- The Washington Times - Monday, December 15, 2003

NEW YORK — Attacks on U.S. soldiers in Iraq are financed by a combination of al Qaeda-linked funds and profiteering from the recently dissolved U.N. oil-for-food program, according to former Treasury Department senior official.

The attacks would decrease markedly, said David Aufhauser, if world governments showed more cooperation in tracing and halting the money flowing to former Ba’athists and their sympathizers.

Money skimmed from the United Nations program by the deposed regime “has not been found, and that money is fueling the insurgency that’s going on in Iraq,” said Mr. Aufhauser, who two weeks ago left the Treasury, where he was general counsel and a key player in the Bush administration’s efforts to stanch the flow of cash to terrorist organizations.

He said that Ba’athists have joined with al Qaeda operatives in “a growing and unholy alliance” to oppose U.S. economic and military power.

U.S. military officials say anti-U.S. elements in Iraq are paying from $150 to $500 for every attack on American forces. With as many as 30 attacks taking place every day, the frequency is creating a heavy demand for funds.

To choke off the insurgency, Mr. Aufhauser said, Syria has to tighten its border controls and U.S. analysts must locate the billions of dollars the deposed regime is suspected of profiteering from the U.N. oil-for-food program.

“You have to make sure Syria gets serious about transfers of funds,” he said. “Either people are walking boxes of money over the border or transferring it through some kind of electronic means.”

If Damascus does not restrict the cash flow to insurgents, he said, the Bush administration has the right under the Patriot Act and existing presidential directives to unilaterally ban commerce with Syrian banks.

But there might be billions of dollars in stashed in metaphorical mattresses throughout Iraq, including money skimmed by favored businessmen from the U.N. humanitarian program.

The oil-for-food program “was designed by bureaucrats, not businessmen,” Mr. Aufhauser told a gathering of the Middle East Forum last week. “It was easily gamed by Saddam Hussein, and he made it a holiday for graft, kickbacks, schemes and front companies. He integrated himself into the program and openly skimmed north of $6 billion.”

Although few analysts are willing to speculate how much money was illicitly accrued during seven years of increasingly bold surcharges, informal licensing and other profiteering, it is clear that a group of favored businessmen grew immensely rich during the sanctions decade.

Ian Steele, spokesman for the oil-for-food office, acknowledged the profiteering but said it was none of the program’s business.

“The [U.N.] Security Council set this up for the sale of oil, and using the proceeds for purchase of humanitarian goods,” he said Friday. “Any skimming or kickbacks was outside the framework of the program itself. We didn’t have a policing or investigating role.”

Under the Security Council’s resolutions, governments were responsible for enforcing the sanctions and policing their borders.

The Bush administration has been threatening Syria with unilateral banking sanctions since Secretary of State Colin L. Powell’s visit to Damascus in April.

The Patriot Act includes a provision, called Section 311, that allows the president to bar U.S. financial institutions from dealing with a foreign country, business or individual who has been found to be abetting terrorists.

Nauru and Ukraine, two countries noted for their no-questions-asked banking, have already been hit with Section 311 sanctions.

Damascus denies any wrongdoing.

“No financial assets belonging to the listed entities or individuals have been detected in the Syrian Arab Republic,” the government reported in its May declaration to the Security Council committee charged with overseeing the embargo against the Taliban and al Qaeda.

Military officials in Iraq have said they expect the phase-out of the Saddam dinar to curtail the attacks, as much of the cash stockpiled by the old regime will be worthless after its Jan. 15 expiration.

Mr. Aufhauser disputed that assessment, noting that plenty of U.S. dollars were in circulation and conversion to the new dinar had gone smoothly.


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