The Political Conundrum!

This past week, Treasury secretary Timothy Geithner traveled to Saudi Arabia and the United Arab Emirates for his first official visit to the Middle East since assuming his current position. Although in many respects the Obama administration is off to a bumpy start with Saudi Arabia, Geithner praised Saudi efforts in combating terrorist financing, which is a significant departure from statements made by senior Treasury officials in recent years. His remarks in Riyadh were more than just empty praise, reflecting the broader view in Washington that the Saudis are finally beginning to make progress on this important front. Despite improved Saudi efforts, however, the kingdom remains one of the major sources of terrorist financing throughout the world, with significant funds continuing to go to al-Qaeda, the Taliban, and Laskhar-e Taiba (LET), among other groups.

Targeting Operatives, Not Financiers

Al-Qaeda's May 2003 attacks in Riyadh have been described as a watershed event in Saudi Arabia, awakening the Saudi government to the terrorist group's threat to the kingdom's survival. In the wake of that attack, Saudi Arabia aggressively took on Usama bin Laden's networks in the kingdom, arresting and killing numerous operatives, and effectively dismantling al-Qaeda's Saudi-based operational infrastructure. The Saudis however, did not bring that same aggressiveness to their efforts to combat terrorist financing, particularly when it came to money exiting the kingdom for terrorist groups abroad.

Although many U.S. government officials began to laud Saudi Arabia's counterterrorism efforts publicly in the years after the Riyadh attack, Treasury officials continued to heavily criticize Riyadh's handling of terrorist-financing-related issues. In a widely quoted September 11, 2007, appearance on ABC, Treasury undersecretary Stuart Levey stated: "If I could somehow snap my fingers and cut off the funding from one country [for terrorism], it would be Saudi Arabia." Levey also criticized the Saudis for failing to prosecute terrorist financiers and called on Saudi officials to treat the financing of terrorism as real terrorism. Former Treasury secretary Henry Paulson had offered similar sentiments in a speech several months earlier, cautioning that although the Saudis are "very effective at dealing with terrorists within the kingdom," the Saudis "need to do a better job holding people accountable who finance terrorism around the world."

Major Steps Forward

Over the past several years, Saudi Arabia has made significant improvements to its counterterrorism-financing efforts. In the week prior to Geithner's visit, the Saudis announced that 330 individuals had been convicted of terrorism charges in the first trials involving the kingdom's new specialized terrorism court. Although the Saudis provided few details about these cases, it was notable that the charges included terrorist-finance-related offenses, an indication that Riyadh may have begun to consider terrorist financing as "real terrorism," as Levey put it. Saudi Arabia no longer appears to be focused solely on al-Qaeda; the kingdom has expanded its efforts to crack down on Taliban fundraising activities as well.

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