SUBJECT: SAUDI ROYAL WEALTH: WHERE DO THEY GET ALL THAT MONEY? ¶1. (U) CLASSIFIED BY ACTING DCM ALBERT THIBAULT. REASON: 1.5 (B). THIS MESSAGE FULFILLS A POST REPORTING PLAN REQUIREMENT. ------------------------ SUMMARY AND INTRODUCTION ------------------------ ¶2. (C) SAUDI PRINCES AND PRINCESSES, OF WHOM THERE ARE THOUSANDS, ARE KNOWN FOR THE STORIES OF THEIR FABULOUS WEALTH--AND TENDENCY TO SQUANDER IT. THIS CABLE EXAMINES THE MECHANISMS, NOT COUNTING BUSINESS ACTIVITIES, THROUGH WHICH SAUDI ROYALS OBTAIN THEIR MONEY. THESE MECHANISMS OFTEN PROVIDE THE SEED MONEY FOR ROYALS TO LAUNCH LOCAL AND INTERNATIONAL BUSINESS VENTURES. A SUBSEQUENT CABLE WILL EXAMINE THE BUSINESS ACTIVITIES OF SAUDI ROYALS. ¶3. (S) THE MOST COMMON MECHANISM FOR DISTRIBUTING THE NATION'S WEALTH TO THE ROYAL FAMILY IS THE FORMAL, BUDGETED SYSTEM OF MONTHLY STIPENDS FOR ALL MEMBERS OF THE AL SAUD, MANAGED BY THE MINISTRY OF FINANCE'S "OFFICE OF DECISIONS AND RULES." THE STIPENDS RANGE FROM $270,000 PER MONTH ON THE HIGH END TO $800 PER MONTH FOR THE LOWLIEST MEMBER OF THE MOST REMOTE BRANCH OF THE FAMILY. BONUS PAYMENTS ARE AVAILABLE FOR MARRIAGE AND PALACE BUILDING. THE EMBASSY ESTIMATES THAT THE STIPENDS SYSTEM PUTS AN ANNUAL DRAIN OF ABOUT $2 BILLION ON THE $40 BILLION GOVERNMENT BUDGET. ¶4. (S) ASIDE FROM THE STIPENDS SYSTEM, A HANDFUL OF THE SENIORMOST PRINCES ENRICH THEMSELVES BY CONTROLLING SEVERAL BILLION DOLLARS IN ANNUAL EXPENDITURES IN "OFF-BUDGET" PROGRAMS. WITH NO MINISTRY OF FINANCE OVERSIGHT OR CONTROLS, THESE PROGRAMS ARE WIDELY VIEWED AS SOURCES OF ROYAL RAKEOFFS. AS CHARACTERIZED BY BILLIONAIRE PRINCE AL-WALID BIN TALAL (STRICTLY PROTECT) TO THE AMBASSADOR, THROUGH THESE OFF-BUDGET PROGRAMS, FIVE OR SIX PRINCES CONTROL THE REVENUES FROM ONE MILLION BARRELS PER DAY (B/D) OF THE KINGDOM'S EIGHT MILLION B/D OF CRUDE OIL PRODUCTION. ¶5. (S) OTHER WAYS SOME PRINCES OBTAIN MONEY INCLUDE BORROWING FROM THE BANKS, AND NOT PAYING THEM BACK. WITH THE POSSIBLE EXCEPTION OF NATIONAL COMMERCIAL BANK (NCB), WHICH HAS ALWAYS BEEN VIEWED HERE AS THE ROYAL FAMILY'S BANK, SAUDI BANKS GENERALLY TURN ROYALS AWAY UNLESS THEY HAVE A PROVEN REPAYMENT TRACK RECORD. PRINCES ALSO USE THEIR CLOUT TO CONFISCATE LAND FROM COMMONERS, ESPECIALLY IF IT IS KNOWN TO BE THE SITE FOR AN UPCOMING PROJECT AND CAN BE QUICKLY RESOLD TO THE GOVERNMENT FOR A PROFIT. ANOTHER COMMON MONEYMAKING SCHEME IS FOR INDIVIDUAL PRINCES TO "SPONSOR" SOMETIMES HUNDREDS OF EXPATRIATE WORKERS WHO ARE UNLEASHED TO FREELANCE ON THE LOCAL ECONOMY AND IN RETURN PAY THEIR ROYAL SPONSOR A SMALL MONTHLY FEE, USUALLY AROUND $100. ¶6. (S) IN THE END, ROYALS STILL SEEM MORE ADEPT AT SQUANDERING THAN ACCUMULATING WEALTH. DESPITE THE HANDOUTS, THERE ARE MORE COMMONER BILLIONAIRES THAN ROYAL BILLIONAIRES IN THE KINGDOM. THE WEALTHIEST ROYALS AND THEIR PERSONAL FORTUNES BY OUR ESTIMATES ARE: AL-WALID BIN TALAL BIN ABD AL-AZIZ -- $13 BILLION, KING FAHD -- $10 BILLION, DEFENSE MINISTER PRINCE SULTAN BIN ABD AL-AZIZ -- $10 BILLION, KHALID BIN SULTAN BIN ABD AL-AZIZ -- $2 BILLION. ¶7. (S) ROYALTY HERE IS EXPECTED TO HAVE WEALTH AND THE TRAPPINGS OF POWER TO A CERTAIN DEGREE. FOR EXAMPLE, IMPORTANT ROYAL FAMILY MEMBERS HOLD 'MAJLISES' WHERE VISITORS WILL DISCUSS THEIR CONCERNS AND SEEK ROYAL INTERCESSION WITH AUTHORITIES. CROWN PRINCE ABDULLAH'S WEEKLY MAJLIS ATTRACTS MANY DOZENS TO HUNDREDS OF PETITIONERS MOST OF WHOM RECEIVE SOME GIFT OR ATTENTION TO THEIR PROBLEMS. PRINCES CUSTOMARILY PROVIDE HOSPITALITY, TOO. ONE FORMER EASTERN PROVINCE GOVERNOR, FAHD BIN SALMAN, CLAIMS THAT HE SPENDS IN THE NEIGHBORHOOD OF SR 4 MILLION OUT OF HIS OWN POCKET ON LARGESSE AND FEASTS FOR COMMONERS DURING THE HOLY MONTH OF RAMADAN. HOWEVER, THERE IS A DIFFERENCE BETWEEN APPROPRIATE ROYAL LARGESSE AND GREED. MANY BELIEVE THAT ROYAL GREED HAS GONE BEYOND THE BOUNDS OF REASON, TO INCLUDE WIDESPREAD INTERLOPING ON THE BUSINESS COMMUNITY'S TURF, TRADITIONALLY OFF LIMITS TO ROYALS. (SEE SEPTEL EXAMINATION OF PRINCES IN BUSINESS.) AS LONG AS THE ROYAL FAMILY VIEWS THIS COUNTRY AND ITS OIL WEALTH AS AL SAUD INC., THE THOUSANDS OF PRINCES AND PRINCESSES WILL SEE IT AS THEIR BIRTHRIGHT TO RECEIVE DIVIDEND PAYMENTS AND RAID THE TILL. IT IS OUR VIEW THAT OF THE PRIORITY ISSUES THE COUNTRY FACES, GETTING A GRIP ON ROYAL FAMILY EXCESSES IS AT THE TOP. END SUMMARY AND INTRODUCTION. ---------------------- THE SYSTEM OF STIPENDS ---------------------- ¶8. (C) EVERY PRINCE AND PRINCESS FROM BIRTH GETS A MONTHLY ALLOWANCE, WHICH IS PART OF THE STATE BUDGET AND DISTRIBUTED THROUGH AN OFFICE OF THE MINISTRY OF FINANCE CALLED THE "OFFICE OF DECISIONS AND RULES" (IDARAT AL-MUQARRARAT WA AL-QAWA'ID). ECONOFF RECENTLY PAID A COURTESY CALL ON THE OFFICE'S DIRECTOR, ABD AL-AZIZ AL-SHUBAYLI. THE OFFICE, IN AN OLD BUILDING IN WHAT PASSES AS RIYADH'S BANKING DISTRICT, WAS BUSTLING WITH SERVANTS PICKING UP CASH FOR THEIR MASTERS. AL-SHUBAYLI, WHO SPOKE NOT A WORD OF ENGLISH, HOSTED ECONOFF FOR NEARLY TWO HOURS IN AN