Bush Moves to Cut Terrorists' Support
Foreign Banks Urged to Help Freeze Assets of 27 Entities

By Mike Allen and Paul Blustein
Washington Post Staff Writers
Tuesday, September 25, 2001; Page A01

President Bush yesterday ordered U.S. financial institutions to freeze any assets belonging to Osama bin Laden and 26 other people and groups suspected of funding terrorists, and threatened retribution against overseas banks that do not follow suit.

With special operations troops and aircraft carriers heading toward Afghanistan in the biggest military mobilization since the Persian Gulf War, Bush said he will use "all the elements of our national and international power" to "starve the terrorists of funding."

The president acknowledged that most of the money fueling bin Laden's al Qaeda network is beyond U.S. borders. And experts on money-laundering pointed out that past efforts to cripple bin Laden, including a 1998 executive order by President Bill Clinton, have failed in part because the sources of his financing are so hard to find.

But administration officials said Bush's effort, which he called "the international financial equivalent of law enforcement's 'Most Wanted' list," is broader than the three anti-terrorist executive orders issued by Clinton. Bush's version expands the targets from terrorists operating in the Middle East to those operating anywhere in the world, enlarges the coverage to those who support the groups and promises to deny access to U.S. financial markets to foreign banks that do not cooperate.

Bush and other administration officials have repeatedly held bin Laden responsible for the Sept. 11 attacks on the Pentagon and World Trade Center. But the president said yesterday that he will not authorize release of all the information gathered by the administration that establishes a direct link between bin Laden and the attacks. Bush said that in assembling the financial targets and naming bin Laden as the prime suspect in the attacks, the United States is "acting based on clear evidence, much of which is classified, so it will not be disclosed."

Secretary of State Colin L. Powell said Sunday on ABC's "This Week" that the administration would "put before the world, the American people, a persuasive case" that bin Laden's network was responsible.

But Powell, appearing with Bush, seconded the president's observation that most of the information is classified. He said that as the information is reviewed, if unclassified details are found "and it will allow us to share this information with the public, we will do so."

White House press secretary Ari Fleischer, in a humorous reference to Washington jargon, said he was told such disclosures can be expected "State Department soon," suggesting they are not imminent.

Bush said he chose yesterday's formal Rose Garden setting for his announcement on asset seizures as a way to underscore that the war on terrorism will be fought on many fronts and to remind the American people that patience will be required.

"You bet there's a concern about whether or not we'll be able to wrap up every financial instrument used to fund terrorism," he said. "But make no mistake about it: We're going after them all. And we'll win, we're going to win. Terrorists are going to realize they can't face down freedom. Terrorists are going to realize they made a big mistake, they miscalculated America. And I think they miscalculate a lot of our allies and friends, too."

Later in the day, Bush formally notified Congress of his deployment of troops and hardware to the Central and Pacific Command areas. He said he may "find it necessary to order additional forces into these and other areas of the world."

Most of the groups targeted by Bush are based in Africa, the Middle East and Central Asia. One, Abu Sayyaf Group, operates from the Philippines.

Three groups -- Makhtab Al-Khidamat/Al Kifah, Al Rashid Trust and the Wafa Humanitarian Organization -- are described by the Treasury Department as "would-be charitable organizations." Fleischer said Americans may have unwittingly contributed to them.

Not on the list are three groups -- Hamas, Hezbollah and Islamic Jihad -- that are frequently denounced by the United States. Still, they receive support from countries seen as potential members of the coalition Bush is trying to build against bin Laden.

"We're putting banks and financial institutions around the world on notice," Bush said. "We will work with their governments, ask them to freeze or block terrorists' ability to access funds in foreign accounts. If they fail to help us by sharing information or freezing accounts, the Department of the Treasury now has the authority to freeze their banks' assets and transactions in the United States."

Treasury officials said that under yesterday's order, the U.S. entity holding the funds may not transfer them to anyone else. Banking officials said the money will probably be held in escrow, earning interest, until the block is lifted. In past cases, the money has been used to pay off debts to U.S. creditors.

A former senior Clinton administration official called the move "an incremental, useful step, but not a silver bullet." The official said the move would "dry up the legitimate banking system for bin Laden, although we've pretty much done that," but said it cannot prevent his use of underground and Islamic banking systems.

Jack Blum, a Washington lawyer and money-laundering expert who is a former special counsel to the Senate Foreign Relations Committee, said Bush's order breaks new ground because the United States has "been reluctant to impose sanctions on foreign financial institutions, and the sanctions could be very effective." Blum called the measure a useful start, but compared it to catching water in a sieve.

Some diplomats said it was too early to know how their governments would react to the financial demands by the administration, but a European Union diplomat was enthusiastic. "We're doing exactly the same as the U.S.," said Matthew King, financial attache at the EU delegation in Washington. "Quite a lot of significant actions have taken place recently -- a number of accounts were closed down in London over the weekend."

Thomas L. Farmer, general counsel of the Bankers' Association for Finance and Trade, which represents the international interests of U.S. banks, said his members "are relieved to be told what they're expected to do" and said they already have begun adjusting their software to help them comply.

Continuing his consultations with foreign leaders, Bush yesterday had lunch with Canadian Prime Minister Jean Chretien and discussed ways to make the border less permeable for terrorists. As the two posed for photographers, Bush brought up his failure to mention Chretien in his address to Congress last week, which was taken as a snub by some in Ottawa. "I didn't necessarily think it was important to praise a brother," Bush said. "After all, we're talking about family."

Bush, who spoke for nearly an hour on Saturday with Russian President Vladimir Putin, revealed that on the day of the attacks Putin had agreed not to heighten the alert status of his troops in response to the higher U.S. alert status -- evidence, Bush said, that Putin "understands the Cold War is over."

Early today, Reuters reported that Saudi Arabia had cut its ties with the Taliban leaders in Afghanistan, where bin Laden is believed to be living.

"Because the Taliban government did not pay attention to all the contacts and attempts made by the Kingdom of Saudi Arabia to persuade it to stop harbouring criminals and terrorists . . . the government of the kingdom of Saudi Arabia announces cutting off all its relations with the Taliban government," an official Saudi statement said.

Bush also met privately with about 50 relatives of the passengers and crew of United Flight 93, which crashed in Pennsylvania Sept. 11 after a group of passengers apparently rushed the hijackers after hearing that other hijacked planes had been flown into the World Trade Center.

On the legislative front, Bush narrowed his request to Congress concerning the waiving of U.S. economic sanctions against Pakistan and India. In a presidential directive Saturday night, Bush had activated waiver provisions in sanctions that have restricted economic assistance to both countries since they exploded nuclear devices in 1998.

The new request would allow the United States to provide military assistance to Pakistan that is currently prohibited because of its 1999 military coup, and because it has not paid outstanding debts to the United States. Neither of those congressionally mandated sanctions contains presidential waiver authority.

The new proposal, sent to Capitol Hill late yesterday morning, replaced a much broader request for five-year presidential waiver authority over all existing U.S. aid sanctions against any country, if Bush determined it would help the war against terrorism.

The blanket provision would have allowed Bush to waive existing sanctions in every category, including human rights abuses, state-sponsored terrorism and nuclear weapons proliferation.

Staff writers Karen DeYoung and Charles Lane contributed to this report.