise, transfer and launder not only used the Biqa’a Valley's poppy funds in support of their terrorist activity. crop for funds, but also to buy support These activities include small-scale from Israeli Arabs ready to carry out businesses that engage in a few thousand operations.(26) dollars worth of business but transfer tens
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of thousands of dollars around the globe, charity organizations, those unknowingly mafia-style shakedowns of local Arab hijacked by terrorists who divert funds, and communities, and sophisticated import- others deliberately engaged in supporting export scams involving traders from India terrorist groups. Leaders of the latter and Hong Kong, to name just a few.(29) organizations raise funds both from Taking a page from Hizballah individuals purposely seeking to fund operatives in the Tri-border area (where terrorist groups as well as from innocent Paraguay, Brazil and Argentina meet), contributors unwitting of the groups' links Hamas and others fund themselves with the to terrorists. proceeds of pirated multimedia. Copying intellectual property brings in millions of Financing Terrorism dollars a year from "royalties" that terrorist Long before September 11, officials groups collect from criminals engaged in were aware that financial networks of the counterfeit multimedia business. charitable and humanitarian organizations Hamas, Fatah, and even senior members of were financing terror. Investigators the Palestinian Authority may participate in looking into the 1993 World Trade Center such activities.(30) attack traced funding for the operation back In the United States, law enforcement to a company that imported holy water officials are investigating a variety of from Mecca to Pakistan.(34) In 1997, criminal enterprises suspected of funding Canada cut all government funding to Middle East terrorist groups including the Human Concern International, a Canada- stealing and reselling of baby formula, based charity then under investigation in food stamp fraud, and scams involving both Canada and the United States for grocery coupons, welfare claims, credit terrorist connections.(35) Only afterward, cards and even unlicensed T-Shirts.(31) however, did the trend receive major U.S. officials believe "a substantial attention.(36) portion" of the estimated many millions of On December 14, 2001, federal officials dollars raised by Middle Eastern terrorist raided the offices of the Global Relief groups come from the $20 million to $30 Foundation in Chicago and froze its assets. million annual illicit scam industry in the NATO forces raided the group's offices in U.S.(32) Recent examples of such activity Kosovo a few days later after NATO was include an Arab-American in Detroit provided credible intelligence information caught smuggling $12 million in fraudulent regarding the group's alleged involvement cashiers' checks into the United States, and in planning attacks.(37) In 2001 alone, a fitness trainer in Boston accused of Global Relief raised more than $5 million providing customers' social security and in the United States. While much--perhaps credit card numbers to Abd al-Ghani most--of these funds likely went to Meskini, an associate of Ahmad Ressam, legitimate causes, investigators maintain the Algerian convicted of plotting to blow the organization served as an important up Los Angeles international airport in front for al-Qa'ida. International terrorism 2000.(33) investigations have raised further reason for concern. For example, according to CHARITABLE AND information provided by the Spanish HUMANITARIAN ORGANIZATIONS Interior Ministry, a senior Bin Ladin Humanitarian organizations present an financier arrested in Spain, Muhammad especially sensitive challenge, as Ghalib Kalaje Zuaydi, transferred funds to authorities must discern between legitimate several individuals linked to the Bin Ladon
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network, including $205,853 to the head of The assets of Ghalib Himmat have also the Global Relief office in Belgium, Nabil been frozen for links to terrorism. Sayadi (Abu Zaynab).(38) Himmat, reported in a German intelligence U.S. officials have described the al- report to have expressed "pleasure" over Wafa Humanitarian Organization-a major the news of the September 11 attacks, is a Saudi Arabian charitable organization-as a board member of the Geneva section of the key component of Bin Ladin's Kuwait-based International Islamic organization. One official said al-Wafa is Charitable Organization (IICO).(44) The among those charitable groups that "do a IICO's Palestine Charity Committee (PCC), small amount of legitimate humanitarian headed by Nadir al-Nuri, sends its funds work and raise a lot of money for through local committees, many of which equipment and weapons."(39) For are linked to Hamas.(45) Himmat is also example, Afghan police discovered an an executive of the al-Taqwa banking explosives' laboratory in a building network. occupied by al-Wafa's Kabul office prior to On December 4, 2001, the Bush the city's liberation from the Taliban.(40) administration exposed the Holy Land Abd al-Aziz, a Saudi citizen and senior al- Foundation for Relief and Development as Qa'ida official who was captured by U.S. a front organization for Hamas. Five days forces in Afghanistan, also allegedly before the September 11 attacks, the FBI financed al-Qa’ida activities through al- raided the offices and froze the assets of Wafa.