Blood From Stones: The Secret Financial Network of Terror
by Douglas Farah (Broadway Books, 225 pages, $24.95)

AS DOUGLAS FARAH SAYS apparently correctly, he was “often far ahead of what U.S. intelligence agencies knew as they scrambled to understand al Qaeda’s money in the aftermath of the 9/11 attacks.” Farah, then the West African correspondent for the Washington Post, wrote the first account of al Qaeda’s interest in the “blood diamonds” of Sierra Leone and, by extension, Charles Taylor’s government in Liberia. Al Qaeda bought the diamonds from the murderous rebels of Sierra Leone to use as currency in place of dollars. The murderous rebels, meanwhile, were pawns of the equally murderous Taylor, who had prominent American friends, Jesse Jackson, Pat Robertson, and members of the Congressional Black Caucus, among them. Farah mentions them, but only in passing. He is more concerned by the failures of the FBI and the CIA.

Farah has a particular grudge against the CIA, understandably so. It tried to discredit his reporting, and it long denied that al Qaeda was buying Sierra Leone diamonds. In fact, diamonds are easy to transport, smuggle, and convert, and along with gold, tanzanite, emeralds, and sapphires they make up a parallel currency for terrorists. In July 1999, Farah writes, the Clinton administration froze $240 million in al Qaeda and Taliban funds. Aware of its vulnerability then, al Qaeda began moving its money from banks into commodities. But U.S. and European intelligence agencies, according to Farah, “missed the shift completely.” They thought Osama bin Laden financed terrorism by writing checks.

Blood From Stones is a primer on the terrorists’ financial network, and the difficulties in closing it down. Hawalas, relying almost entirely on trust and family relationships, for example, move hundreds of billions of dollars a year across the Arab world and Asia. The vast bulk of the transactions — by migrant workers sending money home — are benign; law enforcement officials refer to “white hawala.” Terrorist financing and other criminal activities are “black hawala,” and black and white often intertwine, and are impossible to separate. But the hawala system is not likely to be shut down. The economies of several countries, including India and Pakistan, depend upon it.

Intelligence agencies and law enforcement officials also suffer from a cultural gap. Currencies are volatile, but the price of gold is the same in New York as it is in Dubai, and so the hawalas run on gold. Western efforts to trace criminal financial networks, however, have focused on drug money flowing to South America. Gold is an alien concept. “We were talking about a different culture and a completely different way of doing business than what we are used to,” an official tells Farah. “We were so ethnocentric we couldn’t conceive of doing something different ways.”

And there is the intelligence gap, even wider, perhaps, than the culture gap. In Karachi, Farah says, he is told of an Abdul Razzak, who presides over a gold empire that is based in Dubai, but stretches from the Arabian Peninsula and the Indian subcontinent to Britain and America, and includes an oil refinery, jewelry stores, and a satellite TV station in London. After September 11, Razzak apparently helped the Taliban spirit millions of dollars in gold out of Afghanistan; he is also reported to have ties to “India’s most wanted criminal kingpin,” a known terrorist financier.

Consequently Farah goes to Dubai, in January 2002, and twice interviews Razzak, who, of course, denies ever having done anything either unethical or illegal. Farah then visits the U.S. embassy official in Abu Dhabi who supposedly monitors the gold market and knows all the big players. The official, however, had never heard of Razzak; in fact, “no one in the embassy had even heard of one of the largest companies in the gold business.”

Farah goes to Washington after that and meets with Treasury and Customs officials, all of them eager to hear what he has learned. Indeed the Customs officials want to know how he had been able to track down Razzak. “I told them I had looked in the telephone book,” Farah writes, “and then called…for an appointment.”

That’s the kind of anecdote foreign correspondents like to tell. It shows they know the world in a way bureaucrats do not. Similarly the most vivid parts of Blood From Stones come when Farah writes about himself and what he has seen, especially in West Africa. It was, and still is, a neglected area, and U.S. intelligence assets there are virtually nonexistent. Correspondents who are willing to take risks and endure discomfort may be our best sources.

FARAH DISCOVERED AL QAEDA’S interest in diamonds when a Liberian acquaintance, idly leafing through a copy of Newsweek, saw pictures of three al Qaeda operatives. He had seen two of them, he said, in Sierra Leone, where they had bought many diamonds. Farah, intrigued, arranged a meeting then with rebel commanders, sullen, suspicious men who could neither read nor write, and had spent their lives in the bush. He talks to them for hours, and is on the verge of giving up when one finally says, “We do know these people. It is true they were here. It is true they bought diamonds.”

Other details soon emerge, and on November 2, 2001, the Washington Post ran Farah’s story on page one. It described al Qaeda’s diamond buying, and it told how it had enriched Charles Taylor. A week later, a U.S. embassy official in the Ivory Coast informed Farah there had been “credible threats” of “retribution” against him. The next day, a Post editor called to tell him the intelligence service of another country had warned the paper of a plan “to take care of the Washington Post reporter.” Farah, his pregnant wife, and their two-year-old son boarded a plane out of Africa soon after.

Farah is kind to the Clinton administration in Blood From Stones. Members of Clinton’s National Security Council appear to be some of his best sources. Farah dutifully notes that the Clinton administration arranged the peace agreement that gave the Sierra Leone rebels control of the diamond mines. But he neglects to mention that when it became clear the agreement had led only to more horror and brutality, the administration lied; it denied it had brokered the agreement. Clinton’s tenure, in fact, was a disaster for Africa.

Blood From Stones concludes with a warning that the Iraq invasion has siphoned the resources necessary for an overall counter-terrorism strategy, and that U.S. policy is in disarray. Farah seems to know what is he is talking about, and you may hope that someone is listening.