Fighting the Financing of Terrorism: A Conversation With Bob Casey

Fighting the Financing of Terrorism: A Conversation with Senator Bob Casey

Michael Hirsh National Editor, Politico
Bob Casey

U.S. Senator (D-PA), Member, U.S. Senate Committee on Finance


U.S. Senator and Member of U.S. Senate Committee on Finance Bob Casey joins Politico National Editor Michael Hirsh to discuss the issue of terrorism financing. Casey discusses ways to counter terrorist financing and facilitation networks, the STORM Act, and his views on authorities the U.S. president should hold to penalize countries that enable terrorist financing.


HIRSH: Hello. Greetings. Thanks for coming to a discussion with Senator Bob Casey, Pennsylvania’s senior senator, related to the issue of terrorism financing and how to stop it. I think it’s interesting and appropriate, somehow, that we’re having this discussion on the eve of the 15th anniversary of 9/11, when during this period we have seen the terrorist threat change, modify itself, partly in response to strategic mistakes on our part—on the part of the West—partly because it’s found new harbors. And, of course, the most recent incarnation is ISIS or ISIL, the Islamic State, as it calls itself, which has an unusual advantage over previous iterations—al-Qaida affiliates—in that it actually controls a substantial part of two states, two countries, and not just any countries but in one case one that is oil-wealthy.

And Senator Casey’s new legislation, the Stop Terrorist Operational Resources and Money, or STORM, Act of 2016, attempts to address this very new, and yet at the same time old problem. So I want to start by having Senator Casey come up and talk a little bit about it.

CASEY: Well, Michael, thank you very much. And I’m honored to be with you tonight to talk about this subject.

I do want to first thank the Council on Foreign Relations for the opportunity and to have a conversation. I’ll have about maybe 10 minutes of remarks, and we’d love to take your questions after that.

It is, as Michael indicated, especially timely as we approach the 15 years since terrorists attacked our country on September the 11th, 2001. At that time, the U.S. had a fundamentally different understanding of terrorist groups, their ideologies, their operations. And although we’ve—we had seen terrorist attacks before September the 11th, that date marked the beginning of a new chapter in our nation’s security.

In the years since, our national security apparatus has responded to evolving threats, and has prioritized the fight against terrorism and violent extremism. We’ve invested in a cadre of professionals—dedicated professionals who track, analyze, and evaluate terrorist groups’ operations, and we’ve developed our own strategies and tactics to prevent and respond to these operations.

By the time that I joined the United States Senate in January of 2007, our country’s response to terrorism had evolved dramatically. We had new bureaucratic structures, new domestic laws, a new set of international norms, and regulations dedicated to cracking down on terrorist groups’ operations. We invested in technology and research, and profoundly changed the way we fight asymmetric threats.

A good example of this is our response to the threats posed by improvised explosive devices, known as IEDs. We enacted tough, effective sanctions—sanctions like asset freezes and visa bans—against terrorist financiers, as well as secondary sanctions against the banks that facilitated their transactions.

We invested in programs to help keep nuclear and radiological materials secure, so they don’t end up in the hands of terrorist groups. For example, prior to 9/11, the Department of Treasury was not as significant in our fight against terrorism as it is today. An act of Congress established the Treasury Office of Terrorism and Financial Intelligence and its Office of Intelligence and Analysis in 2004. Since then, this office has grown into an essential component—and I think that’s an understatement—an essential component of our counterterrorism work. They’ve been changed with the task of cutting off the financial resources that terrorist groups need to survive.

I first began to work on terrorism financing issues in the context of Hezbollah, the terrorist organization, army, and criminal syndicate that masquerades as a political party. They derive revenue from a variety of sources, and their wealth allowed them to establish operational cells in Europe, as well as to build a sophisticated fighting force.

I led the effort in the Senate to urge the European Union to designate Hezbollah as a terrorist organization so that sanctions could be applied to cut off their ability to use the European financial system. Of course, the EU did end up designating Hezbollah’s military wing, and we again increased the pressure with the enactment of Senator Jeanne Shaheen’s Hezbollah International Financing Prevention Act last year. This legislation levies tough sanctions against financial institutions that do business with Hezbollah and strengthens congressional oversight of the administration’s efforts to stop the financing of this group.

The terrorist group ISIS, of course, presents a new set of challenges. Similar to Hezbollah, ISIS is part terrorist group, party army, and part criminal syndicate, followed—or I should say fueled by a hateful ideology, and fueled by controlling communities in both Iraq and Syria, as we alluded to earlier. Early in its—in its Iraq campaign, ISIS gained a huge windfall as it sacked banks in places like Mosul. We know that ISIS profit from the illicit sale of oil, antiquities, and other items through the black market, while extorting the civilians under its control. It uses this funding to conduct terrorist attacks, and control territory in Iraq and Syria. They use it to buy more weapons, ammunition, and component parts for IEDs. They also use it to pay salaries to their fighters, and to develop propaganda materials to spread their hateful ideology.

