Thursday, April 11, 2002

International Response:  U.S. and Europe Disagree Over Terrorist Funds

U.S. Treasury Secretary Paul O’Neill is facing private disagreement from European allies over which terrorist finances to block and how, the Wall Street Journal reported today (see GSN, April 9).

U.S. officials have said European countries have not blocked the assets of many entities and people on a U.S.-sponsored list of 192 terrorist financiers and have added few names (see GSN, March 8).

The United States has identified 165 entities and people it believes sponsor terrorists and has asked its allies to freeze their assets.  Spain has provided 21 entities allegedly related to Basque extremists, and the United Kingdom has added six entities allegedly involved with extremists in Northern Ireland.

Germany and France have moved to block the assets of 140 names on the list but have provided no additional names.  The two countries have refused to block assets of several organizations, including the Palestinian group Hamas.

Despite disagreements over certain names, the United States has blocked $34 million in assets it believes are tied to terrorism while Europeans have blocked $35 million and other countries have blocked another $35 million, according to the Journal.

Although it is unclear what percentage of total terrorist funding that blocks, U.S. intelligence reports have indicated al-Qaeda has had difficulty accessing its money.  Terrorists are “finding it very difficult to secure and move funds,” O’Neill said, but the work is “a long way from complete.”

Resistance

The United States has not provided evidence to prove certain entities and people it placed on the financiers’ list are connected to terrorism, said some European officials. 

“Before we can take action, we have to have evidence that will stand up in court,” said one German financial investigator.  “The U.S. attitude seems to be accuse first and stir up a great fuss but not actually provide evidence … We have other standards.”

Also, the European Union permits freezing accounts only when the United Nations agrees the group with the account is related to al-Qaeda or the Taliban, according to the Journal.  O’Neill has asked Germany and France to push the EU to change those rules quickly.

Some European countries are also less willing to meet U.S. demands on freezing assets due to certain U.S. foreign policies.  The United States is concerned its support for Israel could damage European attempts to crack down on Islamist extremist groups, according to the Journal. 

O’Neill has also had difficulty focusing discussions on terrorist financing because Europeans strongly oppose U.S. tariffs on imported steel.

Germany has also said the United States should take action against tax havens in the Caribbean and elsewhere that do not monitor money transfers and therefore ease the process of transferring money to potentially dangerous organizations.  Some U.S. politicians have expressed concerns about a campaign against tax havens.

Middle East

Meanwhile, the United States has also been pressuring other allies to crack down on terrorist financing.  U.S. officials will attend a May conference in the United Arab Emirates to discuss the hawala system, a traditional money transfer system that maintains few records of financial transactions (see GSN, Nov. 8, 2001).

A U.S. Treasury team is currently in Bahrain this week to observe discussions on how Persian Gulf countries should regulate Islamic charities.  The United States has placed several such charities on the list of alleged terrorist financiers (Phillips/Johnson, Wall Street Journal, April 11).