President Bush announced the seizure yesterday of assets and records of one of the nation's largest Islamic charities and accused it of funding the Palestinian extremist group Hamas, which claimed responsibility for last weekend's suicide bombings in Israel.
Expressing solidarity with Israel for the fourth day in a row, administration officials said they would target Hamas's finances as aggressively as they have squeezed funding for Osama bin Laden's al Qaeda network.
Bush said the Holy Land Foundation for Relief and Development raised $13 million from U.S. residents last year and used the money partly to fund Hamas's efforts to "recruit suicide bombers and to support their families." Bush also blocked the accounts of a bank and holding company that the administration described as affiliates of Hamas.
"Those who do business with terror will do no business with the United States -- or anywhere else the United States can reach," the president said during a Rose Garden ceremony. "The net is closing. Today it just got tighter."
The announcement was the first time since the Sept. 11 attacks that the administration has prominently targeted a group other than al Qaeda as part of its war on terrorism. Previously, Bush officials had sought to keep the focus on bin Laden and had worried about losing the support of Arab allies for the military campaign in Afghanistan. But the suicide bombings over the weekend, which took 26 lives, have prompted a series of strong public statements in support of Israel.
Administration officials said that during an Oval Office meeting on Sunday, Israeli Prime Minister Ariel Sharon asked Bush to move against the Holy Land Foundation, and the president speedily obliged. "We -- bam -- did it," a senior official said.
U.S. authorities have investigated the foundation since about 1992. But the Texas-based organization, which has 35 full-time employees and describes itself as the largest Islamic charity in the United States, strenuously denies that it provides financial support to terrorists.
John Janney, a spokesman, said yesterday the Holy Land Foundation has "been fighting the war on terrorism by giving Palestinians the choice of bread instead of bullets and books instead of bombs."
Islamic groups reacted with outrage to the White House announcement, which came during Ramadan, the peak season for Muslim charitable giving. The Council on American-Islamic Relations and seven other North American Muslim groups called Bush's action "an unjust and counterproductive move that can only damage America's credibility with Muslims in this country and around the world, and could create the impression that there has been a shift from a war on terrorism to an attack on Islam."
The administration's position is complicated because Hamas, in addition to being a militant group that has challenged Yasser Arafat's leadership of the Palestinians and used terrorism against Israel, is also a social service organization that provides medical care and poverty relief in the West Bank and Gaza.
Treasury Department officials said Bush's order immediately froze $1.9 million in foundation funds in at least five U.S. banks. The foundation's offices in California, Illinois and New Jersey also were raided.
The U.S. government simultaneously moved against Al-Aqsa Islamic Bank and Beit el-Mal Holdings, an investment group, both based in the West Bank. Treasury Secretary Paul H. O'Neill, appearing with Bush, said those institutions "aren't just banks that unknowingly administer accounts for terrorists -- they are direct arms of Hamas established and used to do Hamas business."
Attorney General John D. Ashcroft said the seizures signal that the United States "will not be used as a staging ground for the financing of those groups that violently oppose peace as a solution to the Israeli-Palestinian conflict."
"We won't tolerate it any more than we will tolerate the financing of groups that on September 11th attacked our homeland," Ashcroft said.
Hamas, whose name comes from the Arabic initials for Islamic Resistance Movement, was a conspicuous omission from an administration order, issued Sept. 24, freezing the assets of 27 individuals and groups suspected of funding terrorists. But it was among 22 groups added to the list on Nov. 2.
In June 2000, the U.S. Agency for International Development approved the Holy Land Foundation to receive grants. But two months later, the foundation was removed from the list of certified Private Voluntary Organizations after the State Department notified USAID that the relationship was "contrary to the national defense and foreign policy interests of the United States." No grants had been made, an agency official said.
For the second consecutive day, the Bush administration declined to condemn Israeli retaliatory strikes against targets in the Palestinian territories. Instead, the administration continued to stress Arafat's responsibility to arrest suspected terrorists and clamp down on Hamas and Islamic Jihad.
Bush said yesterday in an interview with ABC's Barbara Walters, to be broadcast tonight on "20/20," that Hamas "doesn't want peace -- they will do everything they can to destroy the peace process."
"It's now time for Mr. Arafat to prove whether or not he is for peace," Bush said. "The way he can do that is to aggressively rout out those who would derail the peace process by murdering innocent Israelis, innocent women, innocent children. And now is the time for him to step up and lead. He must show that behind his words of peace there is action."
Speaking before a meeting in Romania with Israeli Foreign Minister Shimon Peres, Secretary of State Colin L. Powell similarly demanded that Arafat take stronger measures. But Powell also cautioned Sharon to avoid escalating the conflict.
Among Israel's supporters in Congress there was some talk about pressing the administration to suspend contacts with the Palestinian Authority. U.S. contacts with the Palestinian Liberation Organization were suspended during Bush's father's presidency after a terrorist attack and did not resume for three years.
Administration officials described both of the financial institutions included in yesterday's actions as arms of Hamas. Al-Aqsa Islamic Bank, with offices in the West Bank and Gaza, was established in 1997 with $20 million in capital and started operations in 1999. It is not allowed to do business in Israel. Administration officials said a majority of Al-Aqsa's shareholders and senior officers have ties to Hamas.
The Beit el-Mal Holdings investment group has locations in East Jerusalem, the West Bank and Gaza, the administration said. Officials said it financed projects owned or managed by Hamas activists, and that its founders, shareholders and employees were associated with Hamas.
Staff writers Alan Sipress in Ankara, Paul Duggan in Richardson, Tex., and Kathleen Day, Karen DeYoung and John Mintz in Washington contributed to this report.