In August of 2014, I joined with Senator Rubio to urge the administration to prioritize the issue of ISIS’s financial support and prioritize, of course, stopping that support. Soon after, the president announced his comprehensive strategy to degrade and defeat ISIS. And already we’ve seen evidence that the U.S. and coalition efforts against their financial networks, including airstrikes on oil trucks and cash storage sites, that’s had a meaningful impact on their finances.

For example, ISIS has had to reduce its salaries to pay their fighters in recent months. And in recent weeks, the administration has been reporting significant progress on rolling back ISIS control of territory. In April, Major General Peter Gersten, deputy commander of the Combined Joint Task Force-Operation Inherent Resolve, reported on April 26th, 2016, quote: “ISIS’s ability to finance their war through oil refineries has been destroyed.” Unquote.

The president recently signed into law my bill, which was called the Protect and Preserve International Cultural Property Act. That’s been signed into law to help ensure that the U.S. is not a market for antiquities that have been looted from Syria.

Nonetheless, ISIS is rewriting the rulebook when it comes to how terrorist groups operate. Despite the loss of territory in Syria and Iraq, it continues to cultivate affiliates in Northern and Western Africa, Central Asia, and other parts of the Middle East. It continues to sow seeds of terror in neighboring countries like Turkey and Saudi Arabia, and further afield in Europe, in Africa, and of course here in the United States of America. They’ve figured out how to—how to operate outside of the international financial system, lessening the impact of our banking sanctions.

It’s taken far too long for our own strategy to adapt and respond to this new reality. We may be able to defeat ISIS, but the problem of terrorist financing will stay with us. I took a trip back in February to the following countries: Israel, Qatar, Turkey, Saudi Arabia. And in that trip, was able to confirm that basis assessment, that this issue will remain with us unless we take specific action.

That’s why I believe a more robust, permanent international architecture for countering terrorist financing and their facilitation networks is warranted. In June I introduced the Stop Terrorist Operational Resources and Money Act, so-called STORM Act—you always need an acronym—with Senator Isakson as a first step. And I’m grateful for his help in helping us to put the bill together and to introduce it in a bipartisan fashion.

The STORM Act is a new concept in stopping terrorism financing. Here’s the basic concept: governments, not just banks, have an inherent responsibility to pull their weight. Thus far, we’ve had—we’ve had—we have not had a strong set of tools to compel greater cooperation from our partners and our allies. We have to go further than, quote, “naming and shaming.”

We know that in 2014 Treasury Undersecretary David Cohen called out both Qatar and Kuwait as, quote, “permissive jurisdictions for terrorism financing,” unquote. That public shaming had an impact. But without penalties behind it, progress in these countries has been slow. And perhaps this is because Republicans have failed to act to confirm Adam Szubin, the Treasury official now in charge of these efforts, sending a signal that partisan politics prevails over national security and, of course, the national security imperative of rigorously enforcing existing sanctions, holding countries accountable for failure to pull their weight. There’s no excuse for failing to act on Adam Szubin’s nomination. He is eminently qualified.

The STORM Act itself, here’s what it does. It authorizes a new designation called, and I quote, “jurisdiction of terrorism financing concern,” unquote, which can be triggered either by a lack of political will or a lack of capacity. We see both in these countries. Some countries have the capacity to make meaningful progress, but lack the political will or domestic consensus to do so. I believe we should levy tough penalties that that prompt reconsideration of their willful ignorance or tacit acceptance of terrorist financiers carrying their country’s passports or operating in their territory. The most troubling scenario, from my perspective, is when corruption and politics hinder law enforcement and judicial proceedings. The penalties under the STORM Act include—and this is not an exhaustive list—but a suspension of security or development assistance, for example; the blocking of arms sales; or the blocking of loans from the IMF or the World Bank.

With some countries, though, the challenge is not political. It’s a basic lack of capacity. In these situations, the United States is well-equipped to provide technical capacity and—I’m sorry, technical assistance and capacity building. We’ve done this before with nuclear nonproliferation, where for decades U.S. nuclear security and border security experts provided training to other countries. We can and should do the same on the issue of countering terrorism financing. The STORM Act authorizes the administration, at least three agencies—Treasury, Homeland Security, and the State Department—to, in fact, do this kind of work.

In the years since 9/11, terrorist groups have become more sophisticated in the way that they obtain money and finance their operation. We’ve stopped—I should say we have to respond to that threat in kind. And it is right to expect that our allies and partners do the same. This effort will require tough conversations—in some cases, very tough conversations—with our partners, and it will require diplomatic leadership, analogous to the work that I and others did with Secretary Clinton to stop the flow of IED materials into Afghanistan.

