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CAIRO, Egypt - Al-Qaida, which gets its money from the drug trade in Afghanistan and sympathizers in the oil-rich Gulf states, is likely to escape the effects of the global financial crisis.








One reason is that al-Qaida and other Islamic terrorists have been forced to avoid using banks, relying instead on less-efficient ways to move their cash around the world, analysts said.

Those methods include hand-carrying money and using informal transfer networks called hawalas.

While escaping official scrutiny, those networks also are slower and less efficient — and thus could hamper efforts to finance attacks.

"It would be inconceivable that large amounts of (terror-linked) money would transit through the formal financial system, because of all the controls," said Ibrahim Warde, an expert on terrorist financing at The Fletcher School at Tufts University.

The question of where al-Qaida and its sympathizers get their money has long been crucial to efforts to prevent terrorist attacks. A 2004 U.S. investigation found that banks in the United Arab Emirates had unwittingly handled most of the $400,000 spent on the Sept. 11 attacks.

After the attacks, the U.S. made an aggressive push to use law enforcement techniques to disrupt terrorist financing networks and worked with allies to improve their own financial and regulatory institutions.

Al-Qaida and the Taliban have benefited from the drug trade's growth in Afghanistan after the U.S.-led invasion in 2001, and the booming business likely will not be affected by the global slowdown.

Opium cultivation has fallen slightly this year but is still about 20 times higher than in 2001, according to the U.N. Office on Drugs and Crime.

Former U.S. drug czar Gen. Barry McCaffrey, who recently consulted with U.S. and NATO officials in Afghanistan, issued a report in July saying al-Qaida and the Taliban "are principally funded by what some estimate as $800 million a year derived from the huge $4 billion annual illegal production and export of opium/heroin and cannabis."

In addition, wealthy donors and Islamic charities in the oil-rich Gulf, especially Saudi Arabia, continue to be "one of the most significant sources of illicit financing for terrorism," said Matthew Levitt, a former Treasury Department terrorism expert now with The Washington Institute for Near East Policy.

The Saudis have long insisted they are doing all they can to rein in terror financing, and U.S. officials have praised their efforts.

But, under a system known as "zakat," wealthy Muslims are required to give a portion of their money to the poor. Much of that is given to Islamic charities, and U.S. officials say at least some of that money continues to be channeled to al-Qaida and other terrorist groups.

Saudi Arabia and other Gulf countries have benefited in the last two years from a surge in oil prices from about $60 per barrel at the beginning of 2007 to more than $145 per barrel in the middle of this year. Prices have fallen almost 50 percent in the last few months in response to the global financial crisis, but not before generating hundreds of billions of dollars to oil producers.

Levitt said the covert nature of terrorist financing makes it difficult to determine a direct correlation between rising oil revenues and the amount of cash al-Qaida has on hand.

But "it stands to reason that if there is more oil revenue, there will be more revenue for all kinds of things licit and illicit," he said.

Al-Qaida and other extremist groups have gloated in recent weeks about the West's financial woes, painting the crisis as either divine punishment for supposed wrongs or the last gasps of a dying empire.

An American al-Qaida member, Adam Gadahn, said in a video released this month that "the enemies of Islam are facing a crushing defeat, which is beginning to manifest itself in the expanding crisis their economy is experiencing."

Members of the militant Palestinian group Hamas and hard-liners in Iran also have cheered the economic turmoil.

Iran is thought to be the last major government supporter of terrorist groups. The majority Shiite country is not believed to finance al-Qaida, a Sunni group, but does support the militant Hezbollah faction in Lebanon, which engaged in war with Israel in 2006.

Iran denies the financial crisis is hurting its economy, but falling oil prices will cut into its crude sales, which make up 80 percent of the government budget. It is unclear how that will affect support to Hezbollah.

Despite the apparent glut in potential money for terrorist groups, Levitt believes anti-terrorism efforts have hampered their ability to transfer money where they want.

Levitt points to several messages from senior al-Qaida leaders in Pakistan and Afghanistan intercepted by the U.S. or released by the terrorist group itself, asking Gulf supporters for more help because of funding shortfalls. The al-Qaida leader in Afghanistan, Mustafa Abu al-Yazid, appeared in a May 2007 video saying "the mujahedeen of the Taliban number in the thousands, but they lack funds."

But Warde and other analysts are not convinced al-Qaida is really hurting.

"Anybody who is involved in fundraising of any sort is never going to say we have enough money, so I think it is a silly argument to say that because there is this intercept ... it is proof that everything we've done has succeeded brilliantly," said Warde.



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