[Dialogue] U.S. Finds Iraq Insurgency Has Funds to Sustain Itself

[Harry Wainwright]

 <http://www.nytimes.com/>  <http://www.nytimes.com/> The New York Times
<http://www.nytimes.com/> 

 




  _____  

November 26, 2006

U.S. Finds Iraq Insurgency Has Funds to Sustain Itself 

By JOHN F. BURNS
<http://topics.nytimes.com/top/reference/timestopics/people/b/john_f_burns/i
ndex.html?inline=nyt-per> 

BAGHDAD, Nov. 25 - The insurgency in Iraq
<http://topics.nytimes.com/top/news/international/countriesandterritories/ir
aq/index.html?inline=nyt-geo>  is now self-sustaining financially, raising
tens of millions of dollars a year from oil smuggling, kidnapping,
counterfeiting, corrupt charities and other crimes that the Iraqi government
and its American patrons have been largely unable to prevent, a classified
United States government report has concluded.

The report, obtained by The New York Times, estimates that armed groups
responsible for many of the insurgent and terrorist attacks across Iraq are
raising between $70 million and $200 million a year from illegal activities.
It says that between $25 million and $100 million of the total comes from
oil smuggling and other criminal activity involving the state-owned oil
industry that is aided by "corrupt and complicit" Iraqi government
officials.

As much as $36 million a year comes from ransoms paid to save thousands of
kidnapping victims in Iraq, the report said. It estimates that unnamed
foreign governments - previously identified by senior American officials in
Iraq as including France and Italy - paid Iraqi kidnappers an estimated $30
million in ransom last year.

A copy of the report was made available to The Times by American officials
in Iraq, who said they acted in the belief that the findings could improve
American understanding of the challenges facing the United States in Iraq.

The report offers little hope that much can be done, at least anytime soon,
to choke off insurgent revenues. For one thing, it acknowledges how little
the American authorities in Iraq know - three and a half years after the
invasion that toppled Mr. Hussein - about key aspects of insurgent
operations. For another, it paints an almost despairing picture of the Iraqi
government's ability, or willingness, to take measures the report says will
be necessary to tamp down the insurgent financing.

"If accurate," the report says, its estimates indicate that these "sources
of terrorist and insurgent finance within Iraq - independent of foreign
sources - are currently sufficient to sustain the groups' existence and
operation." To this, it adds what may be its most surprising conclusion: "In
fact, if recent revenue and expense estimates are correct, terrorist and
insurgent groups in Iraq may have surplus funds with which to support other
terrorist organizations outside of Iraq."

Some terrorism experts outside the government who were given an outline of
the report by The Times, criticized it for a lack of precision and a
reliance on speculation.

Completed in June, the report was compiled by a working group in Iraq that
operates under the leadership of the National Security
<http://topics.nytimes.com/top/reference/timestopics/organizations/n/nationa
l_security_council/index.html?inline=nyt-org>  Council.

A Bush administration official confirmed the group's existence, saying it
has probed sources of insurgent financing in Iraq and studied how money is
moved into and around the country. He said the group's members are drawn
from the C.I.A.
<http://topics.nytimes.com/top/reference/timestopics/organizations/c/central
_intelligence_agency/index.html?inline=nyt-org> , the F.B.I.
<http://topics.nytimes.com/top/reference/timestopics/organizations/f/federal
_bureau_of_investigation/index.html?inline=nyt-org> , the Defense
Intelligence
<http://topics.nytimes.com/top/reference/timestopics/organizations/d/defense
_intelligence_agency/index.html?inline=nyt-org>  Agency, the state
department, the treasury department, and the Army's Central Command, which
oversees the war in Iraq. The group has about a dozen members, the official
said, and its chairman is Juan Zarate, deputy national security adviser for
combating terrorism.

Even taking the higher figure of $200 million, the group's estimate of the
financing for the insurgency underscores the David and Goliath nature of the
war here, with American, Iraqi and other coalition forces fighting a shadowy
array of Sunni and Shiite groups that can draw on huge armories of weapons
and ammunition left over from Mr. Hussein's days, and the willingness of
many insurgent fighters to go with little or no pay. If the $200 million a
year estimate is close to the mark, it amounts to less than what it costs
the Pentagon, with an $8 billion monthly budget for Iraq, to sustain the
American war effort here for a single day.

For Washington, the report's most dismaying finding may be that the
insurgency no longer depends on the sums Saddam Hussein
<http://topics.nytimes.com/top/reference/timestopics/people/h/saddam_hussein
/index.html?inline=nyt-per>  and his associates seized as his government
collapsed. As American troops entered Baghdad, American officials said at
the time, Mr. Hussein's oldest son, Qusay, took more than $1 billion in cash
from the Central Bank of Iraq and stashed it in steel trunks aboard a
flatbed truck. Large sums were found in Mr. Hussein's briefcase when he was
captured in Dec. 2003.

But the report says Mr. Hussein's loyalists "are no longer a major source of
funding for terrorist or insurgent groups in Iraq." Part of the reason, the
report says, is that an American-led effort has frozen $3.6 billion in
"former regime assets." Another reason, it says, is that Mr. Hussein's
erstwhile loyalists, realizing that "it is increasingly obvious that a
Baathist regime will not regain power in Iraq," have turned increasingly to
spending the money on their own living expenses.

