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West African Diamond Smuggling Traced to Terror Financing - 2004-10-12

Diamond smuggling in West Africa has become a steady, almost untraceable source of funding for U.S.-listed terror groups like al-Qaida and Hezbollah, according to information discovered by journalist Douglas Farah. These hidden transactions are among the most difficult for law enforcement officials to cut off.

Terrorist operatives buy millions of dollars worth of black-market diamonds, gold, and other commodities from warlords in Liberia and Sierra Leone to finance their empires, according to Douglas Farah, an American journalist who uncovered al-Qaida's involvement in diamond smuggling in West Africa.

Mr. Farah told reporters during a briefing in New York that al-Qaida, the terrorist network behind the September 11, 2001 attacks on the World Trade Center, trafficked diamonds with the go-ahead of former Liberian President Charles Taylor. Mr. Farah says it is an ideal way to move vast sums of cash around the world without being detected.

"The al-Qaida representatives came in at the end of 2000 and paid Taylor $100,000 and asked for permission to not only buy diamonds but to control the production for a set period of time," he said.

Mr. Farah's new book, Blood From Stones: The Secret Financial Network of Terror, exposes the estimated $20 million link between al-Qaida and West Africa. Mr. Farah's discovery was based on documents and interviews with American, European and other intelligence officials, as well as his own reporting in Liberia, Sierra Leone, Dubai, Pakistan, and Europe.

The former Washington Post newspaper reporter says shadowy regions around the world enable terrorist networks to fund their activities through phony companies and illicit enterprises that operate outside the legitimate global financial system.

"There are vast sections of the world in this continent, in Sub-Saharan Africa, in Southeast Asia that are essentially stateless regions or where you have states similar to Liberia that are functioning criminal enterprises and are not states at all," he said. "These are vital resources for terrorist organizations. They need the identification and passports they can get there. They need places where international criminals and others who deal with them can register their aircraft, import weapons without question, buy end-user certificates which are vital to the flow of weapons around the world."

Mr. Farah says that new strategies and a better understanding of how terror groups operate are necessary to cut off the flow of money for terrorist activities.

"Finances are like water running down hill," he said. "They will look for the course of least resistance. If you put up a dam some place, they will run around that dam and keep going. I think all you can do is raise the cost ultimately and make it much more difficult. You cannot eliminate it. Ultimately, if you have international enforcement, you can the raise the price a little bit."

Mr. Farah, now a consultant and freelance writer on terror finance, says efforts by the United States and United Nations to publicly name individuals involved with terror financing in their home countries is very effective.