[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]




                               BEFORE THE


                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION


                           SEPTEMBER 13, 2012


                           Serial No. 112-177


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                      COMMITTEE ON FOREIGN AFFAIRS

                 ILEANA ROS-LEHTINEN, Florida, Chairman
DAN BURTON, Indiana                  GARY L. ACKERMAN, New York
ELTON GALLEGLY, California           ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
DONALD A. MANZULLO, Illinois         BRAD SHERMAN, California
EDWARD R. ROYCE, California          ELIOT L. ENGEL, New York
STEVE CHABOT, Ohio                   GREGORY W. MEEKS, New York
RON PAUL, Texas                      RUSS CARNAHAN, Missouri
MIKE PENCE, Indiana                  ALBIO SIRES, New Jersey
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
CONNIE MACK, Florida                 THEODORE E. DEUTCH, 
JEFF FORTENBERRY, Nebraska               Florida
MICHAEL T. McCAUL, Texas             DENNIS CARDOZA, CaliforniaUntil 8/
TED POE, Texas                           14/12 deg.
GUS M. BILIRAKIS, Florida            BEN CHANDLER, Kentucky
JEAN SCHMIDT, Ohio                   BRIAN HIGGINS, New York
BILL JOHNSON, Ohio                   ALLYSON SCHWARTZ, Pennsylvania
DAVID RIVERA, Florida                CHRISTOPHER S. MURPHY, Connecticut
MIKE KELLY, Pennsylvania             FREDERICA WILSON, Florida
TIM GRIFFIN, Arkansas                KAREN BASS, California
TOM MARINO, Pennsylvania             WILLIAM KEATING, Massachusetts
JEFF DUNCAN, South Carolina          DAVID CICILLINE, Rhode Island
RENEE ELLMERS, North Carolina
                   Yleem D.S. Poblete, Staff Director
             Richard J. Kessler, Democratic Staff Director

         Subcommittee on Terrorism, Nonproliferation, and Trade

                 EDWARD R. ROYCE, California, Chairman
TED POE, Texas                       BRAD SHERMAN, California
JEFF DUNCAN, South Carolina          DAVID CICILLINE, Rhode Island
BILL JOHNSON, Ohio                   GERALD E. CONNOLLY, 
TIM GRIFFIN, Arkansas                    Virginia
ANN MARIE BUERKLE, New York          BRIAN HIGGINS, New YorkRemoved 6/
RENEE ELLMERS, North Carolina            19/12 deg.
                                     ALLYSON SCHWARTZ, Pennsylvania

                            C O N T E N T S



Ms. Lisa Curtis, senior research fellow, Asian Studies Center, 
  The Heritage Foundation........................................     7
Mr. Jeffrey Dressler, senior research analyst, Institute for the 
  Study of War...................................................    20
Ms. Gretchen Peters, author, Haqqani Network Financing...........    28


The Honorable Edward R. Royce, a Representative in Congress from 
  the State of California, and chairman, Subcommittee on 
  Terrorism, Nonproliferation, and Trade: Prepared statement.....     3
Ms. Lisa Curtis: Prepared statement..............................    10
Mr. Jeffrey Dressler: Prepared statement.........................    22
Ms. Gretchen Peters: Prepared statement..........................    31


Hearing notice...................................................    50
Hearing minutes..................................................    51
The Honorable Gerald E. Connolly, a Representative in Congress 
  from the Commonwealth of Virginia: Prepared statement..........    53



                      THURSDAY, SEPTEMBER 13, 2012

              House of Representatives,    
                     Subcommittee on Terrorism,    
                           Nonproliferation, and Trade,    
                              Committee on Foreign Affairs,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:08 p.m., in 
room 2172, Rayburn House Office Building, Hon. Edward R. Royce 
(chairman of the subcommittee) presiding.
    Mr. Royce. This hearing of the subcommittee will come to 
    This hearing title is ``Combating the Haqqani Terrorist 
Network.'' We are examining a terrorist network that the State 
Department has just decided to designate as a Foreign Terrorist 
Organization. And yesterday, we were all saddened and angered 
over the killing of an American diplomat and three other U.S. 
Government personnel during an attack on our consulate in 
Benghazi, Libya. Exactly 1 year ago today, it was the Haqqani 
network that launched a 20-hour long assault on the U.S. 
Embassy compound in Kabul. And that attack left 16 Afghans 
    It was after this attack that our then top military officer 
pronounced the Haqqani network a ``veritable arm'' of the 
Pakistani ISI used to pursue its paranoid policy of ``strategic 
depth'' in Afghanistan. The Haqqani base of operation in 
Pakistan's tribal area of North Waziristan is the most 
important militant haven in the region. Al-Qaeda is said to 
train and plan attacks under the protection of the Haqqani 
network from their bases there. Indeed one prominent report 
finds that ``the Haqqani network has been more important to the 
development and sustainment of al-Qaeda and the global jihad 
than any other single actor or group.'' The Haqqanis have 
plenty of blood on their own hands, killing U.S. and coalition 
    Yet the State Department more than dragged its feet in 
doing the obvious, which would have been to blacklist the 
Haqqani network. Despite calls from U.S. commanders to act, it 
kept the case under lengthy review. Frustrated, Congress--on a 
bipartisan basis--unanimously passed the Haqqani Network 
Terrorist Designation Act of 2012, and that legislation was 
signed into law last month. This act spurred last week's 
designation announcement, which apparently was not an easy one 
for the administration to make. Without congressional pressure, 
I am sure the Haqqanis would have been under permanent review, 
further shortchanging our efforts against it.
    This hearing is about looking ahead though. What can we do 
now? In this regard, it is too bad the State Department was 
unable to provide a witness to discuss what this designation 
will mean operationally.
    The Foreign Terrorist Organization (FTO) designation sets 
the stage to attack the vast financial network supporting the 
Haqqanis. And as we will hear today, this outfit has built an 
empire out of kidnappings, out of extortion, out of their 
smuggling operations. Arab donors from the Middle East, 
trucking firms, car dealerships, real estate. The financial 
streams running into North Waziristan are very diverse and 
widespread. We have many targets.
    As one witness notes, while they have faced military 
pressure, ``the Haqqanis have never had to deal with a 
sustained and systemic campaign against their financial 
infrastructure.'' As Ms. Peters will testify, such a campaign, 
in concert with military efforts, could even bring the Haqqani 
network to the point of ``collapse.'' That is optimistic but at 
least now possible with the Foreign Terrorist Organization 
designation that has been made.
    This subcommittee has looked at U.S. Government financial 
squeezes on others: The North Korean criminal state, arms 
dealers, such as Victor Bout, A.Q. Khan, and Hezbollah. Success 
has required sustained support and leadership from the very 
top. Given the administration's dithering on the Haqqani 
designation, it is right to be concerned about its will to 
execute an aggressive financial campaign against that entity.
    Concluding, this cannot be a case of designate and forget. 
It is clear that continued congressional pressure will be 
needed to ensure that this was just a step toward hammering the 
Haqqani network.
    And I will now turn to our ranking member, Mr. Sherman from 
California, for his opening statement.
    [The prepared statement of Mr. Royce follows:]


