Global crisis unlikely to hit al-Qaeda funds

PHILADELPHIA ENQUIRER

10/17/08

Global crisis unlikely to hit al-Qaeda funds

Sebastian Abbot

Associated Press -- CAIRO, Egypt - Al-Qaeda, which gets its money from the drug trade in Afghanistan and sympathizers in the oil-rich Gulf states, is likely to escape the effects of the global financial crisis.

One reason is that al-Qaeda and other Islamic extremists have been forced to avoid using banks, relying instead on less-efficient ways to move their cash around the world, analysts said.

Those methods include hand-carrying money and using informal transfer networks called hawalas.

While escaping official scrutiny, those networks also are slower and less efficient - and thus could hamper efforts to finance attacks.

"It would be inconceivable that large amounts of [extremist-linked] money would transit through the formal financial system, because of all the controls," said Ibrahim Warde, an expert on extremist financing at the Fletcher School at Tufts University.

The question of where al-Qaeda and its sympathizers get their money has long been crucial to efforts to prevent attacks. A 2004 U.S. investigation found that banks in the United Arab Emirates had unwittingly handled most of the $400,000 spent on the 9/11 attacks.

After the attacks, the United States made an aggressive push to use law-enforcement techniques to disrupt extremist financing networks and worked with allies to improve their own financial and regulatory institutions.

Al-Qaeda and the Taliban have benefited from the drug trade's growth in Afghanistan after the U.S.-led invasion in 2001, and the booming business likely will not be affected by the global slowdown.

Opium cultivation has fallen slightly this year but is still about 20 times higher than in 2001, according to the U.N. Office on Drugs and Crime.

Gen. Barry McCaffrey, the former U.S. drug czar who recently consulted with U.S. and NATO officials in Afghanistan, issued a report in July saying that al-Qaeda and the Taliban "are principally funded by what some estimate as $800 million a year derived from the huge $4 billion annual illegal production and export of opium/heroin and cannabis."

In addition, wealthy donors and Islamic charities in the oil-rich Gulf, especially Saudi Arabia, continue to be "one of the most significant sources of illicit financing for terrorism," said Matthew Levitt, a former Treasury Department terrorism expert now with the Washington Institute for Near East Policy.

The Saudis have long insisted they are doing all they can to rein in extremist financing, and U.S. officials have praised their efforts.

But, under a system known as zakat, wealthy Muslims are required to give a portion of their money to the poor. Much of that is given to Islamic charities, and U.S. officials say at least some of that money continues to be channeled to al-Qaeda and other groups.

Saudi Arabia and other Gulf countries have benefited in the last two years from a surge in oil prices from about $60 per barrel at the beginning of 2007 to more than $145 per barrel in the middle of this year. Prices have fallen almost 50 percent in the last few months in response to the global financial crisis, but not before generating hundreds of billions of dollars to oil producers.

Levitt said the covert nature of extremist financing makes it difficult to determine a direct correlation between rising oil revenues and the amount of cash al-Qaeda has on hand.

But, he said, "it stands to reason that if there is more oil revenue, there will be more revenue for all kinds of things licit and illicit."