Mon, Nov 27, 2006 - Page 7 News List

Iraq insurgency self-sustaining: report

FRANK US ASSESSMENT The report suggests little can be done to choke off insurgent funding. It also acknowledges how little the US authorities know about their operations

NY TIMES NEWS SERVICE , BAGHDAD

The insurgency in Iraq is now self-sustaining, raising tens of millions of dollars a year from oil smuggling, kidnapping, counterfeiting, corrupt charities and other crimes that the Iraqi government and its US patrons have been largely unable to prevent, a classified US government report has concluded.

The report, obtained by the New York Times, estimates that armed groups responsible for many of the insurgent and terrorist attacks across Iraq are raising between US$70 million and US$200 million a year from illegal activities. It says that between US$25 million and US$100 million of the total comes from oil smuggling and other criminal activity involving the state-owned oil industry that is aided by "corrupt and complicit" Iraqi government officials.

As much as US$36 million a year comes from ransoms paid to save hundreds of kidnap victims in Iraq, the report said. It estimates that unnamed foreign governments -- previously identified by senior US officials in Iraq as including France and Italy -- paid Iraqi kidnappers an estimated US$30 million in ransom last year.

A copy of the report was made available to the Times by US officials in Iraq, who said they acted in the belief that the findings could improve US understanding of the challenges facing the US strategy in Iraq.

The report offers little hope that much can be done, at least anytime soon, to choke off insurgent revenues. For one thing, it acknowledges how little the US authorities in Iraq know -- three-and-a-half years after the invasion that toppled former Iraqi president Saddam Hussein -- about key aspects of insurgent operations. It also paints a despairing picture of the Iraqi government's ability, or willingness, to take measures the report says will be necessary to tamp down the insurgent financing.

"If accurate," the report said, its estimates indicate that the "sources of terrorist and insurgent finance within Iraq -- independent of foreign sources -- are currently sufficient to sustain the groups' existence and operation."

"In fact, if recent revenue and expense estimates are correct, terrorist and insurgent groups in Iraq may have surplus funds with which to support other terrorist organizations outside of Iraq," the report said.

Some terrorism experts outside the government who were given an outline of the report by the Times, criticized it for a lack of precision and a reliance on speculation.

Completed in June, the report was compiled by a working group in Iraq that operates under the National Security Council.

A Bush administration official confirmed the group's existence, saying it has probed sources of insurgent financing in Iraq and studied how money is moved into and around the country.

He said the group's members are drawn from a wide range of defence agencies.

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