U.S. Seeks to Cut Off Guerrillas' Money

A spate of U.S. raids on Iraqi smugglers signals a new strategy to deny the guerrilla insurgency one of its chief recruiting assets: money.

If U.S. military strategists are correct, in just over a month, the insurgency will face a financial crisis when old Iraqi dinar notes bearing the face of Saddam Hussein (search) will be worthless. The military wants to deepen the crisis by launching raids on black marketeers thought to be funding the guerrilla movement.

"If we can stop the money, we can stop the insurgency," a coalition military official in Baghdad (search) told The Associated Press, speaking on condition of anonymity. Because many strikes are carried out by hired attackers, he said Thursday, the United States is going after the "paymasters."

The insurgency's need for funds was highlighted by coordinated attacks in Samarra (search), where bands of guerrillas laid in wait at two banks awaiting the delivery of dinars -- setting off firefights with U.S. troops that claimed dozens of Iraqi lives.

The guerrillas are thought to be funding the insurgency with the former regime's stockpiles of old dinar notes, or by counterfeiting the relatively simple Saddam notes, which are now being exchanged for new, Saddam-free notes.

In Washington, a U.S. defense official speaking on condition of anonymity said the money changeover is expected to inhibit guerrilla operations that rely on paying attackers for bombings and hits on U.S. troops.

As the currency approaches expiration on Jan. 15, the U.S. military is pressing its advantage. At least four U.S. Army units have either begun or plan to launch new operations targeting the guerrilla financiers.

At the same time, insurgent groups have shown an increasing desperation for hard currency.

U.S. military officials have said individual payments for attacks have risen in past months, and now range from $150 to $500 per attack, making financiers scramble for funds.

U.S. military convoys supplying banks with new Iraqi dinars have been ambushed on six occasions, including the attacks Sunday in Samarra. U.S. military officials in Baghdad and Washington said the attacks are a sign of the insurgency's increasing desperation for money to fund its fight.

The U.S. military is launching a series of counter-funding moves targeting "paymasters" who finance bomb workshops and hire mercenaries.

Earlier this week, Brig. Gen. Mark Hertling of the Army's 1st Armored Division said the unit would soon embark on Operation Iron Justice, an anti-smuggling and corruption drive aimed at breaking financial links to Baghdad's insurgent groups. Hertling said 1st Armored would aim at smugglers of gasoline, cooking fuel and other items.

"Our human intelligence suggests a link between price gouging and the financing of these networks," division commander Brig. Gen. Martin Dempsey said Monday. "I can't say for sure it exists. But I have enough to know it's worth addressing."

The Army's 4th Infantry Division will soon launch a similar effort, dubbed Operation Ivy Cyclone II, while the 3rd Armored Cavalry Regiment is readying Operation Bayonet Lightning, the coalition official said. The Army's 173rd Airborne also launched raids this week seeking rebel financiers.

The U.S.-led raids have seized more than $100 million since the end of major combat May 1, the coalition military official said.

Many of the foreign fighters coming into Iraq are joining the guerrillas simply as paid mercenaries, the coalition official said.

"The 'rat lines' are generally bringing in foreign fighters to fight for money," the official said. They're "not the ideologues that many back in [Washington] D.C. suggest."

Military officials have not said whether they've developed a plan to thwart insurgents from simply exchanging old dinars for new currency. The Washington defense official said anybody exchanging large amounts of old cash should raise a red flag, as with narcotics traffickers in the United States.

The currency exchanges have safeguards that can be used to delay exchanges of more than 5 million dinars at a time while authorities are contacted, said Karen Triggs, a Coalition Provisional Authority spokeswoman.

She said many of the exchange points are guarded by Iraqi police and coalition troops, and bank tellers are able to call on them in the event of suspicious transactions. Triggs said tellers are also seizing counterfeit dinars -- to which insurgents are thought to have access -- and filing reports when large amounts are brought in.

"Coalition security services are watching the bad guys known to them very carefully throughout the dinar exchange," Triggs said.