Allying with terror?

[Amy Sommer <a.sommer@mail.utexas.edu>]

Another example of the US using strategic power in the Middle East for profit 
(oil).  It seems that these kinds of flaky alliances cost us more in the end 
than they're worth.  (i.e. September 11th).  Read the article below...

****Some interesting quotes from the article:

...While both countries say that progress has been made, American officials are 
finding it hard to stop the longtime flow of money from wealthy Saudis and 
Saudi-financed charities to people and groups deemed by the United States to be 
supporting terrorist attacks around the world....

...The longstanding tensions between the two countries over the financing issue 
erupted this week after reports that about $2,000 from the wife of Saudi 
Arabia's ambassador to the United States may have inadvertently aided two of 
the Sept. 11 hijackers. Administration officials responded with praise for 
Saudi efforts and defended the ambassador, Prince Bandar bin Sultan, and his 
wife, Princess Haifa al-Faisal...

...Outside experts have been more critical of the Saudis. A report sponsored by 
the Council on Foreign Relations last month said Saudi Arabia was the largest 
source of financing for Al Qaeda, and blamed both the American and Saudi 
governments for not being tough enough...

...The latest dispute comes at a critical moment in American-Saudi relations. 
The Bush administration is working to obtain permission to use Saudi air bases 
if there is a war against Iraq, and to make sure the Saudis step up oil 
production to fill a possible worldwide shortage in the event of war...

...In the 1980's, the kingdom and individual Saudis, with American blessing, 
were the most important source of financing for the mujahedeen fighting the 
Soviets in Afghanistan. The money helped to serve as the foundation on which 
Osama bin Laden, a Saudi, built Al Qaeda...

**************

THE MONEY TRAIL
Saudis Called Slow to Help Stem Terror Finances
By JEFF GERTH and JUDITH MILLER
The New York Times

WASHINGTON, Nov. 28 — While both countries say that progress has been made, 
American officials are finding it hard to stop the longtime flow of money from 
wealthy Saudis and Saudi-financed charities to people and groups deemed by the 
United States to be supporting terrorist attacks around the world.

Saudi officials have repeatedly pledged to tighten regulations on some 300 
charities that dole out as much as $4 billion a year, but a senior Bush 
administration official said Saudi cooperation in stopping the money flow had 
been "difficult and slow" since the Sept. 11 attacks.

"The Saudi banking system is not totally transparent, and Riyadh has not 
maintained strict oversight" on nongovernmental organizations abroad, Carl W. 
Ford Jr., the assistant secretary of state for intelligence and research, said 
in recently released written responses to questions from the Senate Select 
Committee on Intelligence. Congressional leaders criticized the Bush 
administration for not being more aggressive in pressing the Saudi government, 
particularly since 15 of the 19 hijackers in the Sept. 11 attacks were Saudi 
citizens.

The longstanding tensions between the two countries over the financing issue 
erupted this week after reports that about $2,000 from the wife of Saudi 
Arabia's ambassador to the United States may have inadvertently aided two of 
the Sept. 11 hijackers. Administration officials responded with praise for 
Saudi efforts and defended the ambassador, Prince Bandar bin Sultan, and his 
wife, Princess Haifa al-Faisal.

Hassan Yassin, a former Saudi information officer in Washington, said in a 
telephone interview from London that the Saudis were moving at their own pace 
to curb terrorism. Toward that end, he said, Crown Prince Abdullah, the 
kingdom's de facto ruler, recently sought to limit overseas donations by 
emphasizing that Saudis should help the poor in their own country.

The issue is not new. Two decades ago, the State Department tried 
unsuccessfully to pressure Saudi Arabia to stop underwriting militant Islamic 
groups in Algeria. Saudi officials said that the financial support did not 
constitute official policy, but also insisted that "they couldn't tell Saudis 
where to put their money," Edward S. Walker Jr., a former top State Department 
official involved in the talks, said in an interview.

Saudi officials say the country's leaders are committed to fighting terrorism, 
and the administration credits the Saudis with backing the American campaign 
against it. They said that the government had already blocked $70 million at 
the request of the United States and that banking regulators were auditing the 
network of Islamic charities that extend the Saudis' reach worldwide through 
donations that Saudi officials estimated at $200 million to $300 million a year.

A Saudi official said the government had taken many steps to tighten controls, 
including forbidding banks from transferring cash to individuals without an 
audit trail. The official said the government had also set up a financial 
intelligence unit to share information about bank transactions, and bank 
executives now exchange information about financial transactions. He said that 
while Saudi law now required charities to "coordinate" donations overseas with 
the Foreign Ministry, the kingdom was slowly moving toward banning such aid 
except through official government channels.

Outside experts have been more critical of the Saudis. A report sponsored by 
the Council on Foreign Relations last month said Saudi Arabia was the largest 
source of financing for Al Qaeda, and blamed both the American and Saudi 
governments for not being tough enough.

Matthew Levitt, a fellow at the Washington Institute for Near East Policy and a 
former terrorism analyst for the Federal Bureau of Investigation, said Saudi 
officials and state-paid religious leaders sat on the boards of charities the 
American government suspected of supporting terrorism.

"More than a year into the war against terrorism, Saudi officials continue to 
actively support organizations that finance international terrorism," he said 
in an interview.

The latest dispute comes at a critical moment in American-Saudi relations. The 
Bush administration is working to obtain permission to use Saudi air bases if 
there is a war against Iraq, and to make sure the Saudis step up oil production 
to fill a possible worldwide shortage in the event of war.

Saudi Arabia's role as a major oil supplier to the West and an ally has kept 
Washington from pressing too hard for tough action against terrorism, said 
current and former government officials. and outside experts.

