The Bush Administration is engaged in one of the most delicate political balancing acts of any American Administration in history, in assembling the coalition against terrorism. In particular, three vital members of their coalition—Pakistan, Saudi Arabia and Israel—each are simultaneously pursuing their own political agendas, agendas which have the potential to not only shatter the anti-terror effort, but to detonate a larger international series of conflicts and chaos.
Here we examine the nature of these three political agendas, in each case, through looking at the specific money flows in each country which tie into Al Qaida's agenda. Among other things, it involves control over 70% of world heroin supply, a major share of world illegal diamond traffic, as well as billions of dollars in illegal Hawala banking flows from wealthy Gulf Arabs.
In the case of Pakistan, the principal problem confronting the government of General Pervez Musharraf is not so much the Taliban, or even the domestic threat from pro-Taliban Islamic extremists in Pakistan. This threat to date, Musharraf has rather successfully contained, as it represents at best perhaps only a 10-15% minority of Pakistan's population. Far the larger threat facing Musharraf is that coming from his own military and military intelligence services, specifically from the elite layers of the Army and the Inter-Services Intelligence or ISI military intelligence. The nature of this threat, however, is poorly understood outside Pakistan.
A significant shift in the politics of Central Asian drug flows took place in the early 1980's when the Ayatollah Khomeini in Iran banned the cultivation of poppy and the production of drugs. This coincided in the beginning of the 1980's with the Soviet troop entry into Afghanistan. The combined effect was to force the Iranian drug barons to shift their capital and infrastructure to the Helmand Province in southwest Afghanistan between Kandahar and Nimruz provinces. At the same time, with a blind eye from US intelligence, the "anti-Soviet" Mujahideen was permitted to traffic in drugs to raise cash to buy more arms. The Pakistani ISI played the lead role in this aspect at the time. Pushtu-speaking tribes on the border between Pakistan and Afghanistan were encouraged in this heroin and opium traffic to supply the Mujahideen "freedom fighters."
The Soviet troop presence in Afghanistan closed the traditional export route through the USSR into Europe for the heroin. Iran as well was closed. This left South Asian routes to be developed from the Afghan-Pakistan border region, south, through India, Nepal and Sri Lanka and out to Western markets.
Inside Pakistan, the vast bulk of illegal opium is cultivated in the North-West Frontier Province and Baluchistan near Quetta, bordering Afghanistan's Pushtun-inhabited southern border. Together, Afghanistan and Pakistan today are responsible for an estimated 70% of world illicit opium production. The border between the two opium regions is more or less trans-national or non-existant, as the drug traffic defines political boundaries since the advent of Taliban control in 1997.
Not coincidentally, this is precisely the area which is the base of Taliban strength as well as the location of the many radical Islamist madrassas or seminaries, along the Pakistani border, supplying young fanatics to the Taliban. The heroin goes from Quetta or Hyderabad to Lahore and either directly on to the West or to Bombay or Delhi. India serves only as a major transit state for far more lucrative markets in Europe and especially in the United States for processed heroin.
In effect, over the past years, even before the takeover of large parts of Afghanistan by Taliban forces, a Pakistan-Afghan borderless drug state, a narco-state, was coming into being. Notable in this regard is a statement by former Pakistani Army Chief, General Aslam Beg, in 1989 in a Pakistani newspaper, that "Afghanistan and Pakistan were two countries but one people, and any future war will be our war, which gives the Pakistani Army added capability." At the time he referred to the Pakistani-trained Mujahideen forces, which later surfaced as the Pakistani-trained Taliban.
The same General Aslam Beg, together with ISI Chief, General Asad Durrani, sought approval in 1991, from then-new Prime Minister, Nawaz Sharif, for their "detailed blue-print to sell heroin to pay for covert military operations." In a 1994 interview, Sharif told the Washington Post, "Both General Beg and General Durrani insisted that Pakistani's name would not be cited because the whole operation would be arrived at by trustworthy third parties."
