War on financing of terrorism stalls

Experts blame groups' adaptation, mistrust abroad, friction at home

March 24, 2008|By Josh Meyer | Josh Meyer,LOS ANGELES TIMES

WASHINGTON -- The U.S.-led effort to choke off the financing used by al-Qaida and other terrorist groups is foundering because an array of setbacks at home and abroad has undermined the Bush administration's highly touted counterterrorism weapon, according to current and former officials and independent experts.

In some cases, extremist groups have managed to blunt financial anti-terror tools by finding new ways to raise, transfer and spend their money. In other cases, the administration's campaign has stumbled because of legal difficulties and interagency infighting, officials and experts say.

But the most serious problems have come from fractures and mistrust within the increasingly fragile coalition of nations that the United States admits it needs to target financiers of terrorism and to stanch the flow of funding from wealthy donors to extremist causes around the world.

"The international cooperation and focus is dropping, the farther we get from 9/11," said Michael Jacobson, a senior adviser in the Treasury Department's Office of Terrorism and Financial Intelligence until March 2007. "Some countries lack political will. Others just don't have the basic capacity to govern their countries, much less create a viable financial intelligence unit."

The administration's effort to build a global coalition to interrupt extremists' funding has suffered political, legal, cultural and technical setbacks so serious that it is falling apart, said many of the current and former officials and experts.

"Al-Qaida, the Taliban and other terrorist groups continue to have access to the funds they need for active and expanded indoctrination, recruitment, maintenance, armament and operations," said Victor Comras, a former United Nations enforcement official.

Internationally, the urgency of the financial terror war has waned in the years since Sept. 11, 2001. Changing political climates and negative perceptions of the United States have prompted key U.S. allies to reduce their cooperation, current and former officials conceded.

Many countries in the Middle East and elsewhere have resisted U.S. pressure to investigate and publicly identify financiers of terrorism.

Countries such as Saudi Arabia and Pakistan have not taken the necessary steps to crack down on terrorist financing or money flowing across their borders. Other countries, including Afghanistan and some African nations, lack the technological sophistication to provide meaningful cooperation.

At that, the most deadly terrorist attacks since Sept. 11 have cost so little - often less than $10,000 - that they are virtually impossible to detect or stop by following the money trail.

Terrorist networks need larger sums to travel, train their operatives, bribe government officials, evade capture and expand their support bases. Increasingly, however, militant groups are moving funds through means that fly below the radar of U.S.-led enforcement and intelligence-gathering efforts, officials and experts said.

Cash couriers, for instance, use donkeys and camels in places like Pakistan and Afghanistan and private jets in oil-rich Gulf kingdoms to move cash, gold and jewels. They continue to rely on centuries-old informal banking systems known as hawala, which leave virtually no trail.

Overall, it is nearly impossible to distinguish funds meant for potential terrorism from legitimate transactions, said a senior State Department official, who like some of the those interviewed, spoke on condition of anonymity due to prohibitions against commenting on the record or when discussing internal debates.

Current and former U.S. officials acknowledge they are struggling to get at funding streams, especially without much-needed help from allies who are either unwilling or unable to provide assistance.

"It's not as much that we're not properly executing our strategy," said Robert Grenier, a former senior CIA official. "It's that the strategy is of limited utility in countering terrorism financing given the mechanisms that terrorists use."

The campaign targeting terrorism's financiers began 12 days after the Sept. 11, 2001, attacks, when President Bush announced "a major thrust of our war on terrorism ... a strike on the financial foundation of the global terror network."

"We will starve the terrorists of funding, turn them against each other, rout them out of their safe hiding places and bring them to justice," Bush said in a Rose Garden speech, flanked by his secretaries of treasury and state.

Since Sept. 11, the campaign targeting terrorism's financiers stretched across the federal government, encompassing the CIA, FBI, the Justice and Homeland Security departments and others.

At the same time, the administration moved to enlist the cooperation of allies and international organizations such as the United Nations.

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