The farcical nature of the post-911 attack on ’terrorists’ was brought out to me by Ibraham Warde, who appeared on “Foreign Exchange” this week. His account of the pursuit we tend to think of as “following the money” was so engaging, I looked up an account of the activity he had written earlier. It gives a really spectacular overview of our clownish cabal. It also points out that typically, small sums of clean money (not illegally obtained) are used to fund acts of terror

In the late 1990s the Clinton administration attempted without success to introduce “know your customer” rules which would have forced banks (already bound to disclose suspicious transactions) to scrutinise their clients. It also undertook, in conjunction with the Organisation for Economic Cooperation and Development, to crack down on tax havens.

As soon as he became president in 2001, George Bush scuttled that initiative and took steps to diminish the anti-money laundering regime until the 9/11 attacks resulted in a major policy U-turn. With the zeal of new converts, those who had been intent on dismantling financial controls presided over an unprecedented expansion of the anti-money laundering apparatus.
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Terrorist financing is more like money soiling than laundering, since small sums of clean money (not illegally obtained) are used to fund acts of terror (9). None of the post-11 September attacks has cost more than $20,000. The London attacks of 7 July 2005 cost less than $1,000 (10); their “terrorist financier” was one of the suicide bombers who made a living as a substitute teacher. In Iraq, more than half of US casualties have been the result of cheap roadside improvised explosive devices .
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…In the days after 9/11 swift action was not immediately possible against Afghanistan, which harboured Osama bin Laden and al-Qaida. No contingency plans existed and military action took weeks (11). Bush was attracted to financial strikes because freezing accounts was the one seemingly bold action the US could take immediately. An added advantage was that the financial front was conducive to what he called a scorecard logic. He gave the order to “seize some assets, and quickly”.

The Treasury general counsel, David Aufhauser, later described the subsequent frantic weekend search: “It was almost comical. We just listed out as many of the usual suspects as we could and said, let’s go freeze some of their assets” (12).

Such financial strikes have since become routine. Not surprisingly, they have done little to dent terrorism (13). Easy and often innocent victims were targeted, such as the Somali remittance group Al-Barakaat. The first 100-day progress report of the war on terror set the tone: “The US and its allies have been winning the war on the financial front” and “denying terrorists access to funds is a very real success in the war on terrorism” (14).

In reality, shifting resources from money laundering to terrorist financing caused terrible mismatches. Those trained to spot global financial crime, and Spanish-speaking specialists in the Latin American drug trade, found themselves chasing Islamic terrorists, leaving the business of money laundering unattended.

This Keystone Cops episode reminds me of the Iraq-Contra weapons trading, that wound up with our stationing our mercenaries in Costa Rica only to have them thrown out by President Oscar Arias. The misrepresentations of the occupied White House hark back to the inept crooks that seemed to prosper under Richard Nixon, and have never really crawled back into the sewers where they belong. They would be more laughable if they weren’t so destructive to everything they touch.

(This post also at http://cabdrollery.blogspot.com )