    Mr. Sherman. Thank you, Mr. Chairman for holding these 
hearings. I want to join with you in our expression of both 
regret and anger as to the death of our diplomats in Benghazi. 
And I know that the administration is responding with urgency 
to work with the Libyan Government to bring these attackers to 
    Now the focus of our hearing. The Haqqani network based in 
Pakistan's tribal areas is commonly viewed as the most lethal 
force battling us in Afghanistan. The group is responsible for 
many high profile attacks, including the attack on the U.S. 
Embassy in Kabul in September 2011. Secretary of State Hillary 
Clinton formally announced the designation of the militant 
Haqqani network responsible for these deadly attacks as a 
terrorist organization last Friday. I commend the Obama 
administration and the Secretary of State for making this 
    The Haqqani Network Terrorist Designation Act of 2012 was 
passed by this Congress and called upon the State Department to 
report within 30 days on the issue of designating the Haqqani 
network. I cosponsored that bill and also cosponsored a House 
bill with our colleague Ted Poe which would have simply taken 
the matter out of the administration's hands and designated 
what we all knew to be true and that by any definition, and 
certainly the definition of our laws, the Haqqani network was a 
terrorist organization and remains so today.
    This designation last Friday was not the first action taken 
against the Haqqani, either legal or kinetic. Several Haqqani 
network members were already on the U.S. Government's list of 
specially designated global terrorists. The administration has 
posted a $5 million reward leading to the capture of one of the 
group's leaders and killed the main leader's son who was also 
an operational figure. This is an organization, the Haqqani 
network, that works hand in hand with the Taliban and has a 
history of supporting al-Qaeda.
    Most worryingly, then Chairman of the Joint Chiefs of 
Staff, Admiral Mullen, testified before Congress that the 
Haqqani network acts as a veritable arm of Pakistani 
intelligence, the ISI. The admiral also noted that with ISI 
support Haqqani operatives planned and conducted the assault on 
the U.S. Embassy in September 2011.
    So this is a terrorist organization that seems to be 
benefiting from moneys of the U.S. taxpayer in two ways. First, 
we provide a lot of aid to Pakistan with insufficient control. 
Much of that ends up in the hands of the ISI, and the ISI then 
supports the Haqqani network.
    Second, our use of private contractors to get supplies into 
Afghanistan, combined with the fact that we maintain 85,000 or 
more troops there, means that these private contractors 
sometimes find it profitable to pay protection money to the 
Haqqanis. So both our foreign aid funds and our military 
operations funds can find their way into Haqqani hands.
    The Haqqani network has a sophisticated financial means, 
according to recent studies. The organization raises money from 
those who are ideologically sympathetic donors, but also gets 
profit from smuggling the protection payments and 
transportation that I have previously mentioned, et cetera.
    In fact, the labeling of the Haqqani network as a terrorist 
organization is necessary but not sufficient. Now is the time 
for the State Department and Transportation Department to ramp 
up efforts to go after the network's global finances and 
businesses and front companies.
    We also have to change our policy toward Pakistan. Part of 
that is reaching out to the Pakistani people. We should no 
longer kowtow to Islamabad when they tell us that the Voice of 
America should broadcast only in Urdu. It is time to reach out 
to the Pakistani people in other languages, particularly 
southern Pakistan in the language of Sindhi. And it is time for 
us to try to go around the military-dominated political forces 
in Islamabad and reach out to the Pakistani people while at the 
same time conditioning our aid on different policies of the 
Pakistani Government.
    And I yield back.
    Mr. Royce. Thank you, Mr. Sherman.
    We will go now to Mr. Connolly of Virginia for 3 minutes 
for your opening statement.
    Mr. Connolly. Thank you, Mr. Chairman. I also want to 
commend the State Department for declaring the Haqqani network 
as a Foreign Terrorist Organization, however long overdue that 
designation might have been. But I want to join with the 
chairman in expressing disappointment that the State Department 
is not represented here today. I think they owe the 
subcommittee and the Congress a fuller explanation for how and 
why we got to that determination and operationally, as the 
chairman suggested, what it means moving forward. 
Responsibility to account to the Congress is a constitutional 
responsibility and it is not a matter of when and if the 
administration chooses to respond to Congress' request to 
testify before a subcommittee such as this.
    I must say the designation, however, raises as many 
questions as it provides answers. What does it mean with our 
drawdown in Afghanistan just across the border given the 
impunity with which the Haqqani network now operates in that 
part of Pakistan? What does it mean that there is clear and 
documented evidence that the ISI, the Pakistani ISI, has long 
provided overt protection, including security protection, to 
leaders of the Haqqani network within the Pakistani borders? 
And what does that mean for the level of cooperation that is 
actually cited in the designation announcement in which 
Pakistan was referred to as an extremely valuable ally in 
countering extremism and terrorism? How does that comport with 
overwhelming evidence that one branch of the Pakistani 
Government is not cooperating in those endeavors at all when it 
comes to the Haqqani network?
    So I am looking forward, Mr. Chairman, to this hearing and 
to the testimony to be provided. And like you, I wish the State 
Department were represented here. I think they should be. Thank 
you so much for holding the hearing.
    Mr. Royce. Thank you, Mr. Connolly.
    Ms. Lisa Curtis is the senior research fellow for South 
Asia at the Heritage Foundation. And before joining Heritage, 
she served on the Senate Foreign Relations Committee staff and 
at the State Department and at the Central Intelligence Agency. 
She has appeared before the House Foreign Affairs Committee 
numerous times. It is good to have you back.
    Mr. Jeffrey Dressler is a senior research analyst and leads 
the Afghanistan and Pakistan team at the Institute for the 
Study of War. He has written several extensive reports on the 
Haqqani network. Mr. Dressler was invited to Afghanistan in 
July 2010 and participated in a team conducting research for 
General David Petraeus.
    And lastly, we have Ms. Gretchen Peters, a researcher and 
author. In July, the Combating Terrorism Center at West Point 
published her extensive thesis, ``Haqqani Network Financing: 
The Evolution of an Industry.'' She is also author of a book, 
``Seeds of Terror,'' which traces the role of the opium trade 
in Afghanistan.
    We will start with Ms. Curtis.