The veracity of Sharif is not the highest, as he had cultivated his own specific ties to drug clans. However, evidence suggests his implication of the Chief of Staff, General Beg, and Durrani of the ISI was accurate. Notably, it was Nawaz Sharif who in 1998 greatly expanded the role of illegal Hawala money operations in the Pakistani economy. Sharif had earlier been a key figure in the now-defunct Pakistani-Gulf "Islamic bank," BCCI. BCCI was set up in the 1970's by ISI, in order to launder the heroin proceeds to finance Pakistan foreign military ventures. It used the growing network of Pakistanis which were, as a matter of state policy, being sent by the thoudands to oil-rich Gulf states as guest workers, as civil servants, as economists, as police, and as military. Through such links, BCCI was able to enlist the Emir of Abu Dhabi and top Saudis to the board of BCCI.
Once the Bank of England blew the whistle on BCCI money laundering fraud in 1989, Pakistan faced a significant money laundering problem. In 1998, Sharif, on the pretext of stabilizing the currency, froze all Pakistan bank foreign currency accounts. This stopped the huge volumes of money transfers through normal banks from Pakistanis in the Gulf to Pakistan. Curiously, Sharif conspicuously omitted the role of Hawala cash exchanges. Before the May 1998 freeze of bank transfer accounts, Hawala accounted for some 60% of Gulf foreign transfers back to Pakistan. After the freeze on bank transfers by Sharif's government, Hawala rose to an estimated 95% of all foreign transfers. This in large part more than made up for the loss of BCCI and made the drug capital flows impossible to monitor. Interestingly, in 1975 Indira Ghandi's government imposed a state of emergency and jailed major Hawala money changers and froze their accounts, all but shutting Hawala out of the Indian economy. This Pakistani Hawala infrastructure is not only vital to the laundering of the huge Pakistan-Afghan heroin profits overseen by ISI. It is as well, the major source of finance for the Al Qaeda and other Jihad organizations.
A Pakistani journalist reports that in 1994 General Zia al-Haq ordered heroin be sold by representatives of the Army, and that a share of the proceeds go to the government "for security purposes." General Aslan Beg, by then retired, gave an interview in 1998 in the journal, Muslim of Islamabad, in which he urged the Sharif government to use the Islamist "Jihad groups" to regain Kashmir, and to reject American proposals for status quo on Kashmir. He declared, "What is vital is that war be made too expensive for India...The Pakistani armed forces, if given the mission, are in a position to create such an impact." As recently as October, 2001, General Aslam Beg went on record warning President Musharraf against allowing US forces to use bases in Pakistan to wage action against Afghanistan.
In June, 2000, under a mandate from the Musharraf government, the Pakistani National Accountability Bureau, headed by General Husain Syed, issued a report on very wealthy Pakistanis. It listed General (ret) Aslam Beg as a "dollar billionaire," impressive for a career military man. The General has had more than his share from the lucrative ISI heroin trade by all indications.
The Pakistani clans who run the heroin traffic, using the trucking mafia as transport, include the Jaduns, Yusufzais, Khattaks and Afridis. Each clan in turn have intimate links to key generals in the ISI, and the Pakistani Army. Army trucks are used to transport the heroin across borders where they are not checked. Pakistan Air Force planes smuggle the heroin outside the country. In 1997 the US DEA arrested a Pakistani Air Force Squadron leader carrying 2 kg of heroin on a flight to pick up F-16 spare parts. The Army in short, insures safe passage for the drug clans. In fact, while it is denied, the ISI is an integral part of the Pakistani Ministry of Defense, not a separate fly-alone entity. It is always headed by an Army Lt. General and is controlled de facto, by the Army Chief of Staff.
Already in 1974, Pakistan's effort to get a nuclear bomb capability was entrusted to the ISI, in a clandestine division for technology procurement, funded then by Saudi and Libyan funds and in part by heroin proceeds. According to a detailed study of the organization and history of ISI prepared by the Indian think-tank, South Asia Analysis Group, within the ISI, the Joint Intelligence North (JIN) is responsible for the proxy war in Kashmir and Jammu, as well as control of Afghanistan through Taliban. JIN controls the Army of Islam which consists of Al Qaeda, Harkat-ul-Mujahideen, Jaish-e-Mohammad and others. This division of ISI also controls all opium cultivation and heroin refining and smuggling from Pakistani and Afghanistani territory on behalf of the Army according to the institute.
The difficulty at this point, even assuming the strongest will and honest intent on the part of General Musharraf to extricate Pakistan from the grip of its own drug-terror or narco-terror corruption of state institutions over the past 20 or so years, is the pervasive extent of drug cash flows in dominating a de facto bankrupt Pakistani economy. The tribal drug warlords have used heroin cash to purchase arms themselves, such that the tribes in the heroin region of the Northwest have stated, "The government cannot stop us growing poppy. We are one force, and united, and if they come with their planes, we will shoot them down."
