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U.S.: Washington Launches War Against Terrorists On Financial Front

Six weeks ago, U.S. President George W. Bush announced that he was opening a financial front in the war against international terrorism. Yesterday Bush announced that the U.S., with the cooperation of some important foreign allies, has cracked down on two major financial networks suspected of having ties to terrorist groups.

Washington, 8 November 2001 (RFE/RL) -- U.S. President George W. Bush has announced the first major assault in the financial front of America's war against terror.

Action was taken yesterday, both in America and overseas, and Bush says such crackdowns will eventually make suspected terrorist Osama bin Laden's Al-Qaeda network unable to practice terrorism.

In the United States, law enforcement officials raided businesses, arrested one person, and froze the assets of nine organizations and two people. Overseas, two Arab businessmen based in Italy were questioned by Swiss police in cooperation with Italy and the United States.

Washington also requested that nine nations freeze bin Laden's assets in their territory. The nations from which Washington expects cooperation are Switzerland, Somalia, Liechtenstein, the Bahamas, Sweden, Canada, Austria, Italy, and the United Arab Emirates.

Bush says bin Laden is the mastermind of the 11 September attacks in New York, Washington, and Pennsylvania that killed an estimated 5,000 people.

In announcing the actions yesterday, Bush said countries that do not cooperate in targeting bin Laden's assets will be viewed as helping international terrorists. He warned that choosing the wrong side could be disastrous: "Today's action interrupts Al-Qaeda's communications, it blocks an important source of funds, it provides us with valuable information, and sends a clear message to global financial institutions: You are with us, or you are with the terrorists. And if you're with the terrorists, you will face the consequences."

Bush announced the financial war on terrorism less than two weeks after the September terrorist attacks in America. At the time, his administration issued a list of 88 organizations and individuals suspected of being associates of terrorist organizations. Today, the U.S. raised that number to 150. A number of the businesses and people listed have already had their assets frozen.

New to the list are two financial networks said to have links to bin Laden: Al Taqwa and Al Barakaat. They are described as "hawalas" -- unregulated financial organizations that make financial transactions with little or no paperwork. U.S. officials say they finance Al-Qaeda by channeling money to the terrorist network from the businesses and non-profit organizations that they operate.

According to Bush, Al Taqwa is a group of foreign financial institutions that move Al-Qaeda's money from country to country. He said Al Barakaat is a financial group also involved in communications that is owned by a friend and supporter of bin Laden. The president described the activities of the two groups this way: "Al Taqwa and Al Barakaat raise funds for Al-Qaeda. They manage, invest, and distribute those funds. They provide terrorist supporters with Internet service, secure telephone communications and other ways of sending messages and sending information. They even arrange for the shipment of weapons. They present themselves as legitimate businesses, but they skim money from every transaction for the benefit of terrorist organizations."

When Bush announced the financial front in his war against international terrorism, some observers wondered whether it would be possible to affect Al-Qaeda's finances meaningfully. They noted that it is virtually impossible to track the transactions of hawalas.

But one expert told RFE/RL that an international effort can yield significant results. He is Brett Schaefer, who studies international financial institutions at the Heritage Foundation, a policy institute in Washington: "If you can get a coordinated effort together by the United States, its European allies, Japan, and other developed countries, you're going to have a much greater impact than just what the United States alone can do. And the more difficult you make financial activity in support of terrorists -- or terrorist activities or terrorists themselves -- the more you're going to put impediments in their efforts."

Schaefer says the 11 September terrorist attacks have changed the way the world looks at international law enforcement. Countries that would have ignored a plea for cooperation before that date are now stepping forward to help.

A good example is Switzerland, whose largest industry is banking. Once it probably would not have helped track down financiers suspected of helping terrorists because its banks so jealously guard their customers' identities. But yesterday, it was a Swiss police action that closed in on the two Arabs questioned about bin Laden's financial affairs.

"Before 11 September, it's more than likely that these individuals would not have been arrested. In fact, they [Swiss police] might not even have had efforts looking for them. And after 11 September, you're starting to see a crackdown on individuals connected with terrorism, closer scrutiny of their financial transactions."

Ann Florini agrees. She studies financial institutions at the Carnegie Institute for International Peace, another Washington policy center. According to Florini, any effort to cripple Al-Qaeda's finances is worth the effort. But she wonders whether the results will be significant: "If what you're trying to do is shut down a particular terrorist network, going after the money is a step you ought to try, but the prospects for making a significant difference that way are not that great. The money flows are just too small; they don't stand out in the international economy."

Like most financial observers, Florini says the shadowy, undocumented transactions of hawalas like Al Taqwa and Al Barakaat make thorough investigations virtually impossible: "They [hawalas] certainly make things a lot more complicated because there's no paper trail for us to go after. And the whole system, the whole set of systems that we have in place and that other countries have in place to track money flows depend on a paper trail. Without that, we almost don't have a starting point to go after the money flows."

But Florini says perseverance can have its rewards. Bush has said the U.S. and its allies will root out bin Laden in Afghanistan by "draining the swamp" -- a metaphor for denying a place for bin Laden and his terrorist network to hide. Florini uses a similar metaphor to describe going after well-concealed financial organizations: "The way to think about it is lowering the water level in a lake. As you lower it, as you create fewer and fewer hiding places, it makes it easier to know what you should be going after, where the hiding places still are. So it is certainly not a waste of time to be trying to go after the money, to be trying to get these countries to crack down seriously."

Florini says a concerted effort to uncover the financiers of international terrorism may lead to an unexpected bonus. "Lowering the water level" means fewer places for all financial criminals to hide, not just terrorists. And that means the war on terrorism could help make a significant difference in America's ongoing war against organized crime.