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Saudi terrorism funding

December 20, 2009

Eight years after the 9/11 attacks on New York, US and European officials say Saudi efforts to stop the flow of funds from Saudi charities and individuals to terrorist groups have improved but failed to halt it.

Saudi Arabian flag
Saudi Arabia has been accused of funding al Qaeda terroristsImage: DW

For the first 18 months after the September 11 attacks, US officials charged that Saudi Arabia, shell-shocked by the fact that a majority of the perpetrators had been Saudi nationals, was dragging its feet on implementing measures to prevent Saudis from funding militant Islamic groups like al Qaeda.

It took a series of al Qaeda attacks on Saudi targets in 2003 and 2004 to persuade the kingdom to pay more than lip service to the need to halt funding of terrorist groups.

US and European officials acknowledge that the Saudi government has introduced strict monitoring of bank transactions and banned the transfer abroad of charitable funds without government approval. They also note that some 100 suspected terrorism financiers have been arrested in the kingdom over the past two years, approximately 20 of which were prosecuted. Most recently, Saudi authorities said that they had arrested a charity official for directing funds to extremists.

The praise for the Saudi efforts by US Treasury Secretary Tim Geithner during a July visit to Saudi Arabia constitute a significant departure from US Treasury statements since September 11, which tended to assert that Saudi measures to halt the flow of funding of terrorist groups did not go far enough.

An al Qaeda terrorist on TV
Efforts to halt the funding of al Qaeda have had some successImage: AP/Al Jazeera

US Assistant Secretary for Terrorist Financing David Cohen last month, highlighting Saudi successes, described al Qaeda as a cash-strapped organization that was finding it increasingly difficult to raise funds. In recognition of its efforts, Saudi Arabia was recently admitted to the Egmont Group, the international network of Financial Intelligence Units.

Saudi Arabia, a key ally

Guido Steinberg, a Middle East expert at the German Institute for International and Security Affairs, says the post 9/11 perception of Saudi Arabia as a funder and promoter of terrorism has been replaced by one in which the kingdom "for Western politics and public opinion is an irreplaceable ally and a leading power in an anti-Iranian alliance of moderate Arab governments and nations."

In a study published earlier this year, Steinberg questions European and German policy of viewing Saudi Arabia as primarily an American sphere of interest. "Given the importance of the Middle East for the Federal Republic (of Germany) and the European Union, the question arises if Saudi Arabia could not become an important partner in German and European policy," Steinberg writes.

Arguing that Saudi policies toward various Middle Eastern trouble spots - Iran, Palestine, Iraq and Lebanon - coincide with those of Germany and the EU, Steinberg concludes: "The thought of closer collaboration with Saudi Arabia looms large if Germany wants to expand its ability to maneuver in the Middle East."

If the will to fight terrorism funding was at the core of US and European criticism in the years following the September 11 attacks, the issue today for Western law enforcement is implementation and effectiveness of Saudi efforts to close the terrorism money tap.

Saudi Arabian flag
Some sections of Saudi society still support al Qaeda and other militant groups

A US Government Accountability Office (GAO) report concludes that "Saudi individuals and Saudi-based charitable organizations continue to be a significant source of financing for terrorism and extremism outside of Saudi Arabia." It quotes US Treasury officials as saying that "Saudi-based individuals are a top source of funding for al Qaeda and associated groups, such as the Taliban." The report says Saudi individuals and charities circumvent Saudi restrictions by employing couriers to transfer cash to militant organizations.

"While the Saudi government is now more focused on terrorist financing, the scale and volume make it an uphill battle. In Saudi Arabia's conservative society, some support for al-Qaeda - and undoubtedly more support for Hamas - still exists," Michael Jacobson, of the Washington Institute for Near East Policy and a former advisor in the US Treasury's Office of Terrorism, told Deutsche Welle.

"Furthermore, because Saudi Arabia remains a wealthy, cash-based society where carrying or transferring large sums of money is not unusual, it is far more difficult for governments to trace and detect illicit transactions," Jacobson said.

Taliban and Pakistani groups benefit

US President Obama's special envoy to Pakistan and Afghanistan has in recent months repeatedly complained that Saudi funding may be as important to the Taliban as drug revenues as a source of income. "In the past there was a kind of feeling that the money all came from drugs in Afghanistan. That is simply not true… [the Taliban] get a lot more money out of the Gulf, according to our intelligence sources," Holbrooke recently told a news conference in the Pakistani capital Islamabad.

A recent Pakistani police report accused Saudi Arabia's Al Haramain Foundation of donating $15 million (10 million euros) to militants responsible for suicide bombings in Pakistan and the assassination of former Prime Minister Benazir Bhutto. The US and Saudi Arabia jointly as well as the United Nations have designated in recent years several foreign branches of Al Haramain as terrorist organizations. However, Al Haramain continues to operate legally in Saudi Arabia although the US Treasury last year put the foundation as a whole, including its Saudi headquarters, on its list of designated terrorist organizations.

Similarly, Indian officials say Lashkar e Tayiba, the Pakistani group responsible for last year's attacks in Mumbai, continues to operate in Saudi Arabia. Indian police recently arrested Lashkar leader Muhammad Omar Madni shortly after he had visited the kingdom on a fundraising trip. Indian police said they had also recently found a large amount of Saudi riyals during a raid on a Lashkar safe house in Mumbai.

Flaws in the Saudi ability to halt the flow of funds to militant groups is part of an emerging perception that the kingdom's ability to leverage its status as the world's major oil producer and the administrator of Islam's most holy sites to influence Middle Eastern events has diminished as countries like Iran and Syria and groups like Hizbollah in Lebanon and Hamas in Gaza chart their own course.

"Beyond Riyadh's preoccupation with Iran, the broader currents of change sweeping over the Middle East are challenging Saudi foreign policies as well…The growing role of non-state actors, militias and ethnic breakaway movements, has exposed the limitations of Riyadh's reliance on petro-dollars to simply buy off whole governments," Webster Brooks, a foreign policy fellow at the University of Denver's Center for New Policy and Politics, told Deutsche Welle.

Author: James M. Dorsey
Editor: Rob Mudge

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