OPEN-DOOR SESSION THAT WAS INCESSANTLY INTERRUPTED BY PETITIONERS. BASED ON AL-SHUBAYLI'S COMMENTS, ECONOFF'S OBSERVATIONS AND COMMENTS BY A SAUDI FAMILIAR WITH THE ORGANIZATION, THE OFFICE APPEARS TO SERVE AT LEAST THREE FUNCTIONS: -- DISTRIBUTION OF STIPENDS TO THE ROYAL FAMILY. -- DISTRIBUTION OF STIPENDS TO OTHER FAMILIES AND INDIVIDUALS GRANTED MONTHLY STIPENDS IN PERPETUITY. EXAMPLES INCLUDE THE AL AL-SHAYKH FAMILY--DESCENDENTS OF THE ORIGINAL "WAHHABI," MEMBERS OF THE AL-SUDAYRI FAMILY, CADET BRANCHES OF THE ROYAL FAMILY, SUCH AS THE BIN JILUWI--FAMOUS COMRADES-IN-ARMS WITH THE KINGDOM'S FOUNDER ABD AL-AZIZ, AND DESCENDANTS OF INDIVIDUAL SOLDIERS WHO ASSISTED ABD AL-AZIZ IN HIS CONQUEST OF THE ARABIAN PENINSULA. -- FULFILLMENT OF FINANCIAL PROMISES MADE BY SENIOR PRINCES, SUCH AS CROWN PRINCE ABDALLAH OR RIYADH GOVERNOR SALMAN, TO AVERAGE SAUDIS, MOST LIKELY DURING A MAJLIS WHEN NUMEROUS SAUDIS PERSONALLY APPROACH AND PETITION SENIOR LEADERS. ¶9. (S) THE STREAM OF PETITIONERS INTO AL-SHUBAYLI'S OFFICE DURING THE MEETING GENERALLY WERE OF TWO TYPES: THOSE SEEKING FOLLOW- THROUGH OF A ROYAL COMMITMENT, AND THOSE SEEKING TO VERIFY LEGITIMATE REGISTRATION ON THE ROLES AS RECIPIENTS OF MONTHLY STIPENDS. ¶10. (S) THE FIRST TYPE INCLUDED MANY PETITIONERS WHO HAD SLIPS OF PAPER WITH ROYAL DIWAN LETTERHEAD CARRYING HAND-SCRAWLED ARABIC INSTRUCTIONS FOR ASSISTANCE. AL-SHUBAYLI GENERALLY GRUDGINGLY APPROVED THESE, BUT IT WAS CLEAR TO ECONOFF THAT AN IMPORTANT PART OF HIS JOB, AT LEAST IN TODAY'S MORE FISCALLY DISCIPLINED ENVIRONMENT, IS TO PLAY THE ROLE OF BAD COP. FOR EXAMPLE, HE INTENSELY AND RUDELY GRILLED A NEARLY BLIND OLD MAN ON WHY AN EYE OPERATION PROMISED BY A PRINCE AND CONFIRMED BY ROYAL DIWAN NOTE HAD TO BE CONDUCTED OVERSEAS AND NOT FOR FREE IN ONE OF THE FIRST CLASS EYE HOSPITALS IN THE KINGDOM. AFTER LISTENING FOR SOME MINUTES TO THE REQUISITE GROVELING AND PLEADING, AL-SHUBAYLI SIGNED OFF ON THE REQUEST. AFTER THIS PARTICULAR EPISODE, AL-SHUBAYLI TURNED TO ECONOFF AND NOTED THAT HE HAD BEEN IN THE U.S. TWICE FOR MEDICAL TREATMENT HIMSELF, ONCE FOR A CHRONIC ULCER AND ONCE FOR CARPEL TUNNEL SYNDROME. HE CHUCKLED, SUGGESTING THAT BOTH WERE PROBABLY JOB-INDUCED. ¶11. (C) AL-SHUBAYLI HAS BEEN THE ONLY DIRECTOR OF THE OFFICE SINCE ITS CREATION UNDER KING ABD AL-AZIZ ALMOST HALF A CENTURY AGO WHEN IT WAS CALLED THE RIYADH FINANCE OFFICE. HE CLEARLY REALIZES THAT DISCRETION IS KEY TO KEEPING HIS JOB. WHEN ASKED BY ECONOFF WHAT HIS OFFICE DOES, HE SAID "FINANCIAL THINGS, LIKE ANY OFFICE OF THE MINISTRY OF FINANCE." WHEN ASKED WHETHER THE SAG'S AUSTERITY BUDGETS WERE AFFECTING HIS OFFICE, HE INITIALLY JUST ANSWERED, "OF COURSE." HE LATER NOTED THAT THE OFFICE HAD RECENTLY PUT OUT THE WORD THAT ALL RECIPIENTS OF MONTHLY STIPENDS HAD TO COME INTO THE OFFICE TO VERIFY THEIR RIGHT TO BE ON THE ROLLS. HE MENTIONED THAT HE HAD DISCOVERED CASES OF SERVANTS WHO WERE STILL PICKING UP MONTHLY STIPENDS FOR RECIPIENTS WHO HAD DIED. THIS EXPLAINED THE SECOND TYPE OF PETITIONERS PRESENT DURING ECONOFF'S VISIT. ONE SAUDI SUCCESSFULLY VERIFIED HIS RIGHT TO A STIPEND WITH A SERIAL NUMBER FROM THE RIFLE HIS FATHER HAD USED IN BATTLE WITH ABD AL- AZIZ. ANOTHER, WHOM ECONOFF VAGUELY RECOGNIZED, INTRODUCED HIMSELF AS THE SAUDI TV WEATHERMAN. AFTER JOKING ABOUT THE MONOTONY OF HIS JOB--ALWAYS FORECASTING "HOT AND DRY"--HE TOLD ECONOFF THAT HE WAS IN RIYADH TO VERIFY THAT HIS INFIRM UNCLE IN JEDDAH BELONGED ON THE ROLLS. ¶12. (S) EVEN WITH HIS RETICENCE, AL-SHUBAYLI NOTED THE OBVIOUS, THAT THE MOST IMPORTANT FUNCTION OF THE OFFICE IS TAKING FINANCIAL CARE OF ROYALS. WHILE AL-SHUBAYLI REFUSED TO ELABORATE, ACCORDING TO A VARIETY OF SOURCES, ROYAL FAMILY STIPENDS ARE AS FOLLOWS: -- THE REMAINING SONS AND DAUGHTERS OF ABD AL-AZIZ ARE ON INDIVIDUAL PAY SCALES, RANGING FROM ABOUT $200,000 TO $270,000 PER MONTH ($1 EQUALS 3.75 SR). -- GRANDCHILDREN OF ABD AL-AZIZ RECEIVE IN THE RANGE OF $27,000 PER MONTH, ACCORDING TO ONE CONTACT FAMILIAR WITH THE STIPENDS. PRINCE AL-WALID BIN TALAL TOLD BUSINESS WEEK THAT HE, AS A GRANDSON, RECEIVED ABOUT $19,000 PER MONTH. -- GREAT GRANDCHILDREN GENERALLY RECEIVE ABOUT $13,000, AND GREAT GREAT GRANDCHILDREN RECEIVE $8,000 PER MONTH. -- UPON MARRYING, A PRINCE CAN RECEIVE A STIPEND OF ABOUT $1 - 3 MILLION FOR CONSTRUCTION OF A PALACE, THOUGH THIS GRANT IS NOT AUTOMATIC AND REQUIRES SOME INFLUENCE WITH THE ROYAL DIWAN. MONTHLY STIPENDS ALSO VARY DEPENDING ON WHETHER A ROYAL IS SINGLE OR MARRIED. -- AMOUNTS FOR DISTANT ROYALS OR PRIVILEGED NON-ROYALS IS SUBSTANTIALLY LESS. THE LEAST ONE RECEIVES IS $800 PER MONTH. A TYPICAL MID-LEVEL MEMBER OF A NON-ROYAL RECIPIENT FAMILY WOULD RECEIVE ABOUT $5,000 PER MONTH. ¶13. (C) BASED ON THE ABOVE SCALE AND ASSUMING ABOUT 60 REMAINING SONS AND DAUGHTERS OF ABD AL-AZIZ, AND AN AVERAGE 7 CHILDREN PER PARENT (420 GRANDCHILDREN, 2,900 GREAT GRANDCHILDREN, AND PROBABLY ONLY ABOUT 2,000 GREAT GREAT GRANDCHILDREN AT THIS POINT), TOTAL ANNUAL STIPEND PAYMENTS