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The war on terror money

Will nations' efforts to cut off terrorists' financing stop future attacks?

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More often, financing attacks is so cheap that they're less likely to be affected by a money squeeze. By one estimate, a suicide attack in Israel costs some $150 in materials. Even a big and well-planned strike, such as the Sept. 11 attack, probably only cost between $300,000 and $500,000, a General Accounting Office report notes. The real expense comes in the personnel and infrastructure needed to support such attacks - and it's here that the international crackdown on funding could have a big impact.

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Behind such attacks is an infrastructure "critical for indoctrination, recruitment, training, logistical support, the dissemination of propaganda, and other material support," according to the Treasury's Office of Foreign Assets Control. The sums involved could be millions or tens of millions of dollars, says Mr. Wolosky.

Since a few individuals can provide terrorist groups with big revenues, authorities around the world have teamed up to track them down. For example, Mohammed Ali Hasan al-Moayad, a Yemeni cleric who claimed to have provided $20 million to Al Qaeda, was charged a year ago in Brooklyn, N.Y., arrested in Germany, extradited to the US in November, and is now awaiting trial on charges of material support to terrorist groups.

Tracking donations

Donors don't always know that their money is going to terrorist groups. The Bush administration has closed down several charities operating in the US that it claims were front organizations that provided some legitimate support in troubled areas but also funneled money to terrorists. Authorities here and abroad have also shut down businesses that diverted profits to militant groups.

But these charitable and business activities represent only about a third of the money for terror, author Napoleoni argues. The rest comes from criminal activities, mostly drug trading and smuggling.

Last month, an Indian-born US citizen and a Pakistani pleaded guilty in San Diego to federal charges that they sold hashish and heroin in a plot to buy Stinger missiles for Al Qaeda.

Another example: Over a period of four years, US residents linked to Hizbullah, a Lebanese group that fights Israeli occupation of Palestinian land with terrorist actions, netted some $1.5 million by buying cigarettes in low-tax North Carolina and reselling them in high-tax Michigan.

On the international front, terrorism financing is on the top of the agenda at meetings of both the G-7 and the G-20, says the Treasury's Mr. Zarate. The G-7 comprises the seven largest industrial nations, and the G-20 includes these as well as major developing countries. The IMF and World Bank have just expanded their programs on terror financing.

The United Nations Security Council has approved two resolutions, 1372 and 1390, that call for action by member states to combat financing terrorism. Last month, the Security Council's counter- terrorism committee agreed to "revitalize" its work to "fight the worldwide scourge." Some 100 countries have passed new laws to strengthen safeguards against terrorist funding.

But few, if any, governments have taken the steps that Saudi Arabia has after two Al Qaeda-directed attacks in Riyadh and the uncovering of local Al Qaeda cells last year. Prohibiting donations of cash in churches, for instance, would be impossible in democracies. Saudi charities have been reined in too. They can only open bank accounts in Riyadh, cannot use ATM or credit cards against such accounts, and cannot transfer money from these accounts outside Saudi Arabia.

"We are pushing them [the Saudis] both publicly and privately," says Zarate. "We demand real action of our friends."