In this context, the swift move by General Musharraf in early October to remove three top Army commanders tied to the Taliban indicates the fragility of Musharraf's position. He removed General Mehmood Ahmad as head of ISI and replaced him with Lt. General Ehsanul Haq, who since May had been commander of the critical Peshawar 11 Corps. Peshawar is the primary support and logistic base for Taliban, and assuming Haq shares Musharraf's decision to dismantle the Taliban project, could play a decisive role in assisting the US-led alliance. This is not yet clear. He also replaced Army Deputy Chief of Staff Lt. General Usmani, an Islamist fanatic, and "kicked upstairs" General Aziz Kahn, known as "the Islamic soldier" to a ceremonial post. General Aziz is a protege of General Zia ul-Haq and shares Zia's vision of a pan-Islamic state including Afghanistan and the Central Asian republics.
The Pakistani Army, using the ISI as the interface, has built a structure of Islamist terrorism, weapons and drugs traffic to further their geopolitical goals. The prime initial focus was India. To weaken India's potential strength and national will, so argued the Pakistani Army faction behind the heroin and irregular warfare strategy, the ISI would covertly promote illegal arms traffic into target areas such as Jammu, Kashmir, Punjab, Assam. It would patronize the drug syndicates to insure a flow of heroin into the target areas created further social disruption, and ISI would develop hard links to the underworld mafias, push counterfeit currency and finance all secretly and untraceably via Hawala informal banking. Since, it has expanded to creation of a Pakistan-centered Central Asian sphere of Islamist influence which in many respects has already gotten well beyond the ability of the ISI to control.
The situation remains extremely precarious in terms of the US-led coalition's ability to depend on Musharraf for the reasons indicated above.
Just across the Gulf of Oman from Pakistan lie the oil-rich Gulf Emirates and Saudi Arabia. The links between Pakistan and Saudi Arabia go back to the early 1970's when Ali Bhutto's government encouraged major migration of Pakistani labor and bureaucrats to the Saudi Kingdom. The aim was to cement ties between the oil-rich Saudis and the populous, but dirt poor Pakistan. This Saudi link, as well as between Pakistan and Abu Dhabi and other Gulf oil Emirates, assumes new interest in the context of September 11 and after.
The modern-day form of Hawala banking emerged during the 1970's between especially Pakistan and the Gulf oil countries, especially Saudi Arabia, as noted elsewhere. The German Finance Ministry estimates that the global annual volume of Hawala cash transfers today is some $200 billions.
The role of Saudi Arabian wealthy families in secret funding of Al Qaida and other Islamist terror organizations has to date been kept deliberately in the background by Washington, largely out of sensitivity to the precarious internal situation in Saudi Arabia itself. King Fahd is near death, and his designated successor, Crown Prince Abdullah, is known to be more actively hostile to American foreign policy, and more sympathetic to militant Wahabite clerical Sunni currents in the Islamic world. In the succession process now underway, the crucial question is whether moderate voices within the Royal family will be given significant policy posts or not. Washington knows well that a head-on clash with the Saudi Royal House at present would serve the interests only of the radical faction inside the Royal family.
A major strategic goal of the Al Qaida terror attacks including inside Saudi Arabia itself in recent years has been to escalate the pressure on the "Western corrupt" elements of the Saudi Royal house, with the aim of replacing them with fanatical feudalist Wahabite elements, a kind of Talibanization of the Saudi Kingdom.
The internal Saudi situation is complicated by the fact that many very wealthy Saudi families financially support the Al Qaida effort, as part of a strategy of purging the Saudi Kingdom of infidelism and Western corruption. In many cases these influential Saudis reach into the extended Royal family, including the murky figure of recently-fired Saudi intelligence chief, Turki al-Faisal, son of the late King Faisal.