    Ms. Curtis. Thank you very much, Mr. Chairman, Ranking 
Member Sherman.
    Mr. Royce. I am going to ask you to push the button there.
    Ms. Curtis. Thank you, Mr. Chairman, Ranking Member 
Sherman, and the rest of the distinguished committee for 
inviting me here today.
    The Obama administration's designation of the Haqqani 
network as a terrorist organization was certainly a welcomed if 
not long overdue step. The Heritage Foundation has been calling 
for this designation for a year, ever since the Haqqani network 
attacked the U.S. Embassy in Kabul on this day a year ago. This 
designation will facilitate U.S. goals in Afghanistan by 
pressuring Pakistan to deal effectively with this deadly group 
and assisting the U.S. in attacking the group's financial 
    Since Pakistan has failed over the last 3 years to either 
take military action against the group or to bring this group 
to compromise at the negotiating table, the U.S. had little 
choice but to corner Islamabad on the issue. Pakistani 
officials had repeatedly questioned why they should take 
military action when U.S. policy toward the group was 
ambiguous. With this designation, the U.S. leaves no doubt on 
where it stands on the issue and thus removes a major Pakistani 
excuse for failing to take action.
    Up to this point, Pakistani military officials seem to have 
calculated that the U.S. would acquiesce to a strong Haqqani 
role in any future political dispensation in Afghanistan. Now 
the U.S. has signaled that instead it would work to prevent the 
Haqqanis from re-establishing their base in Afghanistan.
    I think people are generally familiar with who are the 
Haqqanis, but let me briefly talk about who they are. 
Jalaluddin Haqqani is a powerful, independent, militant leader 
whose followers operate mainly in eastern Afghanistan in the 
provinces of Paktia, Paktika, and Khost. They operate from 
their headquarters in North Waziristan in Pakistan's tribal 
border areas.
    Jalaluddin Haqqani has been allied with the Afghan Taliban 
for over 16 years, having served as the tribal affairs minister 
in the Taliban regime in the late 1990s. His son Sirajuddin is 
now the operational commander of the group.
    The Haqqani network of course has been a major facilitator 
of the Taliban insurgency, having conducted some of the 
fiercest attacks against U.S. and coalition forces, Afghanistan 
civilians, and U.S. civilian interests. The source of the 
Haqqanis' power stems mainly from their ability to forge 
relations with a variety of terrorist groups in the region as 
well as with the Pakistani intelligence service. Pakistani 
military strategists view the Haqqani network as their most 
effective tool for blunting Indian influence in Afghanistan.
    The overarching goal of the U.S. should be to end 
Islamabad's dual policies toward terrorism. Islamabad's 
continuing support for the Taliban, the Haqqani network, and 
other terrorist groups is jeopardizing the entire U.S. and NATO 
mission in Afghanistan.
    It is true that Pakistan has facilitated efforts to degrade 
al-Qaeda's capabilities. We have shared intelligence with the 
Pakistanis. Pakistan has helped us capture key al-Qaeda 
leaders. And for all its complaints about drones, Pakistan has 
never taken direct hostile actions against the drone program. 
Still, Islamabad's inconsistent approach to terrorism is 
undermining the stability of the state. It is no secret that 
several thousand Pakistani civilians and security forces have 
been killed in attacks by the Tehrik-e-Taliban Pakistan, the 
TTP. So it is simply confounding that Pakistan's military would 
support the Haqqani network when it cooperates with the TTP.
    Let me say a few words about peace talks. One of the most 
frequent arguments against designating the Haqqani network was 
that it could upset efforts to engage in peace negotiations. 
But the Haqqanis have had ample chance to engage in 
negotiations. And it should be noted that only 1 month after 
the U.S. met with Jalaluddin Haqqani's brother Hajji Ibrahim 
Haqqani a year ago, it was only 1 month later that the Haqqani 
network attacked our Embassy in Afghanistan, clearly signaling 
their lack of interest in negotiations.
    The administration must avoid the temptation to pin false 
hopes on a political reconciliation process merely to justify a 
troop withdrawal. Political reconciliation is desirable but 
only if it contributes to the goal of ensuring that Afghanistan 
never again serves as a safe haven for terrorists.
    Any political solution with the Taliban must, one, preserve 
the human rights improvements of the past decade; two, maintain 
the integrity of the democratic political process; three, 
ensure the Taliban has broken ranks with al-Qaeda; and four, 
make sure the U.S. maintains the capability to retain a troop 
presence for counterterrorism and training missions well beyond 
    So in conclusion, the onus is on Pakistan to demonstrate it 
is willing to squeeze insurgents on its territory and to use 
its leverage with these groups to bring them to compromise. 
Otherwise the U.S. and NATO must try to isolate Pakistan in the 
region and limit its ability to influence developments in 
Afghanistan. It should be clear that unless Pakistan supports 
the U.S.-led strategy in Afghanistan, it will sacrifice U.S. 
aid and diplomatic engagement. The U.S. will look toward other 
like-minded partners in the region and even be prepared to 
block IMF and World Bank loans which are critical to the health 
of the Pakistani economy.
    The way Pakistan deals with Afghanistan over the next 2 
years will have a lasting impact on how it is viewed and 
treated by the international community. Pakistani brinkmanship 
in Afghanistan would likely carry high costs for the country 
over the long term.
    Thank you.
    Mr. Royce. Thank you, Ms. Curtis.
    [The prepared statement of Ms. Curtis follows:]


    Mr. Royce. We are going to, due to the votes, take a recess 
for approximately 25 minutes after which time we will resume. 
So in the interim, we stand in recess. Thank you.
    Mr. Royce. The committee will come to order.
    Let me recap, because earlier I mentioned the role that 
Congress played in getting the Haqqani network designated as an 
FTO. But also key to that was the information being put out by 
private researchers. And we are joined today by three of these 
expert witnesses who have worked on this subject matter. And we 
are now going to go to Mr. Jeffrey Dressler for his testimony.


