When slaughter is cheap...

At least the taxi drivers are honking each other again. And the New York sidewalks are again arenas for confrontation. But as they stagger back to normality, New Yorkers are still aware that they are living in a city under siege. Roads, bridges and tunnels around Manhattan continue to be blocked off as police conduct random vehicle searches. The flowers now taped to the 'missing' posters are fresh reminders of the horror. Sirens continue to scream from one bomb scare to another.

Amid the fear, New York searches for reassurance. The soothing words of Mayor Rudy Giuliani have helped immeasurably. And the White House has orchestrated a so far near-perfect example of positive news management, each day introducing a new tough-sounding initiative designed to hit back at the terrorists.

The US government knows it is not enough to focus solely on the perpetrators. It must destroy the system that sustains them if the Big Apple is not to remain in constant fear of something as innocuous as a crop-dusting plane.

For this reason, the Bush administration now talks of waging a financial war against the terrorists. 'Money is the lifeblood of terrorist operations. We're asking the world to stop payment,' the President said.

As an opening salvo, the US government has announced that it is freezing the US assets of 27 individuals and organisations that it suspects of being involved in the financing of terrorist campaigns. It has also warned the world's banks and financial institutions that they could be barred from doing business with the US if they do not co-operate with its investigations.

The New York press was suitably patriotic in its response. 'W kicks terror in the assets,' exalted the Post. 'Banks on notice,' threatened the Times. But intelligence experts warn that destroying such networks will be difficult, if not impossible.

Terry Lenzner, former assistant chief counsel on the Senate Watergate Committee, is often described as Washington's best known investigator. As chairman of Investigative Group Inter- national, he enjoyed close links with the Clinton administration. He believes the apparently watertight cell structure of the World Trade Centre terrorists represents a new challenge.

'You can use the techniques that have been used against organised crime,' said Lenzner. 'But I think the difference is that we're dealing with people who have been in this country in some cases for up to seven years - with not one leak. That's incredible.'

William Daly, an FBI veteran who is now a senior vice president with international security consulting firm Control Risks Group, agrees: 'Bush's announcement is an important move, but people shouldn't be overwhelmed by it. This is a very murky world. International money laundering is fraught with dead ends, shell companies and paperless transactions. There are so many ways of moving money around that this is only scratching the surface.'

One of the difficulties is that terrorist cells have proved adept at slushing money around between legitimate and illegitimate bases, making it extremely difficult to trace. 'This has been going on in this country for years. Some of the Irish charitable organisations have raised money for weapons in Northern Ireland,' Lenzner said.

Al-Qaeda, Osama bin Laden's terrorist network, is said to be a sophisticated proponent of such techniques, using small stores and money-lending organisations - known as 'hawala' - to move cash discreetly across countries and continents. The 27 groups and individuals who have already had their US assets frozen number three charities, including the Al Rashid Trust, which describes itself as a UN-recognised welfare organisation with a network of bakeries in Afghanistan. The US government says the charity supports the Taliban. The UN says it doesn't recognise the trust.

Also on the list is the Mamoun Darkazanli Import-Export company, based in Hamburg, which specialises in selling TV sets and other electronics goods. Darkazanli himself is also known as Abu Ilyaf, who is, security sources say, a close associate of bin Laden. He denies the claim.

Other names are likely to be added to the list soon. The US government is thought to have warned several unwitting and well intentioned benefactors that they are sitting on the boards of charities with close links to money-laundering operations. The government is said to be giving them a few weeks' grace to stand down so they can distance themselves from the impending furore.

The presence of a shadowy financial network that funds al-Qaeda would help explain how bin Laden continues to operate. Although born into a wealthy Saudi Arabian family, bin Laden's assets in the kingdom were frozen after his citizenship was revoked in 1994. According to intelligence officials, his family no longer has anything to do with him.

Bin Laden also suffered a serious setback when the Bank of Credit and Commerce International was closed down in 1991. Organisations with close links to bin Laden held several accounts with the BCCI, a multi-billion pound money-laundering operation that helped fund the mujahideen in its war against the Soviet army.

It has also emerged that three as yet unidentified New York-based banks cut their ties with Al Shamal Islamic Bank, a Sudan-based company set up by bin Laden in the early Nineties. However, authorities are probing the relationship between Al Shamal and banks as far afield as Frankfurt, Geneva, Johannesburg and London.

But even if US agencies can identify nodes in the al-Qaeda terrorist network, it is unclear how effective they can be in shutting them down.

Bush has already admitted that bin Laden and his organisations 'don't have much money in the United States'. This means that for Bush's plan to be more than symbolic, other countries, especially those hitherto regarded as 'safe havens', must play their part in turning over confidential financial information.

There are precedents for this. 'We've been successful in getting some information from some of the safe havens,' Lenzner said. 'We've been able to get information out of Liechtenstein and the Bahamas, but ultimately I'm not too optimistic.'

The failure of a number of initiatives by the Clinton administration to clamp down on the financing of terrorism in the wake of the 1993 World Trade Centre bombing does not offer much encouragement. In addition, departmental and agency rivalries have led to accusations that those charged with protecting the US have failed to provide a cohesive response to the threat. The new appointment of a cabinet member to co-ordinate the response seems to indicate that the Bush administration understands this.

Such co-operation across organisations and countries would be unprecedented - but these are times without precedent, the experts point out. Said Daly: 'For the past decade, bin Laden has been the poster boy, literally and figuratively. But there will be other people waiting in the wings. Law enforcement agencies have got to think outside the box. This is not the Cold War.'

Indeed fanaticism has brought a new raft of problems. Some experts believe it cost as little as $200,000 to finance the atrocities of 11 September, although Lenzner believes they could have needed as much as $2 million to support the entire cell infrastructure over several years. Nevertheless, in a financial system that moves trillions of dollars around each day, a couple of hundred thousand dollars, or even a couple of million, is minuscule and difficult to trace or restrict. No matter how the US tightens the tap, the fear is it can't turn the supply off completely.