The STORM Act sends a clear message: If you fail to pull your weight, there will be consequences; if you want to improve your record, the United States is here to help. This is but a first step in building a more robust international system and legal architecture to stop terrorism financing—and to stop it, of course, in the long run, but also to undermine al-Qaida and ISIS today, as well as some future group that has not yet emerged.

Thank you for your attention, and I’d love to take your questions.

HIRSH: Thank you. Well, I’ll start out by asking a few questions, and then we’ll go to the audience.

CASEY: Sure.

HIRSH: Let me be devil’s advocate slightly for a moment. So some of the—granted, the critique of banking sanctions is well-taken. But, I mean, some of these very quiet forms of terrorist financing that don’t go through the banks have been around for decades, literally, such as hawala. You know, how exactly would this legislation change these long-entrenched methods, which are very quiet and, you know, hard to uncover?

CASEY: Well, that’s a—that’s a significant challenge, because—and in some ways, it’s what’s led me to focus on ISIS, because they were—they were able to escape or thwart any effort that would be directed at the banking system, or the traditional means of clamping down on abuses or problems in the—in the banking or financial system.

So ISIS has presented us with a set of challenges, whether it’s on deriving revenue from oil revenue and antiquities or the other methods that I mentioned. So I think, by dealing with ISIS, we will have some experience and some potential strategies to deal with even something more ancient, which is hawala or any system where you can transfer cash in large amounts to terrorists.

One way to focus on it, I think, is by increasing pressure, which I would argue is not there now. The pressure, I think, right now, in some of these countries, is rather minimal. There’s engagement. There’s diplomatic pressure sometimes. But we don’t have the hammer of both designation and penalty. So I think that alone increases the pressure.

And you get people’s attention in the region, as I did, when you start asking these questions. Sometimes they’re very defensive. Sometimes they dismiss it outright and tell you why you’re wrong. But you get their attention. And again, we’re giving them—and we’re giving the president—not only authority, but—to designate, but also the authority to say, well, if you’re willing to work with us and enter into an agreement, we’re going to have an opportunity to make—to make this circumstance better and to really crack down on this financing.

But I admit that the more ancient ways of transferring money are a challenge. But I think we can—I think these will help.

HIRSH: Would this law, if enacted, actually require the president, the administration, to treat a country so-designed—a jurisdiction of terrorist financing concern—would it actually mandate that they be cut off from foreign aid or military support aid? Or, you know, how much latitude would it give the administration?

CASEY: The president has the authority to designate. The president also has the opportunity to refrain from imposing designation and turn to an agreement, and then has to report on Congress on how that’s working out. It’s not indefinite. So there are—there are timelines on how at a—at intervals of time, like after a year, the president’s going to have to come back to Congress and say, well, it’s either working or not working—they’re cooperating, they’re making changes. But it’s—but it’s purely voluntary. The president doesn’t have to exercise this authority. And they’re—you’ve got a—the president has to ground his or her decision on the prevalence of terrorism financing in the country, and the lack of effort and the lack of activity on the part of that country to crack down on it.

HIRSH: Just a couple more questions before we go to the audience.

Could you sort of maybe give us a real-world example of how this would work? I mean, for example, Qatar and to some degree Saudi Arabia have been implicated in possibly supporting or looking the other way at private financing of al-Nusra, which is the al-Qaida affiliate in Syria, possibly ISIS. It’s not entirely clear. Now, these countries would come back—Saudi Arabia would come back, as they have actually been saying very forthrightly, look, you know, we may have done this sort of thing in the past, but we see ISIS as an enemy; we don’t do this. So they’re kind of in a state of denial. I mean, how—and furthermore, we know that these Sunni-majority countries are caught up in this very complex sort of region-wide civil war, Sunni-Shia civil war, and we know why they’re doing it. We know why what they’re doing in Yemen, for the same reason, because the Shia Houthi rebels have sort of taken control. So how would you—how would this law apply in that real-world situation? How would we go to—you don’t have to name the country if you don’t want, but how would we go to a country like, say, Qatar, and deal with what we suspect they’re doing, even if we can’t completely prove it?

CASEY: Well, the first thing you’d start with—I’ll actually read some of the—this is just—these are just excerpts, but I think they’re relevant to the question. This is the country reports on terrorism, a publication of the State Department as of June of this year. Here’s what—in pertinent part, here’s what they say about Kuwait. Quote, “entities and individuals within Kuwait continue to remain a funding source for terrorists and extremist groups,” unquote. That’s our government, in pretty clear language. The Qataris, here’s what we say about them: “Despite these efforts,” where earlier in the text they talk about efforts undertaken, “entities and individuals within the country continue to serve as a source of financial support for terrorists and violent extremist groups, particularly regional al-Qaida affiliates, such as the Nusra Front,” unquote. The Saudis, same kind of—“individuals and entities continue to serve as sources of financial support for Sunni-based extremist groups, al-Qaida and the Nusra Front.” So these aren’t—(laughs)—it’s not like we have a—you know, it’s not as if the president would be making a—undertaking their own review. There’s going to be some ongoing reporting and documentation of it.