(41) Infocom, an Internet company that shares The U.S. offices of a number of Saudi personnel, office space, and board organizations were also raided in Virginia members with the Holy Land Foundation. in March 2002, including the offices of the The two organizations were formed in SAAR Foundation, the Safa Trust, and the California around the same time, and both International Institute for Islamic Thought received seed money from Hamas leader (IIIT), most of which shared office space. Musa Abu Marzuk. According to its 2000 The SAAR Foundation had recently closed tax return, Holy Land Foundation's (HLF) but was of particular concern because of total revenue exceeded $13 million. In a the close links between the Saudi royal detailed 49-page memorandum, the U.S. family and its founder, Saudi banker government established that these funds Shaykh Sulayman Abd al- Aziz al-Rajhi were used by Hamas to support schools (initials SAAR). Tarik Hamdi, an IIIT and indoctrinate children to grow up into employee, personally provided Bin Ladin suicide bombers. Money raised by the Holy with the battery for the satellite phone Land Foundation was also used by Hamas prosecutors at the New York trial of the to recruit suicide bombers and to support East Africa Embassy bombers described as their families. The HLF relied heavily on "the phone bin Laden and others will use to local zakat (charity) committees in the carry out their war against the United West Bank and Gaza to funnel funds to States."(42) Both SAAR and IIIT are also Hamas. The FBI memorandum establishes suspected of financing Hamas and that known Hamas activists ran the zakat Palestinian Islamic Jihad through the committees. For example, the World and Islamic Studies Enterprise memorandum reported that a financial (WISE) and the Islamic Committee for analysis of HLF bank records indicated the Palestine (ICP), once PIJ fronts in Florida foundation donated over $70,000 to the but since closed.(43) Tulkarm zakat committee from 1997 through 1999. Among the senior Hamas
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members affiliated with the Tulkarm zakat several charities as fronts for the terrorist committee are Muhammad Hamid Qa'adan, group, including Mercy. Documents head of the Tulkarm zakat committee, and presented at the trial demonstrated that Ibrahim Muhammad Salim Salim Nir al- Mercy smuggled weapons from Somalia Shams, a member of both the Tulkarm into Kenya, and Abdullah Muhammad, one zakat committee and the Supreme Hamas of the Nairobi bombers, delivered eight leadership.(46) boxes of convicted al-Qa'ida operative Militant Islamist organizations like the Wadi al-Haji's belongings--including false Tulkarm zakat committee are funded by a documents and passports--to Mercy's wide array of international organizations, Kenya office. which frequently mask their support for Along with Mercy, the Kenyan Hamas as generic support for Palestinians. government also banned the International For example, in July 2002, the "Islam-on- Islamic Relief Organization (IIRO) after line" portal featured a special page the embassy bombings.(50) From 1986 to stressing the need to support Palestinian 1994, Bin Ladin's brother-in-law, armed struggle and glorifying suicide Muhammad Jamal Khalifa, headed the attacks but also the need to support youth IIRO's Philippine office, through which he education, social activity and economic channeled funds to terrorist groups assistance (which it defined as "economic affiliated with al-Qa'ida, including Abu Jihad").(47) The site provided a long list Sayyaf. In November and December 2001, of European, American, South African and Philippine police arrested four Arabs Arabic social organizations, which serve, associated with the Moro Islamic according to the site, as a channel to Liberation Front (MILF) and described transfer funds to recommended Palestinian them as an al-Qa'ida "sleeper cell." associations, many of which are directly Mohammad Sabri, one of the four men linked to Hamas.(48) arrested, is a Palestinian who, according to Philippine police, worked closely with Facilitating Terrorism Khalifa in running the IIRO office.(51) In Several charitable and humanitarian January 1999, Indian police foiled a plot to organizations have not only financed bomb the U.S. consulates in Calcutta and terrorist groups, but actively facilitated Madras. The mastermind behind the plot operations. According to a U.S. Defense was Sayid Abu Nasir, an IIRO employee Department official, interrogators in who received terrorist training in Afghanistan quickly realized that if Afghanistan.(52) In 2001, Canadian captured suspects say, "'I'm a humanitarian authorities detained Mahmud Jaballah aid worker caught up in the fighting,' they based on an Interpol warrant charging him likely have been through [military] with being an Egyptian Islamic Jihad training." The official continued, "That's terrorist. In 1999, Canadian officials the answer they were told to give [if attempted to deport Jaballah based on his captured]."(49) work for IIRO and what they described as Several humanitarian organizations, IIRO's involvement in terrorism and such as the Mercy International Relief fraud.(53) The IIRO came up in the Organization (Mercy), played central roles investigation into the September 11 attacks in the 1998 U.S. embassy bombings in as well: hijacker Fayez Ahmed reportedly Africa. At the New York trial of four men told his father he was going abroad to work convicted of involvement in the embassy for IIRO when he left for the suicide attacks, a former al-Qa'ida member named mission. Furthermore, documents seized by
