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#3295, 13 December 2010
WikiWrecks: An Analysis of Terrorism Financing
Siddharth Ramana
Research Officer, IPCS

Revelations by WikiLeaks that the US is critical of Gulf states in their approach against terrorist financing of South Asian groups, including the Taliban and LeT, shed light on an observation which has been documented by counterterrorism officials. While countries such as Saudi Arabia have long featured in assessment reports by counter-terrorism officials of being a key player in terrorism financing, the WikiLeaks disclosures provide insight into the problem of terrorism financing which is pervasive in the region, and its relevance to India.

There are two key observations made in these assessments. Firstly, there is a widespread belief in not cracking down substantially on terrorist members and conduits operating in their countries, for fear that it would lead to reprisal attacks and greater domestic stability. In other words, the countries seek to turn the other way as long as terrorism is directed outside their immediate region. The disclosures make this point in reference to Kuwait and Qatar, but its effect is most significantly seen in Saudi Arabia.

In Saudi Arabia, for example, a serious crackdown on terrorism only began in the aftermath of the May 2004 bombings which targeted expatriate housing compounds in Riyadh. The measures included curtailing radical speeches in local mosques and ensuring greater transparency in previously opaque financial dealings of charities and mosques. However, as documented by the embassy cables, there is a perceptible difference in the Saudi dealing with groups affiliated to al Qaeda and al Qaeda itself. The report states that it remains a key challenge in persuading Saudi officials in “treating terrorist financing emanating from Saudi Arabia as a strategic priority.”

The Saudi financial link to terrorism directed against India is not merely limited to donations made to charitable organizations that have scrupulous backgrounds. The country has long been held as a major source of fundraising for Islamist groups, including proxies for the Lashkar-e-Taiba, such as the Student Islamic Movement of India. For example, following the 2006 serial commuter train blasts in Mumbai, Mumbai's Anti-Terrorist Squad seized approximately 3,7000 Saudi Riyals from the residences of the LeT's Mumbai cell chief, Faizal Ataur Rehman Sheikh, which was wired from Saudi Arabia via Hawala channels.

The second observation made from the cables is the Gulf states’ limited counterterrorism intent, even when information on terrorism suspects and fundraisers is shared with them. The report, for example, makes critical observations about the United Arab Emirates and Qatar in their counterterrorism cooperation. The disclosures reveal that the United Arab Emirates is seen as a key fundraising state for groups such as al Qaeda, Hamas and the Lashkar-e-Taiba. In the backdrop of the two Emirati citizens who were involved in hijacking during the September 11 attacks, the country’s counterterrorism credentials need deeper scrutiny.

UAE has been a favorite haunt of terrorist members, including those evading red corner notices issued by Interpol, an example being Dawood Ibrahim. The country has especially been known to have turned a blind eye to anti-Indian terror financing. For example, it is widely reported the UAE’s lax Hawala laws have been used to divert funds to anti-Indian terror outfits. Indian investigators linked UAE to the August 2003 twin blasts in Mumbai, and also to the December 2010 bombing at Varanasi. Disturbingly, the WikiLeaks disclosures report that oversight regulations continue to be found wanting, and that information on the identity of Taliban and LeT donors and facilitators in the UAE remains inconclusive.

In an added concern for India, Qatar is described as being largely passive in its approach to cooperating with the U.S. against terrorist financing, with its counterterrorism cooperation being labelled the worst in the region. In 2009, Indian authorities had arrested Mohammad Omar Madani, a key financier of the Lashkar-e-Taiba, who had, preceding his visit, widely travelled in the Gulf states. Madani’s brother, Hafiz Mohammad Zubair, also a Lashkar operative, is known to be operating in Qatar. Qatar has also figured in investigations into the serial bomb blasts in Bengaluru as being a conduit point for funds provided by senior Pakistani Intelligence officials for its operations in south India. What is particularly disturbing to note is that the report reveals that “Qatar’s security services have the capability to deal with direct threats and while they occasionally have put that capability to use they have been hesitant to act against known terrorists out of concern for appearing to be aligned with the U.S. and provoking reprisals.”

The disclosures are illustrative of the domestic problems of legitimacy the governments in the Gulf states face. For India, these disclosures indicate that despite the words of strong support which India receives from the Gulf states in its fight against terrorism, there is a dichotomy in how these states choose to respond to terrorism affecting themselves and others. It is this dichotomy which has led to many a terror plot being traced back to the Gulf region, and points to a fear that the outfits such as the LeT may move their operational and logistics to the Middle East to further elude investigators.

With a combination of a large number of migrant Indian workers and Indian individuals linked to terrorism fundraising, the importance of stepping up India’s intelligence activities in the region has not been lost to the government. The success of the purported Indian intelligence operation in deporting Sarfaraz Nawaz, a suspected Lashkar financier from Muscat, is an indication that the government is actively bolstering much needed intelligence capabilities in the region.

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