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Saudi Arabia: Terrorist Financing Issues

Introduction:

Terrorism brings with it a wide range of issues for the international community toconsider. These issues are shaping government policies worldwide. The terrorists attacks againstthe World Trade Center and the Pentagon on September 11 2001 and the subsequent terrorattacks in different parts of the world have ignited wide concern. Saudi Arabia has suffered aseries of terrorists attacks in recent decades of different types and magnitudes. Responding tothe most recent attack of May 12, 2003, which was well organized and synchronized, the SaudiGovernment mobilized its resources to combat this threat for security of the country and toparticipate in cooperative efforts with the world community. Significant efforts have been madein this regard. These include economic, educational, and media efforts to halt and eradicateterrorism in all possible ways. Direct domestic security operations are primarily focused on thedismantling of existing terrorist cells. Assisting these efforts will lead to a desirable end state that

is beneficial not only for the security of Saudi Arabia but for the security of the whole world.The purpose of this paper is to examine the efforts that have been put into effect to fightterrorism by Saudi Arabia, and to recommend actions to assist and improve these efforts.

Abstract:

The September 11, 2001 attacks fueled criticisms within the United States ofalleged Saudi involvement in terrorism or of Saudi laxity in acting against terroristgroups. Of particular concern have been reports that funds may be flowing fromSaudi Arabia and other Middle East countries to terrorist groups, largely under the

guise of charitable contributions. Critics of Saudi policies have cited a number ofreports that the Saudi government has permitted or encouraged fund raising in SaudiArabia by charitable Islamic groups and foundations linked to Osama bin Ladens AlQaeda organization or like-minded entities.

The final report released by the bipartisan National Commission on TerroristAttacks upon the United States (the 9/11 Commission) indicates that theCommission found no evidence that the Saudi government as an institution or seniorSaudi officials individually funded [Al Qaeda]. The report also states, however, thatSaudi Arabia was a place where Al Qaeda raised money directly from individualsand through charities, and indicates that charities with significant Saudigovernment sponsorship may have diverted funding to Al Qaeda.

In numerous official statements and position papers, Saudi leaders have saidthey are committed to cooperating with the United States in fighting terroristfinancing, pointing out that Saudi Arabia itself is a victim of terrorism and shares theU.S. interest in combating it. Saudi leaders acknowledge providing financial supportfor Islamic and Palestinian causes, but maintain that no Saudi support goes to anyterrorist organizations, such as the Hamas organization. The U.S. State Departmentin its most recent annual report on international terrorism states that Hamas receivessome funds from individuals in the Persian Gulf states but does not specifically

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mention Saudi Arabia.Since the September 11 attacks, Saudi Arabia has issued numerous decrees and

created new institutions designed to tighten controls over the flow of funds in orthrough the kingdom, with particular emphasis on increasing the effectiveness ofgovernmental supervision over charitable donations and collections. A rash of

terrorist attacks on residential and office compounds in Saudi Arabia in 2003-2004appears to have given added impetus to the Saudi leadership in expanding counterterroristefforts. Since mid-2003, the Saudi government has: set up a joint task forcewith the United States to investigate terrorist financing in Saudi Arabia; shutteredcharitable organizations suspected of terrorist ties; passed anti-money launderinglegislation; banned cash collections at mosques; centralized control over charitablecollections; closed unlicensed money exchanges; and scrutinized clerics involved incharitable collections. H.R. 10, introduced on September 24, 2004, would requirethe President to submit to designated congressional committees a strategy forU.S. Saudi collaboration, with special reference to combating terrorist financing.

Saudi Arabia: Terrorist Financing Issues

Overview:

The attacks of September 11, 2001 fueled criticism within the United States ofalleged Saudi involvement in terrorism or of Saudi laxity in acting against terroristgroups. One area of particular concern is the suspicion that public or private fundsmay be flowing from Saudi Arabia and other Middle East countries to financeinternational terrorist activity.

Reliable figures on the amount of money originating in or passing through SaudiArabia and ending up in terrorist hands generally are difficult to obtain, for several

reasons. First, the relatively small amounts of money required for terrorist acts caneasily pass unnoticed. Second, the structure of the Saudi financial system makesfinancial transfers difficult to trace. Personal income records are not kept for taxpurposes in Saudi Arabia and many citizens prefer cash transactions. Third, Muslimcharitable contributions (zakat) are a religious obligation, constituting one of the fivepillars of Islam. Contributions are often given anonymously, and donated fundsmay be diverted from otherwise legitimate charities. Moreover, Saudi funding ofinternational Islamic charities is reportedly derived from both public and privatesources which in some cases appear to overlap, further complicating efforts toestimate the amounts involved and to identify the sources and end recipients of thesedonations.

This paper reviews allegations of Saudi involvement in terrorist financingtogether with Saudi rebuttals, discusses the question of Saudi support for religiouscharities and schools (madrasas) abroad, discusses recent steps taken by SaudiArabia to counter terrorist financing (many in conjunction with the United States),and suggests some implications of recent Saudi actions for the war on terrorism.

Saudi Arabia: Allegations of Terrorist Financing

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In the aftermath of the September 11 attacks, numerous allegations have beenleveled against the Saudi Arabian government and prominent Saudi citizensregarding financial support for international terrorist groups. Although many of theallegations fault the Saudi government for failing to act decisively to close down

channels of financial support, some critics go so far as to accuse Saudi governmentofficials of responsibility for the September 11 attacks through design or negligenceand for the continuing threat posed by the perpetrators or by like-minded terroristgroups. Some of the allegations also deal with possible ties between Saudi officials,private citizens and the exiled Saudi terrorist Osama bin Laden and his Al Qaedaorganization. However, Saudi authorities revoked bin Ladens citizenship in 1994,and senior Saudi officials have stated publicly that the Saudi regime is as much a target of AlQaeda as is the United States. There also have been suggestions thatmembers of the large and sometimes fractious Saud family, numbering 5,000 ormore, have acted independently of the countrys senior leadership in providingsupport to Islamic fundamentalist groups prone to violence. Since September 11,

some U.S. government officials have described Saudi Arabia as a strong ally to theUnited States in [the fight against terrorist financing]; however, others havequalified this viewpoint, and at least one has described Saudi Arabia as theepicenter of financing for Al Qaeda and other terrorist organizations. Thefollowing are summaries of the more publicized post-September 11 reports of allegedSaudi involvement in terrorist financing.

General Allegations

The 9/11 Commission, The final report released by the bipartisan NationalCommission on Terrorist Attacks upon the United States indicates that the

Commission found no evidence that the Saudi government as an institution or seniorSaudi officials individually funded [Al Qaeda]. The report also states, however, thatSaudi Arabia was a place where Al Qaeda raised money directly from individualsand through charities, and indicates that charities with significant Saudigovernment sponsorship, such as the Al Haramain Islamic Foundation, may havediverted funding to Al Qaeda.

Specifically, the report describes bin Ladens use of the Golden Chain, aninformal financial network of prominent Saudi and Gulf individuals originallyestablished to support the anti-Soviet Afghan resistance movement in the 1980s.U.S. officials state that this network collected funds and funneled it to Arab fightersin Afghanistan, and later to Al Qaeda, using charities and other non-governmental

organizations. According to the Commissions report, Saudi individuals and otherfinanciers associated with the Golden Chain enabled bin Laden and Al Qaeda toreplace lost financial assets and establish a base in Afghanistan following their abruptdeparture from Sudan in 1996. These activities were facilitated in part, the reportargues, by the extreme religious views that exist within Saudi Arabia and the factthat until recently Saudi charities were subject to very limited oversight.Although the report highlights a series of unsuccessful U.S. government effortsto gain access to a senior Al Qaeda financial operative who had been detained by

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Saudi Arabia in 1997, the report credits the Saudi government with assisting U.S.officials in interviewing members of the bin Laden family in 1999 and 2000. Thereport argues that these meetings were integral to U.S. efforts to understand the roleof bin Ladens personal wealth in the financing of Al Qaeda. As a result of thisassistance, U.S. officials learned that Saudi government actions in the early 1990s

had in effect divested bin Laden of his share of the bin Laden family fortune, leadingAl Qaeda to rely thereafter on a a core group of financial facilitators based in thePersian Gulf and particularly in Saudi Arabia for funding. The report also creditsSaudi government actions following the May 2003 bombings in Riyadh whichapparently reduced the funds available to Al Qaeda perhaps drastically.