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Israeli forces during recent operations in Journal reporter Daniel Pearl in Pakistan. the West Bank include records from the The attackers, linked to domestic Pakistani Tulkarm zakat committee, the same radical Islamic fundamentalist groups Hamas-controlled committee noted above, (including Jaish) operating in cooperation indicating that the IIRO donated at least with, and on behalf of, al-Qa'ida, held Pearl $280,000 to the Tulkarm zakat committee in a two-room hut in the compound of a and other Palestinian organizations linked commercial nursery owned by al-Rashid. to Hamas.(54) Several madrassas, or Islamic schools, Like many other Saudi humanitarian under construction dominate the immediate organizations, IIRO is part of the Muslim area around the nursery, the largest and World League, which is funded and closest of which is owned by al- supported by the Saudi government (in Rashid.(60) Pakistani investigators fact, the Muslim World League and IIRO uncovered twelve telephone calls placed by share offices in many locations one of the kidnappers, a rogue policeman worldwide).(55) A senior League official named Shaykh Adil, to an unidentified al- in Pakistan, Wael Hamza al-Jlaidan, is Rashid Trust employee.(61) In addition, a listed on the Treasury's terrorist financial British Internet site called the Global Jihad blocking order list.(56) In March 2002 the Fund, which openly associates itself with northern Virginia offices of both the IIRO Bin Ladin, provided bank account and Muslim World League were raided by information for al-Rashid and other fronts a Treasury Department task force searching and groups to "facilitate the growth of for evidence they were raising or various Jihad movements around the world laundering funds for al-Qa'ida, Hamas or by supplying them with funds to purchase PIJ.(57) Attempting to mask the League's their weapons."(62) radical agenda, League officials recently Last October, NATO forces raided the completed a U.S.-tour aimed at "improving Saudi High Commission for Aid to Bosnia, the image of Muslims among Americans," founded by Prince Selman bin Abd al-Aziz an admirable objective if not for the and supported by King Fahd. Among the group's established links to terrorist items found at the Saudi charity were organizations and proactive terrorist before-and-after photographs of the World financing.(58) Trade Center, U.S. embassies in Kenya and The Treasury Department has frozen the Tanzania, and the U.S.S. Cole; maps of assets of other Muslim World League government buildings in Washington; member organizations suspected of funding materials for forging U.S. State terrorism, including the Rabita Trust. Department badges; files on the use of crop Rabita, which U.S. officials say changed its duster aircraft; and anti-Semitic and anti- name to the Aid Organization of the American material geared toward children. Ulama, is based in Pakistan and actively Currently, an employee of the Saudi High raised funds for the Taliban from 1999 to Commission for Aid to Bosnia and another 2001.(59) cell member who was in telephone contact The al-Rashid Trust, another group that with Usama Bin Ladin aide and al-Qa'ida funded al-Qa'ida and the Taliban, is closely operational commander Abu Zubayda, as linked to the Jaish Muhammad terrorist well as four other Algerians are group (an organization also associated with incarcerated at Guantanamo Bay's Camp al-Qa'ida). Al-Rashid has been directly X-Ray for plotting an attack on the U.S. linked to the January 23, 2002, abduction embassy in Sarajevo. Authorities are now and subsequent murder of Wall Street trying to track down $41 million, which are
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missing from the commission's operating grounds, Arnaout was subsequently funds. charged in October 2002 with conspiracy In December, U.S. authorities raided the to provide material support to terrorists, Chicago offices of another Saudi-based among other charges.(67) Contrary to his charity, the Benevolence International statements and those of the foundation, Foundation. The foundation's videos and documents and cooperating witnesses have literature glorify martyrdom, and, indicated that Arnaout facilitated money according to the charity's newsletter, seven and weapons transfers for bin Ladin of its officers were killed in battle last year through the foundation and had a personal in Chechnya and Bosnia. In March 2002, relationship with both bin Ladin "and many Bosnian officials investigating foreign of [bin Ladin's] key associates dating back humanitarian organizations reported funds more than a decade."(68) In fact, Bin were missing from the Bosnian office of Ladin trusted Arnaout enough to allow him Benevolence International.(63) Also in to host one of Bin Ladin's wives at March, Bosnian police raided the offices of Arnaout's apartment in Pakistan where Bin an Islamic charity called Bosnian Ideal Ladin later picked her up. The foundation Future, which is the local name under was established by a wealthy Saudi and which Benevolence International operated Bin Ladin associate, Shaykh Adil Abdul in Bosnia. Officials seized weapons, plans Galil Betargy, who later transferred control for making bombs, booby-traps and false to Arnaout.