WOULD AMOUNT TO OVER $2 BILLION. THE STIPENDS ALSO PROVIDE A SUBSTANTIAL INCENTIVE FOR ROYALS TO PROCREATE SINCE THE STIPENDS BEGIN AT BIRTH. A SAUDI WHO RECENTLY ATTENDED PORTLAND STATE UNIVERSITY TOLD ECONOFF THAT THERE IS A PRINCE IN THE SMALL PORTLAND, OREGON SAUDI STUDENTS ASSOCIATION WHO HAS CONVINCED A LOCAL COMMUNITY COLLEGE TO CARRY HIM ON THE ROLLS EVEN THOUGH HE WOULD NEVER ATTEND A CLASS. ACCORDING TO THIS SAUDI, THE PRINCE'S MAIN GOAL IN LIFE IS TO HAVE MORE CHILDREN SO HE CAN INCREASE HIS MONTHLY ALLOWANCE. ------------------- OFF-BUDGET PROGRAMS ------------------- ¶14. (S) WHILE THE STIPEND SYSTEM IS THE OFFICIAL MECHANISM FOR TAKING CARE OF ROYALS' FINANCIAL NEEDS, IT IS CLEARLY NOT ENOUGH FOR MANY PRINCES, AND SEVERAL OTHER ENRICHING PRACTICES, GENERALLY VIEWED AS CORRUPT, OCCUR. BY FAR THE LARGEST IS LIKELY ROYAL SKIMMING FROM THE APPROXIMATELY $10 BILLION IN ANNUAL OFF-BUDGET SPENDING CONTROLLED BY A FEW KEY PRINCES, PRIMARILY DEFENSE MINISTER SULTAN. TWO OF THESE PROJECTS--THE TWO HOLY MOSQUES PROJECT (ABOUT $5 BILLION PER YEAR) AND THE MINISTRY OF DEFENSE'S STRATEGIC STORAGE PROJECT (ABOUT $1 BILLION PER YEAR)--ARE HIGHLY SECRETIVE, SUBJECT TO NO MINISTRY OF FINANCE OVERSIGHT OR CONTROLS, TRANSACTED THROUGH THE NATIONAL COMMERCIAL BANK (SEE BELOW), AND WIDELY BELIEVED TO BE A SOURCE OF SUBSTANTIAL REVENUES FOR THE KING AND A FEW OF HIS FULL BROTHERS. IN A RECENT MEETING WITH THE AMBASSADOR, SAUDI BILLIONAIRE PRINCE AL-WALID BIN TALAL, ALLUDING TO THESE OFF-BUDGET PROGRAMS, LAMENTED THE TRAVESTY THAT REVENUES FROM "ONE MILLION BARRELS OF OIL PER DAY" GO ENTIRELY TO "FIVE OR SIX PRINCES." ----------------- GOING TO THE BANK ----------------- ¶15. (S) THE TWELVE COMMERCIAL BANKS IN THE COUNTRY ARE GENERALLY LEARY OF LENDING TO ROYALS BECAUSE THE BANKS HAVE LIMITED RECOURSE SHOULD A PRINCE DEFAULT ON A LOAN. NATIONAL COMMERCIAL BANK (NCB) HAS BEEN THE PRIMARY BANK OF THE ROYAL FAMILY FOR MANY YEARS. IN THE LATE 1980S AND EARLY 1990S, NCB'S NON-PERFORMING ROYAL LOAN PROBLEMS WERE SO SEVERE THAT THE BANK NEARLY COLLAPSED. KING FAHD REPORTEDLY INJECTED $2 BILLION OF PERSONAL FUNDS INTO THE BANK TO RESTORE ITS FINANCIAL INTEGRITY. THE MANAGING DIRECTOR OF A MAJOR BANK IN THE KINGDOM TOLD EMBOFFS THAT HIS BANK, WITH LOANS TO FEWER THAN A DOZEN PRINCES, WAS PROBABLY AT THE LOW END OF THE SPECTRUM IN TERMS OF EXPOSURE TO ROYALS. HE IS CARRYING TWO NON-PERFORMING LOANS--ONE FOR 300 MILLION SR TO PRINCE SATTAM BIN ABD AL-AZIZ, AND ANOTHER SMALLER LOAN TO A SON OF PRINCE SALMAN BIN ABD AL-AZIZ. THE BANK WITH PROBABLY THE LOWEST EXPOSURE TO ROYALS IS THE KINGDOM'S ONLY ISLAMIC BANK--AL-RAJHI. ACCORDING TO ITS TOP OFFICER, THE BANK HAS A STRICT POLICY AGAINST LENDING TO THE AL SAUD. HE SAYS THE BANK HAS ONLY MADE TWO EXCEPTIONS, TO PRINCES WHO HAVE BEEN LONGSTANDING RELIABLE CUSTOMERS OF THE BANK. AT THE HIGH END ARE NCB AND SAUDI AMERICAN BANK (SAMBA). IN ITS LATEST FINANCIAL REPORT, FOR THE THIRD QUARTER OF 1996, SAMBA REPORTED LOWER PROFITS THAN LAST YEAR DUE IN PART TO A 200 MILLION SR PROVISION FOR A BAD LOAN, WHICH, ACCORDING TO A SAMBA OFFICER, IS TO ONE OF THE BROTHERS OF KING FAHD'S WIFE. THE BANKS HAVE THE FREEDOM TO REFUSE DOING BUSINESS WITH ROYALS, BUT BANKS SUCH AS NCB AND SAMBA HAVE HAD A POLICY OF ATTRACTING SUCH "HIGH NET WORTH CLIENTS" TO THEIR PRIVATE BANKING DEPARTMENTS TO ADD PRESTIGE TO THE BANK. ¶16. (S) THE MANAGING DIRECTOR OF A MAJOR BANK IN THE KINGDOM TOLD THE AMBASSADOR THAT HE VIEWS ROYALS IN FOUR TIERS, WHICH DETERMINE HOW HIS BANK DEALS WITH THEM: THE TOP TIER IS THE SENIORMOST PRINCES, GENERALLY THE MOST WELL-KNOWN SONS OF ABD AL-AZIZ. SOME OF THESE HAVE ACCOUNTS AT THE BANK, BUT, PROBABLY BECAUSE OF THEIR EXORBITANT WEALTH, THEY NEVER ASK THE BANK FOR LOANS. THE SECOND TIER INCLUDES SENIOR PRINCES KNOWN TO BE INCREDIBLY WEALTHY BUT WHO OFTEN SEEK LOANS FROM THE BANK. THE BANK INSISTS THAT SUCH LOANS BE 100 PERCENT COLLATERALIZED BY DEPOSITS IN OTHER ACCOUNTS AT THE BANK. HE SAYS SUCH ARRANGEMENTS HAVE WORKED WELL FOR THE BANK. THE THIRD TIER ARE THE THOUSANDS OF LESSER PRINCES WHOM THE BANK REFUSES TO LEND TO. THE FOURTH TIER, NOT REALLY ROYALS, ARE WHAT THIS BANKER CALLED THE "HANGERS ON"--PEOPLE WHO WORK FOR PRINCES AND WHOSE "CASH FLOWS" CAN CHANGE DRAMATICALLY FROM ONE DAY TO THE NEXT. THESE, HE SAID, HAVE MOST RECENTLY GIVEN THE BANK THE MOST TROUBLE. ¶17. (S) WITH A FEW NOTABLE EXCEPTIONS, THERE IS NOT EXTENSIVE ROYAL OWNERSHIP OF THE TWELVE COMMERCIAL BANKS IN SAUDI ARABIA. PRINCE AL-WALID BIN TALAL IS THE MAJORITY OWNER OF UNITED SAUDI COMMERCIAL BANK AND HE IS TRYING TO ACQUIRE SAUDI CAIRO BANK. RUMORS ARE THAT OTHER PRINCES, JEALOUS OF HIS SUCCESS, ARE TRYING TO BLOCK THE ACQUISITION. THE BANKING COMMUNITY EXPECTS THAT HE WILL MERGE THE TWO BANKS IF HE SUCCESSFULLY ACQUIRES SAUDI CAIRO BANK. A SECOND RUMOR IN THE BANKING COMMUNITY IS THAT THE MONEY BEHIND KHALID BIN MAHFUZ'S RECENT ACQUISITION OF 100 PERCENT OWNERSHIP OF NCB--THE LARGEST