HIRSH: Right, right. And so this law would then allow him to go to the Qataris or the Saudis or the Kuwaitis, who are all, you know, U.S. allies, and say what, that we’re going to—you know, unless you do something about A, you’re in danger of being designated by me, my administration, under this law, which will make it extremely difficult for me to continue our foreign aid program? Is that—that’s basically how it would work? It would give him that additional tool?

CASEY: And you could read them the list of potential penalties, if you wanted to.

HIRSH: And you think that that sort of a designation would have an extra stigmatizing effect that would, you know, motivate that particular group?

CASEY: Well, they’d be motivated by probably one of a number of factors. But, look, we’ve even—just by—just by the pressure that is applied over time, we have seen some of them make changes. I was sitting with the—Mr. Jubeir, the Saudi foreign minister, and he took a long time walking through what he thought were significant changes. The Turks have wrestled with it. So, even with the pressure that’s been applied to date, they’re taking steps to make changes. But it’s far too slow, and it’s—and we’re—when you—when they assert they’ve taken—they’ve taken steps to change it, then we see these—our government reporting as of June, obviously there’s not enough—not enough progress.

HIRSH: Right. Tell us a little bit more about your trip, and whether, you know, your discussions with Jubeir and others contributed to your thinking on this. You know, was there some sense that they would welcome it, that they would—if not welcome it, that they would tolerate it, or?

CASEY: I don’t think the words “welcome” or “tolerate” would arise. But, no, they’re defensive. And they would argue that, you know, we’re asking them to do things that they sometimes can’t do, or they don’t have the capacity to do. But that’s why I think when we’re offering—it is a kind of a carrot and stick, and I think that the carrot here is pretty substantial. You’re getting access to a level of expertise which ultimately will inure to your benefit. I mean, one of the reasons that Saudis have taken steps, and I think the Turks—and based upon recent events, the Turks will probably take even more steps—is because they’re feeling the threat themselves to extremism, to terrorism, to that kind of violence. So, in the end, it would—it has the potential to give them exposure to expertise that will help them in their own internal security.

HIRSH: Yeah. Just focus on the politics back here for a moment. You know, we’re dealing with a Congress and an administration that have been able to get almost nothing done. We were just discussing before the problem over the AUMF, Authorization of the Use of Military Force. And that’s lain stagnant for a year. Talk about the political environment. Even if, you know, the Senate Democrats do manage to take over after this election, you’re still going to have Republican control of the House. You’re still going to have this poisonous political atmosphere. Could something even as, you know, seemingly agreeable as this legislation, with your—you know, you’ve got Isakson and Rubio on your side from the other party. I mean, do you really think you’ll be able to get it through? Do you have enough support? I mean, there’s only been a few people to come out in favor of it.

CASEY: Yeah. And we’ve taken a more deliberative approach and more incremental approach to kind of lining up cosponsors. It’s kind of the Noah’s Ark idea, where you get a Republican and you get a Democrat. So we have people that are—that are that are wanting to sign on. We’re trying to do it in pairs. But I thought it was significant that the first pair that emerged—and it wasn’t like I had to put them—

HIRSH: They don’t have to be male and female?

CASEY: No, no. (Laughter.) But the first pair that emerged—and we—it wasn’t like we had to put them in a headlock to force them onto the bill—were Senator Rubio and Senator Warren. So that’s a good start. But we’ve got a lot more to do. And look, I realize that this, like anything else, can be caught up in the dysfunction of Washington, but I think there’s a lot of consensus on this.

HIRSH: Are you getting the support of the Hillary Clinton campaign? Have they sounded off on this?

CASEY: Well, I haven’t asked—I haven’t asked the campaign to weigh in on it, but I think it would help any president to have this, because then there’s no question about the authority and no question about the penalties.

HIRSH: Right. And should there be, or will there be, do you think, an international component of this? I mean, we’ve all learned about the dangers of unilateral sanctions in the past. Obviously most people think it was only very forceful, multilateral sanctions against Iran that had an effect there.

CASEY: Right.

HIRSH: Are you thinking about that at all in terms of—

CASEY: Well, I’m hoping that this could be the beginning of—the best analogy I can come up with is the international architecture that was developed around nuclear nonproliferation. It took a while to get there and we still have trouble with it, but that’s kind of a model. But I think we have to start it here. And almost—it’s almost as if you hope not just to develop the architecture or the legal framework for it internationally, but develop the expertise so that whenever there’s a question about how to set up this kind of a more robust system, they just say, well, these guys over here did it. They know how to do it. Or that guy—that expert over there can—he can get to—you know, he can fly into your country and help you right away. So that kind of best practices or, you know, model architecture will help a lot.