    Mr. Dressler. Thank you, Mr. Chairman, Ranking Member 
Sherman, and committee members, for inviting me to testify 
about the Haqqani network Foreign Terrorist Organization with 
historical and enduring ties to al-Qaeda and their affiliates 
that poses a threat to American national security interests. 
Accordingly, it is imperative to focus all available 
instruments of U.S. Military and economic power against the 
    The Haqqani network is responsible for the vast majority of 
the most heinous attacks against U.S. international 
organizations, Afghan forces, and innocent Afghan civilians. 
Some of the most notable attacks include a June 2012 raid of a 
lakeside hotel in Kabul killing 18 and two September 2011 
attacks, one on the U.S. Embassy and ISAF headquarters and 
another attack consisting of a suicide truck bombing of U.S. 
Combat outposts in Wardak province, injuring 77 U.S. soldiers.
    Sirajuddin Haqqani, leader of the Haqqani network, no 
longer heads the tribal insurgency limited to remote regions of 
southeastern Afghanistan. His organization is not simply a 
Mafia-like criminal network solely focused on maximizing 
profits. The network's vast licit and illicit financial 
enterprise enables them to pursue their strategic and 
operational objectives. They maintain a working partnership 
with groups like al-Qaeda and its allies and affiliates to 
include Lashkar-e-Taiba, which conducted the Mumbai attacks, 
and a litany of other terrorist actors. Haqqani has provided 
lethal support to those groups as they pursue an international 
global jihadist agenda. The network maintains a national reach 
and has national level objectives, which I am happy to 
elaborate on the in the Q&A period.
    Although the Haqqani network's historical area of influence 
was limited to the southeastern provinces of Khost, Paktia and 
Paktika, the network has slowly spread into the surrounding 
provinces surrounding Kabul. The Haqqani network's presence in 
Wardak, Logar, Nangarhar, Kapisa and Laghman provinces 
facilitates their attacks in Kabul, and the network generates 
revenues for those attacks through kidnapping, extortion, and 
    In northern Afghanistan, the Haqqani network is closely 
partnered with terrorist organizations such as the Islamic 
Movement of Uzbekistan and local insurgent groups who depend on 
the Haqqani network's facilitation, command and control, and 
finances. This relationship affords the Haqqani network a 
disproportionate amount of influence in northern Afghanistan 
relative to its physical presence. In the north, Haqqani 
network fighters have engaged in destabilizing assassinations 
of key northern political military figures, such as General 
Saeed Kili, the former Kunduz police chief, General Daud Daud, 
the northern zone police commander, and more recently, Ahmed 
Samangani, a prominent parliamentarian assassinated at his 
daughter's wedding. Of course the Haqqanis have also attempted 
unsuccessful assassinations of Bismullah Kahn and Fahim Kahn, 
key leaders of Afghanistan's Tajik block. If this trend 
continues, it could provoke Tajik leadership to withdraw from 
the government in Kabul, which could be the catalyst for a 
national level civil war reminiscent of the 1990s but perhaps 
in this case even more brutal. Furthermore, if the Haqqani-led 
presence in the north continues to expand, it could provide a 
platform for the spread of terrorist attacks in Central Asia 
spearheaded by the Islamic Movement of Uzbekistan.
    However, the threat from the Haqqani network is not simply 
an Afghanistan-specific problem. The network also represents a 
threat to regional stability. In Pakistan's tribal areas, the 
Haqqanis' relationship and stature amongst myriad terrorist 
groups with local regional and international agendas continue 
to expand. Although the Haqqani network has not directly 
orchestrated an international terrorist plot, they are 
supportive and committed to an international jihadist ideology 
and have provided shelter, training, protection, and resources 
to groups who have attempted to execute international terrorist 
plots, to include al-Qaeda, the Islamic Movement of Uzbekistan, 
the German Jihad Mujahedin, and of course Lashkar-e-Taiba, 
among many others. The Haqqanis are now seen as the most lethal 
facilitator of terrorist groups in the region and yet at the 
same time continue to serve as key interlocutors between the 
Pakistani security services and anti-Pakistan groups, such as 
the TTP, or the Tehrik-e-Taliban Pakistan. For this reason and 
because the Haqqanis continue to serve as proxy forces for 
elements of Pakistan's security establishment, they have been 
allowed to operate with relative impunity and in some cases 
have received active facilitation and support.
    In closing, designating the Haqqani network as a Foreign 
Terrorist Organization and as a specially designated global 
terrorist entity is of both substantive and symbolic 
importance. The intelligence community must prioritize 
identifying and analyzing the Haqqani network's global economic 
enterprise, including second and third party individuals and 
institutions who conduct business with the network in Pakistan 
and abroad. Furthermore, as is the case with most specially 
designated global terrorist entities, the Haqqani network 
should be added to the United Nations al-Qaeda sanctions list, 
which would pave the way for flight bans for network members 
and additional measures aimed at undermining the network's 
    Last but not least, U.S. policymakers must raise awareness 
of the Haqqani network financial operations in Gulf states such 
as the UAE and urge all relevant foreign governments to assist 
with efforts to target and restrict the Haqqani network's 
    Thank you, Mr. Chairman, committee members, for the 
opportunity to appear before you today, and of course I look 
forward to answering your questions.
    Mr. Royce. Thank you very much, Mr. Dressler.
    [The prepared statement of Mr. Dressler follows:]


    Mr. Royce. We will now go to Ms. Peters.


