DRAINING TERROR'S FINANCIAL SWAMPS:
By Douglas Farah
Diamonds from West Africa are a particularly attractive commodity to armed groups and criminals because they are alluvial and require very little investment in order to exploit. Taylor had launched two bloody civil wars (one in Liberia and one in neighboring Sierra Leone) in order to gain control of diamond fields.
The fact that the U.S. intelligence community had no agents on the ground monitoring the situation, developing human intelligence, or studying the different networks explains why the threat was not understood or taken seriously for several years. It also helps explain why the intelligence community dismissed out of hand the first revelations of Taylor's ties to al Qa'ida and other terrorist organizations.
The picture of al-Qa'ida operations in West Africa changed dramatically toward the end of 2000, when senior al-Qa'ida operatives arrived in Monrovia to take control of the diamond buying operations. They set up a monopoly arrangement with the Revolutionary United Front (RUF) in Sierra Leone for the purchase of diamonds through Taylor. This was in the months immediately prior to 9/11, when the terrorists were moving their money out of traceable financial structures into commodities in preparation for the aftermath of the attacks.
In the immediate aftermath of the 1998 attacks on two U.S. embassies in East Africa, the Clinton administration sought to punish the Taliban and al-Qa'ida by freezing its assets. To the surprise of U.S. officials, the move netted some $240 million, mostly in the form of gold on deposit with the U.S. Federal Reserve.
To convert cash assets into an untraceable commodity, al-Qa'ida operatives paid a premium of 10 percent to 20 percent over the going rate for uncut stones, leaving regular buyers without any merchandise. The pace of the purchases picked up beginning in January, 2001, and lasted until just before 9/11. The available evidence, compiled by the Belgian police, points to al-Qa'ida purchasing some $20 million worth of RUF diamonds during the eight months prior to 9/11.
A combination of rebel forces, international pressure, and the guarantee of gilded exile caused Taylor finally to leave power in August, 2003, and take refuge in Nigeria. But throughout most of his tenure – ruler of most of Liberia since 1992 and President since 1997 – Taylor's massive criminal and terrorist ties went unstudied and were given a low priority by the intelligence community.
Terrorist groups are sophisticated in their exploitation of "gray areas" where states are weak, corruption is rampant, and the rule of law is nonexistent. They have used areas like West Africa for many years to finance their activities. They correctly bet that Western intelligence services did not have the capacity, resources, or interest to track their activities there.
Terrorist groups in these areas learn from their own mistakes as well as from each other. Al-Qa'ida lost a large amount of cash following the 1998 Embassy bombings, but it moved to correct that weakness before the 9/11 attacks.
We need better intelligence (particularly human intelligence) and analysis if we are to trace terrorist funding and the use of commodities. Relying on high-tech monitoring systems is not an effective way to gather intelligence in countries in which telephones are rare, Internet access is very limited, and business deals depend largely on familial relationships.
Terrorist networks and criminal networks can overlap and function in the environments of failed states, like that of Liberia. Commodities like diamonds are the currency of choice, as the different groups provide services to governments or rebel groups in exchange for cheap and easy access to commodities.
The intelligence community does not react well to information that it does not procure on its own. The use of diamonds, along with tanzanite and other commodities, was dismissed for years because newspaper correspondents, rather than intelligence operatives, came up with the initial information. If it had not been for the dedicated work of a handful of members of Congress and the intelligence community, the information would have been buried.
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Douglas Farah uncovered the story of al-Qa'ida's involvement in West Africa's diamond smuggling while reporting on Africa for the Washington Post and described the situation in detail in Blood from Stones: The Secret Financial Network of Terror (New York: Broadway, 2004). Mr. Farah, now a consultant, freelance writer on terror finance and national security matters, and a senior fellow at the Consortium for the Study of Intelligence, addressed the Middle East Forum in New York City on October 11, 2004.
Mr Farah's briefing can be found on the Internet website of the Middle East Forum.
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