HIRSH: Why don’t we open it up to questions from the audience? Yeah, right in the back there. Lady in the back.

Q: Hi. Rachel Oswald, Congressional Quarterly. Hi, Senator.

CASEY: Hi there. She caught me in the hallway. She got—this is her second question of the day. (Laughter.)

Q: I’ll make sure it’s a different question.

CASEY: I’m only kidding.

Q: Returning again to the issue of an international architecture, what—I mean, I can envision of a Persian Gulf State is designated under this bill, and loses the ability to purchase U.S. arms, because that’s really the only stick that we have over them, what then if a European defense firm sells them the weapons they want?

CASEY: Well, look, there are—I’m sure in that circumstance, they would find ways to evade or substitute—evade the impact of our prohibition—our penalty, I should say—and to substitute. But, you know, in answer to the last question, I think over time we’re going to be able, I think, to develop much more of an international structure or architecture that would prevent that. But you rightfully point to a problem if they were denied it.

But they’re—we can—it’s not simply arms sales. I mean, that’s one way to do it, but you could also—I mean, here’s just some examples: military experts is one, but suspending development or security assistance is another, limiting credit, procurement, and contracting by federal agencies, opposing proposals that favor a country in the international—with regard to international financial institutions. So there are a number of—I mean, it’s a menu of potential penalties. And it would be up to the president and his or her administration to say, well, we’re going to impose just one and ratchet it up or we’re going to impose several. But I think we—I think we can create a new avenue of pressure that just isn’t there now.

HIRSH: OK. This gentleman over here. Please identify yourself.

Q: Hi. Thanks, Senator. Zach Vertin from the Wilson Center.

Michael asked about leeway in terms of the executive for designation. And I wondered the same question when it came to rescindment for a designation. Do you see that equally voluntary, or the executive having authority, or specific criteria that would have to go through Congress? And I ask because that’s been difficult in some other designations—SST and others.

CASEY: Right. Obviously Congress has a role to play in terms of receiving reports and getting information about the designation, about the progress that’s been made, either in the context of designation or in the context of an agreement, that would be in the absence of designation. And I’m sure there will be—they’ll be arguments or fights or debates about the lifting of a designation once it’s made. And there might be—might be fights as well about the designation itself or the penalties.

But I think having some clarity with regard to both penalty and designation gives—I mean, the president has plenty of authority right now to impose certain penalties. But we don’t have an authorization now where it is a authority to designate for this specific purpose, and to have in statute and law the penalties that attach to that. So I think the clarity and the specificity of it would reduce the likelihood—not eliminate it, but reduce the likelihood you’ll have those kinds of administration versus Congress kind of conflicts.

HIRSH: Yes, sir.

Q: Hi. Stefan Grobe, Euronews, European television. Good evening, Senator.

CASEY: Good evening.

Q: I want to come back to this international level. How would you characterize the U.S.-European cooperation with respect to fighting financing terrorism? Is it enough? Is it—why not? Are there sticking points? You have—are you in contact with European counterparts at the EU parliament, or from various important countries? Is there a strong cooperation existing or not? What is your assessment? Thank you.

CASEY: Well, I think—I think counterterrorism cooperation with us and the Europeans—or, between us and the Europeans is very strong. However, ISIS presents a whole new set of challenges that don’t—that we don’t see with the traditional clamp down on the financial system abuses and levy sanctions. And you can do that sometimes in concert. And we’ve seen that work in a lot of different contexts. But, and the answer to the other part of your question, I haven’t consulted with European counterparts. But I think as we begin to think of a—more of an international dimension to this, we can and we must do that.

But I think the cooperation is there, but I think the challenge is different. It’s of a different form than it has been, number one. And number two, one problem we still have is sometimes is just intelligence sharing is difficult because we gather intelligence different ways and sometimes—just in the last six months—I think we’ve learned a lot about sometimes the limits of that intelligence sharing. And even that has to be more robust.

HIRSH: Can I just follow-up on that? I mean, is there an argument, given the mood in Europe, for going for, you know, international support, cooperation, as a way of sort of winning over the Congress? I mean, you definitely have a very different mood, particularly in France, after Paris, after Nice. It used to be said after 9/11 that the Americans and the Europeans had very different views of terrorism. They saw it more as a policing problem; we saw it more as a war. Well, they’re now seeing it as a war. And they clearly have borne the brunt of ISIS more than we have in terms of civilian attacks. So I mean, I’m a little surprised that you haven’t, you know, sort of pushed that point a little harder.

CASEY: No, I think you’re right. They’re more predisposed—at least the French, but I think several others—they may be more predisposed to work with us on this.

HIRSH: Yeah. Let’s see, we have this lady here.

Q: I’m Louise Shelley. I’m director of the Terrorism and Transnational Crime and Corruption Center at George Mason.

