TREASURY DAS MENDELSOHN DISCUSSES TERROR FINANCE

S E C R E T CAIRO 002395

SIPDIS

TREASURY OIA/MENDELSOHN

E.O. 12958: DECL: 11/20/2018
TAGS: EFIN EG PGOV PREL PTER
SUBJECT: TREASURY DAS MENDELSOHN DISCUSSES TERROR FINANCE
ISSUES WITH EGYPTIAN GOVERNMENT

Classified By: ECPO Minister Counselor William Stewart
for reasons 1.4 (b) and (d).


1. (S) Summary: Treasury DAS for Intelligence and Analysis
Howard Mendelsohn met with Ashraf Mohsen, counter terrorism
coordinator for the Ministry of Foreign Affairs, and State
Security Brigadier General Hisham Abda on November 13. Also
accompanying were Eugene Oleynikov from Treasury's Office of
Intelligence and Analysis (OIA) and Alex Severens, Treasury
Attache. The goal of the meeting was to improve the USG
relationship with Egypt in the area of exchanging information
on terrorism finance and specifically to discuss how to fill
information gaps on the 13 outstanding names which Egypt has
sent to the UN 1267 committee. The U.S. has placed a hold on
these designations due to insufficient information. Prior to
the meeting, Treasury provided Mohsen with specific questions
and some new information on the 13 names, as well as eight
potential new targets of interest. The meeting was
constructive and productive, exceeding our expectations,
given Mohsen's initial lack of enthusiasm about the meeting.
Mohsen and Abda agreed to get back to the USG with answers to
the questions on the 13 names, and to also follow up on the
information Treasury provided on the potential new targets.
Mohsen stated that the GOE will be formally writing to the UN
to request that 5 of the 13 names no longer be considered for
designation. DAS Mendelsohn and Mohsen agreed to work
bi-laterally, in coordination with others as appropriate, on
terrorist designation targets of mutual interest and to have
a follow-up meeting on the margins of the annual U.S.-Egypt
counter-terrorism bilateral, which is scheduled to be in
Washington in early-2009. End summary.

Discussion of Proposed Designation Targets
--------------


2. (S) DAS Mendelsohn started the meeting with providing an
overview of OIA's role in advancing the USG designation
process. He discussed the importance of OIA's work to
analyze all relevant information, and the importance of legal
review in the U.S. domestic process. This contrasts with the
way most countries work as they can typically take an action
against a designated entity simply based on the UN
determination. DAS Mendelsohn emphasized that the U.S. is
committed to making every effort possible to support the
names that Egypt has submitted, but that we would need to
work together closely to develop the evidence needed to
support designation.


3. (S) Mohsen stressed the importance of the U.S.-Egypt
bilateral counter-terrorism efforts, as well as the direct
threat of terrorism on the national security of Egypt and its
relationship to the conflicts in the area. He inquired about
Treasury's sudden urgency to respond to the three-year old
Egyptian UN 1267 submissions. DAS Mendelsohn explained that
his office was following senior USG direction to carefully
review all U.S. holds (of all countries) and try to resolve
any outstanding issues. In addition, DAS Mendelsohn noted
that Treasury was making increased efforts to engage directly
with partner countries in instances where we needed
additional information to support UN nominations. He also
recognized Egypt's expertise and leadership role in combating
terrorist support network activity, as reason to believe we
could begin a much more robust and on-going dialogue.


4. (S) Regarding the 13 names, Mohsen welcomed Treasury's
non-paper and repeatedly said that he, in coordination with
State Security, will provide additional information on the
potential designation targets as soon as the information
becomes available and hopefully before the U.S.-Egypt CT
bilateral which is due to take place early 2009.


5. (S) Mohsen indicated that of the 13 names which the U.S.
has a hold on, five of these targets no longer pose a threat,
because they are either in jail, placed under close
surveillance, or are participating in the
counter-radicalization program. As such, the GOE will be
formally writing to the UN to request that these names not be
considered for designation. (Note: These five individuals
are Muhammad Sha'ban Muhammad Hasanayn, Isam Muhammad Shu'ayb
Jad Al-Mawla, Salim Id Salim Abdul Hadi, Ashraf Sha'rawi
Muhammad Hamad, and Hamdi Ali Khalid Umar. End note.) DAS
Mendelsohn appreciated the new information and agreed that if
the GOE had determined that these targets were contained,
there may be no need to designate them.


6. (S) DAS Mendelsohn pointed out that one of the
submissions appears to be a Muslim Brotherhood member, who
can be designated only if his link to al Qaida could be

proven and not because he is a member of the Muslim
Brotherhood. Mohsen agreed. This also provided an
opportunity to clarify for State Security the sort of
intelligence necessary to support the nominations, including
information broadly relating to the individuals, actions in
support of or on behalf of Al Qaida and EIJ -- not just
relating to financing.


7. (S) Mohsen and Brigadier Hisham Abda were not in a
position to respond immediately to the specific questions
posed in the Treasury non-paper but promised to investigate
further and get back to the USG. Mohsen also said they would
do all they could to follow up on the information Treasury
provided on the potential new targets, many of whom appear to
be involved in supporting activities in Iraq, and requested
that Treasury provide additional identifying information, if
and when it becomes available, that would help the Egyptian
security services locate these individuals.