BANK IN THE KINGDOM--CAME FROM THE KING'S SON, ABD AL-AZIZ BIN FAHD, WHO IS THE SHADOW OWNER. IT IS WIDELY VIWED IN BANKING CIRCLES THAT KHALID BIN MAHFUZ, A FORMER BCCI INDICTEE, COULD NOT HAVE GOTTEN CENTRAL BANK APPROVAL TO FULLY OWN NCB WITHOUT THE MOST SENIOR ROYAL BACKING. SAUDI HOLLANDI BANK IS MAJORITY OWNED BY THE CONGLOMERATE AL-MAWARID, WHICH IN TURN IS OWNED BY PRINCES. THE MAJORITY OWNERS OF THE OTHER BANKS ARE GENERALLY THE LARGE NON-ROYAL BUSINESS FAMILIES IN THE KINGDOM. ---------- LAND GRABS ---------- ¶18. (C) STORIES ABOUND OF SOME GREEDY PRINCES EXPROPRIATING LAND FROM COMMONERS. GENERALLY, THE INTENT IS TO RESELL QUICKLY AT HUGE MARKUP TO THE GOVERNMENT FOR AN UPCOMING PROJECT. DISCONTENT OVER ROYAL USURPATION OF LANDS HAS BEEN EXACERBATED BY SAG CUTBACKS IN LAND DISTRIBUTION PROGRAMS WHICH PRIMARILY BENEFITED THE MIDDLE CLASS. FROM THE MID-1970S TO THE LATE 1980S THE SAG UNDERTOOK AN AMBITIOUS, AND POPULAR, LAND GRANT PROGRAM DESIGNED TO SETTLE NOMADIC POPULATIONS AND TO GARNER THE SUPPORT OF THE SAUDI POPULACE. OVER 1.3 MILLION RESIDENTIAL PARCELS WERE DISTRIBUTED FREE OF CHARGE THROUGHOUT THE KINGDOM, WITH LITTLE MORE THAN A PETITION TO THE LOCAL GOVERNOR REQUIRED TO OBTAIN THE DEED. AN EQUALLY SUCCESSFUL PROGRAM WAS ADMINISTERED BY ARAMCO, WHOSE ENVIRONS TODAY ARE SURROUNDED BY UPSCALE NEIGHBORHOODS SETTLED BY EMPLOYEES WITH THE HELP OF A COMPANY-DEEDED PIECE OF PROPERTY AND NO-INTEREST LOANS. ¶19. (C) THE LAND GRANT PROGRAM HAS NOW DWINDLED TO AN EPISODIC GESTURE OF ROYAL LARGESSE, PERHAPS BECAUSE THE NUMBER OF GRANTS WAS STRESSING THE GOVERNMENT'S ABILITY TO PROVIDE INFRASTRUCTURE -- WATER, ELECTRICITY, AND ROADS. SIMILARLY, ARAMCO, HAVING DISTRIBUTED OVER 30,000 PLOTS OF LAND, RAN OUT OF DESIRABLE ACREAGE AND NOW OFFERS A LUMP SUM CASH PAYMENT. WHEN COMBINED WITH THE ABSENCE OF MORTGAGE LOANS FROM THE COMMERCIAL BANKS, A DECADE-LONG WAITING LIST FOR A GOVERNMENT HOME LOAN, THE RESULT IS THAT HOME OWNERSHIP IS BECOMING AN ELUSIVE GOAL FOR YOUNG, NON-ROYAL SAUDIS. ¶20. (S) AGAINST THIS BACKDROP, ROYAL LAND SCAMS INCREASINGLY HAVE BECOME A POINT OF PUBLIC CONTENTION. IN THE 1993 "MEMORANDUM OF ADVICE" PETITION SIGNED BY OVER 100 OF THE KINGDOM'S MORE ACTIVIST CLERICS, THE KING WAS URGED TO HALT THE DISTRIBUTION OF LAND, EXCEPT TO THOSE WITH LIMITED INCOMES OR NO PLACE TO LIVE. MINISTER OF DEFENSE SULTAN, HIS SONS, AND THE OFFSPRING OF KING FAHD ARE THE MOST OFT-CITED SENIOR CULPRITS: -- ACCORDING TO A BANKER WHO SAYS HE HAS A COPY OF THE WRITTEN INSTRUCTIONS, DEFENSE MINISTER SULTAN ORDERED LOCAL AUTHORITIES IN THE MECCA AREA TO TRANSFER TO HIS NAME A "WAQF"--RELIGIOUS ENDOWMENT--OF A SMALL PARCEL OF LAND THAT HAD BEEN IN THE HANDS OF ONE FAMILY LITERALLY FOR CENTURIES. THE BANKER NOTED THAT IT WAS THE BRAZENNESS OF THE LETTER, WITH NO EFFORT TO HIDE THE SIMPLE INTENT OF CONFISCATING LAND, THAT WAS PARTICULARLY EGREGIOUS. -- THE KING'S SON, ABD AL-AZIZ BIN FAHD, WAS REPORTEDLY GRANTED THE HUGE EXPANSE OF LAND THAT THE KING KHALID INTERNATIONAL AIRPORT OUTSIDE OF RIYADH WAS BUILT ON FOR RESALE TO THE GOVERNMENT FOR THE PROJECT. -- PRINCE MISHAL BIN ABD AL-AZIZ (ELDER HALF-BROTHER OF SULTAN), WHO ACCEDED TO BEING PASSED OVER IN THE LINE OF SUCCESSION, IS FAMOUS FOR THROWING FENCES UP AROUND VAST STRETCHES OF GOVERNMENT LAND. ONE CONTRACTOR REPORTS BEING ORDERED BY MISHAL TO KEEP EXTENDING THE PERIMETER OF THE FENCE ENCIRCLING HIS DESERT PROPERTY OUTSIDE OF RIYADH UNTIL AN ADDITIONAL 80 SQUARE KILOMETERS OF LAND WERE INCORPORATED INTO HIS PRIVATE ESTATE. LIKEWISE, MISHAL HAS ACQUIRED A 450 SQUARE KILOMETER TRACT ENVELOPING THE KING KHALID MILITARY CITY OUTSIDE OF HAFR AL-BATIN. -- MISHAL'S FULL BROTHER, MITIB BIN ABD AL-AZIZ, IS THE BENEFICIARY OF ALL LAND RECLAMATION PROJECTS ALONG THE ARABIAN GULF. THIS RIGHT WAS GRANTED AFTER MITIB INSISTED THAT HIS FATHER, KING ABD AL-AZIZ, HAD PROMISED HIM ALL OF THE KINGDOM'S FISHERY RIGHTS. THE FAMILY'S COMPROMISE WAS TO CREATE THE NATIONAL FISHERIES COMPANY, OF WHICH MITIB WAS MADE A PARTNER, AND TO CEDE HIM THE RIGHTS TO ALL RECLAIMED LANDS IN THE EASTERN PROVINCE. ¶21. (S) THE CONFISCATION OF LAND BY SOME GREEDY PRINCES EXTENDS TO BUSINESSES AS WELL. ONE PROMINENT AND WEALTHY SAUDI BUSINESSMAN REPORTS THAT ONE REASON SOME WEALTHY SAUDIS KEEP SO MUCH MONEY INVESTED OUTSIDE OF THE COUNTRY IS BECAUSE THEY DO NOT FACE THE RISK ABROAD OF "ROYAL EXPROPRIATION" OF BUSINESS ASSETS. ACCORDING TO THIS BUSINESSMAN, AS SOON AS A SMALL BUSINESS SHOWS SIGNS OF HIGH GROWTH AND PROFIT POTENTIAL, THE OWNER, PARTICULARLY IF HE IS KNOWN TO BE WELL-OFF, WILL COME UNDER PRESSURE FROM ROYALS TO SELL OR GO INTO PARTNERSHIP. AS A RESULT, MANY OF THE MORE PROMINENT BUSINESSMEN NOW CHOOSE TO USE A LESSER NAME SAUDI AS A SHADOW OWNER OF A BUSINESS TO AVOID DRAWING THE ATTENTION OF BUSINESS-HUNGRY PRINCES. --------------- THE VISA RACKET --------------- ¶22. (C) A PHENOMENON OF THE PAST FIVE OR SO YEARS HAS BEEN THE ROYAL SPONSORSHIP OF EXPATRIATE LABOR