    Ms. Peters. Thank you, Mr. Chairman, and to Ranking Member 
Sherman and to the respected members of the subcommittee.
    We have seen this week in Libya why as a country we must 
remain vigilant about the problem of extremist terrorists 
around the world. And I strongly believe that the Haqqani 
network is the type of threat network that the United States 
needs to remain vigilant against and also take action against.
    Since 2005, I have spent a great deal of my time studying 
the links between organized crime and insurgency in Afghanistan 
and Pakistan. I have studied among other groups the Quetta 
Shura branch of the Taliban, Hezb-e-Islami Gulbuddin, Lashkar-
e-Taiba, Lashkar-e-Jangvi, al-Qaeda, the Islamic Movement of 
Uzbekistan. And most recently, I have spent the better part of 
the last 2 years looking at the Haqqani network's financial 
    Now it is well known, as both of have you have commented 
previously, that the Haqqanis are the most ruthless and violent 
faction of the Taliban and also that they have the capacity to 
launch spectacular attacks against U.S. installations and other 
important sites in the capital Kabul and around Afghanistan. We 
all know that they have hosted, facilitated, and networked with 
all sorts of bad actors around the region, from other extremist 
groups like al-Qaeda and the Pakistani Taliban whom they 
continue to work with closely, and also criminal networks like 
Dawood Ibrahim's D-Company.
    What is less known, what even came as a surprise to me, was 
the extent of their criminal business network. This is not only 
the most ruthless and violent network in Afghanistan and 
Pakistan, it is also the most diversified from a business 
    Now most of the groups that I have looked into, that I 
named before, engage in some sort of protecting smuggling or 
smuggling themselves, usually narcotics, sometimes other 
resources like timber or gemstones. The Haqqanis are also 
involved in that. Many of the groups also engage in kidnapping 
and extortion. The Haqqanis are involved in all of that. And I 
would say they systematically extort all business that takes 
place in their areas of operation. One of the things that we 
found from interviewing community members and business leaders 
in the areas that the Haqqanis operate is that business does 
not get done unless the Haqqanis profit off it and condone it 
in their areas.
    Now on top of that, they also get involved in a lot of 
other businesses that we don't see other networks involved in. 
Smuggling of timber, gemstones, mining operations, chromite and 
marble, electronics import and export, clothing, cooking oil 
and other food products. They run construction companies. Some 
of these construction companies have even gotten contracts by 
the coalition for USAID projects in the region. They raise an 
enormous amount of money from ideological donors and also run 
fundraising programs at mosques around the region, not just in 
Afghanistan and Pakistan but as far away as the Emirates and 
Saudi Arabia and Kuwait.
    They also, as my colleague Mr. Dressler mentioned, engage 
in what I would call--they act sort of like guns for hire. They 
will do work for the Pakistan Government, or the Pakistan's 
ISI. They will assassinate people around Afghanistan. They will 
work for other branches of the Taliban. They will even carry 
out killings, targeted killings, to settle scores between 
business people and the community.
    So in other words, they operate very much like a 
sophisticated transnational Mafia network. They have expanded 
their area of operations inside of Afghanistan, as Jeff 
mentioned. They have also expanded across the region and really 
around the world. We found evidence of operations that extended 
as far away as South Africa--meaning they do--again, I want to 
stress the point that this is a transnational operation with 
bank accounts and entities that they own in areas where the 
U.S. can access them through the legal authorities that we 
have. I can't say for sure how much they earn. I think it is a 
mistake for people like me to try and put estimates on criminal 
earnings. But what I can say with absolute surety is they earn 
a lot more money than they spend. And we need to I believe put 
together a task force to figure out more specifically where 
that money is and start seizing it, and freezing it.
    They continue to collaborate on criminal and terrorist 
activities with the Pakistani Taliban, the Quetta Shura 
Taliban, al-Qaeda, and other groups in the region. This is the 
most clear with their criminal activities, particularly 
smuggling and kidnapping. I interviewed about a half a dozen 
people who had been kidnapped by the Haqqanis. They all 
described seamless cooperation between the Haqqanis and other 
networks, including the Pakistani Taliban. And I would like to 
just very briefly make the point that some Pakistani officials 
will describe the Haqqanis as the ``good Taliban,'' the Taliban 
that they can work with. When you start following the money, 
when you start looking into their criminal activities, they are 
working very, very closely with the Taliban that the Pakistanis 
considered the ``bad Taliban.'' And I think this network is as 
much a risk to Pakistan as it is to the United States.
    I also believe that their relationship with the ISI, 
although close--and this is a relationship that has lasted 
since the 1970s, Jalaluddin Haqqani was one of the first Afghan 
Islamists to emerge and to work very closely with the ISI, even 
prior to the Soviet arrival in Afghanistan. But today the 
relations with the ISI are much more fraught than many 
outsiders imagine. The ISI certainly is able to get the 
Haqqanis to engage in certain activities for them, but it would 
be a stretch to say that they control them or that they trust 
each other.
    I think that this is an organization that has a number of 
vulnerabilities that could be exploited if there is a 
systematic effort to attack their financial infrastructure. 
Among other things, this is a very small and centralized 
network at the top. Last month, an air strike killed Badaruddin 
Haqqani, the operations chief of the network. Earlier this 
year, U.S. forces captured Hajji Mali Khan, one of their 
leading commanders. Last year, a drone strike killed Jan Baz 
Zadran. I believe that the network will start to really crumble 
if they suffer many more high level losses like that. However, 
it is going to be very difficult to get to some of those people 
because they are not in Afghanistan. They are not even in the 
tribal areas. They are hiding deep inside Pakistan.
    One of the things I had the opportunity to do with this 
report I did with CTC was to go through documents that are 
inside the military's Harmony database. We went through 
thousands of documents pertaining to the business side of the 
Haqqanis that had been seized from their safe houses and pocket 
litter that was found on commanders and fighters that had been 
captured. One thing that was very striking when we laid out all 
of those receipts and documents and payroll records and 
property records that they had, was the extent to which the 
Haqqanis are really a Pakistani organization. The only receipts 
we found from Afghanistan were from petrol stations. Their ID 
cards, their residences, their hospital bills, everything they 
purchased, the command and the control of this organization is 
in Pakistan and not in the FATA or not in the tribal areas, 
deep inside Pakistan, records that extended down into Karachi, 
into Lahore, Rawalpindi. And I think it is important to 
recognize the extent to which this network is integrated 
through the region. We also know of extensive property holdings 
in the UAE, Shargah, Dubai, and Abu Dhabi. And I think that 
there is growing awareness in the Emirati states that groups 
like the Haqqanis, because of their involvement in narcotics 
and other organized crime, are a threat to stability there too.
    So I feel like as we move forward, one challenge is going 
to be for U.S. diplomats and military attaches to work with our 
counterparts in Pakistan and the UAE and other parts of the 
Gulf to raise awareness of the threats that this and other 
groups like them pose.
    A designation, to me, is like an arrest warrant. It can be 
completely meaningless if there is not action to follow it up. 
And I hope that Congress and the committee members here today 
encourages the administration to follow up by creating a task 
force of financial and fraud investigators, logistical and 
supply chain experts, intelligence and law enforcement 
officers, and subject matter experts to spend say 4 or 5 months 
really mapping out the financial side of this network and 
figuring out where the vulnerable nodes are and what 
authorities we have to attack it.
    This has been done before in operations against the Cali 
cartel, the Medellin cartel, more recently, La Familia 
Michoacana in Mexico. There is an ongoing operation against 
Hezbollah which has been tremendously successful. We can do 
this. It is a question of the political will to follow it up 
and properly resource the investigators and the experts we have 
here in Washington and in places like Tampa who can do this.
    There is an old Robin Williams joke that divorce is like 
tearing a man's heart out through his wallet. And I always make 
the comment that I think increasingly when we are facing 
nonstate adversaries, irregular warfare is going to be like 
tearing their hearts out through their wallets. They don't have 
infrastructural facilities that we can go after to try and 
weaken them. To really degrade their capacity to project force, 
we are going to have to go after their financial assets. Left 
in place, I fear that this group is in a strong position to 
take control of the territory in southeast Afghanistan and down 
into North Waziristan and parts of the FATA and I believe that 
they will continue to provide safe haven and to facilitate the 
activities of other militant and terrorist actors who seek to 
do the United States harm.
    Thank you very much.
    [The prepared statement of Ms. Peters follows:]


