Thread: Foreign Donations, Not Drugs, Taliban's Largest Money Source

Diverse Sources Fund Insurgency In Afghanistan

Restricting Cash Flow Difficult, U.S. Says

By Craig Whitlock
Washington Post Foreign Service
Sunday, September 27, 2009

KABUL -- The Taliban-led insurgency has built a fundraising juggernaut that generates cash from such an array of criminal rackets, donations, taxes, shakedowns and other schemes that U.S. and Afghan officials say it may be impossible to choke off the movement's money supply.

Obama administration officials say the single largest source of cash for the Taliban, once thought to rely mostly on Afghanistan's booming opium trade to finance its operations, is not drugs but foreign donations. The CIA recently estimated that Taliban leaders and their allies received $106 million in the past year from donors outside Afghanistan.

For the past decade, the U.S. Treasury and the U.N. Security Council have maintained financial blacklists of suspected donors to the Taliban and al-Qaeda. The U.N. list, originally designed to pressure the Taliban to hand over al-Qaeda leader Osama bin Laden, requires all U.N. members to freeze the assets of designated Taliban officials and their supporters.

The U.N. and Treasury blacklists were greatly expanded after the Sept. 11, 2001, terrorist attacks. Since 2005, however, only a handful of alleged Taliban benefactors have been added to the lists.

Some American and Afghan officials said the U.S. government, which had been a leading nominator of names for the U.N. blacklist, paid less attention to Taliban donors after the 2003 invasion of Iraq. Until recently, they said, Washington had also been preoccupied with preparing sanctions against individuals and companies doing business with the Iranian government.

Richard Barrett, the coordinator of the United Nations' Taliban and al-Qaeda Monitoring Team, said Taliban sympathizers are much more skillful today at masking their donations and ensuring that the money cannot be traced back to them.

"It's been very, very difficult to identify these people," Barrett said. "You can track the money flow and say this money came from the Gulf, but it's a lot more difficult to confirm the source."

In July, Richard C. Holbrooke, the Obama administration's special representative for Afghanistan and Pakistan, said the Taliban was reaping the bulk of its revenue from donors abroad, especially from the Persian Gulf.

Other U.S. officials have noted that the Taliban received substantial financial help from Gulf countries during the 1990s, when Saudi Arabia and the United Arab Emirates -- along with Pakistan -- were the only nations that gave diplomatic recognition to the Taliban government.

U.S. officials said there is no evidence today that the Saudi, UAE or other Gulf governments are giving official aid to the Taliban. They said they suspect that Pakistani military and intelligence operatives are continuing to fund the Afghan insurgency, although the Islamabad government denies this.

As the insurgency has grown in strength, the Taliban and its affiliates have embraced a strategy favored by multinational corporations: diversification. With money pouring in from so many sources, the Taliban has been able to expand the insurgency across the country with relative ease, U.S. and Afghan officials said.

In an Aug. 30 report assessing the overall state of the war, Gen. Stanley A. McChrystal, commander of U.S. and NATO forces in Afghanistan, said the Taliban's range of financial resources made it difficult to weaken the movement.

"Eliminating insurgent access to narco-profits -- even if possible, and while disruptive -- would not destroy their ability to operate so long as other funding sources remained intact," McChrystal wrote.

U.S. officials said reliable estimates of the Taliban's overall cash flow are difficult to calculate because the insurgency is a decentralized movement comprising many factions and commanders. But annual revenue is thought to total hundreds of millions of dollars.

Money skimmed from the narcotics business -- Afghanistan is the world's top opium producer -- still offers crucial support to Taliban operations, particularly in the southern provinces where opium-producing poppies grow in abundance, officials said.

The U.S. military has estimated that the Taliban collects $70 million annually from poppy farmers and narcotics traffickers. The U.N. Office on Drugs and Crime, which monitors opium production, earlier projected that the Taliban and its affiliates earned as much as $400 million a year from the drug trade. The agency later revised the figure sharply downward, to about $100 million a year.

"The international community and the Americans have been deceiving themselves for the past seven years, saying the Taliban has been getting all of their money from drugs," said Waheed Mojda, who served as a Foreign Ministry official for the Taliban before the U.S.-led invasion of Afghanistan in late 2001.

Increasingly, Taliban commanders are paying for their operations through a variety of extortion schemes, U.S. and Afghan officials said. Many insurgent leaders impose a "tax" on local Afghans or take a cut from gemstone, timber or antiquity smugglers. Ransoms from kidnappings in Afghanistan and Pakistan also have proven lucrative.

Another rich source of revenue: extortion payments from Afghan and Western subcontractors forced to cough up "protection money" to safeguard redevelopment projects, according to U.S and Afghan officials.

"The Taliban know they cannot rely on just one source of money," said Hekmat Karzai, director of the Center for Conflict and Peace Studies in Kabul. "Any of these sources could potentially evaporate."

This year, the U.S. government created a special investigative unit called the Afghan Threat Finance Cell. Modeled after a similar U.S. unit in Iraq, it gathers financial information about the Taliban for law-enforcement and intelligence purposes.

The cell has about two-dozen members drawn from the Drug Enforcement Administration, U.S. Central Command, the Treasury Department and the CIA. The FBI is expected to join soon.

Kirk E. Meyer, a DEA official who directs the cell's operations in Afghanistan, said the mission is to understand how the Taliban-led insurgency is financing its operations, as well as to find ways to put pressure on its money supply.

"I think it's possible to have an impact on certain areas," he said. "It is not going to be the silver bullet, but if it's integrated with what everybody else is doing, like DEA and the military, it's got to have an impact."

Afghanistan, which has only a handful of banks, lacks a modern financial system. Tools commonly used to combat money laundering, such as freezing bank accounts or monitoring electronic wire transfers, are largely useless, U.S. officials said.

Most money transfers in Afghanistan are made under the hawala system, an informal network of money brokers who traditionally keep few, if any, records about their customers. With help from U.S. officials, the Afghan government has begun to regulate its hawala brokers for the first time. Brokers in seven provinces are now registered with the government and are required to report all transactions each month to the central bank, which conducts audits to ensure compliance.

Some hawala brokers have become informants, notifying authorities of suspicious or unusually large transfers. Accustomed to the traditional anonymity of hawala networks, Taliban supporters sometimes fill out their customer slips by plainly stating that the payment is for "heroin" or "five vehicles for Taliban commander so-and-so," said a senior U.S. law-enforcement official.

"Right now, they're at the point where they're not used to having anybody harass them," the official said. "I think we'll start to see more coded-type documents. It will start to say, 'For the Boy Scouts' or something."

The Taliban and its affiliates also move large amounts of cash via human couriers, both domestically and internationally, U.S. and Afghan officials said. Foreign recruits who travel to Pakistan to train in Taliban-sponsored camps are regularly asked to bring $10,000 in cash with them, the U.S. law-enforcement official said.

In Washington, the U.S. government recently established a group to devise an overall strategy for restricting the flow of money to the Taliban. The Illicit Finance Task Force is directed by the U.S. Treasury but draws on personnel from different agencies.

"We're going after this with a great deal of urgency and a huge amount of effort to even more effectively disrupt the networks that fund the Taliban," said David S. Cohen, the Treasury Department's assistant secretary for terrorist financing.

http://www.washingtonpost.com/wp-dyn/co ... 9092602905

Frightening.