(69) According to the passports.(64) This search also yielded an government's affidavit, senior al-Qa'ida al-Qa’ida organizational chart; notes on the operative Mamduh Salim (Abu Hajir) formation of al-Qa’ida by bin Ladin, traveled to Bosnia on documents signed by Azzam, and others; and "a list of wealthy Arnaout listing Salim as a director of the sponsors from Saudi Arabia,' including foundation.(70) Muhammad Bayazid, a references to bin Ladin.(65) A day later, bin Ladin operative involved in efforts to the U.S. Embassy in Bosnia was shut down obtain nuclear and chemical weapons for for four days, from March 20-24, after al-Qa'ida, listed the foundation's address as Bosnian officials informed the embassy of his residence in his application for a a possible threat. According to a Bosnian driver's license. official, Al-Qa'ida terrorists reportedly met in Sofia, Bulgaria, where they decided that DISRUPTING THE FLOW OF "in Sarajevo something will happen to TERRORIST FINANCING Americans similar to New York last Since September 11, 2001, the Bush September."(66) Two days before the administration has issued a series of Embassy reopened, Bosnian police arrested financial blocking orders targeting terrorist Munib Zahiragic, the head of the local groups, including terrorist organizations, Benevolence office and a former officer in front companies, and individuals. In total, the Bosnian Muslim secret police. the U.S. government has designated some In January 2002, BIF's bank accounts 191 individuals, organizations, and were blocked by the U.S. Treasury financial supporters of terrorism from Department. Then, on April 30, 2002, the around the world, including over $34 foundation's executive director, Enaam M. million in terrorist assets. Other nations Arnaout, was arrested on perjury charges have followed the U.S. lead. The Secretary for making false statements in a lawsuit of the Treasury reported that 150 against the U.S. government. Although "countries and jurisdictions" have blocking this charge was later dismissed on technical orders in force, and have blocked more
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than $70 million in assets.(71) According in Southeast Asia, told his interrogators to U.S. officials, intelligence information that al-Qa’ida operations in the region were indicates that terrorist operatives are funded through a branch of al-Haramain. finding it increasingly difficult to gain According to al-Faruq, "money was access to funds needed to escape the laundered through the foundation by international dragnet targeting them, donors from the Middle East."(76) communicate effectively between cells in Subsequent reports, however, indicate that different parts of the world, and conduct U.S. authorities are concerned that Saudi further operations. authorities are glossing over the terrorist connections of other humanitarian International Cooperation: organizations, including the al-Wafa Targeting a wide array of groups and Humanitarian Organization, the organizations funding and transferring International Islamic Relief Organization terrorist funds is critical, but must be (IIRO) and its parent, the Muslim World conducted as part of a well-coordinated League.(77) international effort. This is a particularly sensitive issue, especially in the Middle Skirting Saudi Noncooperation: East. In November 2001, for example, a Saudi officials have, at minimum, a senior U.S. delegation went to Saudi clear pattern of looking the other way when Arabia to solicit greater cooperation in the funds are known to support extremist arena of tackling terrorist financing. purposes. One Saudi official was quoted as Secretary of the Treasury Paul O'Neill saying that an organization created to crack visited again three months later, agreeing down on charities funding terrorism does to broach concerns regarding specific little because "it doesn't want to discover humanitarian organizations with Saudi top people giving to charities."(78) Prince officials before putting them on U.S. Bandar bin Sultan, the Saudi ambassador to terrorist lists. The new tactic fits the mold the United States, acknowledged the of traditional U.S.-Saudi diplomacy and problem of tracking the money trail, stating quickly bore fruit. The U.S. and Saudi that Saudi officials "found money leaves governments jointly froze the accounts of Saudi Arabia, goes to Europe and we can the Bosnian and Somali offices of the follow it, goes to the United States and we Saudi-based al-Haramain Humanitarian lose contact with it."(79) Organization just days later.(72) On the one hand, the Saudis have taken Following the closure of the Bosnian some small steps to battle money offices, Bosnian investigators found that all laundering and freeze accounts related to of the foundation's records since 1994 were the September 11 conspirators and passed missing.(73) Nevertheless, in August new regulations governing private 2002, Saudi pressure led Bosnian fundraising. Saudis are now encouraged to authorities to release the assets and renew donate funds in fulfillment of their zakat the operating license of those offices.(74) obligations only through established groups Al-Haramain's questionable activities are operating under the direct patronage of a not limited to its Bosnian and Somali member of the royal family. However, on offices. The foundation is also reported to the other hand, as the case in Bosnia have financed al-Qa’ida associated attests, many of these groups are Chechen fighters.(75) Moreover, after his themselves suspected of financing arrest in Indonesia, on June 5, 2002, Umar terrorism. Moreover, documents show not al-Faruq, al-Qa’ida's operational point man only that the Saudi Ministry of the Interior