    Mr. Royce. And I thank you for that testimony. But I would 
assume you would add to that that it would be impossible to 
negotiate any kind of an arrangement for Afghanistan with the 
Haqqanis that wouldn't end up being an embarrassment and a 
threat frankly to the United States long term.
    Ms. Peters. As a former journalist, I covered efforts to 
negotiate with a variety of branches of the Taliban since 1996, 
back to the days when they blew up the Bamiyan Buddhas, about 
28 efforts by the U.S. State Department to get the Taliban to 
hand over Osama bin Laden, and a number of peace deals that the 
Pakistan Government made with the Pakistani Taliban and the 
Haqqanis and others. They always fail. I don't believe that 
reconciliation is possible with these organizations. And there 
are clear indications that, as in the past, they hope to get 
what they can out of reconciliation efforts, to get us to 
release prisoners back to them and then not hold up their end 
of the bargain.
    Mr. Royce. So instead, cut off the resources is your point. 
And I believe you stated it very, very well.
    One of the other observations is that this particular 
organization manages to run a lot of these Deobandi schools or 
particular madrasas, which are Deobandi madrasas. And out of 
these schools, as I think you note, the graduates manage to 
replace the losses if they lose about 150 fighters a month. 
That comes right out of the graduates of the school system.
    Ms. Peters. Absolutely.
    Mr. Royce. One of the questions I would ask you, because I 
have been in Pakistan three times petitioning the government to 
try to get them to close these particular Deobandi schools. 
First, why won't they close them? And second, is it true that 
some of the resources to maintain these schools come from the 
Gulf states? Or do you think that the revenue is now generated 
for the Deobandi schools internally through the graft and 
corruption and kidnapping and so forth?
    Ms. Peters. I haven't specifically looked into funding of 
the Deobandi madrasas but I do believe--and I know that 
historically, a lot of the funding for them came from the Gulf 
states and that funding Islamic education was a popular place 
for wealthy Arabs to send their money in Pakistan.
    Some of these schools--I have been to the Haqqania mosque 
in Akora Khattak on a number of occasions. This is where 
Jalaluddin Haqqani trained and where he took his name from. It 
has at any given time about 10,000 to 15,000 students. It is an 
enormous compound. And there are I believe about 10,000 
madrasas across Pakistan. Not all of them bad.
    Mr. Royce. But we are talking now about these particular 
Deobandi schools, which is what I want to focus on because we 
have a list of the ones that purportedly churn out the 
fighters. We know from some of the messaging that goes on in 
these schools which ones are doing it. So does the government 
in Pakistan.
    So my question to the witnesses here is what happened to 
the political will to shut down these particular schools? We 
have been up to see schools that have been set up--public 
schools to compete. And the Haqqanis come in and blow those 
schools up. And yet there is no effort to close down the very 
schools that frankly represent a threat to the state, to the 
Pakistani Government itself. Why not? What is the intimidation 
or whatever it is that prevents that from happening? And I will 
ask each of the witnesses their view.
    Mr. Dressler. Sir, I think from the Haqqani perspective and 
from the view of elements of Pakistan security services, the 
recruits and the fighters that these schools are churning out 
are going to work for the Haqqani network, are going to work 
for the Quetta Shura Taliban. And as long as those 
organizations continue to be supported by elements of the 
security services, both current and retired, in pursuit of 
their strategic objectives in Afghanistan, then it would be 
counterproductive for them to go after these madrasas.
    And of course your point that some of these fighters are 
being turned against the Pakistani state is exactly the point 
and is exactly the danger of sponsoring proxy groups for the 
exportation of terror. And I think Gretchen mentioned this 
during her oral testimony, that ultimately this can go bad for 
the state. And it is a reason why I think yourself and others 
have highlighted this as a problematic policy. So that is what 
I would say.
    Mr. Royce. Ms. Curtis.
    Ms. Curtis. Yes. Pakistan's policy of relying on violent 
militants for strategic objectives goes all the way back to the 
partition of the subcontinent. So this is a problem with the 
thinking within the military establishment in particular. There 
is a perception that these motivated Islamist fighters serve a 
purpose for Pakistan. So that is why they are not shutting down 
these groups.
    Now there may be some thinking that is starting to evolve, 
some concern that a Taliban-dominated Afghanistan would 
actually not be good for Pakistan. A lot of the Pakistani 
soldiers who are fighting in the tribal areas and dying, some 
of those commanders may be waking up to the fact that these 
groups are a threat to the Pakistani state. But we have not 
seen that overall shift that we have been looking for within 
the senior Pakistan military leadership. And that is why in my 
testimony, I have indicated that we have to be willing to step 
up the pressure to help them understand that they need to do 
what is in their own interest because they simply have not been 
able to overcome the fear that they will be subsumed by India, 
and so I think it is really a problem with the thinking within 
the military establishment.
    Mr. Royce. Let me conclude my questions with one point 
relating back to a point that Ms. Peters made in her written 
testimony, which was that the degree of extortion that occurs 
here impacts also contractors that are working in this 
geographic area. And on that subject, if that extortion is 
netting tens of millions of dollars for the Haqqani network, 
what types of requirements on U.S. contractors should be 
deployed in your opinion in this circumstance in order to be 
part of the solution in terms of cutting off the valve or the 
resources that goes into the Haqqani network?
    When you could put a halt immediately on U.S. aid into 
those areas, that would be the most direct and swift way to put 
an end to the possibility of getting resources towards--for 
that type of extortion on U.S. contractors. But go ahead.
    Ms. Peters. And that is what I wrote in my testimony. I am 
often asked what the U.S. Government could do to affect the 
amount of money reaching the Haqqanis. And I always say that 
there is something we could do that would affect it tomorrow 
and that is stop the development and CERD aid that is pouring 
into those areas. It is well intentioned but it is not well 
monitored. We are putting too much money out there. And I think 
there is a very big risk that we are doing more harm than good, 
that we are fueling instability and funding the very 
adversaries that we seek to defeat.
    The trucking issue that you appropriately zero in on is 
trickier because we still need to supply our troops who are 
there. I would suggest that there is a far too complex a system 
of contracting and subcontracting and subcontracting of 
trucking companies, and we should find trusted entities that we 
work with who carry goods from Karachi to their end state 
sealed, where the payments get made into--where there is a 
capacity to follow the money instead of what we have now: Where 
we pay Pakistan's National Logistic Cell a lump sum every year 
and it is very hard to follow.
    There was an investigation, in fact, done by Pakistan's own 
Federal Board of Revenue into the container scandal that 
included--it was thousands of containers that went missing. So 
this is also a concern to certain parts of the Pakistani state, 
that they are not collecting revenue on a lot of the stuff that 
is moving across.
    Mr. Royce. Let me just make one observation. I have been up 
to the Northwest Frontier and in these areas around Peshawar 
and so forth. Our USAID employees do not go out because it is 
too dangerous for them. So the thesis that we are going to have 
effective monitoring is unrealistic. And that is why I think 
you get back to the other broader assumption that programs in 
these areas are going to be subject to extortion. And so the 
tougher decision is coming face to face with reality that this 
is providing tens of millions of dollars. The cause is a good 
cause, but it is not having the desired results, and therefore, 
we have to develop a different approach.
    I think the focus should be on the recommendations and the 
