White House

In Australia, Obama looks for help cutting cash flow to Islamic State

United States President Barack Obama is greeted by an official party on his arrival at Amberley Air Force near Brisbane, Australia, Saturday, November 15, 2014.
United States President Barack Obama is greeted by an official party on his arrival at Amberley Air Force near Brisbane, Australia, Saturday, November 15, 2014. AP

President Barack Obama arrived in Australia on Saturday looking for help on one of the most difficult tasks in the fight against the Islamic State: cutting off the millions of dollars flowing to one of the world's best-funded terrorist organizations.

Obama made some progress in previous stops this week in China and Myanmar (formerly Burma).

In China, Obama and his counterpart, President Xi Jinping, agreed to work together on “cracking down on terrorist funding networks.” In Myanmar, the 18 leaders of the East Asia Summit reaffirmed in a statement their support to help combat the Islamic State, including its financing.

And Obama intended to seek more help through the weekend in Brisbane, where he arrived for two days of meetings with the Group of 20 economic powers from around the world.

“The ISIL death cult is a menace to the whole world,” Australian Prime Minister Tony Abbott said in advance of the meeting after huddling with Obama in Beijing, using an abbreviation for the Islamic State. “They’ve declared war on the world.”

Specific details of the group’s finances aren’t known, but the U.S. government estimates that it receives tens of millions of dollars a month and might be richer than some small countries. It makes as much as $1 million a day selling oil from its conquered territories. It extorts another $20 million a year in ransoms for its kidnapping victims. It also receives money through other types of extortion and crime and, to a lesser extent, donations. It reportedly took $430 million from the central bank in Mosul when it took over the Iraqi city.

It is, in the words of a top Obama administration official, the “best-funded terrorist organization we have confronted.” It has “amassed wealth at an unprecedented pace,” said David Cohen, the Treasury Department’s undersecretary for terrorism and financial intelligence.

While the U.S. engages partners from European and Arab nations to help conduct airstrikes in Iraq and Syria – which also help curb financing by damaging refineries held by the Islamic State – Obama also needs help from countries from where much of money flows, including those in South Asia, as well as some in the Middle East strategically located near Iraq and Syria.

In the Middle East, the U.S. has praised Saudi Arabia and the United Arab Emirates for helping to cut off money from wealthy groups that support the Islamic State, but Cohen said Qatar and Kuwait remained “permissive jurisdictions for terrorist financing.”

The criticism comes despite some efforts in those countries. Kuwait recently set up a financial intelligence unit and Qatar passed a law regulating charity fundraising.

“Those countries remain problematic,” said Juan C. Zarate, a senior adviser at the Center for Strategic and International Studies, a research organization. Zarate said the nations continued to be havens for individuals and groups that are funding the Islamic State.

The U.S. also is looking for help from Southeast Asian nations, including Malaysia, Indonesia and Singapore, according to a senior administration official, who spoke only on the condition of anonymity as a matter of policy.

Experts say laws are already on the books to prevent money from being sent in many of the geographically targeted nations, they just need to be enforced.

“It’s a daunting challenge,” said Patrick Johnston, a political scientist who specializes in counterinsurgency and counterterrorism at the RAND Corp. “Those instruments we developed after 9/11 don’t really apply. Other mechanics are going to have to be developed.”

The United States is working to stem profits from oil sales by conducting airstrikes on the refineries, tracking down buyers of oil, discouraging nations from paying ransoms for kidnapping, identifying funding networks, targeting sanctions against the Islamic State’s leadership and preventing the group from gaining access to the international financial system.

But Matthew Levitt, the director of the Stein Program on Counterterrorism & Intelligence at the Washington Institute for Near East Policy, said that while the U.S. had the tools to fight some of the moneymaking schemes, its ability to halt the extortion and criminal activity was “severely limited.”

Such extortion – which brings in an estimated several million dollars a month – might entail threatening to destroy a company’s cellphone towers unless it pays a certain amount.

Levitt said those activities were best fought by boots on the ground, but U.S.-led coalition troops have left and the Iraqi forces don’t have the ability or will. “The very last tool is the military,” he said.

“As with the rest of the campaign against ISIL, our efforts to combat its financing will take time,” Treasury Undersecretary Cohen said in a speech in Washington before the summit. “We have no silver bullet, no secret weapon to empty ISIL’s coffers overnight. This will be a sustained fight, and we are in the early stages.”

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