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LIVE FROM THE HEADLINES

Saudi Arabia Funding Terrorism?

Aired July 31, 2003 - 20:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

PAULA ZAHN, CNN ANCHOR: We start tonight with the concern over alleged Saudi links to the September 11 Saudi attacks. It seems the White House is trying to downplay any link, but a Senate panel today may not help. Now there are new allegations that the Saudis are funding millions of dollars through Islamic charities into the pockets of terrorists and suspicion among White House critics that some parts of the U.S. government could be protecting the Saudis.
I'm joined by "Newsweek"'s Michael Isikoff -- Isikoff. So sorry about that. I've only known you about 15 years. Sorry to butcher your name there. Welcome.

MICHAEL ISIKOFF, "NEWSWEEK": Good evening.

ZAHN: First of all, are you suggesting in your piece that there are certainty divisions of the U.S. government that are trying to block sanctions against Saudi Arabia?

ISIKOFF: Well, in fact, there was Senate testimony to that effect today by Richard Newcomb, who directs the Treasury Department's Office of Foreign Assets Control.

And he did acknowledge that his office has recommended identifying certain groups and individuals in Saudi Arabia to be put on the Treasury Department terror list and to freeze their assets in the United States and block any economic dealings with them and that some of those recommendations have been vetoed by other agencies of the government or by the White House.

ZAHN: And why is that, Michael?

ISIKOFF: Well, we don't know.

In fact, Mr. Newcomb was somewhat dodgy as to the details of these recommendations, which got the senators -- some of the senators -- quite irate. They want to see the list. They want to know whose office has recommended. But, basically, there's the State Department, which traditionally wants to maintain smooth relations with Saudi Arabia, as does the White House, some of whose officials will tell you privately that the Saudis are cooperating like they never have before on some very sensitive covert operations right now aimed at al Qaeda, especially since the May 12 Riyadh bombing, which seems to have energized the Saudi government, and that they don't want to disrupt those by embarrassing the Saudis right now.

ZAHN: Let's talk a little bit more about today's intelligence hearings. Sources tell us that the committee did not get to some of the issues that you outline in your report. These are extremely controversial issues. Do you think this was intentional?

ISIKOFF: Well, I'm not sure exactly what you're talking about.

If we're talking about on the Saudi front, there's a broad range of issues that have come up. I think some of the testimony today, although it didn't get a lot of attention, but talks about Saudi -- continued Saudi funding of Hamas, the Palestinian group that is on the U.S. terror list. And, in fact, there has been some evidence, based on recently-seized documents by Israeli military, that suggests that the Saudis have actually increased their funding of Hamas over the past year. And that's obviously upsetting to the Israeli government.

ZAHN: Thanks for updating us this evening, Michael Isikoff. Always good to see you.

ISIKOFF: Thank you.

ZAHN: And we're going to stay with this topic tonight. Is Saudi Arabia being cooperative or ungrateful, a helpful U.S. ally or an inconsistent one? Those were all the words used to describe Saudi Arabia at that Senate hearing we just talked about. The question: whether the kingdom does, in fact, help fund terrorism and if it is now doing more to stop it.

Republican Senator Susan Collins of Maine chairs the Governmental Affairs Committee, which held the hearing. And she joined me earlier tonight from Washington.

(BEGIN VIDEOTAPE)

ZAHN: Senator Susan Collins joins us tonight.

Welcome. Good to have you with us tonight.

SEN. SUSAN COLLINS (R), MAINE: Thank you, Paula.

ZAHN: First of all, do you think the United States can trust the Saudis?

COLLINS: The Saudis have not been nearly as cooperative in the war against terrorism as they should be. And there are many links that suggests that Saudi citizens and Saudi charitable groups are funneling money to terrorist groups like Hamas and al Qaeda.

ZAHN: Let's talk bout what a former Israeli ambassador testified to on Capitol Hill today, basically saying that 50 to 70 percent of the Hamas budget comes from Saudi Arabia.

COLLINS: That was shocking testimony. And the other evidence which the ambassador and other experts presented to us was equally compelling.

It suggests, a financial network, under which Saudi businessmen and Saudi charitable fronts are funneling money to terrorist organizations that were involved in the September 11 hijackings and also in violence around the world. ZAHN: The Treasury Department, from time to time, has encouraged that some sort of sanctions be slapped against Saudi Arabian businessmen who might be involved in these money transactions. Why haven't those sanctions ever happened?

COLLINS: Well, that's a good question that we asked today at the hearing.

What appears to be happening is that the Treasury Department makes a very strong case for listing certain Saudi organizations on a list that would cause their assets to be blocked and frozen. And instead, it gets overturned by the State Department, in most cases. There's a tension between our law enforcement goals and our diplomatic goals.

ZAHN: An allegation goes even further in "Newsweek," suggesting it's not only the State Department, but, according to "Newsweek," on some occasions, by the FBI and CIA -- quote -- "In other words, other agencies of the government were worried sanctions would upset Saudi- American relations or disrupt ongoing investigations in other areas."

COLLINS: There's no doubt in my mind that that is exactly what is taking place.

Now, in some cases, there may be legitimate reasons for not listing a suspicious group. But, in other cases, it appears that diplomatic or other reasons are trumping the need to cut off the sources of financing from these Saudi-connected organizations.

ZAHN: So why is the State Department and these other organizations doing that?

COLLINS: Well, we have a lot of ties to the Saudis. It's not only oil and our military bases, but we also have been very concerned that Saudi Arabia not fall into the hands of the Taliban or an Osama bin Laden.

And I think that has led us to compromise our standards when it comes to dealing with the Saudi government. And that's very disturbing to me, because the number of connections that suggest that Saudi money is flowing to terrorist groups, the evidence is just overwhelming.

ZAHN: A colleague of yours, Senator Levin, had to say earlier that it's hard to tell whether the Saudis are with us or against us. He kind of said, on one hand, you can answer that question yes, but if you look at the actions on the Saudi Arabians' part, the answer too often is no.

COLLINS: The Saudi rhetoric does not match up with its actions.

There has been some improvement since the bombings of May 12, which occurred in Riyadh. But, generally, the Saudis have not taken the kind of aggressive action that is needed to curtail the funding to these terrorist groups. Too often, our own government is turning a blind eye to what's going on in Saudi Arabia. ZAHN: Senator Susan Collins, good of you to join us tonight. Thank you so much for your perspective.

COLLINS: Thank you.

(END VIDEOTAPE)

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