Administration seeks new ways to dry up funds to terrorists

WASHINGTON -- The Bush administration is stepping up pressure on Saudi Arabia to block the flow of money to terrorists, and working groups throughout the U.S. government are considering ways to tighten controls worldwide.

"The president believes that Saudi Arabia has been a good partner in the war against terrorism, but even a good partner like Saudi Arabia can do more," White House spokesman Ari Fleischer said Tuesday.

The U.S. drive, which extends beyond Saudi Arabia to several other countries, is being taken with care. The administration wants support from the Arab monarchy in the event of war with Saudi Arabia's neighbor Iraq, and two senior U.S. officials said the Saudis agreed -- "with a wink and a nod" -- to help, provided use of its territory was limited.

"We are working continually to find ways to help nations to do more and are exploring concrete ways to do it," Fleischer said.

The working groups are focusing on drying up financial support for terror, but they have not settled on specific recommendations, and none has been approved, another senior official said.

"But it's appropriate to have a broad group look at a number of options, so it's helpful to have ideas kicked around," Fleischer said.

At the same time, the administration is pressing Saudi Arabia to monitor Islamic charities to make sure that contributions do not go to terrorists, another senior official said.

In Mexico City for talks, Secretary of State Colin Powell said the Saudis understand U.S. concern, considering most of the Sept. 11 terror suspects came from the Arab kingdom.

"But we should not in our concern and our desire to protect ourselves go to the point where we rupture relations with a country that has been a good friend of the United States," Powell said at a news conference.

No action against Saudi Arabia was being considered, he said, but the Bush administration has told Saudi Arabia of U.S. misgivings about financing of charitable organizations that result in money going to suspect individuals.

The flow of money from Saudi Arabia and other countries to extremists in Yemen and elsewhere was confirmed, meanwhile, by Abd al-Kareem al-Iryani, special adviser to Yemeni President Ali Abdullah Saleh.

"No Arab government supports extremists," al-Iryani said in a luncheon at the Brookings Institution. "But there is money in the world coming to these people."

The Yemeni official said Saudi Arabia and other Arab countries have limited banking systems and cannot keep track of the contributions. He stressed the financing problem was far bigger than just Saudi Arabia.

Sen. Richard Lugar, who becomes chairman of the Senate Foreign Relations Committee in January, said in an interview Tuesday that the United States should insist Saudi Arabia do more to stop the financing of terror, "with the implied threat the United States will take charge of the situation, and we will attempt to impose some controls."

"This is a time that firmness ought to be on the part of the United States," said Lugar, R-Ind.

Meanwhile, Treasury Secretary Paul O'Neill and senior officials in his department are reaching out to allies in the Middle East and in Europe to block funds for terror groups.

As terrorist financiers are forced out of the traditional banking system, they are turning to riskier ways to move money, including smuggling cash and cigarettes; trafficking in diamonds, gold and drugs; and siphoning money from charitable donations, Treasury officials say.

Secretary of Defense Donald H. Rumsfeld said more than $100 million had been frozen worldwide. "We are getting good cooperation," he said at a news conference.

The drive to intercept funds for terror groups was begun months before recent news reports that a charitable contribution by Princess Haifa al-Faisal, wife of the Saudi ambassador to the United States, may have indirectly helped two of the men who participated in the Sept. 11, 2001, attacks in New York and Washington that killed more than 3,000 people.

U.S. interagency teams have made several trips to Saudi Arabia, and the Saudis have sent officials to Washington to help identify groups that may be a source of funds for terror operations, a senior U.S. official said Tuesday.

Undersecretary of State Alan Larson, Assistant Secretary of State William Burns and Francis Taylor, who headed the State Department's office to counter terror, are among American officials who have gone to Riyadh in the past few months.

Rep. Michael Rogers, R-Mich., who was on his way home from a trip to the Middle East, said Saudi Arabia had shown "some really great signs" of cooperating against terror.

But, Rogers said in a telephone interview from London, "They've shown some signs that they may, in fact, be encouraging pretty extreme behavior in fundamentalist Islam."

"We still need to continue to put pressure on them to open up, to democratize, to be better neighbors in the Middle East," Rogers said.

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On the Net: State Department's Saudi Arabia page: http://www.state.gov/p/nea/ci/c2419.htm