Council on Foreign Relations Studies; An independent task forcesponsored by the Council on Foreign Relations has issued two reports that addressterrorist financing and Saudi Arabias alleged financial support for terrorism. Thetask forces October 2002 report strongly criticized what it asserted was Saudifinancial support for international terrorist groups. For example, the report stated

both in its summary and in the main body: For years, individuals and charitiesbased in Saudi Arabia has been the most important source of funds for Al Qaeda.And for years, Saudi officials have turned a blind eye to this problem. The authorsargued that a connection between Saudi donors and Al Qaeda is logical for severalreasons:

Saudi Arabia possesses the greatest concentration of wealth in the region; Saudinationals and charities were previously the most important sources of funds forthe mujahideen [fighters against the Soviet occupation in Afghanistan]; Saudinationals have always constituted a disproportionate percentage of Al Qaedasown membership; and Al Qaedas political message has long focused on issuesof particular interest to Saudi nationals, especially those who are disenchanted

with their own government.The report grouped Saudi Arabia with Pakistan, Egypt, and other Gulf states and

regional financial centers as source and transit countries, implying that donationsto terrorist causes not only originate in these countries but also those donations fromother countries pass through them en route to terrorist organizations. The Saudigovernment responded by charging that the reports allegations were based on falseand inconclusive information. A Treasury Department spokesperson reportedlydescribed the report as seriously flawed because in the Departments opinion it didnot describe new initiatives adequately.

The task forces second report, released in June 2004, updates the first reportand chronicles the steps the Saudi Arabian government has taken to strengthen its

financial, legal, and regulatory systems and to combat terrorist financing since late2002. According to the report, the Saudi government has announced the enactmentor promulgation of a profusion of new laws and regulations and the creation of newinstitutional arrangements that are intended to tighten controls over the principalmodalities of terrorist financing. The report welcomes these steps and concludesthat on a comparative basis Saudi Arabia has recently taken more decisive legal andregulatory action to combat terrorist financing than many other Muslim states.The second report also identifies several areas in which its authors argue Saudi

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authorities can do more to combat terrorist financing. It argues that additional actionis essential because of the fundamental centrality that persons and organizationsbased in Saudi Arabia have had in financing militant Islamist groups on a globalbasis. The report cites a lack of publicly available enforcement information as thebasis for its questions about the Saudi governments commitment to implement its

new terrorist financing laws and regulations. For example, the report specificallycriticizes the Saudi governments failure to punish, in a demonstrable manner,specific and identified leaders of charities found to be funneling money to militantIslamist organizations. Saudi authorities claim to have prosecuted five individualsfor terror financing and frozen the assets of number of other individuals.

In response to the second reports release, Adel Al Jubeir, foreign policy advisorto Saudi Crown Prince Abdullah and chief Saudi spokesman, charged that the taskforces conclusions were politically motivated, ill-informed, and factuallyincorrect. A Treasury Department spokesperson reportedly agreed with thereports assertion that Saudi Arabia should take further steps to combat terroristfinancing.

The September 11 Lawsuit; In mid-August 2002, the families of more than600 victims of the September 11 attacks filed a suit for approximately $1 trillionagainst three members of the Saudi royal family, a number of financial institutionsand individuals, and the government of Sudan. The suit, which the Saudi media havedescribed as an attempt to extort Saudi deposits in the United States, alleges that thedefendants enabled the September 11 attacks to occur by making financial resourcesavailable to the perpetrators. On November 14, 2003, however, Judge JamesRobertson of the U.S. District Court of the District of Columbia ruled that two of theleading defendants, Defense Minister Prince Sultan and former Director ofIntelligence Prince Turki, were entitled to foreign sovereign immunity for their

official acts.

Linde V. Arab Bank; On July 2, 2004, six families of victims killed orinjured in terrorist attacks in Israel filed a civil lawsuit against Arab Bank PLC ofJordan in the U.S. District Court of New York seeking $875 million in damages.Although the Saudi government is not a party to the lawsuit, the complaint allegesthat the Saudi Committee for the Support of the Al Quds Intifada used accountsestablished at Arab Bank as conduits for funds to charities and individuals in theWest Bank and Gaza Strip associated with the Islamic Resistance Movement(Hamas), Islamic Jihad, and other terrorist entities (for a full description of theCommittee, see Funding for Palestinian Organizations below). The complaint also

alleges that the Saudi Committee used accounts in Arab Bank and Arab Bankbranches in the Palestinian territories to provide insurance benefits to the familiesof suicide bombers and others killed or detained in confrontations with Israelisecurity forces. In 2003, the Central Bank of Jordan ordered all Jordanian banks tofreeze any dealing with six Hamas figures and associated charities. In response tothe lawsuit Shukri Bishara, a senior executive at Arab Bank, reportedly said that theaccusations are completely false and baseless and Arab Bank never participated inany activity knowingly that could lead to violence. A Saudi embassy official also

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reaffirmed that the Saudi government has not provided financial support forterrorism.

Scrutiny of Riggs Bank; The Riggs National Bank, which for two decadeshad been the chief banker for the Royal Embassy of the Kingdom of Saudi Arabia in

Washington, has come under scrutiny from U.S. Treasury and law enforcementofficials and has been fined $25 million for numerous violations of the BankSecrecy Act. In 2003, Riggs began filing suspicious activity reports (SARs) ofunusual or unexplained transactions involving the Saudi Embassys bank accounts.

Saudi accounts at Riggs were closed in early March 2004 at the banks initiative,according to some sources, but Saudi sources say it was a Saudi decision to end theRelationship. On May 13, 2004, federal regulators fined Riggs $25 million forfailing to actively monitor financial transfers through Saudi Arabian and other bankaccounts. The FBI is currently investigating the activities of the former chieffederal bank examiner for Riggs from 1998 to 2002, the period in which allegedmoney laundering violations occurred. In 2002, the official left the Treasury

Department to become a vice president at Riggs.

Joint Congressional Report; The declassification and release in mid-2003of the report of the Joint Inquiry into Intelligence Community Activities before andafter the Terrorist Attacks of September 11, 2001 also brought attention to the allegedrole of Saudi Arabia in supporting terrorism. In the 900-page report, a crucial chapteron foreign support for the hijackers is virtually all blanked out 28 pages in allbecause the Administration refused on national security grounds to release thechapter in a public forum. There has been speculation about the degree to which thedeleted pages might reveal Saudi complicity in the September 11 attacks. Accordingto the press, persons who claim to have read the still-classified section of the report

say it covers Saudi links with individuals involved in the attacks. The Saudi foreignminister appealed to President Bush to publish the censored pages so as to enableSaudi Arabia to rebut these suspicions, but the President refused on the grounds thatan ongoing investigation of the September 11 attacks might be compromised.

The Brisard U.N. Report; A controversial private report issued by Frenchinvestigator Jean-Charles Brisard in December 2002 made several detailedallegations about the involvement of prominent Saudi nationals in the financing ofinternational terrorist organizations. The United Nations Security Council did notsolicit or endorse Brisards report, although it has been mischaracterized as a U.N.report in the public record. Although most public allegations of Saudi support forterrorist activities have not quantified the amounts of money involved, Brisardsreport asserted that Al Qaeda received between $300 million and $500 million duringthe decade prior to 2002, by abusing this pillar of Islam [charitable donations] andtaking advantage of the Saudi regulatory vacuum. Brisard described Saudi donorsas wealthy businessmen and bankers. The report has been the subject of a lawsuitin the United Kingdom regarding defamation of character, and a British High Courtruled in July 2004 that allegations contained within the report were untrue.

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Allegations of Support for Iraqi Insurgents; In October 2004, anunidentified Defense Department official told the press those private Saudi individualsand charities were channeling funds to insurgent groups in Iraq. Saudi officialsvigorously denied the claims and appealed for U.S. officials to provide concrete

information in support of the charges so that Saudi authorities could investigate andprosecute any individuals or entities that may have been involved.In December2004, press reports cited intelligence gathered following U.S. military operations,including the November 2004 assault on Fallujah, which indicated that a handful ofsenior Iraqi Baathists operating in Syria are collecting money from private sourcesin Saudi Arabia and Europe and are channeling it to insurgent groups.Saudi Arabia has contributed $1 billion in loans and credits to reconstructionefforts in Iraq and U.S. officials have engaged Saudi authorities regardingforgiveness of Iraqi debt. The Saudi government administers official aid programsin Iraq under the supervision of the Saudi Committee for the Relief of the IraqiPeople and the Saudi Red Crescent Society. Prince Nayef bin Abd Al Aziz, the

Saudi Minister of Interior directs the Committees operations. The Committee helda fundraising telethon in April 2003, which reportedly raised $11.5 million for reliefefforts in Iraq. In May 2003, the Saudi government established an officialgovernment bank account, Unified Account Number 111, to consolidate public andprivate donations in support of the Iraqi people. Saudi press reports describing theoperations of the Committee and the Red Crescent Society indicate that numerousshipments of food aid and medical supplies have been delivered across Iraq sinceApril 2003, including shipments to the former-insurgent stronghold of Fallujahduring the summer of 2004.

PIRATES THAT HIJACKED THE SAUDI ARABIAN OIL SHIPS

Jeddah, Asharq Al-Awsat- Informed sources have stated to Asharq Al-Awsat that Somali pirates haveasked for a ransom of $20 million for the release of the Saudi Arabian ship "Al-Nisr Al-Saudi" and itscrew which were hijacked last week in the Gulf of Aden.