I wanted to follow up a little about a European issue, and also about whether your legislation is addressing trade-based money laundering as opposed to hawala, because that’s a serious problem of financing and connections to the U.S. system, financing to Africa. And also the problem of ISIS funding in Europe, which is a lot based on small-scale illicit trade, such as the Kouachi brothers were funded by counterfeits and other things which our European colleagues are not looking at enough.

CASEY: No, look, there are going to be instances where we can—we can identify terrorism financing—terrorism financing activity that’s taking place. But this legislation is focusing on country-specific activity and country-specific action or inaction. So there will be times when, I guess, you’ll be aware and maybe have a lot of intel and information about activity, but you may not be able to make then nexus to a country.

So there may be times where there are limitations on what we can do to designate, because you have to have a set—as we do in the bill—a set of criteria about how you make the determination of that country as both, you know, the prevalence of it and the lack of effort, with knowledge that it’s taking place within the jurisdiction. So I guess you could—I could certainly envision a scenario where we’re aware of activity, but we can’t make that connection to a particular country or a particular jurisdiction. And I don’t know if that’s—if that answers part of what you were asking, but.

Q: Then maybe we need to put some more pressure on our European colleagues to be looking at the type of funding that they have that’s funding ISIS, because it affects us as well as them.

CASEY: Sure. And we didn’t limit this to one area of geography. It can apply to any country.

HIRSH: This gentleman over here.

Q: Thank you. Islam Siddiqui, CSIS.

Senator, the poster child countries you mentioned from the State Department report, many of them are old friends and allies. My question is many of these activities and these extreme settlements are non-state actors of citizens of those countries. How is it going work? You are going to penalize the countries when these activities are going on where these shady groups are operating in those countries. I think that’s the biggest challenge we have. So how do you answer that?

CASEY: Well, you do—I mean, the focus of this is a country—is that there’s, in essence, a finding is made by the president that there’s a prevalence of terrorism financing. So you make that finding. The next finding would have to be, OK, what is this country doing about it? And I can envision scenarios where we engage with a particular country, and we identify it, we document it, and then we have an argument about what they’re doing or not doing. They may come to us and say, look, we’re aware of it. We’re doing all these things to try to intercept it or crack down on it. But we have limitations by way of capacity or limitations by way of political realities. And we can only go this far right now.

A president might say, well, that’s not good enough and here comes the penalty. Or, they might say, you know what? We’re going to work with you, see where we are in six months, see where we are in a year. Right now it’s—I just think it’s—not only we do we lack the tools, but it tends to be a lot more open-ended. And I found that—it’s interesting to listen, for example, to our intelligence officials briefing me in a classified setting in Turkey, for example—I won’t tell you what they said—but one of the scenarios was they might make the arrest, they initiate the prosecution, and the case is moving up the chain. All of a sudden, whammo, it gets knocked out. I mean, I’m paraphrasing very simply.

We got to find out what happened at that level. Was it a lack of capacity or expertise or was it a pure political interference that prevented that prosecution from going to the next step to get a o conviction? So you’re going to—I think you’re going to have a lot of—you know, a lot of variety to it, but we need not just to engage, but to really sustain the engagement to get to a result. And sometimes we’re going to need a hammer to do that.

HIRSH: And this legislation allows you to find out whether it was—what happened at that level, because you’ll have the additional pressure, or?

CASEY: Well, I think that we’re going to be developing over time a set of benchmarks that countries may not have to meet now. And that will lead to discussions and a lot of back and forth about why that prosecution stopped where it was, or why this guy has been doing all this activity for years. And we’ve told you about it, you know, 30 times, and he’s still operating. Why is that? And look, we’ve—anyone who’s been—people in this room have been in these trenches more than I have. Some people have been working on this for years, and the progress in getting a result can be—you know, can be really illusive.

 HIRSH: Let’s see. This gentleman here in the front, then we’ll go to the back.

Q: Thank you very much. Thank you, Senator. I am Hani Findakly from the Clinton Group.

Dealing with terrorist financing I think is very critical, it’s very important, and it is part of the building block. The military component is also important. Last month the foreign minister and defense minister of Iraq came to Washington. And they both mentioned about the fact that in Iraq and in Syria the young people from 106 countries are fighting in that. So the question I have is it looks to me like—

CASEY: You mean the foreign fighters? Right.

Q: The foreign fighters in these countries. That we have built the necessarily conditions, but not necessarily sufficient conditions to deal with this whole issue of terrorism. And my question is, are there things that we could do beyond the military and the—as much as we can, on the movement of money and people that deal with the root causes of what motivates young people coming from thousands of miles away, different cultures, and fighting. Why do they hate us? And what can we do to deal with these fundamental issues that are root causes of terrorism?

