By Dafna Linzer
Washington Post Staff Writer
Wednesday, July 5, 2006; A11
Last summer, Stuart A. Levey, the Treasury Department's undersecretary for terrorism and financial intelligence, was about to depart Libya for Turkey when his travel plans abruptly came to a halt. At the airport, Libyan officials directed Levey to an aircraft idling on the runway.
Aboard, Levey and his aides found themselves inside the private plane of Moammar Gaddafi surrounded by what one official described as an "homage to Austin Powers." Outfitted with shag carpeting, gold-plated safety belts and wide, white leather seats, the plane took off on an unscheduled flight from Tripoli to the coastal town of Sert.
An hour later, Levey's team was in black sedans speeding across miles of empty desert toward Gaddafi's man-made oasis. "It was like being in some kind of James Bond movie," Levey recalled in a recent interview. "There was a pool and a pond, a couple large tents and Gaddafi sitting out in a cabana, under an umbrella."
Levey was wearing a suit and tie. The Libyan leader was wearing track pants, a fishing cap and orange sunglasses. The surprise meeting was their first, and much was riding on Levey's impressions: He had just spent several days assessing whether Libya should be taken off the list of states that sponsor terrorism. They two men spoke for an hour -- Gaddafi from prepared remarks, Levey off the cuff.
It must have gone well. A few days later, the State Department announced that Libya was coming off the terrorism list, 18 years after the bombing of Pan Am Flight 103 over Lockerbie, Scotland, took 270 lives, most of them American.
Levey is not the first head of the Treasury Department's unusual intelligence branch, but he is the most influential. At 43, the Harvard Law School graduate has a strong hand in many of President Bush's top foreign policy and national security initiatives, from counterterrorism to money laundering to weapons of mass destruction. He is the senior Treasury official overseeing a classified program that taps a global database of confidential financial records in search of terrorist transactions.
Revelations about the program in newspaper reports last month led to a stream of Republican condemnations of the press. But none came from Levey: Described by friends as mild-mannered and good-humored, Levey made his disappointment over the reports strongly known without resorting to attack. It is a style that separates him from some within the administration he serves while bringing him closer to others.
Deputy national security adviser J.D. Crouch had not heard of Levey during Bush's first term. Now he relies more and more on Levey, who attends several high-level national security meetings a week chaired by Crouch.
"Stuart is really thorough, and committed to turning over all the rocks and making sure that things are done in the proper way," Crouch said. "And when he says he'll do something, he does."
He said that Levey must "convince not only other people in the government but other people in the world" to buy into new financial pressures on al-Qaeda and on unfriendly governments.
It is a task that Levey has grown into. In the 1990s, he was a white-collar criminal defense attorney in the boutique Washington firm of Miller, Cassidy, Larroca & Lewin, with friends and colleagues on both sides of the political aisle.
Jamie S. Gorelick, who worked with Levey at the law firm before she served as deputy attorney general under President Bill Clinton, called him a close friend. "Stuart is a loyal Republican, but he would not let politics color or direct a judgment that he would otherwise make," she said.
After the firm merged with Baker Botts, whose senior partner is James L. Baker III, Levey was dispatched to Florida as part of the 2000 election recount. Like many of the Republican lawyers behind Bush v. Gore , Levey joined the government shortly afterward. He chose the Justice Department, serving under then-Deputy Attorney General Larry D. Thompson.
Levey started out handling immigration issues. After the attacks of Sept. 11, 2001, Thompson promoted him to chief of staff and added money laundering and anti-terrorism activities to his portfolio.
Thompson is among a long list of conservative mentors to Levey. They include Judge Laurence H. Silberman, former senator John C. Danforth (R-Mo.) and Martin Peretz, the New Republic's editor in chief, who was Levey's Harvard thesis adviser and who describes him as "dazzlingly smart."
Levey joined Treasury shortly before Bush's reelection in 2004 and took on North Korean counterfeiting operations. It turned out, he discovered, that simply asking bank managers to drop their business with Kim Jong Il worked better than surprising them with public embarrassment, as had been the strategy during Bush's first term.
Other efforts, such as financially crippling Hamas and the Iranian government, have proven more challenging.
This February, Levey traveled to the Middle East with Secretary of State Condoleezza Rice shortly after Hamas, or the Islamic Resistance Movement, had won Palestinian elections. As part of a small team of administration officials grappling with the results, Levey tried to figure out how to get money to the Palestinian people without going through Hamas.
The trip was important for Levey. He had spent his junior year studying at Jerusalem's Hebrew University, where he worked on an undergraduate thesis on Meir Kahane, the Brooklyn-born rabbi. Kahane had founded the Israeli group Kach, listed by the State Department and the Israeli government as a terrorist organization.
"Kahane was an angry, vicious person who preyed on the fears of people who were vulnerable," Levey said. "Terrorism lives in different cultures, and what got me interested was how it was possible that in a country with such a strong sense of democratic values, this person gained real popularity."
On the way back from Jerusalem, Levey approached Rice on a different matter: financial levers he thought could be used to pressure Iran. Rice was impressed, her aides said, and Levey was asked to lead a task force designed to implement financial sanctions against Tehran if negotiations over its nuclear program fell apart.
But it has been a tough sell. Levey's direct approach with bank managers still comes in handy, but he has had difficulty persuading allies to sign on to a plan that will cost them in Iranian trade and oil.
"I've been in lots of meetings with foreign officials where I tell them what I want, and they look like they want to show me the door," he said.
Researcher Julie Tate contributed to this report.