Kamal Orry, the owner and chairman of the Jeddah-based International Bunkering Company which ownsthe hijacked ship told Asharq Al-Awsat in a telephone interview that "the hijackers who are Somalipirates have demanded a ransom of $20 million in return for the release of the ship and its crew." Orryalso confirmed that he was not involved in the negotiations and that the insurance company that coversAl-Nisr Al-Saudi's insurance was conducting the negotiations with the pirates; however he refused to

disclose the name of this insurance company or the details of the insurance agreement to Asharq Al-Awsat.

Orry also told Asharq Al-Awsat that "the negotiations are being conducted by a representative of thepirates who contacted them [the insurance company] via a satellite telephone where he was informed thatthe ship is insured and negotiations are being carried out with the insurance company."

Orry also informed Asharq Al-Awsat that "the ship has a 14-man crew; 13 Sri Lankans and the ship'scaptain who is Greek." He added "they contacted their families yesterday and they are in good health."

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He also revealed that this ship is brand new and was heading to Jeddah from Japan when it was hijacked.Orry said "the ship is new and modern and was not carrying any oil at the time of the hijack." The shipwas destined to operate as part of the International Bunkering Company operations in the Gulf of Jeddahwhere it would refuel other ships at sea.

News agencies quoted Andrew Mwangura of the East African Seafarers' Assistance Programme as

confirming that said that the Saudi-owned 5,136 tonne al-Nisr al-Saudi ship which was seized on Mondayis currently moored off the Somali coast.

In 2008, the Saudi Arabian oil tanker the Sirius Star was hijacked by Somali pirates in the Indian Ocean,and it was also later moored off the Somali coast, near the port of Harardhere, a Somali pirate stronghold.

Saudi Arabia's Dubious Denials Of Involvement International Terrorism

Saudi Arabia's past involvement in international terrorism is indisputable. While the Bush

administration decided to redact 28 sensitive pages of the Joint Intelligence Report of the U.S.

Congress, nonetheless, Saudi involvement in terrorist financing can be documented through

materials captured by Israel in Palestinian headquarters in 2002-3. In light of this evidence, Saudi

denials about terrorist funding don't hold water.

Israel retrieved a document of the International Islamic Relief Organization (IIRO) which

detailed the allocation of $280,000 to 14 Hamas charities. IIRO and other suspected global Saudi

charities are not NGOs, since their boards of directors are headed by Saudi cabinet members.

Prince Salman, a full brother of King Fahd, controls IIRO distributions "with an iron hand, isaccording to former CIA operative Robert Baer. Mahmoud Abbas, in fact, complained, in a

handwritten December 2000 letter to Salman, about Saudi funding of Hamas. Defense Minister

Prince Sultan has been cited as a major IIRO contributor.

It was hoped, after the May 12 triple bombing attack in Riyadh, that Saudi Arabia might

halt its support for terrorism. Internally, the Saudi security forces moved against al-Qaeda cells

all over the kingdom. But externally, the Saudis were still engaged in terrorist financing,

underwriting 60-70 percent of the Hamas budget, in violation of their "roadmap" commitments

to President Bush.

Additionally, the Saudis back the civilian infrastructure of Hamas with extremist

textbooks glorifying jihad and martyrdom that are used by schools and Islamic societies

throughout the West Bank and Gaza Strip. Ideological infiltration of Palestinian society by the

Saudis in this way is reminiscent of their involvement in the madrassa system of Pakistan during

the 1980s, which gave birth to the Taliban and other pro bin-Laden groups.

Saudi Arabia Provided the Ideological Backdrop for 9/11

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Nine years ago on September 11, 2001, most well-informed observers of the Middle East

were shocked to hear that 15 out of the 19 hijackers who carried out the attacks on the World

Trade Center and the Pentagon were Saudi citizens. It was equally surprising that the mastermind

of the worst terrorist attack on the United States in its history, Osama bin Laden, was born and

raised in Saudi Arabia. This curiosity and wonder about the Saudi role in the attack came up

once more with the release of the September 11 Joint Intelligence Report by the U.S. Congress

and its disclosure of what the U.S. press called "incontrovertible evidence" linking Saudis to the

financing of al-Qaeda operatives in the United States.

For decades, terrorism had been associated with states like Libya, Syria, or Iran. Saudi

Arabia had been a pro-Western force during the Cold War and had hosted large coalition armies

during the 1991 Gulf War. Saudi Arabia had not been colonized during its history, like other

Middle Eastern states that had endured a legacy of European imperialism. This background only

sharpened the questions of many after the attacks: What was the precise source of the hatred that

drove these men to take their own lives in an act of mass murder? The Saudis were initially in a

state of denial about their connection to September 11; Interior Minister Prince Naif even tried to

pin the blame for the attacks on Israel, saying it was impossible that Saudi youth could have been

involved.

Yet over time it became clearer how Saudi Arabia could have provided the ideological

backdrop that spawned al-Qaeda's attack on the United States. In a series of articles appearing in

the Egyptian weekly, Ruz al-Yousef (the Newsweek of Egypt), Wael al-Abrashi, the magazine's

deputy editor, attempted to grapple with this issue. He drew a direct link between the rise of

much of contemporary terrorism and Saudi Arabia's main Islamic creed, Wahhabism, and the

financial involvement of Saudi Arabia's large charitable organizations:

Wahhabism leads, as we have seen, to the birth of extremist, closed, and fanatical

streams, that accuse others of heresy, abolish them, and destroy them. The extremist religious

groups have moved from the stage of Takfir [condemning other Muslims as unbelievers] to the

stage of "annihilation and destruction," in accordance with the strategy of Al-Qa'ida - which

Saudi authorities must admit is a local Saudi organization that drew other organizations into it,

and not the other way around. All the organizations emerged from under the robe of Wahhabism.

I can state with certainly that after a very careful reading of all the documents and texts of

the official investigations linked to all acts of terror that have taken place in Egypt, from the

assassination of the late president Anwar Sadat in October 1981, up to the Luxor massacre in1997, Saudi Arabia was the main station through which most of the Egyptian extremists passed,

and emerged bearing with them terrorist thought regarding Takfir - thought that they drew from

the sheikhs of Wahhabism. They also bore with them funds they received from the Saudi

charities.

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Thus, while some Western commentators have sought to explain the roots of al-Qaeda's

fury at the U.S. by focusing on the history of American policy in the Middle East or other

external factors, a growing number of Middle Eastern analysts have concentrated instead on

internal Saudi factors, including recent militant trends among Saudi Arabia's Wahhabi clerics

and the role of large Saudi global charities in terrorist financing. This requires a careful look at

how Saudi Arabia contributed to the ideological roots of some of the new wave of international

terrorism as well as how the kingdom emerged as a critical factor in providing the resources

needed by many terrorist groups.

The International Terrorism Threat Is Changing

Who are the international terrorists?

What are their motives and how do they get their support?

How can we stop them?

The answers to these questions have changed significantly over the last 25 years. There

are dramatically fewer international terrorist incidents than in the mid-eighties. Many of the

groups that targeted America's interests, friends, and allies have disappeared. The Soviet bloc,

which once provided support to terrorist groups, no longer exists. Countries that once excused

terrorism now condemn it. This changed international attitude has led to 12 United Nations

conventions targeting terrorist activity and, more importantly, growing, practical international

cooperation.

Now, a growing percentage of terrorist attacks are designed to kill as many people as

possible. In the 1990s a terrorist incident was almost 20 percent more likely to result in death or

injury than an incident two decades ago. The World Trade Center bombing in New York killed

six and wounded about 1,000, but the terrorists' goal was to topple the twin towers, killing tens

of thousands of people. The thwarted attacks against New York City's infrastructure in 1993

which included plans to bomb the Lincoln and Holland tunnels-- also were intended to cause

mass casualties. In 1995, Philippine authorities uncovered a terrorist plot to bring down 11 U.S.

airliners in Asia. The circumstances surrounding the millennium border arrests of foreign

nationals suggest that the suspects planned to target a large group assembled for a New Year's

celebration. Overseas attacks against the United States in recent years have followed the same

trend. The bombs that destroyed the military barracks in Saudi Arabia and two U.S. Embassies in

Africa inflicted 6,059 casualties. Those arrested in Jordan in late December had also planned

attacks designed to kill large numbers.

However, if most of the world's countries are firmer in opposing terrorism, some still

support terrorists or use terrorism as an element of state policy. Iran is the clearest case. The

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Revolutionary Guard Corps and the Ministry of intelligence and Security carry out terrorist

activities and give direction and support to other terrorists. The regimes of Syria, Sudan, and

Afghanistan provide funding, refuge, training bases, and weapons to terrorists. Libya continues

to provide support to some Palestinian terrorist groups and to harass expatriate dissidents, and

North Korea may still provide weapons to terrorists. Cuba provides safe haven to a number of

terrorists. Other states allow terrorist groups to operate on their soil or provide support which,

while failing short of state sponsorship, nonetheless gives terrorists important assistance.

