Bush Administration Was Concerned About Sanctions Used Against Alleged Terror Financiers

Some counterterrorism experts are criticizing the Obama administration for signing off on the cancellation of U.N. financial sanctions against Muslim Brotherhood representative Youssef Nada. But a former top adviser to George W. Bush says that before leaving office, the Bush administration was already reviewing how such financial sanctions had presented thorny legal and diplomatic challenges for the U.S. government. Juan Zarate, who served as both assistant Treasury secretary for terrorist financing and as head of the counterterrorism office of Bush's National Security Council, tells Declassified that before he left the White House in early 2009, the Bush administration was already "looking at" the complexities of maintaining indefinite financial sanctions against people like Nada, an Egyptian businessman and prominent Muslim Brotherhood member whose name was placed on U.S. and, later, U.N. counterterrorism sanctions lists in the wake of the 9/11 attacks.

"Everyone was looking at these cases, trying to determine what is the long-term viability" of requiring that either U.S. authorities or U.N. member states freeze assets and restrict any travel and financial activity by sanctioned individuals and companies, Zarate says. He says the Bush administration had talked about conducting a review every two years of the names and companies on the sanctions lists.

Earlier this month the U.N. quietly issued a notice declaring that it had dropped Nada, a Swiss-based financier also sometimes described as the Muslim Brotherhood movement's foreign minister, from its list of individuals and entities subjected to sanctions intended to curb support for Al Qaeda and the Taliban. Two Nada companies were also dropped from the list. A U.S. Treasury official acknowledged that the Obama administration had gone along with the delisting, although the Treasury was keeping the names of Nada and his companies on a unilateral sanctions list maintained by the U.S. government.

In a telephone call to Declassified, Nada said Wednesday that he had applied a year ago for the U.N. to delist him and that he did not understand why the U.S. was keeping his name on its own sanctions list. Nada denied any dealings with Al Qaeda, the Taliban, or the Palestinian resistance movement Hamas, although he acknowledged he was affiliated with the Brotherhood, an Egyptian-based movement that seeks to establish a worldwide Islamic caliphate, purportedly through peaceful means. Nada, who lives in an Italian enclave geographically surrounded by Switzerland, said that he now was going to try to unfreeze and recover assets that had been sequestered when U.N. sanctions were in force.

Since their use was greatly stepped up after 9/11, international financial-sanctions regimes have come under criticism, particularly from governments and human-rights activists overseas, for being opaque, open-ended, and not offering persons and entities subjected to sanctions clear procedures for challenging the listings. Zarate says that since Nada, now more than 80 years old, was first put on the unilateral U.S. list in November 2001, the potential risks posed by his alleged activities have diminished: "His operations are not now the threat that they once were," Zarate says.

Zarate adds that one reason the Obama administration might have gone along with the U.N. move to drop Nada from its sanctions list might have been to ease tensions in the fraught relationship between the U.S. and Switzerland, where a parliamentary committee recently recommended that the Swiss government stop enforcing international sanctions against people like Nada unless accusations against them had been validated by some kind of independent authority or in a judicial proceeding. Though officially the U.S. and Switzerland maintain warm and friendly relations, behind the scenes tensions have sometimes erupted over both Swiss handling of terrorism and nuclear-proliferation-related investigations and over the handling by Swiss banks and government authorities of U.S. demands for the names of Americans who sought to hide taxable income behind Switzerland’s historical procedures for tight bank secrecy. The Treasury Department had no immediate comment on whether Swiss-U.S. relations played a role in the administration's handling of this issue.