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Last update - 00:52 19/11/2008
U.S. paper: War on terror must include war on terrorists' cash
By Natasha Mozgovaya, Haaretz Correspondent
Tags: Israel news, terrorism 

The terror attacks of September 11, 2001 in New York City energized a national U.S. struggle against terror financing, but the urgency gradually subsided, argue two former U.S. treasury officials in a new Policy Focus from the Washington Institute for Near East Policy.

In the paper, titled "The Money Trail: Finding, following and freezing terrorist financing", Matthew Levitt and Michael Jacobson "examine the critical role money plays in the success of terrorist organizations and why countering financial flows must be an integral part of the U.S. government's counterterrorism strategy."

Levitt, who was deputy assistant treasury secretary for intelligence and analysis, and Jacobson, who worked in the Office of Terrorism and Financial Intelligence, investigated the developments in this field, which receives considerably less public and media attention than the military operations against terrorist cells. They reached the conclusion that despite the initial success of reducing the money available to extremists, the terror devotees grew increasingly sophisticated in efforts to fund their activities.
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"We've seen some evolutionary changes in the nature of the terrorism financing," Levitt, director of The Washington Institute's Stein Program on Counterterrorism and Intelligence, said Sunday.

Speaking at the publication launch event, he added that "this is an ongoing effort. Outside the academic community you're challenged on questions, why is it important and how effective it is, because the individual terrorist attacks don't cost too much money. It's a largely misunderstood area."

Levitt stressed that the attempt to block terror funding is "only one tool," but governments would be remiss to underestimate its importance.

"It won't solve problems and it won't prevent people devoted to terror from pursuing their goals, but it will make it more difficult for adversaries to fulfill their plans. We don't know exactly how much money they have, but terrorists need money. Each individual attack doesn't cost so much money, but training, recruiting, equipping, providing for families of the attackers, that costs tremendous amounts of money. It might slow them down."

Some recent case studies, he added, show that over recent years terror cells have become "very stingy with money. They're using it very carefully."

The campaign to stem terror funding might also have deterring effect on donors. "When major donors see others having troubles with their businesses, they'll think twice before putting their financial empires in risk," he said.


The paper argues that there are still serious problems preventing non-profit organizations from funding terror. "It's a delicate issue," admitted Levitt. "Many countries are not eager to take this on because, of course, one of the pillars of Islam is charity. There's a lot of discomfort within the academic community about this issue, and the abuse of charities continues to be critical problem."

Another problem stems from the governments' success in disrupting the institutionalized money flow - as a result, terrorist activity became "franchised." Levitt explained "globalization and technological change present opportunities for our adversaries as well. We see new tools - cell phones used to transfer money; using internet provides cheap, fast and relatively secure means of communication."

"The groups are instructing donors to go to the local offices rather than going through the headquarters," he added.

Instead of centralized funding, local cells affiliated with Al-Qaida now have to rely on themselves to raise funds. They transfer money to relatives' accounts, to make it more difficult to track, and some of the organizations engage in criminal activities to obtain the necessary financing, especially in the drug trade.

The 2004 Madrid train bombing was carried out by a cell which raised most of its money selling hashish. Also in Spain, authorities have seen many Pakistani Jihadists perpetrating petty crimes, presumably to finance extremist groups in Pakistan. The state sponsorship of terror, such as Iran's financing of Hamas and Hezbollah, also remains one of the biggest challenges.

The Gulf region, they say, is still the major source of terror financing, but some Gulf countries have made progress in dealing with this issue, as has the private sector. But many terrorist cells have shifted to cash, a form of terror funding which requires a different response, while in some countries governments still can't agree on a common interpretation of existing guidelines, not to mention more innovative and active approaches to dealing with the problem.

Finally, the paper's authors argued that despite the growing complacency as 9/11 grows distant, and the difficulty in coordinating international efforts, the financial battle ultimately pays off because in some cases insufficient funds might prevent terrorists from carrying out the attacks. They stressed, however, that fighting terror on the financial level will only be effective in the future if the administration of president-elect Barak Obama gives the required attention to all aspects of the war on terror.

"Keeping financiers on the defensive and denying them the luxury of time and space puts them under stress, deters donors, restricts the flow of funds, and helps constrict the operating environment," they concluded.
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  1.   Eliminating the need for oil would be the biggest blow 01:05  |  David G 19/11/08
  2.   Haaretz, lobbyists, and phony non-think tanks 02:12  |  Mark Lincoln 19/11/08
  3.   I agree David G 02:15  |  Mark Lincoln 19/11/08
  4.   If Haaretz Headline Concur with the paper from Policy Focus from 03:33  |  Joseph.E 19/11/08
  5.   #1 David G. Yes 14:32  |  Petra 19/11/08
  6.   UAE is No. 1 Choice for sending funds 23:29  |  Yuri 05/12/08
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