The trend toward higher casualties reflects, in part, the changing motivation of today's

terrorists. Religiously motivated terrorist groups, such as Osama bin Ladin's group, al-Qaida,

which is believed to have bombed the U.S. Embassies in Africa, represent a growing trend

toward hatred of the United States. Other terrorist groups are driven by visions of a post-

apocalyptic future or by ethnic hatred. Such groups may lack a concrete political goal other than

to punish their enemies by killing as many of them as possible, seemingly without concern about

alienating sympathizers. Increasingly, attacks are less likely to be followed by claims of

responsibility or lists of political demands.

The shift in terrorist motives has contributed to a change in the way some international

terrorist groups are structured. Because groups based on ideological or religious motives may

lack a specific political or nationalistic agenda, they have less need for a hierarchical structure.

Instead, they can rely on loose affiliations with like-minded groups from a variety of countries to

support their common cause against the United States.

Al-Qaida is the best-known transnational terrorist organization. In addition to pursuing its

own terrorist campaign, it calls on numerous militant groups that share some of its ideological

beliefs to support its violent campaign against the United States. But neither al-Qaida's extremistpolitico-religious beliefs nor its leader, Osama bin Ladin, is unique. If al-Qaida and Osama bin

Ladin were to disappear tomorrow, the United States would still face potential terrorist threats

from a growing number of groups opposed to perceived American hegemony. Moreover, new

terrorist threats can suddenly emerge from isolated conspiracies or obscure cults with no

previous history of violence.

Not all terrorists are the same, but the groups most dangerous to the United States share

some characteristics not seen 10 or 20 years ago:

They operate in the United States as well as abroad.

Their funding and logistical networks cross borders, are less dependent on state sponsors,

and are harder to disrupt with economic sanctions.

They make use of widely available technologies to communicate quickly and securely.

Their objectives are more deadly.

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This changing nature of the terrorist threat raises the stakes in getting American counterterrorist

policies and practices right.

Saudi Arabia: Number One Terrorist State

Appeasement of Saudi Arabia even in the aftermath of September 11 is absurd andborders on treason. It does nothing to help the Muslim world (at least its leadership) come out ofits state of deep denial for the responsibility for the worst terrorist outrage of all time. This denialis as irrational as the culture and religion that caused it. The real winner of Western appeasementhas been Osama bin Laden and like-minded religious fanatics. Brzezinskis "excellent idea"(going back to President Carter) of using fundamentalist Islam to fight Soviet Communism hasbackfired by failing to grasp Islam's (Wahhabism) inherent link with violence and intolerance.The US helped create bin Laden then ignored the problem in order to appease Saudi Arabia.

Jonathan Pollard tried to warn both the US and Israel of what was going on and got"nailed to the cross" for treason. Turns out he wasn't the one selling out US Intelligence, the real

culprits were a pair of WASP's nailed in the 1990's, not a Jew. But the fact he was a Jew was aready excuse to silence a fair inquiry. Threatening Americans has become a worthy goal forAshcroft and Bush.

Saudi Arabia is still the largest sponsor and supporter of Islamic terrorism in the world.Spreading the Wahhabi Cult across the Muslim world (including many Muslims in America) andteaching hate and intolerance, even of non-Wahhabi Muslims. The hate being taught in schoolsand mosques must be ended. The American "crack whore" addiction to cheap oil must end or wewill continue to sell-out everything we stand for just to get the next fix. $3 a gallon for gas ischeaper then the next September 11.

Now Saudi Arabia itself may be the target of its own terrorists, as they seemed to havelost control. And the US seems to be planning to use terrorists against Iran. This is stupidbecause that will also go out of control.

Quoting Henry Kissinger, "The Saudis are pro-American, they have to operate in a difficult

region, and ultimately we can manage them." Guess the homicide bombings in Saudi Arabia and

the inside help the terrorists got from Saudi officials has proven his point wrong. UnlessPresident Bush stops covering up for Saudi Arabia and using terrorists to bolster American

policy, the War on Terrorism is a sick joke.

Today all of the western countries are looking to the Arab countries as they are terrorist

countries due to the incident that occurred in the past. Arab countries try to proof that they areinnocent from such acts because Islam as a religion calls for stopping this behavior against

humanity. Islam respects human rights and tries to spread peace and harmony.

What is terrorism? In the past years we have all experienced or heard about some

sort of attack that has made a huge impact on us. A few years ago, 9/11 caught us by surprise and

had an overwhelming effect on us. This time powerful figures were targeted such as the World

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Trade Center which symbolizes America's influential economy, the Pentagon, which represents

America's military power, and if it were not for the courageous passengers on United Airlines

Flight 93 the White House would have been another target. There have been other attacks such

as these, some of which have also taken place on an airplane like the Egypt Air Flight 648 that

was heading to Cairo from Athens on November 23.

It is very difficult to resolve the international problem of terrorism for several major

reasons. Terrorists usually don't claim responsibility for their actions until the fuse is lit; it's not a

case of Jack the Ripper sending an ear to the cops and warning them who his next victim will be.

Terrorists usually do claim responsibility for their actions after the media is aware that something

happened, this gains recognition for their cause, which is often the reason they resort to terrorism

in the first place. These groups are often underground and individuals rarely step forward, how

can you arrest an entire group that you can't touch?

Terrorism following the dramatic events of September 11, 2001, the issue of terrorism

has become a permanent actor in the daily amphitheater of international politics. Every Americanshould realize what terrorism entails, especially after 9/11. Whether or not we understand the

proper meaning of terrorism, it has become a large, terrifying part of our society today. To

clarify things, the scientific definition of terrorism is "the use of intimidation, coercion, threats,

and violent attacks to achieve the objectives of an individual or of a group"

Compare and contrast the international terrorism of the early 21st century with the

international terrorism of the 1970s and 1980s.International terrorism of the 1970s and 1980s

compared to that of the terrorism we face in the beginning of the new millennium has changed or

rather evolved in a number of aspects and in particular with regards to; mass media, a shift in

ideology from political to fanatical religious, the objectives becoming increasingly unrealisticand apocalyptic, a change in the methods of exercising violence and the scale of violent with

particular reference to the number of victims targeted. This is a direct result of the shifting

political, social and economic climate of the world, globalization, and the rapid progression of

technologies.

Ideological Roots of the New Terrorism and Its Global Export

While these developments may seem far beyond the horizon of the Israeli-Palestinian

conflict, a careful examination of some of the worst suicide bombings by the Hamas organization

against the State of Israel also leads to Saudi Arabia. As of September 2003, Saudi clerics were

featured prominently on Hamas websites as providing the religious justification for suicide

bombings. Of 16 religious leaders cited by Hamas, Saudis are the largest national group backing

these attacks. The formal Saudi position on suicide bombings, in fact, has been mixed. To his

credit, the current Saudi Grand Mufti, Sheikh Abdul Aziz bin Abdullah Al al-Sheikh, has

condemned these acts. Yet at the same time, Saudi Arabia's Minister for Islamic Affairs, Sheikh

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his funeral. In short, he was mainstream. His militant ideas about justifying the September 11

attacks were echoed by Sheikh Abdullah bin Abdul Rahman Jibrin, who actually was a member

of the Directorate of Religious Research, Islamic Legal Rulings, and Islamic Propagation and

Guidance - an official branch of the Saudi government.

In 2003, the religious opinions of Saudi militant clerics were turning up in Hamas

educational institutions in the West Bank and Gaza Strip. For example, the Hamas-oriented

"Koran and Sunna Society-Palestine," that had been established in 1996 in Kalkilya, had

branches in Bethlehem, Salfit, Abu Dis, Jenin, and the Tulkarm area. It distributed Saudi texts

praising suicide attacks against "the infidels" and condemning those who dodge their obligations

to join "the jihad." The pro-Hamas "Dar al-Arqam Model School" in Gaza, that was established

with Saudi aid, used texts that cited Sheikh Sulaiman bin Nasser al-Ulwan, a pro-al-Qaeda Saudi

cleric, whose name is mentioned in a bin Laden video clip from December 2001. Both the

"Koran and Sunna Society-Palestine" and the "Dar al-Arqam Model School" were supported by

the Saudi-based World Assembly of Muslim Youth (WAMY), and were part of the "civilian"infrastructure of Hamas. Militant Saudi texts extolling martyrdom were infiltrated into schools

throughout the West Bank and Gaza Strip, creating a whole generation of students that absorbed

their extremist messages. The export of thisjihadi ideology to the Palestinians was reminiscent

of the Saudi support formadrasses in western Pakistan during the 1980s, which gave birth to the

Taliban and other pro-bin Laden groups.