type of recommendations, Ms. Peters, that you made here today 
and that your colleagues here have made.
    I am going to go to Mr. Sherman, the ranking member, for 
his questions.
    Mr. Sherman. Thank you. A couple of comments. One is that 
we ought to be doing as much as we can to aid education in 
Pakistan and particularly to make sure that parents don't have 
to pay for the textbooks. If we pay for the textbooks, they may 
not be politically correct by U.S. standards but they won't 
have, you know, chapters in favor of extremist jihad.
    The second thing I will point out is that by having 85,000 
or more troops in Afghanistan, we require ourselves to have 
this huge logistical effort which means the enemy will live off 
our logistical effort. If we have fewer troops, we would have 
less logistics and hopefully much of that could be supplied 
through the northern route. We can't just look at what is the 
cheapest way to bring supplies into Afghanistan. If it costs 
150 percent as much to move them through Russia but we know 
that none of the money is going to the Haqqani network, every 
dollar that goes to the Haqqani network probably does us as 
much harm as $5 or $10 or $15.
    Ms. Peters, do you have any kind of rough pie graph as to 
where the Haqqani network gets its money? That is to say, they 
have got donations. They have got money coming in from the ISI 
and other elements of the Pakistani Government. They have got 
drugs. They have got a protection racket. Then they have got 
kidnappings for hire, and then they have things approaching 
legitimate businesses, where they are competing against those. 
Any idea what are the big elements there?
    Ms. Peters. My feeling is that the big sources of income 
are extortion, the construction and real estate operations that 
they run, and kidnapping. But that is my feeling. It is very, 
very hard to----
    Mr. Sherman. So it is not so much drugs or aid from the 
    Ms. Peters. I think the Taliban in the southwest earn a lot 
more money from narcotics than the Haqqanis do, although what 
is interesting about the Haqqani network is they appear to have 
gotten more involved in the business of importing precursor 
chemicals, specifically acetic anhydride, which I thought was 
very interesting and innovative of them because there is now 
such a glut of opium in parts of the south that per kilo the 
value of acetic anhydride is actually higher. So they actually 
earn more money----
    Mr. Sherman. What is that chemical used for?
    Ms. Peters. Acetic anhydride is the critical ingredient 
along with lime and hydrochloric acid and a few other 
ingredients to process raw opium into--lime and hydrochloric 
acid to take it up to a morphine base, more or less. I am 
simplifying a little bit. Acetic anhydride is critical----
    Mr. Sherman. So they got into the drug dealer's supplier?
    Ms. Peters. That is correct. Acetic anhydride is the 
critical element that turns it into crystal heroin, the most 
addictive and most valuable----
    Mr. Sherman. So what we are finding is being done in 
Pakistan and Afghanistan, not----
    Ms. Peters. The refineries are mostly in southern and 
southwest Afghanistan. Some of them are in eastern Afghanistan 
in the border areas. And we hear sporadic reports of refineries 
opening in the tribal areas. And some are up on the border 
between Iran and Turkey.
    Mr. Sherman. I got you. Now one thing that I think we were 
inadequately sensitive to throughout our involvement in 
Afghanistan is how it is absolutely unacceptable to Pakistan--
and naturally so--that Afghanistan would become a strategic 
enemy or a base for the Indian military. To what extent is 
Pakistan justifiably afraid that Karzai could be a strategic 
ally of India and a strategic enemy of Pakistan? And to what 
extent is there justifiable fear looking at the entire Kabul 
government as a whole?
    Does anybody have a comment? Mr. Dressler.
    Mr. Dressler. Congressman, I think it is overstated the 
extent that there is Indian influence in Afghanistan. I mean 
certainly they have diplomatic influence and----
    Mr. Sherman. Whatever influence they have will be 
multiplied by 10 in the minds of Pakistani generals. So we have 
to make sure it is a pretty low number.
    Mr. Dressler. Yeah. I mean, I don't expect that they will 
be mounting an invasion from Afghanistan into Pakistan. I think 
that is very far from reality. So that concern is unfounded. 
Certainly there is activity. And President Karzai, one of his 
strategies is to leverage all elements of regional competitors 
against each other. And that is simply what he is doing when it 
comes to----
    Mr. Sherman. So instead of assuring Pakistan that he is not 
an ally of India, he threatens Pakistan that maybe he will be?
    Mr. Dressler. [Nods yes.]
    Ms. Curtis. I don't think we should look at Afghanistan as 
a zero sum equation between Pakistan and India. We need to be 
looking at Afghanistan as becoming a stable country that will 
not serve as a safe haven for terrorists. And if you look at 
the kind of assistance that India is providing, there is a lot 
of humanitarian assistance. They have helped build the 
Parliament building. They are supporting democracy. These are 
    Mr. Sherman. I think we need to see this through the eyes 
of those concerned with Pakistani national security.
    Ms. Curtis. Okay. We can do that. But I don't think we have 
seen any evidence of efforts by India to directly undermine 
Pakistani national security. This is something that the 
Pakistanis fear. But I don't think that we should let U.S. 
policy be driven by Pakistani fear. I think we should point out 
that if Pakistan is worried about Afghanistan getting too close 
to India, then it needs to take steps to build its own 
relationship with Afghanistan because what Pakistan is doing, 
by supporting militants, it is not currying favor with the 
Afghan people. So if it wants to have a better relationship 
with Afghanistan, it needs to engage in normal state activities 
that allow that.
    Mr. Sherman. I think you are assuming that the average 
Afghani is on our side and not the Haqqani side. And I would 
very much like to believe that, and I am sure it is true of a 
large number of Afghans. But to say that they are not currying 
favor with the Afghan people ignores just how powerful the 
support network of the wrong side is in Afghanistan. Of course 
the Afghans we meet in our daily lives are all more reasonable 
than what you see on the ground.
    I think my time has expired.
    Mr. Royce. Thank you. Mr. Connolly from Virginia.
    Mr. Connolly. Mr. Chairman, I thank you. But let me just, 
if it is all right with the chair, I would be happy to yield to 
our colleague, Ms. Jackson Lee, if she has some questions at 
this point.
    Mr. Royce. Ms. Jackson Lee, go ahead.
    Ms. Jackson Lee. Mr. Connolly, thank you so very much for 
your courtesies. And let me thank the ranking member and the 
chairman for their courtesies as well. I think this is an 
important hearing. I apologize for being delayed somewhat in 
another hearing that we are addressing.
    Many of us are familiar with the Haqqani network, and 
certainly through the passage of legislation out of this 
committee, the criteria was set in place for the State 
Department to ultimately make a determination. But I want to 
pose several questions regarding the extension between the 
Pakistani people, the military brass, and the Haqqani network 
which I think is tied mostly to the intelligence agency.
    So my first question would be, do you not see any divide or 
any light between the network and some of the military brass in 
the Pakistani military service? Second, are you suggesting that 
the Haqqani network is representative of the people of Pakistan 
and that there are not some viable routes of collaboration with 
the United States and opportunities for mutual cooperation? And 
third, are you aware that in spite of the obstacles that the 
present Pakistani Government has to overcome--and that is 
living in a very dangerous neighborhood and a very challenging 
climate--are you aware of the recent engagement that Pakistan 
has had with India opening up new trade routes, opening up 
cooperation, India becoming one of the major trading partners 
for Pakistan and actually evidencing some real desire for that 
country to tend to the business of normalization so that--is 
there not some divide or light between the Haqqani network and 
Pakistan? What happens is that they are interpreted as the 
same. When you take a broad brush, I think it is unfair. As 
Americans, we never are reminded of the fact that Pakistan 
stood alongside of us in the 20-year war, as I understand, 
