General Odierno: Al Qaeda in Iraq faces serious financial crunch

General Odierno, the top US commander in Iraq, said in a Monitor interview that US and Iraqi forces have broken large Al Qaeda in Iraq rings that extorted millions of dollars a year from companies.

A money crunch is fueling Al Qaeda in Iraq's recent string of robberies and attacks on banks as the weakened organization tries to reconstitute itself, the top US commander in Iraq said.

Gen. Ray Odierno, in an interview with The Christian Science Monitor on Friday, said US and Iraqi operations have arrested or killed dozens of AQI leaders and broken large AQI rings that extorted millions of dollars a year from Iraq’s oil distribution network and major companies.

“Major cellphone companies, for example – they would threaten them, if you don’t pay us we’ll go after towers and networks,” he said, crediting intelligence gained from those arrests and killings for cracking the extortion network. “It’s more difficult for them to get funding, so they’re turning to outward criminality in order to fund their operations.”

In a wide-ranging interview in one of Saddam's former palaces, Odierno said AQI appears to have become increasingly disconnected from Al Qaeda's central leadership in Afghanistan and Pakistan – and fighting to remain influential. To him, Al Qaeda's lack of announcement regarding new leadership in Iraq after top AQI figures Abu Ayub al-Masri and Abu Omar al-Baghdadi were killed this spring indicates that Al Qaeda headquarters considers the weakened organization here to be much less relevant.

“You have decentralized [AQI] cells that are attempting to continue to execute the last orders given – I think bank robberies and other things are a sign that the funding has been cut,” he said. Odierno, in some of the first detailed comments on AQI's operations, said extortion fees from truck drivers and other parts of the oil distribution network had provided a major part of the organization's revenue, along with payments from major companies such as cellphone carriers.

“What they’re trying to do is reorganize themselves so they can garner more attention, more support to continue, so our goal is to continue to work with Iraqi security forces so they’re not able to do that,” he said.

A change in tactics

AQI has either taken credit or is believed to be behind a string of attacks last month, including a suicide raid on Iraq’s central bank, another suicide car bomb attack on the Finance Ministry’s trade bank, and a string of armed robberies of gold stores – all of them marking a change in tactics. The attacks have prompted comparisons with high-profile Taliban operations aimed at getting the attention of potential financial backers.

“They’ve gone from a broad-based insurgency to basically terrorist activities of suicide bombers and suicide vests – that’s about all they’re able to do now, so you see them morphing and trying to figure out what they can do to try to continue their effectiveness within Iraq,” said Odierno.

Al Qaeda in Iraq previously has focused on broader attacks aimed at reigniting sectarian violence. In the depths of Iraq's civil war four years ago, a substantial number of Iraqis, particularly in tribal areas, backed Al Qaeda – some seeing the Sunni organization as protection against Shiite threats. That popular support for the insurgency has now widely dissipated.

US pullout on track, but Iraqi forces face funding cuts

Odierno said the drawdown of US forces to about 50,000 troops by September is on track.

“I think obviously there are still some security issues, there’s still some violence that’s here in Iraq, but I feel comfortable that the Iraqi security forces will be able to deal with this to further reduce violence. It’s now about economics and politics,” he said.

In his first interview since being confirmed this week as head of the Norfolk, Va.-based US Joint Forces Command, Odierno warned that continued budget pressure on Iraqi security forces could translate into a greater risk of not being able to sustain the security gains they’ve made.

A move by the Senate Armed Services Committee to cut in half, to $1 billion, proposed US funds for Iraqi security operations coincides with an Iraqi budget crunch which has slashed the country’s own defense budget.

“The bottom line is about mitigating risk – what it does is raises the risk that the Iraqis will not be as prepared as we would like them to be once we leave at the end of 2011,” said Odierno, who will leave his post as head of US Forces-Iraq in September. “If they don’t have the ability to sustain themselves, the readiness will go down and it could impact their ability to conduct operations, so we want to make sure that they’ve got that in place.”

In what he described as a new and "huge step forward," Odierno said Kurdish leaders and Prime Minister Nouri al-Maliki had recently approved the US training and equipping of four brigades of Kurdish forces for eventual integration into the Iraqi Army.

The mechanics of integrating them are still being worked out, but the brigades are among those currently operating under Kurdish command in areas claimed by both the central government and the Kurdish regional government. The disputed areas in the north are a flash point of Kurdish-Arab tensions and the main focus of concern for the US as it draws down.

Lessons for Afghanistan

Odierno, whose new job oversees 1.6 million servicemen and involves supporting and charting the way forward for all the armed services, said one of the lessons learned in Iraq has been not to rush into reconstruction.

“We tried to do some economic development and reconstruction too early before we had security established – you’ve got to protect the population before you can really do significant civil capacity building,” he said. For example, restoring and improving electricity has been a major priority since the 2003 invasion – taking 40 percent of the US reconstruction budget – but power outages are so frequent that the issue sparked protests across Iraq in June.

Hundreds of millions of dollars of US projects over the past seven years have been destroyed, looted, or sabotaged in areas with no effective security forces.
Odierno also says Iraq has also provided lessons on the high cost of "collateral damage" – killing civilians along with military targets – a key reason for popular support for insurgents both in Iraq and Afghanistan.

“One thing thing we learned here as we moved through the surge and after the surge is you have to assess the environment ... the political environment, the social environment, the economic environment – all of those things contribute to the solution,” he says.

The commander said he did not believe that removing Gen. David Petraeus as head of US Central Command, which oversees both Iraq and Afghanistan, would have any effect on the US military effort in Iraq. Petraeus arrived in Afghanistan today to replace Gen. Stanley McChrystal, who was forced out after a magazine article portrayed his team's disdain for senior Obama administration officials.

“Stan McChrystal is a good friend of mine. I've known him for a long time,” said Odierno. “I have deep respect for him and it’s just unfortunate what happened. The main thing is, what we can’t let this affect is other people’s view of the civil military relationship, and it’s important that we sustain that.”

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