Financial Support for the New Global Terrorism

As already demonstrated, Saudi Arabia erected a number of large global charities in the

1960s and 1970s whose original purpose may have been to spread Wahhabi Islam, but whichbecame penetrated by prominent individuals from al-Qaeda's globaljihadi network. The three

most prominent of these charities were the International Islamic Relief Organization (IIRO; an

offshoot of the Muslim World League), the World Assembly of Muslim Youth, and the

Charitable Foundations of al-Haramain. All three are suspected by various global intelligence

organizations of terrorist funding. From the CIA's interrogation of an al-Qaeda operative, it was

learned that al-Haramain, for example, was used as a conduit for funding al-Qaeda in Southeast

Asia. Furthermore, Russia's Federal Security Service charged that al-Haramain was wiring funds

to Chechen militants in 1999.

It would be incorrect to view these charities as purely non-governmental organizations(NGOs) or private charities, as they are mistakenly called. At the apex of each organization's

board is a top Saudi official. The Saudi Grand Mufti, who is also a Saudi cabinet member, chairs

the Constituent Council of the Muslim World League. The Saudi Minister of Islamic Affairs

chairs the secretariat of WAMY and the administrative council of al-Haramain. All three

organizations have received large charitable contributions from the Saudi royal family that have

been detailed in Saudi periodicals. Indeed, according to legal documents submitted on behalf of

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the Saudis by their legal team in the firm Baker Botts, in the 9/11 lawsuit, Prince Sultan provided

$266,000 a year to the IIRO for sixteen years. He also provided a much smaller sum to WAMY.

In short, these Saudi charities were full-fledged GOs - governmental organizations.

The earliest documented links between one of these charities and terrorists was found in

Bosnia. It is a handwritten account on IIRO stationery from the late 1980's of a meeting attended

by the secretary-general of the Muslim World League and bin Laden representatives, indicating

the IIRO's readiness to have its offices used in support of militant actions. As already noted,

IIRO has been suspected of terrorist funding in the Philippines, Russia, East Africa, Bosnia, and

India. Al-Qaeda operatives became accustomed to Saudi Arabia being their source of support, in

general. In an intercepted telephone conversation, a senior al-Qaeda operative told a subordinate:

"Don't ever worry about money, because Saudi Arabia's money is your money. As recently as

mid-August 2003, U.S. Deputy Secretary of State Richard Armitage admitted in Australia that

"some money from Saudi private charities had gone toward funding militants in Iraq.

But the strongest documentedcases that demonstrate the ties between Saudi Arabia's

global charities and international terrorism are related to Hamas. These ties were allegedly

already in place in the mid-1990s when a Hamas funding group received instructions to write

letters of thanks to executives of IIRO and WAMY for funds it had received. In 1994, President

Clinton made a brief stop-over in Saudi Arabia during which he complained about Saudi funding

of Hamas. These charges about Saudi Arabia bankrolling Hamas have become even more

vociferous in recent years.

The Saudis' Denials Don't Hold Water

The Saudis have been equally vociferous in their denials. Crown Prince Abdullah's

foreign policy advisor, Adel al-Jubeir, asserted on CNN's "Crossfire" on August 16, 2002: "We

do not allow funding to go from Saudi Arabia to Hamas." More recently, Foreign Minister Prince

Saud al-Faisal told the Saudi dailyArab News on June 23, 2003, that since the establishment of

the PLO as the sole legitimate representative of the Palestinian people, the Saudi Kingdom only

sends funding through the PLO. He denied that the Saudis finance Hamas.

Yet during Israel's Operation Defensive Shield last year, a whole array of documents was

uncovered which show these repeated Saudi denials to be completely baseless. One of the

strongest pieces of evidence came from a handwritten letter written in Arabic by the formerPalestinian prime minister, Mahmoud Abbas (Abu Mazen), on December 30, 2000, to Prince

Salman, governor of Riyadh and a full brother of King Fahd. Abbas complained that Saudi

donations in the Gaza Strip are going to an organization called al-Jamiya al-Islamiya (the

Islamic Society) which, Abbas explained, "belongs to Hamas." He wanted the funds for Fatah.

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Al-Jamiya al-Islamiya was not just a Hamas front, supporting positive social programs

and secretly diverting funds to military activity. Even its showcase "humanitarian" activities

were reprehensible. For example, at a kindergarten graduation involving some of its 1,600

Palestinian pre-schoolers, children wore uniforms and carried mock rifles. Others re-enacted the

lynching of Israelis or other terrorist attacks. A five-year-old girl dipped her hands in what was

supposed to be Israeli blood and then lifted them for the cameras.Al-Jamiya al-Islamiya posted

the photographs on its website. Thus, the Saudis were not only funding the current generation of

terrorism but also the next generation as well.

There were other documents linking Saudi institutions to terrorist financing. An actual

IIRO document was found that detailed how $280,000 was to be allocated to 14 Hamas front

groups. Former CIA operative Robert Baer has contended that the very same Prince Salman, who

received Mahmoud Abbas's letter of complaint, controlled IIRO distributions "with an iron

hand." There was further evidence tying the Saudis to Hamas. Checks made out to well-known

Hamas fronts from the corporate account of al-Rajhi Banking and Investment at ChaseManhattan Bank were also uncovered. Al-Rajhi Banking and Investment was one of the largest

Saudi banking networks which serviced the Saudi charities. Its head, Sulaiman al-Rajhi, headed

the family that established the SAAR (the acronym for his name) foundation in Herndon,

Virginia, which was raided last year by U.S. federal agents because of suspected terrorist links.

The Saudis were clearly uncomfortable with the Israeli discoveries. Adel al-Jubeir tried

to question the authenticity of the documents. Alternatively, he attempted to misrepresent their

content. Thus, on the BBC interview program "Hardtalk" with Tim Sebastian on August 15,

2003, al-Jubeir argued that Mahmoud Abbas's letter to Prince Salman, noted above, contained no

reference to Hamas, but only to undefined Islamic groups. Yet, in fact, Abbasmade explicitreference to Hamas as a recipient of Saudi aid, in his own handwriting.

There were other conduits for terrorist funding that were disclosed. Spreadsheets from the

Saudi Committee for Aid to the al-Quds Intifada were found that detailed the movement of

moneys to the families of suicide bombers. Saudi spokesmen tried to distance themselves from

this activity by arguing that they helped these families through "international aid organizations."

Yet it became clear from the spreadsheets that these contributions were given through a

specifically Saudi organization, headed by the Saudi Minister of the Interior, Prince Naif. Indeed,

at the top right-hand corner of the spreadsheets found in the West Bank, the name "Kingdom of

Saudi Arabia" stands out. In the words of Secretary of State Colin Powell, this kind of support"incentivized" the suicide terrorist attacks.

The Hamas case demonstrated the mode of operation of Saudi charities in support of

terrorism. It was significant, as well, for those investigating other cases of global terrorism,

including al-Qaeda, since very often these groups shared the same funding mechanisms. IIRO

and BMI, a New Jersey-based Islamic investment bank, were involved in Hamas funding and are

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suspected to have financed the 1998 bombing of the U.S. embassies in East Africa. As a case-

study, Hamas's funding is particularly useful to examine, since it is the best-documented case of

how the Saudis used their charities to back militant activities.

Defying President Bush

Most of the documents discovered in the West Bank and Gaza Strip were dated from the

year 2000. Saudi diplomats argued that after September 11, 2001, they had turned over a new

leaf. For example, in December 2002, the Royal Embassy of Saudi Arabia in Washington

released a nine-page report detailing the steps they had taken to keep better track of what the

charities were doing. The Saudi report stated that since September 11, 2001, "charitable groups

have been closely monitored and additional audits have been performed to assure that there are

no links to suspected groups." Was this indeed the new Saudi policy, it made sense, since

President Bush had clearly stated that in the war on terrorism, states were "either with us or with

the terrorists?"

Yet just weeks before the newest Saudi assurances were provided on terrorist financing at

a news conference in Washington, one of the top leaders of Hamas, Khaled Mashal, had been

invited to Riyadh for a WAMY conference. So while in Washington the press corps was told that

there were no longer any ties between the Saudi charities and "suspected groups," in Riyadh, one

of the three main Saudi charities was hosting the leader of one of the "suspected groups," Hamas,

which had been labeled by the U.S. government as an international terrorist organization.

According to a captured Hamas document that detailed Khaled Mashal's visit to Saudi Arabia; he

actually had been invited by Crown Prince Abdullah himself. While Hamas had refused at the

time to stop its suicide attacks, nonetheless, Saudi officials reassured Mashal of continuingsupport.

These discrepancies between Saudi declarations and realities on the ground have been

found elsewhere. In a June 12, 2003, news conference in Washington, Adel al-Jubeir announced

that al-Haramain "would be shutting down all of its foreign offices. Yet on July 5, 2003, Jane

Perlez reported in theNew York Times from Jakarta, Indonesia, that al-Haramain put its large

headquarters in a Jakarta suburb up for rent and simply "moved to a smaller house down the

block. In another case, the al-Haramain office in Ashland, Oregon, was still up and running in

September 2003, though its lawyer argued it did not receive funds from its main office in

Riyadh.