"It has been a longstanding policy of the United States government over several 
decades that if the kingdom helps us with oil and helps us with the Middle East 
we won't ask them about their internal issues," said William F. Wechsler, the 
head of an interagency group in the Clinton administration that sought to 
disrupt Al Qaeda's finances and one of the authors of the recent Council on 
Foreign Relations report.

But Saudi Arabia's internal issues have a way of leaking into the rest of the 
world. Giving a small percentage of your wealth to charitable or humanitarian 
causes is a tenet of Islam, called zakat. The kingdom's oil wealth has made it 
a significant source of aid for poorer Muslim nations and communities through a 
network of Saudi-based charitable organizations.

In the 1980's, the kingdom and individual Saudis, with American blessing, were 
the most important source of financing for the mujahedeen fighting the Soviets 
in Afghanistan. The money helped to serve as the foundation on which Osama bin 
Laden, a Saudi, built Al Qaeda.

The Persian Gulf war in 1991 prompted Saudi Arabia to re-examine the activities 
of its wealthy philanthropists. Saudis close to the royal family said King Fahd 
urged the kingdom's richest families to be more careful in how their charitable 
donations were used. A council was set up to supervise requests for money, and 
collecting money without official permission was banned.

Still, some individual Saudis and charities continued to finance extremist 
Islamic groups, wittingly or unwittingly, and Islamic charities figured in some 
prominent attacks. In one example, federal prosecutors said a charity was used 
to provide cover for plotting the bombings of the American embassies in East 
Africa in August 1998.

The Clinton administration discussed the issue with Saudi officials 
periodically. In July 1999, midlevel officials traveled to the kingdom after 
Vice President Al Gore raised the matter with Crown Prince Abdullah, American 
officials said.

But the effort to persuade the Saudis to crack down on the charities never 
became a high-level issue for the Clinton administration and soon faltered, 
said Stuart E. Eizenstat, the deputy secretary of the Treasury at the time. 
Saudi Arabia, he said, was treated "with kid gloves."

Until Sept. 11, the Bush administration paid little attention to terrorist 
finances. But within a few weeks of the attacks, the administration blocked the 
assets of various charities and their supporters. Many were on a secret list of 
31 suspect charities distributed to American antiterrorist specialists as far 
back as 1996.

In October 2001, the Treasury Department identified one Saudi charity on the 
1996 list, the Muwafaq Foundation, as a Qaeda front. Officials said the group 
had transferred millions of dollars to Mr. bin Laden. The government froze the 
assets of Yasin Al Qadi, the Saudi businessman who headed the foundation. Mr. 
Qadi said he had never helped terrorists and went to court in London to contest 
the freeze.

Most of the foundation's $20 million endowment came from Sheik Khalid bin 
Mahfouz, a prominent Saudi businessmen and a former banker to the royal family, 
according to his spokesman, Cherif Sedky. Mr. Sedky said the money was intended 
solely for humanitarian purposes. Sheik Khalid has not been accused of any 
wrongdoing and his accounts have not been frozen. A lawsuit brought by some 
families of Sept. 11 victims, however, names him as a defendant along with 
dozens of other prominent Saudis, including members of the royal family.

Mr. Sedky said the charities mentioned in the lawsuit were not known in 1998 to 
be conduits for terrorism. "We continue to have no reason to believe that any 
of the funds Sheik Khalid provided were used other than for the charitable 
purposes intended," he said.

The lawsuit has strained American-Saudi relations, and Bush administration 
officials said they might move in a federal court to have the suit dismissed or 
delayed.

Last March, the administration and the Saudis together moved to shut down two 
overseas branches of Al Haramain, a Saudi charity suspected of funneling money 
to extremists under cover of supporting Islamic schools and orphanages.

The action closed branches in Bosnia and Somalia, but questions remain about 
whether its activities actually stopped. Al Qaeda's top representative in 
Southeast Asia told the Central Intelligence Agency last summer that the 
network's operations there were financed through Al Haramain, according to a 
transcript of his questioning. Around the same time, Arab news accounts 
suggested that the charity was active again in Bosnia.

Faced with rising criticism, the Saudi Embassy in Washington put out a 
statement last August saying that new regulations had been established to sever 
links between charitable groups and extremist organizations. "All charitable 
groups have been audited to assure there are no links to suspected groups," the 
statement said.

The Bush administration has not described publicly how far the Saudis have gone 
in carrying out the measures.

When a Congressional committee asked Kenneth Dam, the deputy secretary of the 
Treasury, whether the Saudis had taken the steps they had promised, he 
replied: "That's a sensitive question, and my answer would be sensitive. All I 
can say is that we are pleased with Saudi cooperation."

Evidence linking Saudi money to Al Qaeda has continued to mount. Last month, 
federal prosecutors in Chicago charged the head of Benevolence International 
Foundation, an Islamic charity with financial roots in Saudi Arabia, with 
running a criminal enterprise that supported Al Qaeda.

Investigators in Europe have also found ties between Al Qaeda and Saudi donors. 
The Spanish authorities, for example, say a Syrian accused of financing a Qaeda 
cell in Europe was backed by a Saudi trading company that solicited money from 
Saudis.

Last month, an American delegation went to Riyadh to press for increased 
scrutiny of charities and financial networks. It was headed by Alan Larson, the 
under secretary of state for economic affairs.

But in an illustration of the persistent quandary facing Washington, American 
and Saudi oil executives said Mr. Larson had another item on his agenda. He 
wanted to ensure, they said, that Saudi Arabia would pump millions of barrels 
of extra oil into the world market should there be a shortfall caused by an 
American-led attack on Iraq