U.S. To Saudis: Do More On Terrorism

The Bush administration is stepping up pressure on Saudi Arabia to block the flow of money to terrorists and working groups throughout the U.S. government are considering ways to tighten controls worldwide.

The Justice Department and the Treasury have repeatedly asked the Saudi government to freeze the assets of several wealthy businessmen who they believe are still financing al Qaeda and other terror groups, but sources say that their requests are routinely ignored.

Meanwhile, a Saudi man in Jiddah, Saudi Arabia, denied reports that he forwarded money from Saudi Princess Haifa al-Faisal, wife of the Saudi ambassador to Washington, Prince Bandar bin Sultan, to two of the Sept. 11 hijackers who crashed a plane into the Pentagon.

Osama Basnan told the London-based, Saudi-owned newspaper Asharq al-Awsat, that he used the money for medical care for his wife, Palestinian Majeda Dweikat, and that he had not met the terrorists.

Bandar, in an interview posted late Tuesday on The New York Times' Web site, said he regretted that the donations were unfairly putting a strain on U.S.-Saudi relations. Regardless, the link remained strong, he said.

"This is a war and we are in it together," Bandar said in an interview at his northern Virginia home.

His wife told the newspaper she was "outraged when people think I can be connected to terrorists when all I wanted to do was to give some help to someone in need."

Many administration officials are frustrated because they feel the Saudis have been reluctant to confront the problem, reports CBS News Correspondent Bill Plante.

"The president believes that Saudi Arabia has been a good partner in the war against terrorism, but even a good partner like Saudi Arabia can do more," said White House spokesman Ari Fleischer.

"Those funds could get misused and where we have this information we make it available to the Saudis," Secretary of State Colin Powell said Tuesday from Mexico City.

The U.S. drive, which extends beyond Saudi Arabia to several other countries, is being taken with care. The administration wants support from the Arab monarchy in the event of war with Saudi Arabia's neighbor Iraq, and two senior U.S. officials said the Saudis agreed — "with a wink and a nod" — to help, provided use of its territory was limited.

"We are working continually to find ways to help nations to do more and are exploring concrete ways to do it," Fleischer said.

The working groups are focusing on drying up financial support for terror, but they have not settled on specific recommendations, and none has been approved, another senior official said.

"But it's appropriate to have a broad group look at a number of options, so it's helpful to have ideas kicked around," Fleischer said.

According to Plante, administration officials continue to look for new ways to force better cooperation. Their ideas have included a U.S. ultimatum to the Saudis to take action or step aside and allow the U.S. act unilaterally, but so far their suggestions have been ignored because of the delicacy of the U.S.-Saudi relationship, which is built on oil. And things are even touchier now because of the possibility of war in Iraq. If Saddam Hussein were to torch his own oil fields as he did those of Kuwait in 1991, only the Saudis could keep world oil prices from going through the roof.

"They're the only producer around who can ramp up production within a few days to - by 2 to 3 million barrels a day - and that can avert any kind of a crisis in oil pricing. That's important to our economy," said Ned Walker, president of the Middle East Institute and former U.S. Ambassador to the United Arab Emirates.

At the same time, the administration is pressing Saudi Arabia to monitor Islamic charities to make sure that contributions do not go to terrorists, another senior official said.

The flow of money from Saudi Arabia and other countries to extremists in Yemen and elsewhere was confirmed, meanwhile, by Abd al-Kareem al-Iryani, special adviser to Yemeni President Ali Abdullah Saleh.

"No Arab government supports extremists," al-Iryani said in a luncheon at the Brookings Institution. "But there is money in the world coming to these people."

The Yemeni official said Saudi Arabia and other Arab countries have limited banking systems and cannot keep track of the contributions. He stressed the financing problem was far bigger than just Saudi Arabia.

Sen. Richard Lugar, who becomes chairman of the Senate Foreign Relations Committee in January, said in an interview Tuesday that the United States should insist Saudi Arabia do more to stop the financing of terror, "with the implied threat the United States will take charge of the situation, and we will attempt to impose some controls."

With possible war with Iraq approaching, the United States should have high expectations of its allies, Lugar, R-Ind., said. "This is a time that firmness ought to be on the part of the United States."