A new context for the issue of Saudi funding of terrorist groups was created when

President Bush issued the "Roadmap to a Permanent Two-State Solution to the Israeli-

Palestinian Conflict" on April 30, 2003. Besides requiring difficult measures by Israelis and

Palestinians alike, the first phase of the new Bush administration plan specifically called on Arab

states to "cut off public and private funding and all other forms of support for groups supporting

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and engaging in violence and terror." In short, Saudi Arabia had to come under the roadmap, as

well. Meeting the leaders of Saudi Arabia, Jordan, Egypt, and Bahrain at Sharm el-Sheikh on

June 3, 2003, President Bush announced that they had committed themselves to use all means to

cut off assistance to any terror group.

It might have been expected that Saudi Arabia would adhere to this firm U.S. policy and

not defy President Bush. After all, Crown Prince Abdullah had made a commitment to President

Bush at Sharm el-Sheikh. Moreover, on May 12, 2003, Saudi Arabia itself was struck by a triple

suicide bombing that led to 35 fatalities, including 9 Americans. Having denied that there was an

al-Qaeda presence in the Saudi kingdom, the Saudi government began uncovering al-Qaeda cells

and munitions in Riyadh, Mecca, Medina, Jiddah, and in the northern al-Jawf area. After

providing the ideological and financial basis for the growth of al-Qaeda and its sister

organizations, including Hamas, the Saudis found that the fire they had ignited was coming back

to burn them as well.

Unfortunately, while the Saudis appear to be taking their own domestic threat seriously,

there is no indication that they have scaled back terrorism financing abroad. For example, on

June 26, 2003, David Aufhauser, the General Counsel to the Treasury Department, appeared

before the Senate Judiciary Committee and still described Saudi Arabia as "the epicenter" of

terrorist financing. That was more than a month afterthe Riyadh bombings. More than two

months after the bombing, on July 31, 2003, John Pistole, the Acting FBI Director for

Counterterrorism, was asked about Saudi efforts to stop terrorist financing. Pistole, who praised

the level of Saudi cooperation with the FBI on investigating the Riyadh bombings as

"unprecedented," could only say with respect to Saudi moves against terrorist financing, "the

jury's still out."

This has been borne out by the Israeli experience with Hamas. The Israeli national

assessment is that Saudi Arabia today funds more than 50 percent of the needs of Hamas, and the

Saudi percentage in the total foreign aid to Hamas is actually growing. U.S. law enforcement

officials agree. Some Israeli estimates of the Saudi portion of the Hamas budget have been put at

60-70 percent. Saudi Arabia continues to aid the families of suicide bombers. It helps dual-use

charities and charities that funnel funds directly to military activities against Israel. Indeed, in

August 2003, the Hamas spiritual leader, Sheikh Ahmed Yasin, thanked IIRO and WAMY for

their assistance during a public address in the Gaza Strip.

On June 29, 2003, Hamas agreed to a temporary truce with Israel called a hudna, but at

the same time vigorously sought to rebuild its operational infrastructure, including an effort to

increase the quantity and quality of Qassam rockets launched against Israelis towns. Muslim

writers have argued in the past that a hudna is to be maintained until the balance of power

improves for the Muslim side. Funding Hamas clearly jeopardized efforts to reach a full-scale

cease-fire between Israel and the Palestinians and increased the likelihood that Hamas would

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escalate its militant actions. By August 28, 2003, Hamas was able to launch one of its new

extended-range Qassam rockets, developed during the hudna, a distance of nearly six miles,

striking the outskirts of Ashkelon. The hudna had already collapsed.

There was one exception to these disturbing trends. On August 18, 2003, the Saudi

government adopted its first money-laundering law, which, in theory, could be used to block

terrorist financing. The law contained steep fines and long jail terms for violators. But it was too

early to determine whether the law would be enforced or would just remain on the books. In the

past, Saudi counter-terrorist initiatives proved to be mostly empty rhetoric. U.S. Treasury

Secretary John W. Snow praise the Saudi decision to clamp down on terrorist financing during a

visit to Jiddah on September 17, 2003, yet there was little evidence to indicate that this was any

more than an attempt to acknowledge Saudi intentions in the absence of any tangible results.

Very simply, past Saudi commitments to take effective measures against terrorist

financing or incitement to violence have been half-hearted, at best. At a June 12, 2003, news

conference, Adel al-Jubeir announced with great fanfare that Saudi Arabia had fired several

hundred clerics and suspended more than a thousand for preaching intolerance. Yet within

weeks, the Saudi deputy minister for Islamic affairs flatly denied that the move against the

clerics had anything to do with curbing extremism. Whatever the reason why the clerics were

disciplined, the Saudi governmental message to the mosques has not been sufficiently clear: U.S.

Ambassador to Saudi Arabia Robert Jordan noted: "We have noticed lately in influential

mosques the imam has condemned terrorism and preached in favor of tolerance, then closed the

sermon with 'O God, please destroy the Jews, the infidels, and all who support them.'" In short,

all dimensions of the supposed Saudi war on terrorism look incomplete.

The Saudis have faced domestic terrorism before. It is instructive to recall that in 1995,

Saudi Arabia's National Guard headquarters was struck by pro-bin Laden forces. Yet, domestic

threats in the mid-1990s did not cause the Saudis to halt their assistance to jihadi groups abroad,

like Hamas or the Taliban. Riyadh appears able to draw a distinction between acts of domestic

subversion and international terrorist activities, which are seen as part of the global jihad. Saudi

spokesmen frequently ask how they could support an organization that intended to harm them.

Yet that it is the essence of the "Faustian bargain" (to borrow an expression from former CIA

director James Woolsey) that they apparently struck in the 1990s: al-Qaeda could strike globally

and the Saudis would pay them to leave the royal family alone.

Need Zero Tolerance for Terrorist Funding

This analysis was intended to disclose the critical role of Saudi Arabia in providing

ideological and financial support for the new terrorism. While most of the evidence presented

here comes from the specific case of Hamas, the modus operandi adopted in the Hamas case is

probably applicable to other parts of the global terrorist network as well. This is especially true

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of the critical role of Saudi Arabia's global charities in sustaining many similar militant

organizations from Indonesia to central Russia. While Saudi spokesmen have provided repeated

assurances that they have cleaned up these activities, their denials with respect to terrorist

funding do not stand up against the documented evidence that has accumulated in the last two

years.

The Saudi government faces hard dilemmas. It has recently taken disciplinary action

against some of its most extreme religious leaders. But traditionally, the Saudis need the

backing of their clerics to legitimize their regime; that is the heart of the Saudi-Wahhabi

covenant that dates back to the eighteenth century. Yet the Saudis also need the ultimate

protective shield provided by the United States. In order to sustain this, they have spent huge

sums of money for public relations firms and influence-brokers. But the time has come to tell the

Saudis that they have to make a choice. After September 11, there has to be zero tolerance for

terrorist funding and other forms of terrorist support.

The stakes involved are not just a question of public relations or Arab-Israel point-

scoring in Washington. The West needs to come to an understanding with the Islamic world

based on mutual respect and tolerance. The radicalization of the Middle East being promoted by

the Saudis undermines that goal and threatens to substitute instead a vision of perpetual militancy

and conflict. For that reason, what is at stake is nothing less than the security of the United States

and its allies, as well as the question of whether the Middle East moves in the direction of hope

and peace or relapses into a state of continuing strife.

Funding for Palestinian Organizations

Support for Palestinian causes and the provision of humanitarian aid toPalestinians has long been an important component of Saudi foreign policy, andmany Saudis identify strongly with the Palestinian people and view support forPalestinian causes as a religious, cultural, or, in some cases, political obligation.Repeated allegations made by Israeli and Western sources have contended that Saudisupport for Palestinian institutions and individuals has directly or indirectlysupported Palestinian terrorist groups, although public reporting has not conclusivelylinked official Saudi government support to Palestinian terrorist organizations.Saudi Arabia, like other Arab states, recognizes the Palestine LiberationOrganization (PLO) as the legitimate representative of the Palestinian people and

provides some financial support to Palestinian institutions sponsored by the PLO.A 2002 Saudi government report stated that overall government and private aid to thePalestinians had reached $2.61 billion. Currently, Saudi officials say thatgovernment support to Palestinian causes, approximately $80 million to $100 millionper year, goes solely to the Palestinian Authority, this was established pursuant tothe Israeli-Palestinian agreement of September 13, 1993, known as the first OsloAccord.

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Officially Sanctioned Relief Efforts

Saudi Committees; Within Saudi Arabia, two official charitable committeeshave solicited and delivered aid to Palestinian institutions, individuals, and causessince the onset of the second Palestinian intifada in October 2000: the Saudi Popular

Committee for Assisting the Palestinian Mujahideen and the Saudi Committee forthe Support of the Al Quds Intifada. According to Saudi press reports, Prince Salmanbin Abd Al Aziz, the governor of Riyadh Province, established the PopularCommittee and has directed its operations. The Popular Committees periodicpublic reports indicate that it provided approximately $8.8 million to the PLO fromOctober 2000 to April 2003.

