When al Qaeda attacked the United States on September 11, the response was swift. Saudi Arabia, home of the Wahhabi ideology that inspired 15 of the 19 hijackers, reacted somewhat more slowly.
At the time, American critics rightfully lashed out at the House of Saud for its track record of funding anti-Western hatred through state funded mosques and education institutions around the world. Washington subsequently pressured the Saudis to help drain al Qaeda of its funds, and though the process has yielded some successes, we're not yet out of the woods.
The Saudis produce, thanks to proceeds from the West's insatiable thirst for petroleum, far more jihadist philanthropy than any other Muslim country. One former State Department official estimates that Saudis donate between $3 and $4 billion annually to Islamic causes. According to one source, from 1973-2002, the Saudi government spent some $80 billion on Islamic institutions, mosques, Islamic centers, Muslim colleges, and Islamic schools. Given the opaque nature of Saudi society, many terror finance analysts have tried and failed to pinpoint the exact percentage of those funds earmarked for terrorism and extremist causes. But if it's just ten percent (a lowball estimate), that would be $8 billion. The real number is likely higher.
After 9/11, the Saudis began taking tentative steps to stem the flow of those toxic funds. But even then, they believed they could outlast U.S. pressure. Despite the fact that it was in their interest to do damage to al Qaeda—Osama bin Laden was a Saudi national who regularly spewed strong anti-Saudi invective—they slow played the George W. Bush administration.
The Saudis soon paid for their hesitation in blood. In 2003 and 2004, al Qaeda of the Arabian Peninsula launched more than 30 attacks inside Saudi Arabia, killing more than 130, and injuring hundreds more. Only then did the royal family truly take ownership of the problem.
The state cracked down on terrorists inside and outside its borders. What followed was a combination of successful preemptive counter-terrorism operations, a rather unsuccessful charm offensive in the West, and a dubious de-radicalization program for jailed jihadists. (Of the estimated 4,000 graduates of the de-radicalization programs, at least 10 to 20 percent returned to violence). But of all the steps taken by the Saudis, Riyadh's quiet but valuable cooperation with Washington on terror finance was arguably the most valuable.
After wrangling with the Saudis in the early years, Treasury Department officials began to admit begrudgingly that U.S.-Saudi cooperation on terror finance had found its groove. As one former official who worked very closely on this issue stated, "To be sure, it's a different atmosphere. There is much more political will in Saudi on issue than before."
But this doesn't mean that the problem has been solved. While the Saudis have cut funding to al Qaeda, it hasn't dried up. Moreover, significant Saudi funds continue to flow to other jihadist organizations.
The Haqqani network is a case in point. A jihadist group with close links to the Taliban and al Qaeda, the Haqqani network has had clusters designated in several tranches by the Treasury Department in recent years. One Treasury release notes that the network has been relying on Saudi largesse since 2004. In late 2010, Pakistan sources arrested five key figures of the Haqqani network. According to Taliban sources, they were "returning from the annual Hajj pilgrimage to Saudi Arabia, a trip that also had included substantial fundraising activities." Another Haqqani network financier last year was yanked from plane in Kabul that was destined for Saudi Arabia, where he was expected to raise funds.
This underscores a broader problem: While new tactics have neutralized many Saudi terror financing activities, the country's radical Wahhabi ideology continues to thrive, and there's not much Washington can do about it.
The Saudis literally have Washington over a barrel. The U.S., fearing soaring oil prices amid murmurs of a double dip recession, lacks the leverage to push back any more against the world's top oil producer. Moreover, it's no secret that the Saudis are furious with the White House for allowing many of their top Arab allies to fall. Indeed, the Arab Spring is taking its toll on the "special relationship."
Thankfully, the Saudis now see countering terror finance as the pursuit of their own best interests. The same cannot be said for Qatar or Kuwait. Indeed, Kuwait has not even taken steps to criminalize terror finance.
But Saudi Arabia is still a very big part of the terror finance problem. Hypothetically, even if the Saudis halved their terror funding problem, the amount left on the table would still mean that too much jihadist money is flowing into the system.
Thus, despite some tangible gains, a decade after 9/11, the problems that began in Saudi Arabia are far from over. Rather, they will likely continue to pose a significant threat for some time to come.
Jonathan Schanzer, a former terrorism finance analyst at the U.S. Department of the Treasury, is vice president for research at the Foundation for Defense of Democracies.