FOR PROFIT. EVERY FOREIGN WORKER IN THE COUNTRY HAS TO BE SPONSORED BY A SAUDI TO OBTAIN AN IQAMA--RESIDENCE PERMIT. PERMISSION TO SPONSOR FOREIGN WORKERS IS GRANTED BY THE MINISTRY OF LABOR. THE AVERAGE SAUDI CAN SPONSOR FIVE OR SO, ENOUGH TO HIRE MAIDS, NANNIES, AND DRIVERS. BUSINESSMEN CAN GENERALLY GET PERMISSION TO HIRE EXPATS TO FILL JOBS IN THEIR COMPANIES, ALTHOUGH THIS IS GETTING HARDER WITH THE SAG PUSH TO SAUDIIZE THE WORKFORCE. ROYALS CAN GET PERMISSION FROM THE MINISTRY TO SPONSOR SEEMINGLY UNLIMITED NUMBERS OF EXPATS, EVEN THOUGH THEY HAVE NO WORK FOR THEM. ¶23. (C) IT IS COMMON FOR A PRINCE TO SPONSOR A HUNDRED OR MORE FOREIGNERS, KNOWN HERE AS "FREELANCERS," WHO ARE ALLOWED TO FIND THEIR OWN JOBS, MOST OFTEN AS SERVANTS OR UNSKILLED LABORORS. IN EXCHANGE FOR THE PRIVILEGE OF BEING IN SAUDI ARABIA, THESE FOREIGNERS PAY THEIR ROYAL SPONSOR A NOMINAL FEE--$30 TO $150 PER MONTH, WHICH ADDS UP TO A SUBSTANTIAL TAKE FOR SOMEONE SPONSORING OVER A HUNDRED EXPATS--ON AVERAGE ABOUT $10,000 PER MONTH PER 100 EXPATS UNDER SPONSORSHIP. ¶24. (C) WE BELIEVE THAT THIS PRACTICE WAS LARGELY BEHIND THE RAPID GROWTH IN THE EXPATRIATE POPULATION, FROM ABOUT 4.2 MILLION TO 6.5 MILLION, BETWEEN 1992 AND 1995. WITH THE ECONOMY GROWING AT 1 PERCENT OR LESS DURING THOSE YEARS, JOB EXPANSION WAS NOT JUSTIFYING THE RAPID EXPATRIATE POPULATION GROWTH. IN JANUARY 1995, THE SAG RAISED THE PRICE FOR A 2-YEAR IQAMA TO A HEFTY 2,000 SR ($533). THIS COMBINED WITH THE COST OF HOMEWARD PASSAGE FOR WORKERS WHICH MUST BE BORNE BY SPONSORS IS NOW MAKING IT UNECONOMICAL TO ENGAGE IN THE WIDESPREAD SPONSORSHIP OF FREELANCERS, AND WE BELIEVE THAT THE EXPAT POPULATION HAS LEVELED OFF OR IS IN DECLINE AS A RESULT. ONE INDICATION OF THIS IS THAT THE CENTRAL BANK HAS REPORTED THAT EXPATRIATE WORKER REMITTANCES ARE DOWN FROM $12 BILLION IN THE FIRST 9 MONTHS OF 1995 TO $9.9 BILLION FOR THE SAME PERIOD IN 1996. -------------------------------------- PRINCES BETTER AT SPENDING THAN SAVING -------------------------------------- ¶25. (S) ALL THE WEALTH THAT HAS BEEN DISTRIBUTED TO PRINCES OVER THE PAST 20 YEARS HAS NOT CREATED A SIGNIFICANT NUMBER OF SUPER- RICH PRINCES. THERE ARE MORE NON-ROYAL BILLIONAIRES THAN ROYAL ONES. THE HEADS OF THE BIG BUSINESS FAMILIES--AL-JOMAIH, AL- JUFFALI, BIN MAHFUZ, AL-RAJHI, OLAYAN, JAMEEL, AL-RASHID, FOR EXAMPLE--ARE KNOWN BILLIONAIRES WHILE ONLY A HANDFUL OF PRINCES ARE IN THE SAME LEAGUE. THE LONE EXCEPTION OF A PRINCE WHO HAS TURNED HIS SEED MONEY INTO A MULTI-BILLION DOLLAR EMPIRE IS AL-WALID BIN TALAL--THE SON OF AN OUTCAST SON OF ABD AL-AZIZ. WE CALCULATE THAT HIS FOREIGN AND DOMESTIC INVESTMENTS GIVE HIM A NET WORTH OF ABOUT $13 BILLION. THE OTHER BILLIONAIRE PRINCES AND OUR ESTIMATE OF THEIR WORTH ARE KING FAHD -- $10 BILLION, DEFENSE MINISTER PRINCE SULTAN -- $10 BILLION, AND HIS SON KHALID BIN SULTAN -- $2 BILLION. ----------------------------------------- COMMENT: AL SAUD INC. -- NO END IN SIGHT ----------------------------------------- ¶26. (S) WHILE ROYALTY HERE IS EXPECTED TO HAVE WEALTH AND THE TRAPPINGS OF POWER TO A CERTAIN DEGREE, THERE IS A BROAD SENTIMENT THAT ROYAL GREED HAS GONE BEYOND THE BOUNDS OF REASON. ROYAL EXCESS IS A COMMON TOPIC OF CONVERSATION AMONG NON-ROYAL SAUDIS AND EXPATRIATES ALIKE. PALACE CONSTRUCTION, KNOWN TO BE FINANCED FOR EVERY PRINCE THROUGH THE STIPEND SYSTEM, IS A VISIBLE SIGN OF SUCH EXCESS. ONE PALACE IN DOWNTOWN RIYADH HAS NEVER BEEN OCCUPIED BECAUSE THE ROYAL BUILDER SIMPLY DIDN'T LIKE IT. IT NOW STANDS AS A MONOLITHIC REMINDER OF CONSPICUOUS CONSUMPTION. SUCH EXCESSES WERE TOLERABLE WHEN THE ECONOMIC TIDE WAS RISING FOR EVERYONE. NOW, WITH FLAT PER CAPITA GDP AND A GENERAL SENSE THAT QUALITY OF LIFE IS DECLINING FOR THE AVERAGE SAUDI, THE TRANSFER OF SO MUCH STATE WEALTH IS RESENTED AND ONE OF THE COMBUSTIBLE MIXES BESETTING SAUDI ARABIA'S FUTURE. AS IF THIS WEREN'T ENOUGH, THE ROYAL FAMILY IS INCREASINGLY ALIENATING THE MERCHANT CLASS (AS EXAMINED SEPTEL) VIA PERVASIVE VIOLATION OF A DICTUM BY THE KINGDOM'S FOUNDER, ABD AL-AZIZ, THAT ROYALS STAY OUT OF BUSINESS. ¶27. (S) THERE IS SOME SENTIMENT THAT CROWN PRINCE ABDALLAH, AS KING, WOULD INTERCEDE TO ROLL BACK THE ROYAL TAKE. IT IS NOT CLEAR YET, HOWEVER, THAT HE WOULD HAVE THE POWER OR INCLINATION TO MAKE SWEEPING CHANGES, BY, FOR EXAMPLE, ELIMINATING OFF-BUDGET PROGRAMS OR EVEN CURTAILING THE STIPEND SYSTEM. EVEN WITH STIPEND AMOUNTS REMAINING FLAT, DISBURSEMENTS ARE GROWING WITH THE HIGH POPULATION GROWTH OF THE ROYAL FAMILY. SUCH CUTTING BACK INTERNALLY MIGHT FURTHER FRACTURE THE RULING CLAN. ¶28. (S) IT IS OUR ASSESSMENT THAT OF THE PRIORITY ISSUES THE COUNTRY FACES, GETTING A GRIP ON ROYAL FAMILY EXCESSES IS AT THE TOP. BUT AS LONG AS THE ROYAL FAMILY VIEWS THIS COUNTRY AS "AL SAUD INC.," EVER INCREASING NUMBERS OF PRINCES AND PRINCESSES WILL SEE IT AS THEIR BIRTHRIGHT TO RECEIVE LAVISH DIVIDEND PAYMENTS, AND DIP INTO THE TILL FROM TIME TO TIME, BY SHEER VIRTUE OF COMPANY OWNERSHIP.