The Hussein loyalists, some leading insurgent groups in Iraq, many others
fugitives, retain control of "tens or hundreds of million dollars," the
report says.

The trail to these assets "has grown cold," the report adds.

In any case, the document says, the pattern of insurgent financing changed
after the first 18 months of the war, so that by 2005 the main source of
funds was no longer "foreign fighters and couriers" smuggling cash, but
rather widespread crime inside Iraq. "Currently, we assess that these groups
garner most of their funding from petroleum-related criminal activity,
kidnapping and other criminal pursuits within Iraq," the report concludes.

The possibility that Iraq-based terrorist groups could finance attacks
outside Iraq appeared to echo Bush administration assertions that prevailing
in the war here is essential to preventing Iraq from becoming a terrorist
haven like Afghanistan became under the Taliban
<http://topics.nytimes.com/top/reference/timestopics/organizations/t/taliban
/index.html?inline=nyt-org> . But that suggestion was one of several aspects
of the report that drew criticism in interviews with western terrorism
experts working outside the government who were given an outline of the
report's findings.

While noting that the report appeared to go beyond any previous
investigation of the subject, the experts said the seven-page document
appeared to be speculative, at least in its estimates of funds available to
the militants. They noted the wide spread of the estimates, particularly the
$70 million to $200 million figure for overall financing, the report's
failure to specify which groups the estimates covered and the absence of
documentation of how authors arrived at their estimates.

While data may have been omitted to protect sources and methods - the
document has a heading on the front page saying "secret," and a warning that
it is not to be shared with foreign governments - several security and
intelligence consultants said in interviews that the vagueness of the
estimates reflected how little American intelligence agencies know about the
opaque and complex militant groups.

"They're just guessing," said W. Patrick Lang, a former chief of Middle East
intelligence at the Defense Intelligence Agency. He added: "They've been
very unsuccessful in penetrating these organizations."

Dr. Magnus Ranstorp of the Swedish National Defense College, an author of
extensive studies of the Iraqi insurgency, said he doubted Iraqi groups were
ready to finance terrorism outside Iraq. "There's very little evidence that
they're preparing to export terrorism from Iraq to the West," he said. "I
think it's much too early for that."

Investigators have had little success in penetrating or choking off
terrorist financing networks - a conclusion just as American military
commanders have conceded that much that is essential to an understanding
their enemy here remains obscure, including the relationships between
"rejectionist" elements of the Sunni insurgency, seeking to restore Sunni
minority rule, and Sunni groups linked to Al Qaeda
<http://topics.nytimes.com/top/reference/timestopics/organizations/a/al_qaed
a/index.html?inline=nyt-org> .. Shiite terror groups, too, many with Iran's
backing, have proven hard to penetrate, the Americans say.

The report says American efforts to follow the financing trails have been
hamstrung by a weak Iraqi government and its nascent intelligence agencies;
a lack of communication between American agencies, and between the Americans
and the Iraqis; and the nature of the insurgent economy itself, primarily
sustained by manual transfers of money rather than more easily traceable
means.

"Efforts to identify key financial facilitators, funding sources and
transfer mechanisms are yielding some results, but we need to improve our
understanding of how terrorist and insurgent cells interact, how their
financial networks vary from province to province or city to city and how
they use their funds," the report says. It also says the United States must
help the Iraqi government "to excise corrupt officials from its law
enforcement and security services and its ministries" and "to prevent
smuggled Iraqi oil from being sold within their borders."

Another challenge, the report says, is to persuade foreign governments to
"stop paying ransoms." Several American security consultants, all former
members of government intelligence agencies that deal with terrorism, said
in interviews that the ineffectiveness of efforts to impede the money flows
is reflected in the continuing, if not growing, strength of Iraq's
militants. "You have to look at what the insurgency is doing," said Mr.
Lang. "Are they hampered by a lack of funds? I see no evidence that they
are." 

"We've had some tactical successes where we've picked off a financier or
whatever, but we haven't been able to unravel a major component of the
system," said Jeffrey White, a defense fellow with the Washington Institute
for Near East Policy, also a former Middle East analyst with the Defense
Intelligence Agency. 

"I've never seen any indication that they're strapped for cash, " he said.

He said the insurgency has demonstrated tremendous regenerative properties.
"The networks fix themselves, they heal themselves," he said. He pointed to
the success of Al Qaeda in Mesopotamia to withstand the loss of hundreds of
combatants and dozens of major leaders. "They keep coming back," he said,
"and I think the same thing has happened to the financial system."

 

Copyright <http://www.nytimes.com/ref/membercenter/help/copyright.html>
2006 The New York Times Company <http://www.nytco.com/>  

 

-------------- next part --------------
An HTML attachment was scrubbed...
URL: /pipermail/dialogue_wedgeblade.net/attachments/20061125/ec878444/attachment-0001.html 
-------------- next part --------------
A non-text attachment was scrubbed...
Name: not available
Type: image/gif
Size: 1810 bytes
Desc: not available
Url : /pipermail/dialogue_wedgeblade.net/attachments/20061125/ec878444/attachment-0001.gif