In this regard, an extremely important step in the international effort to cut off the financial tentacles of the Islamist terror apparatus took place on November 7. That day a coordinated governmental shutdown of Hawala operations from Boston to Lugano Switzerland to Vaduz Lichtenstein to Bahamas took place, led by the US Treasury and FBI. The targets were two groups of international Hawala banks—Al-Barakaat of Mogadishu Somalia and Dubai; and Al Taqwa Trade, Property and Industry of Vaduz, and its Bank Al Taqwa Ltd. of the Bahamas, and Al Taqwa Bank of Lugano Switzerland. Significant to note, in the days immediately after September 11, when investigation focussed on a series of suspicious short trades in the stocks of key airlines and insurance companies such as Swiss Re, certain to be negatively impacted by the World Trade Center attack, Swiss prosecutors investigated the likely role of the Lugano Al Taqwa Bank, using a stock brokerage in Milan.
The president of the Al Taqwa Bank Group is Youssef Mustapha Nada, naturalized Italian, and a member of the Egyptian Muslim Brotherhood and Jamaa al-Islamiya, which is directly allied with Al Qaeda through Dr. Ayman al-Zawahiri, said by some intelligence sources to be the brains behind bin Laden. When the Bahamas closed Al Taqwa Bank Ltd. early this year, Swiss authorities required a name change in Al Taqwa Bank, which then became registered in Switzerland as Nada Management Organization SA. It is the same Al Taqwa Bank.
In 1970, Youssef Nada moved to Saudi Arabia and, with help from the Muslim Brotherhood, established contact with members of the Saudi Royal family, and founded a construction company in Riyadh, much the same as the bin Laden family. He remained active in Riyadh, and soon founded the first Islamic bank in Egypt, the Faisal Bank.
The Faisal Islamic Bank of Saudi Arabia is the head bank of a number of affiliated Islamic banks under the name across the Islamic world from Egypt to Pakistan to the Emirates and Malaysia. The head of Faisal Islamic Bank of Saudi Arabia is former Saudi intelligence chief, Turki al-Faisal. Faisal Islamic Bank is directly involved in running accounts for bin Laden and his associates, and has been named by Luxembourg banking authorities in this regard.
In Sudan, Osama bin Laden and Al Qaida have been named as principals in the Shamal Islamic Bank of Khartoum, which has been used to funnel large sums to Al Qaida operatives. The Sudan National Islamic Front of Hassan al-Turabi founded the al Shamal Bank in the 1990's. The bank transferred the funds for the US Embassy bombings in East Africa in 1998 according to trial testimony in New York. A 15% share in al Shamal is held by wealthy Saudi financier, Saleh Abdullah Kamel of the Dallah al Baraka Group, which owns the Jeddah al Baraka Bank. The other non-Sudanese shareholder of the Khartoum al Shamal Bank is Faisal Islamic Bank. Russian FSB intelligence has charged that al Baraka Bank was used by a Saudi religious charity, Al-Haramain, to funnel funds to Islamic terrorists tied to Al Qaida in Chechnya.
Turki al-Faisal himself maintained ongoing ties with bin Laden even after the latter fled Saudi Arabia in the mid-1990's after imprisonment by order of the King. It was Turki al-Faisal also who persuaded King Fahd to grant diplomatic recognition to the Taliban.
The role of Saudi Islamic charities in funneling funds, usually via Hawala transfers, is also significant. In 1992 the International Islamic Relief Organization was created under the Muslim World League in Jeddah, Saudi Arabia, an organization officially backed by the Saudi government. The head of International Islamic Relief Organization (IIRO) is Mohammad Jamal Khalifa, the brother-in-law of Osama bin Laden. IIRO has been documented financing Islamist terror insurgencies from the Philippines to South Asia. Funds are collected from wealthy Saudi families seeking to promote the "cleansing" of Islam through Wahabite fundamentalist upheavals.
The presence of significant Saudi financial support for the campaign of Osama bin Laden is a major complication for the United States anti-terror effort, given Saudi Arabia's strategic importance as the world's largest oil reserve nation and its major producer. The Saudi government is walking a fine tightrope as is Washington on this.
Washington's third complicating ally in the fragile anti-terror coalition, even if they have been bluntly told to take a back seat by Washington, is Sharon's Israel. Immediately after September 11, Israeli intelligence began furiously lobbying Washington to convince her that Saddam Hussein's Iraq had perpretrated the attacks. Later when anthrax began appearing in US mails, Israel renewed efforts to convince Washington Iraq was behind that. Sharon's provocative military aggression into Palestinian territory since September 11 have only reinforced the private view within the Washington Administration that Sharon's Israel is an "unreliable ally." Publicly, of course, this will not be said. Pro-Israel voices in the Administration, most notably Paul Wolfowitz at Defense, have been bluntly told by Vice President Cheney to "shut up" about Iraq, and cease making other provocative statements which threaten to break apart the fragile Arab side of the coalition.