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funded Hamas, but that it specifically have added to the list are primarily highlighted the funding of families of domestic groups such as Basque and Irish "martyrs" who conducted "quality attacks" groups. Europeans, in return, have against Israeli civilians.(80) repeatedly expressed their frustration with More than a year into the war on U.S. requests to add people or groups to terrorism, Saudi officials continue to terrorist lists while supplying insufficient support organizations that finance evidence, if any. international terrorism. For example, On May 3, 2002, the European Union several reports trace continued funding of (EU) added eleven organizations and seven al-Qa'ida to Saudi Arabia. A Canadian individuals to its financial-blocking list of intelligence report concluded that Saudi "persons, groups, and entities involved in charities funnel $1 to 2 million per month terrorist acts." Unfortunately, while the list to the organization,(81) while a Council on marks the first time the EU has frozen the Foreign Relations task force described assets of non-European terrorist groups, it Saudi individuals and charities as "the most adopts the fallacy of drawing a distinction important source of funds for al-Qa'ida" between the nonviolent activities of and decried the fact that the Saudi terrorist groups and the terror attacks that government turned "a blind eye" to this they carry out. By distinguishing between activity.(82) Meanwhile, the UN has the terrorist and welfare "wings" of Hamas, reported that al-Qa'ida finances are "fit and for example, the EU lent legitimacy to the well" and that "the prime targets of the activities of charitable organizations that organization are likely to be persons and fund and facilitate terrorist groups' property of the United States of America activities and operations. and its allies."(83) In the wake of attacks like those in Bali The American Bureaucracy: and Moscow, and in light of Saudi Even within the U.S. intelligence and noncooperation in curbing terrorist law enforcement community, the financial financing, the United States and its allies war on terrorism has been hamstrung by must develop joint measures to make the bitter turf wars between the Departments of global economy less hospitable to terrorist Treasury and Justice. The Departments financing, with or without Saudi have reportedly launched parallel task cooperation. An example of what is needed forces that do not communicate or share is the ongoing U.S. effort to secure information. European cooperation in freezing the assets While disconcerting, operational of several principal financial backers of al- inefficiency and territorialism between Qa'ida, most of them wealthy Saudis agencies pales in comparison to the more described as "the check writers."(84) strategic gap in policymaking circles. Cracking down on terrorist financing, Working with Europe: especially in the case of charitable and Nor are divisions over terrorist humanitarian organizations that financing exclusive to the Middle East. camouflage their funding of terrorism by U.S. officials complain that European allies funding legitimate groups and causes as have contributed few names to the list of well, requires a political will that was alleged terrorist financiers subject to markedly absent until September 11. financial blocking orders, that they have Terrorist financing through charitable yet to act on all the names already on the organizations is not unique to Islamic list, and that those names European allies charities, per se, but the fact is that the
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majority of terrorist groups operating in the at world today and targeting the United States
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Extremists, Judge Says," Bloomberg News, America and the United States," The New November 19, 2001. Yorker Magazine, October 28, 2002. 18. Ibid. 30. Amir Buchbot, "Forgeries in the 19. Testimony of Juan C. Zarate, Deputy Service of Terror," Ma'ariv (Tel Aviv), Assistant Secretary, Terrorism and Violent August 14, 2002. Crime, U.S. Department of the Treasury, 31. John Mintz and Douglas Farah, "Small House Financial Subcommittee Oversight Scams Probed for Terror Ties; Muslim, and Investigations, February 12, 2002. Arab Stores Monitored as Part of post- 20. Lucy Komisar, "Shareholders in the Sept. 11 Inquiry," The Washington Post, Bank of Terror?" Salon.com, March 15, August 12, 2002. 2002; and Mark Hosenball, "Terror's Cash 32. Ibid. Flow," Newsweek, March 25, 2002. 33. John Solomon, "U.S. Builds Terror 21. "The United States and Italy Designate Funding Cases," The Associated Press, Twenty-Five New Financiers of Terror," August 28, 2002. Department of the Treasury Office of 34. Mark Huband, "Bankrolling bin Public Affairs, PO-3380, August 29, 2002, Laden," Financial Times, November 29, at 2002.