Thursday, 15 September 2011
SAUDI ROYAL WEALTH: WHERE DO THEY GET ALL THAT MONEY?
JAMMU AND KASHMIR ISLAMIC FRONT-secret doc
JAMMU AND KASHMIR ISLAMIC FRONT (C-NA7-00565) REF: STATE 106548 ¶1. (U) CLASSIFIED SECRET BY NEW DELHI ACTING POLITICAL COUNSELOR GORDON HELLWIG. REASON 1.5 (C). ¶2. (S) EMBASSY WILL CONTINUE TO PURSUE MORE INFORMATION ON THE JAMMU AND KASHMIR ISLAMIC FRONT (JKIF) AS REQUESTED IN REFTEL. POST PROVIDES THE FOLLOWING INFORMATION, OBTAINED BY THE REGIONAL SECURITY OFFICE THROUGH ITS CONTACTS IN THE INDIAN INTELLIGENCE BUREAU IN THE HOME MINISTRY, WHICH PROVIDED A WRITTEN REPORT ON THE JKIF. POLOFFS HAVE HEARD VERY LITTLE FROM CONTACTS IN KASHMIR VALLEY REGARDING THE JKIF, AS MOST OF THEIR TERRORIST OPERATIONS HAVE BEEN CONDUCTED OUTSIDE THE VALLEY. NUMEROUS DISCUSSIONS ON THE VARIOUS MILITANT GROUPS IN KASHMIR HAVE NEVER INCLUDED THE JKIF AS A MILITANT GROUP OF PROMINENCE IN KASHMIR. BEGIN TEXT (ENTIRE TEXT IS CONFIDENTIAL): JAMMU AND KASHMIR ISLAMIC FRONT (JKIF) THE GENESIS OF THE JAMMU AND KASHMIR ISLAMIC FRONT (JKIF) DATES BACK TO 1989 WHEN ITS PRECURSOR, THE JAMMU AND KASHMIR STUDENTS LIBERATION FRONT (JKSLF), WAS FLOATED BY HILAL BEG FOLLOWING DIFFERENCES WITH YASIN MALIK, THE THEN COMMANDER- IN-CHIEF OF JKLF. THE JKSLF INDULGED IN HIGH-PROFILE KIDNAPPING AND MURDER CASES. LATER IN APRIL 1991, HILAL BEG WAS PERSUADED BY PAKISTAN'S INTER-SERVICES INTELLIGENCE DIVISION (ISI) TO RENAME THE JKSLF AS IKHWAN-UL-MUSALMEEN (IUM). THE IUM LED BY HILAL BEG WAS TASKED BY PAKISTAN ISI TO CARRY OUT TERRORIST ACTIVITIES OUTSIDE JAMMU AND KASHMIR. FOR THIS PURPOSE, HILAL BEG CREATED A NETWORK OF HIS AGENTS IN CALCUTTA, BIHAR, ANDHRA PRADESH, KATHMANDU, AND DHAKA. THE ARREST OF FOUR MUSLIM TERRORISTS (INCLUDING 3 KASHMIRIS) IN OCTOBER 1993 AT HYDERABAD AND CALCUTTA REVEALED THE PLANS OF THE IUM TO STAGE BOMBAY-TYPE BLASTS IN VARIOUS PARTS OF INDIA BY RECRUITING, TRAINING, AND ORGANISING GROUPS OF SABOTEURS IN VARIOUS PARTS OF THE COUNTRY. THE JKIF WAS FORMED IN SEPTEMBER 1995 BY ONE SAJJAD AHMED KENU, WHO WAS A WELL-KNOWN ACTIVIST OF THE IUM. SAJJAD KENU HAD ESCAPED FROM SRINAGAR JAIL IN JUNE 1995 AND RESURFACED AS THE SUPREME COMMANDER OF THE JKIF IN SEPTEMBER 1995. SINCE ITS INCEPTION, THE JKIF HAS BEEN UNDER CONSIDERABLE PRESSURE FROM ITS PAKISTAN-BASED LEADERSHIP TO CARRY OUT BOMB BLASTS OUTSIDE J&K, PARTICULARLY IN DELHI. ON NOVEMBER 21, 1995, THE JKIF KINGPIN KHURSHEED AHMED, A.K.A. NAYEEM (SINCE KILLED), ENGINEERED A HIGH INTENSITY BLAST WITH THE HELP OF TWO SIKHS, NAMELY HARDEEP SINGH, A.K.A. NEELA, AND HIS BROTHER RAJINDER, CLOTH VENDORS IN SRINAGAR. THIS EXPLOSION, IN THE CONNAUGHT PLACE AREA OF NEW DELHI, INJURED 23 PERSONS AND DAMAGED A LARGE NUMBER OF VEHICLES AND SHOPS. BEFORE THIS INCIDENT, ON SEPTEMBER 25, 1995, THE SAME SIKH MILITANTS ALSO CAUSED TWO SIMULTANEOUS GRENADE EXPLOSIONS NEAR THE RED FORT IN DELHI, INJURING 47 PERSONS. THE JKIF ALSO CAUSED ANOTHER EXPLOSION IN SADAR BAZAR, DELHI, ON JANUARY 3, 1996, IN WHICH 7 PERSONS WERE KILLED AND 36 INJURED. THE JKIF WAS CONTROLLED FROM PAKISTAN BY PAKISTAN ISI AND TIGER MEMON (PRIME ACCUSED IN THE BOMBAY BOMB BLAST CASES OF 1993). THEIR CONTACT IN PAKISTAN-OCCUPIED KASHMIR WAS BILAL BEG, WHO WAS RUNNING AN INDOCTRINATION CAMP NEAR MUZAFFARABAD, FUNDED EXTENSIVELY BY THE ISI TO CARRY OUT TERRORIST ACTS IN INDIA, ONE COLONEL FAROOQ OF PAKISTAN ISI TASKED BILAL BEG AND TIGER MEMON TO UTILISE KATHMANDU-BASED ACTIVISTS LATEEF AND JAVED KRAWAH TO SET OFF BLASTS IN DELHI BEFORE THE LOK SABHA [UPPER HOUSE OF THE INDIAN PARLIAMENT] ELECTIONS. A TEAM OF COMMITTED JKIF CADRES WAS GIVEN A TWO WEEK SPECIALISED CAPSULE COURSE IN EXPLOSIVES NEAR THE AFGHAN BORDER IN MARCH-APRIL 1996. ON MAY 21, 1996, THIS JKIF TEAM SET OFF A VERY HIGH INTENSITY EXPLOSION AT LAJPAT NAGAR, NEW DELHI, IN WHICH 13 PERSONS WERE KILLED AND 40 OTHERS INJURED. THE RDX USED IN THIS BLAST WAS BROUGHT FROM KATHMANDU. ALTHOUGH OTHER ACCUSED, NAMELY FAROOQ KHAN, A.K.A. ANWAR SADAT LATIF, JAVED CHHOTA, MEHMOOD KILLE, NAZA (ALL KASHMIRIS) AND NAUSHAD (A DELHI MUSLIM) WERE ARRESTED, JAVED KRAWAH AND RIAZ, A.K.A. RIAZ MULLA, MANAGED TO ESCAPE. ACCORDING TO THE LATEST REPORTS, JAVED KRAWAH IS IN PAKISTAN AT PRESENT. THE SUBSEQUENT EXPLOSION IN A RAJASTHAN ROADWAYS BUS NEAR DAUSA ON MAY 22, 1996 WAS ALSO ENGINEERED BY THE JKIF. ANOTHER JKIF TEAM UNDER THE LEADERSHIP OF ABDUL GANI, A.K.A. ASSADULLAH, WAS SENT TO EXECUTE A BOMB BLAST IN AHMEDABAD. THE BLAST WAS PREVENTED BY THE TIMELY ARREST OF TEAM MEMBERS IN AHMEDABAD AND THE SEIZURE OF THEIR HIGH GRADE EXPLOSIVE MATERIAL. JKIF AGAIN PLANNED A CHAIN OF EXPLOSIONS IN DELHI BEFORE REPUBLIC DAY 1997 AT THE BEHEST OF PAKISTAN ISI AND TIGER MEMON. ONE FAIYAZ AHMED SHAH, A.K.A. FAROOQ, TASKED BY BILAL AHMED BEG AND JAVED KRAWAH IN PAKISTAN, WAS GIVEN 20 KG OF RDX AND MONEY IN KATHMANDU. BEFORE HE COULD EXECUTE THE PLAN, FAIYAZ AHMED SHAH, A.K.A. FAROOQ, ALONG WITH GHULAM RASOOL MIR, A.K.A. GOGA, AIJAZ AHMED CHOUDHARY, NAZIR AHMED, AND MANZOOR AHMED DANPOSH, A.K.A. JAN, WERE ARRESTED IN KATHMANDU ON DECEMBER 11, 1996. FOR ALL THESE VIOLENT ACTIVITIES, THE JKIF HAS BEEN EXTENSIVELY USING KATHMANDU AS ITS BASE WITH THE ACTIVE CONNIVANCE OF PAKISTAN ISI. TO DISPATCH MEN AND MATERIAL, AND TO EXECUTE EXPLOSIONS IN INDIA, KATHMANDU WAS INVARIABLY MADE THE NODAL POINT AND JKIF EXPLOITED THE VULNERABLE KATHMANDU-BASED KASHMIRI BUSINESSMEN FOR SUCH ACTIVITIES SINCE THEY HAD A READYMADE AND CLEAN PAST. JKIF KINGPIN JAVED KRAWAH HIMSELF USED TO RUN A CARPET BUSINESS IN KATHMANDU.
