Senator GRASSLEY. We will go to Mr. Pipes before we ask questions.
Mr. PIPES. Thank you, Senator Grassley. I would like to start, like everyone else, by commending the subcommittee for consideration of Senate bill 2465, which I think is an excellent idea.
My specific task is to consider the question of assets belonging to terrorist groups. I would like to start out by pointing to the fact that historically terrorist groups have had very little money. That has changed in the last 20 years as States have adopted terrorist groups as vehicles, as instruments, for the execution of their own policy.
Accordingly, many groups such as M-19, the IRA, the Red Army, and especially the PLO have developed considerable treasuries. By far, the most powerful of these treasuries is that belonging to the PLO, and that is, in fact, the most germane group for our discussions today.
I would like to consider three questions – how much money does the PLO have, where does it come from, what does it do with it – and finally just touch on the question of PLO assets in this country.
The assets of the PLO are a mystery to the outside world. I have gone through a number of efforts by others to estimate what that total might be, and I have come up with estimates ranging from $1 billion to $14 billion. My own guess would be somewhere around $6 billion is their total assets. It is a very substantial amount of money.
On the question of the yearly budget, there is again a wide variance in estimation, with a low of $150 million a year and a high of $2 billion. The details will be in the printed version. The PLO itself has gone public on the question of its yearly budget and, for 1989, has said that that budget was $274 million. My own estimate would be somewhere about double that.
Where does this money come from ? It comes from a whole variety of sources. The Arab States that back the PLO have provided some of the funding. Palestinians living in the Middle East are in some cases required to provide a percentage of their income to the PLO. The PLO, for 12 years, ran a state within a state in Lebanon from 1970 to 1982 and acquired great funds due to their power in Lebanon.
The PLO is mafia-like in some of the illegal activities it is engaged in, such as protection rackets, robberies, the training of foreign terrorists in hijacking. Some of these have led to substantial windfalls of income. Individual supporters, mostly Palestinians, from time to time donate money to the PLO. Finally, interest and dividends from this amount to $5, $6, who knows how many billions of dollars, a substantial source of income.
What is the money used for? Well, the money is used for a whole variety of purposes, as you might imagine. Most importantly perhaps, it provides the PLO leadership with control of some 20,000 gun men. Politically, it allows the PLO to act quite independently of the Arab States that back it, but back it with an intent to control it. If the PLO has its own funding, it cannot be the puppet of some puppeteer.
The enormous funding of the PLO allows it to repress or perhaps coopt potential rivals to itself; that is to say, when a group such as Hamas in Israel in the Israeli-occupied territories attempts to represent Palestinians, it can't be as effective because it doesn't have the kind of resources that the PLO has.
It allows the PLO to win, to buy, to gain favor with many Palestinians by supporting them in a variety of ways. It allows the PLO to put pressure on Arab governments by moving funds, by offering loans, and in some cases by even making grants.
Not to be overlooked is the fact that this extraordinary sum of money allows for a lavish lifestyle among the leadership. Wealth, in short, has become a central feature of the PLO's presence and influence. Indeed, sometimes I would argue it looms larger than the military and diplomatic activities of the organization.
Given the size and sophistication of the PLO financial apparatus, it constitutes a key power center within the organization. Therefore, I would conclude from a policy point of view that it is absolutely critical to go after the funds because he who controls the funds controls the organization. It is not enough simply to go after the footmen, the soldiers, the terrorists, the individuals. One must strike at the heart of the organization, and that means going after the funding.
Finally, just a moment on PLO holdings in the United States. As a former intelligence chief of the PLO, a man called Atallah Atallah, recently observed, Yasir Arafat uses " mafia techniques designed not to leave a trace, " and that, in fact, is a fairly accurate analogy. It is hard to find PLO holdings in the United States. There are some connected to the PLO mission to the United Nations. There also are some quasi-PLO institutions that are funded in this country. By far, the most impressive and powerful of them is the Arab Bank, a bank which is headed by a man named Abdul Magid Shaman who, in the 1960's, was the chairman of finances for the PLO.
There are clear links. I don't know to what extent they can be established as legal links, but the Arab Bank is by far the most powerful financial organization connected or associated with the PLO that is present in the United States, with a branch office at 520 Madison Avenue in New York City.
I think the extraordinary emphasis that has been placed in recent years on the building of a treasury by the PLO gives you some idea of how much the PLO will not want you to pass Senate bill 2465.
Thank you.