The Saudi Committee for the Support of the Al Quds Intifada has served as themain conduit for Saudi financial and material aid to the Palestinian territories sinceits establishment under Royal Decree 8636 on October 16, 2000. Prince Nayef hasdirected the Committees operations since its establishment. A December 31, 2003report issued by the Saudi Embassy in Washington stated that the costs of the Al

Quds Intifada Committees 31 relief programs amounted to 524,265,283 Saudi riyals(SR) [$139,804,075], in addition to the costs of then-current projects, whichamounted to a further 203,699,433 SR [$54,302,249]. The report also stated thatthe value of the services provided by the Committee to the Palestinian peoplethrough December 2003 was equal to an additional 727,964,716 SR[$194,123,924].

The Al Quds Intifada Committees periodic public reports describe millions ofriyals in monetary aid that its programs have provided to the Palestinian people in theform of financial transfers to the Palestinian Authority (PA), donations to charitableorganizations in the West Bank and Gaza Strip, and by means of direct assistance toover 35,000 needy Palestinian individuals. In addition to financial assistance, the Al

Quds Intifada Committee also has provided food, blankets, medicine, ambulances,and other aid in kind through programs aimed at supporting health care, education,and the provision of basic social services in the Palestinian territories that have beendisrupted during the current uprising. The Committee has also constructed hundredsof homes for Palestinians that have been left homeless due to the ongoing violence.Palestinian officials have reportedly praised the Committees support for thePalestinian people.

In June 2004, the Saudi government announced that the future activities of allSaudi charitable committees and organizations that send aid abroad (including thePalestinian committees) will be monitored and directed by the SaudiNongovernmental National Commission for Relief and Charity Work Abroad. As

of December 2004 it was unclear if this National Commission was operational or ifeither of the two Committees described above continued to operate.

Relief Coordination; Since 2000, both Committees have issued publicsolicitations encouraging Saudi citizens to make donations to support the welfare ofthe Palestinian people. In one often cited instance, the Al Quds Intifada Committeeorganized a telethon sponsored by King Fahd in April 2002 that raised over $110million for families of Palestinians killed or injured in the uprising. Saudi officials

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told their U.S. counterparts that the proceeds of this telethon were funneled throughnon-governmental organizations to provide humanitarian support to needyPalestinian families.

Unified Accounts; Saudi press reports indicate that the Al Quds Intifada

Committee consolidated the proceeds of its fund-raising efforts along with public andprivate donations in support of Palestinian causes in national, government-sponsoredunified accounts established in a number of Saudi banks. Unified AccountNumber 98" and Unified Account Number 90" are referred to in Saudi press reportsdescribing the Al Quds Intifada Committees activities, although it is unclear if bothaccounts existed simultaneously, if they are synonymous, if one superseded the other,or if either still exists. According to Saudi press reports, Saudi citizens wereencouraged to make donations to these accounts at their local banks.

Delivery Mechanisms; Once collected, the proceeds of the Al Quds IntifadaCommittees fundraising efforts were delivered to Palestinian beneficiaries in a

variety of ways. Material aid collected by the Committee, such as food, clothing,blankets, and vehicles, was delivered in cooperation with third parties such as theJordanian Red Crescent Society and the United Nations Relief and Works Agency(UNRWA). The Committee also developed a special process to transfer financial aidto Palestinian individuals in cooperation with Jordans Arab Bank PLC.In an April 2002 interview Dr. Said Al Urabi Al Harithi, the chairman of theExecutive Committee in Support of the Al Aqsa Intifada and an advisor to PrinceNayef, provided details about the process used to identify beneficiaries and deliverfinancial aid to them:

Using information provided by welfare societies and official sources in thePalestinian territories, the Al Quds Intifada Committee prepared lists of potential beneficiaries

drawn from the ranks of the wounded, the families of martyrs, and the families ofprisoners and disabled persons and families that had been affected by the uprising. The wordmartyr is used to refer to those killed as a result of violence (usually Israeli actions).

Then, a central committee conducted a general study of the lists and verified thenames of the beneficiaries, their telephone numbers, social conditions, addresses, and the dateand type of Injury. According to Al Harithi, the Committee would coordinate with thePalestinian Authority and the [Palestinian] ambassador on the information in [the lists] toconfirm that it was precise, correct, and clear.

Once the information had been confirmed and approved, the Committee, in coordinationwith the National Arab Bank,opened a bank account in the beneficiarys name, into which astandard amount of riyals or dollars were transferred based on the individuals circumstances and

the criteria set by the Committee for each of its different programs. For example, the committeeallocated 20,000 riyals [$5,333] for the family of each martyr,and the sum of 10,000 Saudiriyals [$2,666] for every prisoner.

After the deposit had been made, a team in the Palestinian territories followed up on theprocess of delivering aid directly to the beneficiaries and filed regular reports to the SaudiCommittee in Support of the Al Quds Intifada.

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Allegations of Support for Palestinian Terrorists

Allegations of Support for the Families of Suicide Attackers; In May2002, Israeli officials released a report that alleged that the Saudi Committee for theSupport of the Al Quds Intifada had transferred large sums of money to families of

Palestinians who died in violent events, including notorious terrorists. The reportargued that this alleged financial support encouraged Palestinian terrorism by easing the potentialburden on the families of attackers. Saudi officials called the allegations baseless and false,and stated unequivocally that Saudi Arabia does not provide financial support to suicidebombers or their families. Saudi officials also questioned the claim that Palestinian suicideattacks were financially rather than politically motivated. Statements made by Committee figuresin response to specific claims that the Al Quds Intifada Committee provided support to thefamilies of suicide bombers or otherwise supported terrorism have been less consistent. Saudigovernment spokesman Adel Al Jubeir has discussed the possibility that money from theCommittee may have gone to the families of suicide bombers, but has categorically ruled out theexistence of any quid pro quo arrangement or reward system similar to that sponsored by former

Iraqi President Saddam Hussein.

Saudi Committee Website; The Al Quds Intifada Committee website, currentlymaintained in the name of the Saudi Committee for Relief of the Palestinian People, containsover 40,000 transaction records that feature the names individuals who received humanitarian aidand financial support from the Committee. The website states that many accounts were openedfor the harmed persons at the Arab Bank branches in the Palestinian territory, and fixed aids [i.e.donations] were transferred to the harmed people in their respective accounts. One of theCommittees programs supported Palestinian families whose primary breadwinners were killedby Israeli forces or under other violent circumstances during the uprising. Records for thisprogram contain the names of deceased individuals, transaction numbers, and the date of their

deaths, their home towns, and the circumstances in which they were killed. The Committeesdescription of the program indicates that payments of 20,000 SR [$5,300] were transmitted to thefamily members of these individuals in their names following their death. Of the 1,300 namescontained in the records for this specific Committee program, over 60 match or closely resemblethe names of known Palestinian militants who carried out attacks on Israeli military personneland civilians from October 2000 to March 2002. these individuals include suicide bombers andgunmen who were killed during actual and attempted attacks inside Israel and the Palestinianterritories. The following is a sample of five names of beneficiaries featured on the Committeewebsite which matches those of individuals associated with attacks: Said Hassan Hussein Hotari- identified as suicide bomber in June1, 2001, attack on Dolphinarium nightclub in Tel Aviv.Hamasclaimed responsibility.

Izzedin Shahil Ahmed Masri - identified as suicide bomber in August 9, 2001 attack onSbarro pizza restaurant in Jerusalem. Hamas claimed responsibility. Maher Muhiaddin KamelHabeishi - identified as suicide bomber in December 2, 2001, attack on Haifa bus. Hamasclaimed responsibility. Wafa Ali Khalil Idris - female, identified as suicide bomber inJanuary 27, 2002 street attack in Jerusalem. The Al Aqsa Martyrs Brigade claimed responsibility.Mohammed Ahmed Abdel-Rahman Daraghmeh - identified as suicide bomber in March 2, 2002attack on Orthodox Jewish neighborhood in Jerusalem. The Al Aqsa Martyrs Brigade claimedresponsibility. Most of the Committee records assigned to individuals whose names match or

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closely resemble those of suicide attackers list assassination as the cause of death howeverother records credit martyrdom. A handful of these records indicate that the individuals theyrefer to were killed during a martyrdom operation.

Support to Hamas; Since the early 1990s, there have been unsubstantiated

reports of Saudi public and private assistance to the fundamentalist Islamic ResistanceMovement (Hamas), which the U.S. government has designated as a foreign terroristorganization. The Saudi government has not officially described Hamas as a terroristorganization.