Secret Pakistani Embassy document 2006
Secret Pakistani Embassy document 2006 SUBJECT: PAKISTAN, ISLAMIC TERROR AND HUA (U) CLASSIFIED BY THOMAS W. SIMONS, JR., AMBASSADOR. REASON: 1.5 (B), (C) AND (D). ¶2. (S) DURING THE COURSE OF FRANK WISNER'S AND MY LUNCHEON WITH THE PRIME MINISTER ON JULY 12, SHE NOTED THAT SHE WAS PICKING UP DISTURBING INTELLIGENCE OF THE EXISTENCE OF RELIGIOUS MADRASSAS AND OTHER INSTITUTIONS, INCLUDING YOUTH TRAINING CAMPS WHICH COULD BE SPAWNING TERRORISM. THE MOST RECENT INDICATIONS ARE THAT INSTITUTIONS OF THIS NATURE ARE FUNDED FROM SAUDI ARABIA. SHE ASSUMES THAT THERE IS PRIVATE SAUDI FINANCE INVOLVED, BUT SHE HAS DIRECTED THAT THE SAUDI GOVERNMENT BE APPROACHED. ¶3. (S) IN THIS CONTEXT SHE EXPRESSED ONCE AGAIN HER SYMPATHY FOR THE KILLING OF THE 19 AMERICANS IN SAUDI ARABIA AND ASKED THAT WE WORK CLOSELY WITH HER IN IDENTIFYING ANY LINES WHICH CONNECT WHAT IS GOING ON IN PAKISTAN TO OTHER TERRORIST OPERATIONS IN THE MIDDLE EAST. I UNDERTOOK TO DO SO AND ASKED THAT THE FOREIGN SECRETARY SHARE WITH US WHATEVER INFORMATION IS AVAILABLE TO PAKISTAN. ¶4. (S) THE PRIME MINISTER CONTINUED, NOTING THAT THE PROBLEM WAS NOT A NEW ONE. THE IRANIANS, LIBYANS AND IRAQIS HAD IN THE PAST FUNDED SIMILAR RELIGIOUS INSTITUTIONS. THE GENERAL PROBLEM AS WELL AS INTERNAL SECURITY PROBLEMS HAD BEEN DISCUSSED AT A RECENT CABINET MEETING ON LAW AND ORDER WHICH SHE HAD CHAIRED. THE POLITICAL CONTEXT WAS WHAT SHE SAW AS A FAIRLY ELABORATE AND WELL ARTICULATED PLOT TO OVERTHROW THE GOVERNMENT. THIS PLOT INVOLVES QASI HUSSEIN AHMED, AMIR OF THE JAMIAT-I-ISLAMI, BUT ONE OF THE GUIDING FORCES WAS FORMER ISI DIRECTOR HAMID GUL. THE MECHANISM ENVISAGED WAS TO BEGIN WITH OPPOSITION TO THE BUDGET AND CONSTRUCT AN EVER-BROADENING POLITICAL MOVEMENT WITH DEMANDS FOR A CHANGE OF GOVERNMENT WITHIN THE CONSTITUTIONAL FRAMEWORK. ELEMENTS WOULD BE THE DEMAND FOR A NEW CENSUS, DEMAND FOR A NATIONAL IDENTITY CARD, AND INVOCATION OF ARTICLE 62 OF THE CONSTITUTION WHICH LIMITS CANDIDATES FOR OFFICE TO THOSE DEFINED AS GOOD MUSLIMS. THE INTENTION WOULD BE TO LIMIT THE DEFINITION OF A GOOD MUSLIM ONLY TO GRADUATES OF MADRASSAS OR ISLAMIC UNIVERSITIES. THE PRIME MINISTER DID NOT BELIEVE THAT THE CAMPAIGN WAS CATCHING ON. AS SHE HAD EXPLAINED TO THE CABINET MEETING ON LAW AND ORDER, HOWEVER, THE GOVERNMENT COULD NOT BE SIMPLY THE PASSIVE OBJECT OF SUCH A CAMPAIGN BUT WAS OBLIGED TO REACT AND BE ACTIVE IN ITS OWN DEFENSE AND IN DEFENSE OF DEMOCRACY. ¶5. (S) THE PRIME MINISTER'S STATEMENT GAVE US AN OPPORTUNITY TO TURN TO THE VEXING ISSUE OF THE HUA. I BEGAN BY THANKING HER FOR HER VERY FIRM COMMENTS IN HER MEETING WITH THE SPOUSES OF THE KASHMIR HOSTAGES. I RECALLED IN PARTICULAR HER REQUEST THAT WE BRING TO HER ATTENTION ANY SOLID INFORMATION THAT WE HAVE SO THAT SHE CAN HAVE THE SUSPECTS BROUGHT IN AND STRONGLY INTERROGATED. IN FACT, SHE INTERJECTED, SHE HAD ASKED MINISTER OF THE INTERIOR NASEERULLAH KHAN BABAR TO GET IN TOUCH WITH THE FBI ON THE EVIDENCE CONCERNING THE KASHMIR HOSTAGES. PAKISTAN ITSELF, AFTER THE MOST THOROUGH REVIEW BY ALL AGENCIES OF THE GOVERNMENT -- INTELLIGENCE, ARMY AND CIVILIAN AGENCIES -- HAD BEEN UNABLE TO DISCOVER CONNECTIONS BETWEEN THE HARAKAT UL ANSAR PEOPLE THAT THEY KNEW AND THE HOSTAGE TAKERS. AT THE SAME TIME SHE RECOGNIZED THAT ALL OUTSIDE INTERLOCUTORS WERE CONVINCED THAT THERE IS SUCH A CONNECTION. THE BRITISH HAD MADE THIS CLEAR TO THEM AND SHE ASSUMED THAT THE AMERICANS HAD THE SAME VIEW. ¶6. (S) FRANK WISNER ASSURED HER THAT THAT IS THE CASE, OUTLINING BRIEFLY THE EVIDENCE THAT WE HAVE IN HAND ABOUT HUA COMPLICITY IN SEVERAL KIDNAPPING EVENTS IN INDIA, INCLUDING THE KASHMIR HOSTAGE INCIDENT. THE PRIME MINISTER SAID SHE COULD NOT RULE OUT THE POSSIBILITY THAT A BREAKAWAY ELEMENT OF HUA MIGHT BE INVOLVED, RECALLING THAT A BREAKAWAY ELEMENT HAD BEEN INVOLVED IN THE ARMY PLOT OF SEPTEMBER 1995. SHE ASKED THE FOREIGN SECRETARY TO CONTACT THE MILITARY AND ASK IF ANY OF THE HUA PLOTTERS IN THE ARMY COUP WERE AWARE OF PLANS TO TAKE HOSTAGES IN KASHMIR. ¶7. (S) WISNER AND I AGREED THAT THIS WOULD BE HELPFUL. I ASKED THE PRIME MINISTER TO DELAY TAKING ACTION WITH BABAR ABOUT THE FBI UNTIL JOHN HOLZMAN OR I HAD A CHANCE TO BRING TO HER ATTENTION INFORMATION WHICH IS CURRENTLY BEING DEVELOPED ON THE HOSTAGE CRISIS. HOLZMAN
Wikileaks Leaked US Cables Reveals Truth About Kashmir
The most recent cache of US State Department cables released by Wikileaks, specifically the cables from the New Delhi Embassy, paints a clear picture of how India and Pakistan have kept the Kashmir conflict alive and well for a myriad of reasons. The direct involvement of both countries’ government, military, and intelligence apparatuses in the six-decade-old conflict led to the senseless killing of over 100,000 lives, not to mention disrupting the communal harmony that once led to rock anthems about Kashmir’s ephemeral beauty, and known simply as ‘Shangri-La’.
