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October 11, 2002

EU nations balk at blocking
Hamas finances

The Bush administration has acknowledged failure in winning full cooperation from the European Union in halting financing to Hamas and other Middle East groups deemed as terrorists.

U.S. officials said the EU has placed Al Qaida and related groups on the European list of terrorist sponsors. But the EU has failed to act against insurgency groups linked to the Arab-Israeli conflict, Middle East Newsline reported.

The officials said the EU insists on distinguishing between the political and military activities of insurgency groups.

The result has been a slowdown in international efforts to halt financing to Al Qaida and its satellite organizations in the Middle East. A key dispute between the United States and the EU regards Hamas, officials said. They said the EU maintains a distinction between the military and political wings of the Palestinian group.

"There are some countries that make a distinction between the political wing of Hamas and the military wing of Hamas," Treasury Undersecretary Jimmy Gurule said. "Unless the U.S. government can provide information that traces money directly to the military wing that is supporting suicide bombings in the Middle East, there is some reluctance, or in some cases unwillingness, to go ahead and designate those individuals or entities. And it's a very difficult diplomatic and political problem with respect to those countries."

Gurule told the Senate Finance Committee on Wednesday that he did not have a list of EU countries that have refused to cooperate with the United States. But other officials said France presents a key difficulty.

The result is that EU countries are refusing to freeze assets of those financing Hamas, officials said. The Islamic movement is said to obtain tens of millions of dollars a year from Iran and Saudi Arabia as well as individuals.

The EU has placed the Al Aqsa Martyrs Brigade on terrorist list. The Fatah-dominated umbrella group is said to be responsible for much of the insurgency attacks in the current war with Israel.

Officials said the United States and EU also differ on Iran. They said the EU has refused to halt investments in Iran, cited as a terrorist sponsor by the State Department. U.S. law prevents major investments in Iran's energy sector.

Undersecretary of State Alan Larson told the committee that the administration is pressing Gulf Cooperation Council states to draft and implement tough measures to halt the private financing of Islamic insurgency groups. He said Kuwait and Saudi Arabia "have indicated plans to take some serious action" to ensure that charities don't raise money for groups deemed as terrorists.

"I'm going to the Gulf shortly, and Dubai is one of the places I'm going to go. And one of the conversations we intend to have is, you know, what further steps can be taken to strengthen surveillance and oversight in the banking system about the money that moves in and out?"