CASEY: Well, there’s no question. I mean, when you—when you approach the broader question of how do you confront terrorism, or terrorists, or terrorist organizations, it has to be a multipronged strategy. This is one of the main component parts. And we’ve seen—in the context just of ISIS, we’ve seen some good progress on this issue, but not enough. One estimate out there is that, yes, we’ve all but destroyed their capacity to use oil revenue, but the whole effort so far cut their financing maybe overall by a third. And that’s good progress, but still two thirds to go. So it’s one part of a larger strategy.

But you’re right, the longer—the longer—the long war here, over the long term, is this narrative that’s been developed over time. Now, I think we are taking steps—just, for example, on Twitter. I mean, major efforts taken by the—by the U.S. and coalition partners to try to match or even exceed the elements of that narrative, just by using social media, Twitter, and other means. But you’re right, we can—even if we were able to achieve a level of great progress on cutting off financing, if the narrative is there there’s still—there’s still a major challenge. So this is but one of several parts of the strategy.

HIRSH: Yes, sir.

Q: Thank you, Senator. Usman Ahmed with PayPal.

A recent Associated Press article noted that the official currency of ISIS is U.S. dollars, physical U.S. dollars. About two years ago they tried to create their own currency based upon silver, gold. It just didn’t work. Nobody would accept it. So they went back to physical U.S. dollars. With that as context, Ken Rogoff, who’s a Council on Foreign Relations fellow and an economist at Harvard, proposes in his new book that we phase out hundred dollar bills because 80 percent of those hundred dollar bills are in other countries, and a lot of them are often used for this very purpose. I just wanted to get your thoughts on that as a potential countering terrorist financing.

CASEY: Well, I haven’t—I haven’t walked through that argument. But it’s—I think we’re going to need all kinds of different approaches here, because getting enactment of a law is only a first step. Making it work is a whole other question over time. But we’re also going to need new ideas like he’s proposing. I just haven’t evaluated it. But I wasn’t aware—you said 80 percent—he claims that 80 percent of all hundred dollar bills—

Q: Are in other countries.

CASEY: In other countries. I wasn’t aware of that. That’s a pretty compelling statistic.

HIRSH: It’s an interesting proposal.

Yes, sir, in the back. And then we’ll get to a few more questions.

Q: Steve Rodriguez. I work in venture capital and have family at Carlisle and Yardley in PA.

CASEY: Great.

Q: What are your thoughts on the recent—

CASEY: How many—how many family members?

Q: A lot. (Laughter.) Candidly, I’m not exactly sure how many. (Laughter.)

CASEY: Not at liberty to say. (Laughter.) I’ll talk to you later about them.

Q: Yes, I appreciate it. Maybe you can help identify some more. (Laughter.) So Prime Minister Erdogan’s, we’ll just say, coup that he suppressed, how do you see that helping or hurting our taking the fight—you know, whether monetary or otherwise—to ISIS or dealing with Iraq? Does that make sense?

CASEY: Yeah, no, it’s—look, that internal conflict that he speaks to all the time and acts in accordance—or acts in response to, I should say—that alone changes the whole conversation when we bring—when I and others go to Turkey and talk about these issues with their officials. The last time I was on this trip, in February, I didn’t have a chance to meet with Erdogan. I met him back in 2010. We had an argument about the Middle East. I won’t go into it, but through the translator we had an argument. But I don’t know if he won, but it was his house I was in. But he—but his whole team obviously, when you bring this issue up, they say: Well, don’t talk to use about—I’m paraphrasing—don’t talk—we’ve got our own internal problems and we’ve got other problems you can’t understand. So don’t—you know, don’t start lecturing us.

So it does change the conversation. But I think there’s a—certainly with regard to ISIS, he’s at least, I think, feeling the adverse impact of ISIS in his own country in addition to however he characterizes in response to internal threats. And I’m hoping that his—maybe more of a focus on ISIS will lead him and others in his country to focus more on this financing issue. But it was interesting to have conversations with them not just about terrorism financing, but the border. We had a—we raised that as a major challenge. And for a whole variety of reasons, they seem to be clamping down more than they were even six months ago on the border, but maybe for reasons—maybe for other reasons. But there seems to be an intensification, which I hope will lead them to focusing on financing in a more robust way.

HIRSH: Yes, sir, right there.

Q: Senator, Lou Cardig (ph) from New America.

I was glad to hear you cite some of the advancements that Treasury has made over the last 15 years in improving their capabilities to deal with the terrorist threat. I’m curious to know if your bill is enacted if you think that they need additional resources or further evolution of their capabilities to fully enforce the regime you’re proposing.

CASEY: I don’t have any suggestions about an amplification or development or their authority or their—you know, or any kind of authorization. I’m always open to listening about resources, because too often, you know, Congress preaches but doesn’t provide the resources to—you know, to deliver on what the Congress hopes any administration or any agency would do. But they’ve done remarkably effective work. And all the more reason to not confirming Adam Szubin is really a travesty. I don’t know what other word to use. But I’m sure, you know, I could think of a couple more. I won’t use them here, but. But there’s no reason, I mean, just pure politics.