In 2006, then US Ambassador to India David Mulford wrote a classified cable titled “Kashmiri Politics as Filthy as Dal Lake”, along with a host of other significant cables specifically regarding the conflict. Amb. Mulford stated that “Corruption cuts across party lines and most Kashmiri’s take it as an article of faith that politically-connected Kashmiri’s take money from both India and Pakistan.” Mulford added that “money from Pakistani and Indian intelligence agencies and from Saudi and other foreign extremists has further distorted Kashmiri politics, incentivized leaders to perpetuate the conflict, and perverted state and central government institutions.” As someone who worked on the issue at the Kashmiri American Council, I know first hand how money, power and influence has directly undermined the prospects of peace.
The unspoken truths commonly understood by those working on the issue from the inside, and confirmed via the released cables, are that two human tragedies and development complications exist due to the childish nature both sides continue to play. First, the average Kashmiri lives every day in fear not knowing if the next time he or she steps out their door, it may be their last. Moreover, that the person who will ultimately kill, rape, or torture them may or may not where an authorized uniform, but certainly will not suffer any form of prosecution or arrest for doing so. In fact, they may even get a bonus if they are lucky.
The dysfunction created by India and Pakistan resulted in an insurrection communally cleansing the Valley of the Pandit population over a rigged election in 1987. The result of this to the present day is the death of over 100,000 Kashmiri’s, both Muslim and Hindu, thousands of which are buried in mass graves. Then there are the billion plus South Asians in general, who are continually held hostage to the threat of war, terrorism or retaliatory communal killings throughout both countries outside of the Kashmir region. Ultimately, what it shows is that both India and Pakistan view any casualties of the conflict as ‘collateral damage’, and in many cases more dollars to be secured for the military industrial complex. The irony of all this is that the one person who started and led the insurrection, comes off looking like the only non-state actor not on the corruption dole.
Surprisingly, Ambassador Mulford acknowledges that India admittedly rigged the Kashmiri elections in 1987. This resulted in Yasin Malik, Chairman of the Jammu Kashmir Liberation Front and a pollster for the party who lost the election, to pick up arms, and wage war against not only the Indian Military, but unleashed his wrath on the Pandit population as well. This was accomplished via direct training, funding, and logistical support by the Pakistani military, and more importantly the ISI. However, for the past fifteen years,, Mr. Malik has engaged in his own form of ‘truth and reconciliation’ by visiting the refugee camps in Jammu, asking for forgiveness and for the Pandits to return to the Valley. Finally, given his background as a militant, he has served as an interlocutor of sorts between militants and the two governments. It must be acknowledged that funding and support via the ISI has continued from Pakistan, where militants seem to choose between fighting the Indians or going to Afghanistan and fighting their ever expanding Jihad.
In actuality, Mr. Malik has engaged in a six-year campaign to root the corruption out of Kashmir. His saving grace from steering clear of the corruption results from two key aspects; he’s secular and he’s from extremely humble beginnings. His ability to maintain legitimacy and relevance inKashmiri politics stems from one reason; he has actually fought for his people and not just stood behind the walls of privilege like his counterparts in both the mainstream and separatist movements.
Having worked on the Kashmir issue for the last six years either as a government relation liaison, or as an independent analyst, I can say without a doubt the US government fully understands and appreciates the twisted reality of the Kashmir problem. Additionally, the US Government understands the hypersensitivity that India has towards third party intervention due to it’s own complicity in corruption, rape, and murder inside Kashmir. Unfortunately, the economic relationship between the United States and India appears for now to be trumping the ability to apply the necessary pressure to force India and Pakistan to finally bring the conflict to its rightful conclusion.
I spent six weeks on the ground in Kashmir in 2008, visiting with Yasin Malik, Mirwaiz Umar Farooq, and Syed Ali Geelani. All three gave contrasting views, and in hindsight, the analysis from the former Ambassador was spot on. With the release of the cables from former Ambassador Mulford, one could only hope that both India and Pakistan will begin to see the writing on the wall. Otherwise the cables to be released may find some of the military and civilian leadership spending some time in Holland at the ICC
YSR Reddy's government was engaged in corruption
Former Andhra Pradesh chief minister Y.S. Rajasekhara Reddy's populist programmes might have reaped him immense political benefits, but these were beset with massive corruption, a leaked US diplomatic cable has revealed.
In a cable sent to the US government on October 22, 2007, then US consul for Chennai, David Hopper, said the YSR-led Congress government in Andhra Pradesh was engaged in corruption beyond the norm for India though the CM had spent billions of dollars on "politically popular" social programmes.
The cable, titled "Corruption plagues Andhra Pradesh's big ticket spending programmes", was exposed by WikiLeaks recently.
Ironically, YSR's son Y.S. Jaganmohan Reddy is now under the CBI scanner on charges of corruption and illegal acquisition of assets.
Hopper made the observation while referring to the collapse of a flyover at Punjagutta in Hyderabad on September 9, 2007. He recalled how leader of Opposition and former chief minister N. Chandrababu Naidu had complained of rampant corruption in YSR government's infrastructure projects.
However, YSR was confident that the TDP would not be able to gain mileage from the issue. "When Naidu tried to raise it in the wake of the overpass collapse, chief minister Reddy shot back at Naidu accusing him of corruption during his tenure. The Congress appears willing to bet that people will focus on what they are getting from the programmes and ignore the corruption," the cable states.
In his observation titled "Corruption beyond the pale (even for India?)," Hopper says that YSR had used populist spending programmes, especially the massive housing and irrigation schemes, to great political advantage.
"However, there is consensus in the state that the irrigation and housing programmes are beset with corruption," he says.
"On separate visits to Hyderabad, we heard allegations of widespread graft from several neutral observers. An economist, who is studying the effectiveness of state government's programmes, said with only four to five companies executing the projects through numerous sub-contractors and little oversight, there are many opportunities for graft in the irrigation schemes," the cable states.
Hopper, quoting comments of other observers, adds: "Typically, five to seven per cent is lost to corruption, but in Reddy's irrigation programme that figure is more than 15 to 20 per cent.
"We thought Naidu was bad, but that was child's play compared with what is happening now."
In another section, the US official said widespread corruption in Andhra Pradesh seemed to be an open secret, but the political impact was unclear. "The man on the street expects corruption. In fact, corruption is inalienable and rather acceptable."
Quoting a media source, Hopper says that citizens seem to be fine with corruption so long as some of the money trickles down to them.
"As long as the Congress continues to spread the wealth, corruption actually strengthens its position in the state. The Congress is consolidating its political base by offering small contracts to the party workers and making them happy," he says.
The US official felt that many elites were disgusted by the level of corruption in the Congress government.
"The sheer size of Reddy's signature programmes, with literally billions of dollars at play every year, leaves much room for 'leakage' to Congress party officials and their allies. But the size of the programmes also means that even with a substantial percentage lost to corruption, a lot of money still must be making its way to the common man," the cable states.
Sunday, 11 September 2011
In Response to Rocket Fire, IAF Targets Smuggling and Terror Tunnels in the Gaza Strip
Overnight, IAF aircraft targeted two smuggling tunnels in the southern Gaza Strip and a tunnel used for terrorist activity in the northern Gaza Strip.
The tunnels were targeted in response to the firing of rockets from Gaza at Israel’s southern communities during the previous day.
The IDF will not tolerate any attempt to harm Israeli civilians and IDF soldiers, and will respond with determination to any attempt to use terror against the State of Israel. The IDF holds the Hamas terrorist organization solely responsible for any terrorist activity emanating from the Gaza Strip. Will India be able to do the same with Pakistan.
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