Al-Qaida's budget slips through the cracks

Seven years after the Sept. 11 attacks, U.S. intelligence officials believe they've won many small victories against al-Qaida's ability to finance its operations, but they remain unable to put a concrete dollar figure on their impact.

That's because they have no reliable estimate of al-Qaida's overall budget, according to current and former U.S. counterterrorism officials, which means the only measures of the organization's economic health are sporadic, anecdotal and fragmentary.

"When you see a cell complaining that it hasn't received its monthly or biannual stipend and it's unable to pay the salaries of the people in the cell, unable to make the support payments to the families of terrorists living or dead, that's a tremendous indicator we have pressured the financial channel," said Adam Szubin, the director of the U.S. Treasury's Office of Foreign Assets Control and the man in charge of tracking terrorist finance.

Intelligence agencies scan phone conversations, e-mails, fax transmissions and instant message traffic for hints they have thwarted the flow of money to al-Qaida and other jihadist groups. But they are unable to get a firmer grasp on the overall state of terrorist finances, in part, because of the nature of most operations.

"Terrorism is unfortunately not a rich man's sport," said a former OFAC official, meaning that it does not take a lot of money to carry out a major attack. Tracking those small numbers in the vast sea of global financial transactions is difficult.

Cost differentials
An NBC News analysis of attacks by al-Qaida and other Sunni extremist groups shows that only one cost as much as $500,000 — the Sept. 11, 2001, attacks on the United States. But others, like the 2005 attack on the London transit system or the 2000 attack on the USS Cole in Yemen, cost less than $15,000 to carry out.

The price of terror Terrorism, as one Treasury official noted, is “not a rich man’s sport.” An analysis of some of the most notable attacks show that al-Qaida and others it has inspired have spent between $5,000 and $500,000 to carry out the attacks.  Although the numbers in most cases is an approximation—and may not include all costs, such as training—they serve as an indicator of how little is needed to get the world’s attention. Michael Sheehan, the former counterterrorism director for the New York Police Department, says the department has long been guided by a “4 x 10” rule – “10 men + 10 weeks + $10,000 = 10,000-pound bomb.” This summary bears out the rule. — 1993 – World Trade Center, New York  – approximately $31,000 to cover the costs of bomb components, rentals of the garage used to assemble the bomb and storage lockers for components, telephone calls to and from the Middle East, and plane tickets for travel to and from the United States. Six dead. — 1998 – U.S Embassy Attacks, Nairobi, Kenya and Dar es Salaam, Tanzania – less than $50,000 on bomb parts, rooms at a seedy downtown hotel, where the bombing was planned, and on an expensive suburban villa where the bomb was put together as well as satellite phones and laptops.  241 dead. — 2000 – USS Cole, Aden, Yemen -- $5,000 to $10,000 to cover the cost of explosives, and inflatable boats as well as a camera to record the event. 17 dead. — 2001 – September 11 attacks, New York and Washington -- $400,000 to $500,000 spent   primarily for flight training, travel, and living expenses (such as housing, food, cars, and auto insurance). 2,975 dead. — 2002 – Nightclub bombings, Bali, Indonesia -- $75,000 to $80,000 spent on explosives and living expenses for the bombers as well as for vehicles used to transport the bombs. Al-Qaida provided the bulk of the funding. 202 dead. — 2003 – Attacks on two Jewish synagogues, British consulate and HSBC banking offices, Istanbul, Turkey -- $50,000 again spent primarily on the bomb and bombers, but also on vehicles and training suicide bombers.  Also financed primarily by al-Qaida’s central operations.  57 dead. — 2004 – Commuter train bombings, Madrid -- $10,000 mainly to purchase bomb components, rent safe houses and purchase cell phone detonators.  191 dead. — 2005 – Underground Attacks, London – No more than $14,000, mostly for bomb components as well as travel and training.   53 dead. Sources: United Nations, Central Intelligence Agency, US Department of Justice, 9-11 Commission.

At the bottom end of the scale, the simplest first-generation suicide bombs constructed by the Palestinian Islamist group Hamas, consisting of duffle bags filled with black powder from unexploded Israeli land mines and ignition switches from abandoned cars, cost no more than $200.

The money also is difficult to track because terrorists do not use the world financial system as extensively as they once did, due partly to U.S. success in cracking down on it.

"Part of it is that the U.S. is sitting on the international banking system," said Roger Cressey, deputy counter terrorism chief in the Clinton and Bush administrations and now an NBC News analyst.

The United States has sponsored a U.N. terrorism funding blacklist, which requires all member states to freeze the assets and impose an international travel ban on people and entities placed on the list.

No one wants to be placed on the U.N. list of 503 people and entities or OFAC's 404-page list of "Specially Designated Nationals," a voluminous compilation of everyone from Cuban tourist agents to Osama bin Laden. Officials said they have intelligence — gathered from electronic eavesdropping — of prospective donors expressing concern about giving money to a charity or other entity that's been listed.

"You'll hear them say 'I'm not giving money anymore to X, they've been listed'," said one official.

Lately, cracks have developed in the list, as legal challenges mount and political support drops, especially in Europe. But Szubin believes the splits are overblown and that European allies will succeed in maintaining the system.

Figure 'totally made up'
Despite the anecdotal successes Szubin cites, U.S. estimates of al-Qaida's budget are rife with problems, according to Richard Clarke, former boss of the White House counterterrorism office.

In 2003, the United States estimated that al-Qaida's budget before the Sept. 11 attacks was $35 million and that it fell to $5 million just two years after the attacks. Those numbers were repeated in the final report of the 9/11 Commission.

"That number was totally made up, totally made up," Clarke said of the $35 million figure.

Clarke explained the figure was based on limited real information. "I don't think there is an integrated budget. In U.S. business parlance, there are 'cost centers', but not an integrated budget," he said.

Even the most cited official measure, OFAC's annual tally of blocked al-Qaida assets, is by Szubin's own admission irrelevant to understanding the state of terrorist financing and the success of U.S. efforts.

OFAC's most recent report, issued in early October, lists $11.324 million in blocked al-Qaida assets, predominantly financial instruments. That number is up from $7.7 million the year before, mainly due to an increase in the number of people and organizations designated by Treasury as terrorists.

"Some have mistakenly drawn on figures of blocked assets as we summarized in our report," Szubin said. "There is a hunger for data and these are numbers, but we try to put a major caveat there and say we don't view these numbers as an indicator of the pressure we're putting on terrorist groups."

Clarke said the best indicator, beyond real-time intelligence gathering, is often the data found in laptops, documents, notebooks and calendars taken after a successful raid or arrest.

"When they do get a cell, you can grab financial documents and do an analysis, go back and find out how they moved their money and then move in on them," Clarke said.

That way, he said, you get a sense of what means they are using to move money and then can try to stanch the flow in the future. But because of al-Qaida's compartmentalization, it doesn't provide a good picture of the organization's financial health.

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