A report in the October 22, 2005 issue of the Economist reports on the US lack of success in stopping terrorist financing (sorry, the article is premium content, but it’s pp.73-75 if you can get the print edition). After the September 11 attacks the US Congress pushed through legislation aimed at taking away the source of funding for terrorists. However, after 4 years reports have shown that this endeavor has not been successful. Many terrorist activities do not require large amounts of money. Further, hawalas are used often in the Middle East as a way to move money.
There are other problems with the system as well. There is a lot of dirty money floating around in the financial system. The Economist reports that only about 1% of all dirty money is used for terrorism purposes. A lot of money that finances terrorism isn’t actually “dirty” (laundered) anyway, coming in the form of donations from wealthy families and/or charities. Banks are filing a lot more reports than they used to, but only because they have the incentive to not be put out of business by foreign governments. The end result is a whole lot more cases that go practically nowhere.
So what is to be done? Is attacking counterterrorist financing a losing battle and if so should the whole practice be scrapped? This the position the author takes. I’m not sure what the answer is, but I do believe that if the current method isn’t working something should be done. I’m not sure the goal of cutting off terrorists from resources and funding should be done away with. The problem is I can’t think of any way to solve the problem. Maybe the whole counterterrorist financing angle should be done away with and then resources could be moved to another area to better combat terrorism. But would the American people accept this defeat? Also, is Bush ready to say “this is not working” with his approval ratings falling and the War on Terrorism his strongest issue in terms of public support.