Interesting in this context is evidence of direct collusion between Al Qaida networks and Israeli intelligence in, of all places, West Africa.
Since at least 1998, Al Qaida operatives have made millions of dollars in buying and reselling "blood diamonds" from the Revolutionary United Front (RUF) Islamist terror organization in Sierra Leone, through the agency of the brutal Charles Taylor dictatorship in neighboring Liberia. The FBI has identified Ibrahim Bah, former Senegalese rebel, as the RUF's principal diamond dealer with Al Qaida, as well as Hezbollah. Bah spent several years with bin Laden in Afghanistan in the 1980's Mujahideen fight, later joining the Hezbollah. Bah trained Charles Taylor of Liberia and RUF head, Foday Sankoh, in the 1980's.
The UN estimates annually some $75 million of Sierra Leone blood diamonds are illegally sold to the world market. Today it is likely in excess of $100 million. RUF gets about 10% of the market value of the diamonds in return for arms, food and medicine. Liberia's Taylor gets a hefty commission.
In 1998 Al Qaida's Abdullah Ahmed Abdullah went to Liberia to set up the arrangement with Bah and the RUF, for Al Qaida to buy the illegal Sierra Leone diamonds on a regular basis. The Bah network goes directly to Antwerp Belgium, the world's largest diamond center.
The entire diamond operation depends on the complicity of Israeli diamond interests and of the Israeli intelligence and mafia organizations, which dominate world diamond trade.
The key figure in the entire operation interfacing Al Qaida, Sierra Leone's RUF and Taylor's Libya is retired Israeli army Lt. Colonel, Yair Klein. According to a report in the Israeli newspaper, Yedioth Aharonoth, in 1996, Klein began a contract to provide weapons and training in Taylor's Liberia and to the RUF in Sierra Leone which controls the wealthy diamond district. Klein, ostensibly retired and a so-called rogue intelligence free agent, enjoys highest-level protection from Israeli authorities. In the early 1990's, he trained the paramilitary forces of the Colombian drug cartels in assassination, bombings and other covert operations. Israeli intelligence uses drugs to finance illegal operations around the world, much as does the Pakistani ISI.
Since at least 1987 Israeli interests have sought to take control over the rich Sierre Leone diamonds, and link to organized crime families in Antwerp, as well as Russia, and the New York diamond mafia.
Antwerp Belgium, where most of the rough Sierra Leone diamonds are sent, is notorious in recent years as a cesspool of international organized crime. A recent UN report criticizes Antwerp's Diamond High Council for corruption and failure to monitor diamond sources. Sierra Leone and other "blood diamonds" from civil war regions are officially banned by UN resolution.
Over the past decade, Israel has set out to dominate world diamond trade, and to displace the more moderate De Beers CSO diamond monopoly of London and South Africa. As the bloody war in Sierra Leone, Congo and other African hot spots escalated in recent years, De Beers pulled out, leaving a vacuum which Israeli diamond operators have largely filled. The most aggressive is Lev Leviev, a Uzbeki-born Israeli billionaire who owns Africa-Israel Investments, one of Israel's largest companies. Africa-Israel owns diamond concessions in Namibia, Sierra Leone, Congo and other key African sites. Another major Israeli player in the West African diamond trade is Israel Diamond Industries of Dan Gertler, nephew of Shmuel Schnitzer, president of the Israel Diamond Exchange. In 1999 diamonds were Israel's second largest export earner, at $5.3 billion.
Strategically, Al Qaida diamond trade would be impossible without Israeli intelligence complicity, therefore. For the Sharon government, the de facto financial support of Al Qaida terror around the world, as well as Hezbollah serves Sharon's long-term strategy of detonating a clash of civilizations between the West and all Islam, in which Israel would be able to launch all-out war against key Arab targets with impunity. A moderate, peace-seeking PLO is an obstacle to such a radical strategy as Sharon backs. Only a shift in favor of Hamas/Hezbollah/Al Qaida terror forces could justify the kind of aggression Sharon envisions. The diamonds are a contrete part of this high-danger strategy from Israel. Who was it who said, 'politics makes strange bedfellows'?