Report Decries Saudi Laxity

"The problem [of terrorist financing] is of enormous magnitude," James Gurule, undersecretary of Treasury for enforcement, told the Senate Finance Committee last week. "We have made a dent, but we have a long way to go."

The report touched on another sensitive issue, saying the administration's difficulties in tracking and disrupting al Qaeda's financial empire "have been exacerbated by the lack of interagency coordination within the U.S. government," and citing duplication of tasks and information-sharing difficulties among the CIA, the FBI and the Treasury Department.

Nichols said that, while there were initially problems with interagency coordination, "the kinks have been worked out, and interagency cooperation is alive and well."

The report was especially harsh on the Bush administration's relationship with Saudi Arabia. The administration "appears to have made a policy decision not to use the full power of U.S. influence and legal authorities to pressure or compel other governments to combat terrorist financing more effectively."

Greenberg, chairman and chief executive officer of AIG, said the administration needs to be "much more forceful" in dealing with Saudi Arabia, and that the administration "should be all over" the Saudi government whenever terrorist financial ties were found.

"Sitting in a corner is not the answer," Greenberg said. "Whatever we are doing, it isn't working."

The report acknowledged that criticizing Saudi Arabia publicly and demanding a crackdown on Islamic banks, charities and wealthy sponsors of al Qaeda could create a backlash that would jeopardize the survival of the Saudi government.

But it said the risk of inaction was even greater, because it will allow terrorist supporters to "gain strength and influence steadily among their own population," which ultimately will put the Saudi government at risk anyway.