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41. John Mintz, "From Veil of Secrecy, 53. Laurie P. Cohen, Glenn Simpson, Mark Portraits of U.S. Prisoners Emerge," The Maremont, and Peter Fritsch, "Bush's Washington Post, March 15, 2002, p. A3. Financial War on Terrorism Includes 42. Judith Miller, "Raids Seek Evidence of Strikes at Islamic Charities," The Wall Money-Laundering," The New York Times, Street Journal, September 25, 2001. March 21, 2002. 54. Israeli report provided to the U.S. 43. Christopher H. Schmitt, Joshua Government entitled "Large Sums of Kurlantzick and Philip Smucker, "When Money Transferred by Saudi Arabia to the Charity Goes Awry," U.S. News & World Palestinians are Used for Financing Terror Report, October 29, 2001. Organizations (particularly the Hamas) and 44. Mark Huband, "Bankrolling bin Terrorist Activities (including Suicide Laden," Financial Times (November 29, Attacks inside Israel)," dated May 3, 2002. 2002) 55. Laurie P. Cohen, Glenn Simpson, Mark 45. "All Forms of Suppression Rejected: Maremont, and Peter Fritsch, "Bush's Firm Support for Uprising," Kuwait Times, Financial War on Terrorism Includes November 6, 2000. Strikes at Islamic Charities," The Wall 46. "Holy Land Foundation for Relief and Street Journal, September 25, 2001 and Development, International Emergency Stewart Bell, "Quebec Group tied to al- Economic Powers Acts, Action Qaeda money web: Virginia Office Memorandum," FBI Memorandum from Raided," National Post (Toronto), March Mr. Dale L Watson, Assistant Director for 21, 2002, P. A1. Counterterrorism, FBI, to Mr. R. Richard 56. Newcomb, Director of the Office of http://www.treasury.gov/offices/enforceme Foreign Assets Control, Department of nt/ofac/sanctions/terrorism.html Treasury, November 15, 2001. 57. Judith Miller, "Raids Seek Evidence of 47. "Hamas-Related Associations Raising Money-Laundering," The New York Times Funds throughout Europe, the US and the (March 21, 2002). Arab World," Israel Defense Forces 58. "Saudi Group Claims Success in U.S. Spokesperson's Unit, available online at Tour," Middle East News Line / MENL,
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63. "Al-Qa'ida Terrorists Planned Bosnia 74. "Saudi Charity linked to al Qaida Attack, Official Says," Associated Press, Renews Operations," Middle East March 23, 2002. Newsline/MENL, August 13, 2002. 64. Alexandar S. Dragicevic, "U.S. 75. Ibid. See also Office of International Embassy in Bosnia Reopens," Associated Information Programs, U.S. Department of Press, March 25, 2002. State, "U.S., Saudi Arabia Act Jointly To 65. United States of America v. Enaam M. Block Terror Funds (Al Haramain's Arnaout, a/k/a 'Abu Mahmoud,' a/k/a 'Abu Branches in Bosnia and Somalia Mahmoud al Suri,' a/k/a 'Abu Mahmoud al Targeted)," press release, march 11, 2002; Hamawi,' a/k/a 'Abdel Samia,' case no. available online 02CR892, Northern District of Illinois,
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83. Oliver Burkeman, "Al-Qaeda Rich and Ready to Strike, Says UN: Europe's Lax Border Controls Fail to Stem Funding," The Guardian (London), August 30, 2002. 84. Douglas Farah, "U.S. Pinpoints Top al- Qaeda Financiers; Treasury Official Heads to Europe to Seek Help in Freezing Backers' Assets," The Washington Post, October 18, 2002.
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