8. (S) Mohsen strongly agreed with the USG's efforts to
target terrorist activity in Iraq, as well as other terrorist
activity which may fall outside the purview of the UN 1267
Committee (which covers only Taliban and Al-Qaida). Mohsen
said that all counter-terrorism means should be used against
extremists, including Baathist insurgency supporters. DAS
Mendelsohn agreed with Mohsen's suggestion that the U.S. and
Egypt work on terrorist designation targets of mutual
interest bi-laterally (outside the UN 1267 framework),
especially non-Taliban and non-Al-Qaida members.


9. (S) Mohsen underlined the importance of the interagency
process in Egypt for designating targets. He also requested
Treasury to notify Egypt in advance of the USG's intention to
designate Egyptian targets in order to avoid undermining
USG's position in the Middle East (USG may be perceived as
targeting Muslims) and the credibility of the UN 1267
committee process. DAS Mendelsohn expressed understanding
and noted that the eight new potential targets in the
non-paper were not necessarily designation targets and that
we deferred to the GOE as to the best way to investigate
these individuals and determine what, if any, action should
be taken against them.

Mohsen Reiterates Concerns About the 1267 Process
-------------- --------------


10. (S) Mohsen raised several concerns about the UN 1267
process. For example, he noted the inflexibility of the
list, and the need for the 1267 team to find ways to delist
deceased individuals. Allowing deceased individuals to
remain on the list has a negative effect as it prevents
family members from receiving pension payments, which can
increase the likelihood that family members will turn to
terrorism to revenge the injustice. He also noted an example
of an Egyptian extremist operating in the UK who has been
allowed to run an anti-Egyptian government Internet site.
Mohsen said that such cases could cause the GOE to lose faith
in the UN designation process.


11. (S) Mohsen also expressed frustration, much of which he
has shared in previous meetings with USG officials, about the
UN designation process and the UN 1267 committee staff. He
specifically complained about the large amount of resources
Egypt had to commit to support the last UN 1267 monitoring
team visit several weeks ago. He also specifically
complained about the fact that the Analytical Support and
Sanctions Monitoring Team has been working on
"radicalization" and has established a new "Radicalization
Working Group" which Mohsen argued is outside its mandate.
DAS Mendelsohn said that Mohsen's frustrations with the UN
1267 process will be conveyed to the USG officials
responsible for coordinating the UN counter-terrorism policy.


12. (S) Mohsen expressed a pessimistic view about the UN
1267 process, in light of the recent European Court of
Justice (ECJ) ruling on the Al-Kadi case requiring that the
EU provide due process rights to the listed individuals. He
said that such a ruling can open up a door to other
de-listings of terrorists and their supporters and as a
result de-legitimize the entire process. He inquired how DAS
Mendelsohn anticipated the USG dealing with these issues.


13. (S) In response to Mohsen's comments about the UN
process, DAS Mendelsohn said that designation is one of many
important tools used to effectively combat terrorism. He
agreed that it was not a good use of a country's time to
designate an individual just for the sake of designating.
Rather, careful consideration should be given as to how such

a designation will impact that individual. In response to
Mohsen's question regarding the USG reaction to the ECJ
ruling, DAS Mendelsohn recognized that it presents a
challenge, but noted his confidence in the USG's ability to
withstand legal scrutiny of its designations and indicated
that the USG will continue to support the domestic and
international designation process, which the USG considers an
important tool in the overall CT strategy.

Mohsen Discuses Terror Finance Challenges
--------------


14. (S) In response to DAS Mendelsohn's request about
regional trends in terrorism, and after consulting with
Brigadier Abda, Mohsen said that the nature of the terrorist
threat has changed in the recent years: with the greater
regulation of the formal financial system the fundraising is
increasingly generated on a local level, while the use of the
Internet to recruit and finance terrorists poses a major new
challenge. Mohsen also said that Egypt is greatly concerned
with non-registered Egyptian NGOs that receive money from the
West, because their financial activities cannot be properly
monitored. He specifically said that there are instances
when these NGOs "use human rights" to publicly advocate
against Egyptian security operations such as security check
points designed to prevent terrorists from operating in the
Sinai and support the families of dead terrorists. Mohsen
agreed to provide specific information on the NGOs that
provide assistance to families of terrorist martyrs.


15. (S) Mohsen briefed DAS Mendelsohn on the Egyptian
efforts to train local and foreign imams to use theological
arguments in countering Islamic extremism in prisons and in
the society in general. Mohsen invited the USG to
participate in their program and advised that a number of
other Arab countries participated in the program.


16. (C) Mohsen suggested that Treasury should participate in
the annual U.S.-Egypt counter-terrorism bilateral which is
due to be held in Washington in early 2009. He also
suggested that a separate meeting between the Egyptian
delegation and Treasury officials to follow up this
discussion would be beneficial. DAS Mendelsohn agreed and
welcomed the opportunity to meet again. Mohsen also
indicated that the GOE would attend (but not host) the
"Targeted Financial Sanctions" workshop that Treasury seeks
to organize early next year.


17. (U) DAS Mendelsohn cleared this cable.
SCOBEY