In its annual report on terrorism for the year 2001 (Patterns of Global Terrorism, 2001),the State Department noted that Hamas receives funding from private benefactors in SaudiArabia and other moderate Arab states. The 2002 andmost recent 2003 editions of the report donot mention Saudi Arabia as a specificsource of funding for Hamas. Other reports haveestimated varying amounts of aidto Hamas from private donations. According to one report,individuals in SaudiArabia have contributed approximately $5 million to Hamas each year, orapproximately half of its annual operating budget. Saudi spokesman Adel Al Jubeir rejoins that

no Saudi government money goes to Hamas, directly or indirectly. Al Jubeir has been quotedas saying that he considers it very likely that some Saudi individuals have provided financialsupport to Hamas. Recently, reports citing unidentified U.S. and Israeli intelligence officialshave indicated that Saudi funding for Hamas has been curtailed and replaced by other regionalsponsors. In June 2004 testimony before the Senate Governmental Affairs Committee, formerTreasury Department General Counsel David Aufhauser quoted informed intelligence sourcesas saying that for whatever reason, the money going to Hamas from Saudi Arabia hassubstantially dried up. Aufhauser indicated that Saudi financial support has been supplementedby money from Iran and Syria flowing through even more dangerous rejectionist groups in theWest Bank.

Similarly, a report in the June 23, 2004 edition of the Israeli daily Maariv quoted an

unidentified Israeli military official as saying that for the first time in years the Saudis havebegun to reduce the flow of funds to Hamas and to the Gaza Strip. This unidentified sourceattributes this change largely to U.S. pressure on Saudi Arabia to stem the flow of funding toHamas and other terrorist organizations.

Charitable Giving and Madrasas

Charitable giving (zakat) is a religious obligation for Muslims, constituting one of thefive pillars of Islam. Many wealthy Saudis contribute approximately 2.5 percent of theirannual income to charitable causes and relief organizations that fund religious educationprograms, orphanages, hospitals, and other development projects both within Saudi Arabia and

around the world. One expert estimates Saudi charitable donations, in general, to be about $3billion to $4 billion annually, of which 10-20% is disseminated abroad. Saudi officials estimatethat $100 million in charitable donations are directed abroad each year. It is unclear how muchmoney is channeled from Saudi Arabian donations towards charitable endeavors in the UnitedStates, but some estimates suggest that $100 million has been donated over the last decade. Towhat extent these donations have stemmed from the Saudi government or from privateindividuals is unknown.

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Charity Oversight

In response to criticism and allegations of involvement in terrorist financing directed atSaudi Arabian charitable organizations, the Saudi government has taken a series of steps toprovide greater oversight to charitable giving in the Kingdom. In December 2002, thegovernment announced the creation of the High Commission for Oversight of Charities toprovide assistance to Saudi Arabian charities in reforming their operations and improving theirtransparency. At that time, Saudi officials also indicated that all Saudi charities had been audited;however, the results of those audits have not been made publicly available. In May 2003, theSaudi government introduced new banking regulations that prohibited private charities and reliefgroups from transmitting funds overseas, until further regulations could be instituted to ensurethat the money would not be channeled to terrorist organizations. The new banking regulationsdo not place similar restrictions on the operations of multilateral charitable organizations basedin Saudi Arabia, such as the Muslim World League (MWL), the International Islamic ReliefOrganization (IIRO), or the World Assembly of Muslim Youth (WAMY), which actively raise

funds among the Saudi population.In February 2004, King Fahd issued a royal decree establishing the Saudi

Nongovernmental Commission on Relief and Charity Work Abroad. The Commission waspublicly reintroduced in June 2004, and described as the sole vehicle through which all privateSaudi donations marked for international distribution will flow in the future. Once theCommission is operational, Saudi charities with overseas operations will either be dissolved orhave their assets consolidated under the control of the new Commission. The extent to whichthese government steps will be effective remains to be seen.

Action Against Questionable Charity

The Saudi government recently dissolved the Al Haramain Islamic Foundation, a largecharity with links to the royal family, after years of sustained criticism and a series of joint U.S.-Saudi actions relating to its alleged involvement in terrorist financing. U.S. investigators havelinked a former Al Haramain employee to the 1998 U.S. embassy bombing in Tanzania, and aJune 2, 2004 Treasury Department statement called Al Haramain one of the principal IslamicNGOs providing supports for the Al Qaida [variant transcription of Arabic word] network andpromoting militant Islamic doctrine worldwide. Since March 2002, the United States and SaudiArabia have jointly designated 11 overseas branches of Al Haramain as front organizations forterrorist activities. The two countries have asked the U.N. Al Qaeda and Taliban SanctionsCommittee (which monitors sanctions pursuant to U.N. Security Council Resolution 1267) to

add the branches to the Committees consolidated list of terrorists tied to Al Qaeda and theTaliban.U.S. authorities also designated Al Haramains founder and director, Aqeel AbdulazizAl Aqil, as a supporter of terrorism in June 2004. In early January 2004, Al Aqil had steppeddown from his position and remains in Saudi Arabia. Al Aqils successor, Dabbas Al Dabbasi,resigned as director of the organization on July 14, 2004 because of the freezing of theestablishments internal accounts and the inability to give charitable support. Saudi officialsindicate that Al Haramains international operations will be absorbed by the newNongovernmental Commission for Relief and Charity Work Abroad.

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Saudi Support to Religious Schools (Madrasas)

Madrasas are religious schools that have historically existed throughout the Muslimworld. Their curriculum varies regionally and culturally; however for the most part these schools

provide a religiously-based education, focusing on the Quran and other Islamic texts, usually tostudents at the primary or secondary school age. Madrasas offer a free education, room, andboard to their students, and thus they appeal to impoverished families and individuals. On thewhole, these religious schools are supported by private donations from Muslim believers throughzakat. On a global front, concern has been expressed over the spread of radical Islam throughSaudi-funded schools, universities, and mosques, which exist in many countries includingBangladesh, Bosnia-Herzegovina, Indonesia, Pakistan, Uzbekistan, Spain, and even in the UnitedStates. Some view the teaching of Saudi Wahhabism, an Islamic movement that encourages areturn to the pure and orthodox practice of the fundamentals of Islam, as threatening theexistence of more moderate beliefs and practices in other parts of the Muslim world. InNovember 2003, a Saudi Embassy spokesman indicated in a press release that we do not fund

the so-called radical madrassas [variant transcription of Arabic word] that people accuse us offunding, because that goes against our policy. To date, there are no published reports on theaggregate amount of funding which has been donated from inside Saudi Arabia to specificallysupport the building ofmadrasas worldwide.

Saudi Counter-Terrorism Efforts

Post-September 11 Actions

Saudi officials maintain that they are working closely with the United States to combatterrorism, which they say is aimed as much at the Saudi regime as it is at the United States. Amonth after the September 11 attacks, the Saudi Government announced that it would implementU.N. Security Council Resolution1373, which called for freezing terrorist-related funds. TheSaudi Arabian Monetary Agency has issued a number of white papers detailing actions takenby Saudi Arabia to combat terrorist financing. The most recent update, issued in April 2004,addresses various steps including adopted legislation, implemented regulations and resolutions,and cooperation with the United States. In the past, U.S. officials, while acknowledging Saudiefforts, have expressed frustration with Saudi reluctance to share information gleaned from Saudiinvestigations of terrorist incidents and to move against organizations and individuals suspectedof involvement in terrorism. Since mid-2003, however, the Saudi government seems to havebecome increasingly convinced of the seriousness of the terrorist threat and its attendantfinancing. Many commentators attribute this increased Saudi concern to terrorist bombings ofcompounds in the Saudi capital of Riyadh in May and November 2003, both linked by U.S. andSaudi officials to Al Qaeda. Two more attacks in the spring of 2004 in which most victims werenon-U.S. support the theory that the continuing attacks are aimed primarily atdestabilizing Saudi Arabia. At a hearing before the Senate Select Committee on Intelligence onFebruary 24, 2004, then-Director of Central Intelligence George Tenet stated that since the May12th bombings, the Saudi government has shown important commitments to fighting Al Qaida inthe kingdom and Saudi officers have paid with their lives. The State Departments most recentissue ofPatterns ofGlobal Terrorism states that the May and November 2003 attacks

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galvanized Riyadh into launching a sustained crackdown against Al Qaidas presence in theKingdom and spurred an unprecedented level of cooperation with the United States.

Joint Task Force; Shortly after the May 2003 attacks in Riyadh, a joint U.S.- Saudiintelligence task force was set up to help identify the perpetrators. This set the stage for a more

permanent bilateral group with a broader mission. During the first week in August 2003, adelegation of senior U.S. counter-terrorism officials from the National Security Council, theState Department, the Treasury Department, and the Federal Bureau of Investigation met withSaudi leaders reportedly to urge them to do more to cut off the funneling of money to terroriststhrough Saudi businesses and organizations. U.S. officials traveled to Riyadh later that month toset up a joint task force to investigate terrorist financing in Saudi Arabia. Subsequently, agentsfrom U.S. organizations including the Federal Bureau of Investigation and the Internal RevenueService joined Saudi officials to set up a center that will focus on bank accounts, computerrecords, and other financial data.

The U.S.-Saudi task force apparently has two components: one focused mainly onintelligence and the other on financing. The intelligence side shares intelligence information

related to threats to the United States, especiall