Rich Saudi donors funding terror, US says

SAUDI Arabia is the world's largest source of funds for Islamist militant groups such as the Afghan Taliban and Lashkar-e-Taiba but its government is reluctant to stem the flow of money, according to US Secretary of State Hillary Clinton.

''More needs to be done since Saudi Arabia remains a critical financial support base for al-Qaeda, the Taliban, LeT and other terrorist groups,'' says a secret December 2009 paper signed by Mrs Clinton.

Her memo urges US diplomats to increase their efforts to stop Gulf money reaching extremists in Pakistan and Afghanistan. ''Donors in Saudi Arabia constitute the most significant source of funding to Sunni terrorist groups worldwide,'' she says.

Three other Arab countries are listed as sources of militant money: Qatar, Kuwait and the United Arab Emirates.

The cables highlight an often ignored factor in the Pakistani and Afghan conflicts: that the violence is partly bankrolled by rich, conservative donors across the Arabian Sea whose governments do little to stop them.

The problem is acute in Saudi Arabia, where militants soliciting funds slip into the country disguised as holy pilgrims, set up front companies to launder funds and receive money from government-sanctioned charities.

One cable details how the Pakistani militant group Lashkar-e-Taiba, which carried out the 2008 Mumbai attacks, used a Saudi-based front company to fund its activities in 2005.

Officials with LeT's charity wing, Jamaat ud Dawa, travelled to Saudi Arabia seeking donations for new schools at vastly inflated costs, then siphoned off the excess money to fund militant operations.

Militants seeking donations often travel to Saudi Arabia during the hajj pilgrimage - ''a major security loophole since pilgrims often travel with large amounts of cash and the Saudis cannot refuse them entry into Saudi Arabia'', says one cable.

Saudi officials are often painted as reluctant partners. Mrs Clinton complains of the ''ongoing challenge to persuade Saudi officials to treat terrorist funds emanating from Saudi Arabia as a strategic priority''.

Washington is critical of the Saudi refusal to ban three charities classified as terrorist entities by the US.

''Intelligence suggests that these groups continue to send money overseas and, at times, fund extremism overseas,'' Mrs Clinton says.

There has been some progress. This year US officials reported that al-Qaeda's fund-raising ability had ''deteriorated substantially'' since a government crackdown. As a result, Osama bin Laden's group was ''in its weakest state since 9/11'' in Saudi Arabia.

Any criticisms are generally offered in private. The cables show that when it comes to powerful oil-rich allies, US diplomats save their concerns for closed-door talks, in stark contrast to the often pointed criticism meted out to allies in Pakistan and Afghanistan.

Instead, officials in the Riyadh embassy worry about protecting Saudi oilfields from al-Qaeda attacks.

The other major headache for the US in the Gulf region is the United Arab Emirates. The Afghan Taliban and their militant partners the Haqqani network earn ''significant funds'' through UAE-based businesses, says one report.

The Taliban extort money from the large Pashtun community in the UAE, which is home to 1 million Pakistanis and 150,000 Afghans. They also raise funds by kidnapping Pashtun businessmen based in Dubai or their relatives.

''Some Afghan businessmen in the UAE have resorted to purchasing tickets on the day of travel to limit the chance of being kidnapped themselves upon arrival in either Afghanistan or Pakistan,'' the report says.

The UAE's lack of border controls was ''exploited by Taliban couriers and Afghan drug lords camouflaged among traders, businessmen and migrant workers'', Mrs Clinton says in one report.