See No Evil

02.07.14

Exclusive: U.S. Won’t Seize Taliban Ally’s Cash

The White House designated a Taliban ally as a terrorist organization in 2012. Seventeen months later, though, none of the network’s assets have been frozen or blocked.

In the last 17 months since the U.S. government financially blacklisted the Haqqani Network, one of the deadliest insurgent groups in Afghanistan and Pakistan, not a single dollar associated with the group has been blocked or frozen, according to U.S. officials and one of the Congressman who oversees the Treasury Department’s financial war on terrorism.

But it’s not just the Haqqanis—an ally today in the Taliban’s fight against U.S. troops and the Afghan government—who seem to have been spared from America’s economic attacks. According to a Treasury Department letter written in late November, not a single dollar been seized from the Pakistani Taliban, either, at least for 2012.

The reason why, according to a leading Congressman, is that enforcing such sanctions might upset delicate negotiations between America, Pakistan, Afghanistan, the Taliban, and other insurgent groups. “The Haqqani network is associated with the Taliban. My opinion is that this is appeasing the Taliban. Because if we go after the Haqqani network’s money, then the Taliban will walk away from these talks,” Rep. Ted Poe, a Republican chairman of a House subcommittee that oversees the fight against terrorism, told The Daily Beast.

While the Obama administration has continued to designate as terrorists individual members of the Haqqani Network—including three such men this week—the investigations and law enforcement actions that typically follow such designations have not resulted in any frozen assets.

“There has been not a dime of money frozen or seized from the Haqqani network,” said Poe. “Finances are what lets these groups continue to commit terrorism.”

While the Haqqani Network is hardly a household name here, the group based on the Pakistan/Afghanistan border is one of America’s most potent foes on the battlefield. In September 2011, Adm. Mike Mullen, who was then the chairman of the Joint Chiefs of Staff, said the Haqqani network was supported by Pakistan’s military intelligence service and was responsible for a deadly car bomb attack on a NATO outpost in Afghanistan. The network has also been tied to bombings against the U.S. and Indian embassies in Kabul.

Nonetheless, for years both the Bush and the Obama administration resisted actually designating the network as a foreign terrorist organization, and subjecting it to the myriad sanctions and financial blacklisting that goes along with it. Pakistani officials would often quietly threaten to withhold cooperation if the United States designated the network, according to former senior Pakistani and U.S. officials. At the same time, the State Department in the Obama years has worried that such a designation might scuttle their efforts to bring the Taliban into negotiations with the Afghan government led by Hamid Karzai.

“This is appeasing the Taliban. Because if we go after their money, then the Taliban will walk away from negotiations.”

That all changed in September 2012, when the State Department signed off on the first designation of the Haqqani Network as an entity. Until then, the U.S. government had sanctioned a handful of the group’s members as individuals. Since the September 2012 designation, the U.S. government has blacklisted 14 persons total that are affiliated with the Haqqani Network in executive actions, but has still yet to freeze or block any of the group’s assets.

“The designation which we fight for all the time is a hollow designation because there is no backup,” Poe told The Daily Beast.

In his role as the chairman of the House Foreign Affairs subcommittee on Terrorism, Nonproliferation and Trade, Poe has hounded the Treasury Department for months on their efforts to go after the finances of the Haqqani Network and other terrorist organizations operating inside Afghanistan.

In response to his queries, the Treasury Department’s Assistant Secretary for Legislative Affairs, Alastair Fitzpayne, wrote in a November 22, 2013 letter to Poe that there were no identified blocked assets relating to the Haqqani Network, Harakat ul-Mujahideen, the Islamic Movement of Uzbekistan, Jaish-e-Mohammad, the Islamic Jihad Union, Harakat ul-Jihad-I Islami or the Pakistani Taliban.

“Blocked assets are just one outcome of our counterterrorism sanctions,” Fitzpayne wrote. “Treasury so far has designated 51 individuals and entities linked to the groups named in your letter. Treasury designations can significantly disrupt a person’s ability to continue illicit activities—even if they hold few assets in the United States.”

The Treasury official went onto say in his letter that U.S. banks and U.S. persons are “generally prohibited from any dealings with the designated parties,” a particularly biting consequence because most of the world’s banks have correspondent relationships with U.S. banks.

Jonathan Schanzer, a senior fellow at the hawkish Foundation for the Defense of Democracies and a former counter-terrorism analyst at the U.S. Treasury Department, said in some ways his old employer is a victim of its success. “It has become virtually impossible to capture their cash,” he said, pointing to how terrorist groups have developed ways to evade U.S. sanctions by working in cash and Hawala networks, ways of transferring cash between networks of brokers in the Islamic world that avoid traditional banks.

Amit Kumar, a former official who worked on countering the financing of terrorism at the United Nations, said it’s difficult to enforce sanctions against groups like the Haqqani network in part because Pakistan and Afghanistan do not have a functioning financial system.

“Looking at the United States, there is an effort to do a name and shame exercise for groups like the Haqqani Network,” Kumar said. “But it’s difficult to identify the assets and to freeze them because the Pakistani and Afghan governments are not equipped technically to freeze assets with the finesse that we have.”

But others—including Gretchen Peters, a senior fellow at the Terrorism, Transnational Crime and Corruption Center at George Mason University—disagree. “My view is that they are not finding Haqqani activity because they are not looking in the right places. The Haqqanis have business partners in the bazars, that help them obtain goods whether it’s money or medicine,” she said.

Peters, who authored a report for the Combatting Terrorism Center at West Point on the Haqqani Network’s financial structure, added, “There is tremendous local knowledge about who the Haqqani partners are in the local communities. They have trucking, banking, Hawala networks and partners. We can identify those people and sanction them.”

But Peters said the Haqqanis have never had to face a sustained attack on their financial infrastructure. “I have noticed a lack of urgency about the problem across the board in the U.S. government. There is an attitude that we just need to get out of Afghanistan and walk away from it. In my opinion it will be very dangerous for the United States if we leave those bastards in place,” she said.