And if you’re going to—everyone engages in politics at some level, but I think you should be more responsible than denying his confirmation. If you say you’re a big, tough guy on terrorism, as a lot of politicians do—pretty hard to make that case if you’re not confirming the most important person in Treasury and, arguably, one of the most important people in our government to take on this challenge, so.

HIRSH: Such as Mitch McConnell, or?

CASEY: Well, it’s his caucus and Mitch is in charge. So it’s ultimately Mitch’s responsibility, yeah. I haven’t heard a good reason. If someone gave me a good reason why Adam Szubin should not be confirmed, please tell me. But I haven’t heard it yet.

HIRSH: Yeah. OK, right here.

Q: I’m Kevin Sheehan from Multiplier Capital.

Senator, it’s always unfair to ask legislation to do too much, but clearly this legislation would do little to counter either the Assad regime or Hezbollah, that you described earlier as a party that acts as a political party, but is actually a terrorist organization. I wonder if you have any thoughts on that front?

CASEY: I’m not sure I understand.

Q: On sort of countering the terrorism perpetrated by the Assad regime or Hezbollah or what we might do legislatively to do better there.

CASEY: Well, look, I mean, I think on the question of what to do about Syria, I’m not sure there’s a legislative proposal that would speak to it directly. I think we have to do everything possible—and the administration, God knows, has been trying—everything possible to get a ceasefire and to get a political solution as soon as we can. It’s been difficult. We’ve, you know, just in the last number of days, dealing with the Russians, and not getting to conclusion. I was in a—I don’t know how big this caucus was back in 2011—but I was proposing then a much more aggressive military response. But my point of view didn’t prevail. But we’re in a different place now. We have to—we got to get—we got to keep working towards that political resolution.

It’s difficult to construct a—at least from my vantage point—it’s difficult right now to construct a military operation or military strategy that would push the political solution more readily. That’s the problem. As much as we need a political solution over here, unless there’ some pressure to get them to the table, or to agree to things they may not want to agree to, it’s—so I worry. And I—there was a front page story in The New York Times I guess two Sundays ago that was really—I forget the—I forget who wrote it, I’ll come to me later—but talking about the nature of these kinds of conflicts, and how long they last, and comparing them to other civil war, internal conflicts. And the conclusion of that article, as I recall it, was that the worst could be ahead of us.

This isn’t—this isn’t moving in the direction of a resolution. But we got to keep trying, because it’s—the human tragedy there is almost incalculable. This article had the number at 400,000 people killed. And that could be a low number. The displacement is—I always tell—you know, when people back home say, well, what is—you know, how bad is it or what does it matter? And you say, well, just imagine half of the population of the United States being displaced from their home. Think about more than 150 million Americans, forced by barrel bombs and violence and military pressure, to leave their homes. We can’t even imagine—we can’t even imagine, you know, 3 million people leaving their homes, let alone 150 million. So the scale of the—of the destabilization and the killing of 400,000 people is reason alone to keep working on it.

HIRSH: I think we have time for one more question, if there is one.

CASEY: It got kind of quiet.

HIRSH: It’s true. Well, I’ll just close it out by asking you, you know, this is 15 years on, sometimes being called the forever war because—

CASEY: That was the name of a book, right?

HIRSH: Yes, it was. Keep rising, like dragon’s teeth, they’re just—and, you know, as you pointed out, ISIS may be back on its heels. Perhaps the assault on Mosul will work, along with the cutoff in oil revenues. And we don’t really have—know whether there’s going to be other—some other group that’s going to adopt a similar type of operational approach or be able to take over an oil-rich state, certainly. Do you see this—you used the word architecture before. Do you see this law as part of, you know, a new permanent architecture for the forever war, for a kind of conflict that may never end?

CASEY: I sure hope so, in addition to what we have to do on the narrative question, and just dealing with the challenges it presents to homeland security, both here and around the world. I mean, obviously we made a great investment in homeland security that was unprecedented. And we’ve been able to stop some things. But that—even the nature of that response will have to evolve. So we’re going to have to do a lot of things well, including cutting off financing.

HIRSH: Well, with that, thank you very much, Senator. Thanks, everyone.

CASEY: Michael, thank you. Appreciate it. Enjoyed it. (Applause.)


"Our national security apparatus has responded to evolving threats, and has prioritized the fight against terrorism and violent extremism. We’ve invested in a cadre of professionals—dedicated professionals who track, analyze, and evaluate terrorist groups’ operations, and we’ve developed our own strategies and tactics to prevent and respond to these operations."
- Bob Casey
"… ISIS is rewriting the rulebook when it comes to how terrorist groups operate."
- Bob Casey
"The STORM Act sends a clear message: If you fail to pull your weight, there will be consequences; if you want to improve your record, the United States is here to help."
- Bob Casey
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