against Russia's presence in Afghanistan. So I would like to 
save Pakistan. And I don't argue with the designation. But I do 
think we should be clear that there is some distinctions.
    So those who are on the panel can respond to the questions. 
Thank you for your testimony.
    Ms. Peters. Ma'am, I thank you for your comments. I have 
spent a lot of my adult life living in Pakistan among the 
Pakistani people. And I have a great deal of affection for that 
country and for the communities there, particularly in the 
border areas. There is a huge divide between the communities 
and these very violent and thuggish and criminalized forces 
that are wreaking havoc on the people. I met with a group of 
businessmen in fact from North Waziristan last year in Dubai 
who were asking me about the reconciliation strategy and said, 
why are you speaking to the Haqqanis? Why is your government 
trying to talk to them? Why don't you come and speak to us? We 
are the doctors and the lawyers and the educated people from 
the border areas. We would like to reconcile with you and be 
partners with you. And that is a strong feeling I have from 
across Pakistan, that the people are by and large moderate, 
that they want to be friends with us and other countries around 
the world. I would even go so far as to say that that is true 
of a lot of people within Pakistan's bureaucracy and even their 
military and intelligence services. Like our military and 
intelligence services and bureaucracies, there are a lot of 
different groups and they don't always get along.
    Increasingly, public polling has showed that public support 
for militancy has plummeted in recent years because of the 
widespread terrorist violence, the kidnapping that is going on, 
the criminal activities that these organizations engage in. I 
am not saying that the United States has become wildly popular. 
However, there is certainly no love lost for the militants in 
that part of the world. I also think that public polling and 
surveys show that people on both sides of the Line of Control--
people in India and Pakistan--would like to see more economic 
cooperation, like the trade agreement that you speak of. They 
would like to see their region become sort of like a South 
Asian ASEAN, if I could put it that way.
    This is one of the most populous regions in the world with 
a lot of cultural affinity because it used to be, of course, 
one country. And I think that there is a way forward. And I 
personally hope that we can go down that road in the next 
    Ms. Jackson Lee. Anyone else? Thank you very much.
    And would you include in your answer whether or not our 
actions should be punitive against the people in the government 
in light of your comments, Ms. Peters?
    Ms. Peters. My feeling is----
    Ms. Jackson Lee. No. Let me get a response from Mr. 
Dressler and Ms. Curtis. If we have time, Ms. Peters, I would 
love to hear you because you have lived among them.
    Mr. Dressler. I think it is a fair point. It absolutely 
should not be punitive against the Pakistani people. I think 
the problem is that there are a select few who are not allowing 
the Pakistani people to rise up against these groups to voice 
their opinions and to basically say, look, we don't agree with 
this policy of having a terrorist safe haven in North 
Waziristan for a variety of groups.
    And your point about the Pakistan-India relationship 
potentially getting better is a great one but it is one that is 
directly undermined by elements of the security services' 
support for groups like Lashkar-e-Taiba and others.
    So I would just echo Ms. Peters' comments about the 
Pakistani populace. It is really not about punishing them. It 
is about encouraging or compelling elements of the security 
services to cease their support and facilitation for these 
    Ms. Jackson Lee. Ms. Curtis.
    Ms. Curtis. Yes. I agree wholeheartedly with what Mr. 
Dressler just said. And I would just add that I bet if you talk 
to most Pakistanis, they would actually support this 
designation of the Haqqani network as a terrorist organization 
because they realize the threat that this network poses to 
their country.
    And here I would like to quote Asma Jahangir. She is a well 
known human rights defender in Pakistan. And just about a month 
ago, she exhorted her fellow countrymen in an article to 
fully--and I am quoting here--``fully comprehend, admit and 
face up to the challenges thrown at the country by militant 
non-state networks,'' noting that the country's leaders were 
conceding territorial and political ground to jihadis of all 
types and nationalities. So clearly there are many Pakistani 
people who do not support these militant networks, who would 
like to see their country more stable in confronting these 
    So I think you are absolutely right. We should not be 
penalizing the Pakistani people. We should be engaging, trying 
to build a relationship but at the same time trying to make 
sure that those linkages between some elements of the Pakistani 
state and militant nonstate networks are broken.
    Ms. Jackson Lee. Mr. Chairman, may I just conclude, I 
didn't know whether you would indulge Ms. Peters. I don't know 
if she has something different to say from these two. I cut you 
off, and I didn't know if you had something different to say.
    Ms. Peters. No. I agree broadly with what they have said.
    Ms. Jackson Lee. Mr. Chairman, if I might just conclude. 
And thank you for your courtesies.
    I co-chair the Pakistan Caucus. And the only thing I would 
like to say to this committee, I agree with the designation of 
the Haqqani network and do believe there are elements in the 
ISI and others. But it would be wrong for us to disengage with 
Pakistan. People are more than desirous of a legitimate 
democratic country but, more importantly, a relationship I 
believe with the United States. We have got to find a way to be 
collaborative on this war on terror.
    I thank the chairman very much and I yield back.
    Mr. Royce. Thank you.
    Ms. Jackson Lee. And I thank the gentleman from Virginia.
    Mr. Royce. Thank you, Congresswoman Jackson Lee. We now to 
Congressman Connolly from Virginia.
    Mr. Connolly. Thank you, Mr. Chairman. And again thank you 
to our panelists for being here.
    A real quick question, Ms. Peters, and a follow-up to your 
answer to Mr. Sherman on the heroin question. That is obviously 
a major source of the financing for the Haqqani network--by the 
way, ironically, some of it--a lot of it coming from Iran which 
has, I guess, the largest number of heroin addicts in the 
    Ms. Peters. Opium addicts.
    Mr. Connolly. Opium. Excuse me. And the United States and 
Iran actually might have something in common there, the desire 
to fight the traffic.
    Ms. Peters. Yes. That is correct.
    Mr. Connolly. What other sources of financing does the 
Haqqani network have externally?
    Ms. Peters. External sources?
    Mr. Connolly. Externally.
    Ms. Peters. Well, they partner with a number of import-
export operations that extend as far away as South Africa and 
that are sort of located throughout the Gulf. They have 
fundraising operations throughout the Gulf states and the 
    Mr. Connolly. Are they receiving direct funding from 
states? For example----
    Ms. Peters. I believe they continue to receive direct 
funding and certain types of logistical support from parts of 
the ISI. I also believe that the Haqqanis are helping to----
    Mr. Connolly. What about Iran?
    Ms. Peters. Well, I was just going to say, I believe that--
it is known that there is a growing operation to bring Iranian 
dinars and other regional currency, Saudi rials, Emerati dinars 
into southeastern Afghanistan to flip them on the hawala 
markets, flip them in the money exchange markets into U.S. 
dollars because there is a wealth of dollars. And I have 
received multiple reports during the course of my research that 
Haqqani operatives act as gunmen protecting those convoys with 
cash that are coming through.
    Mr. Connolly. Thank you. Mr. Chairman, I think as a follow-
up to this hearing, one of the things we are going to have to 
be in touch with the State Department about is, now that it has 
been accorded an FTO, we need to be looking at sources of 
financing, especially if they involve other sovereign states 
directly or indirectly.
    Mr. Dressler--and maybe Ms. Curtis--what should we 
understand about the relationship between the ISI and the 
Haqqani network? And to what extent should we hold the 
Pakistani Government qua-government responsible for that 
relationship of protection?
    Mr. Dressler. Sir that is an excellent question. I think 
just to piggyback on Ms. Peters' answer about the financing, 
you are coming up into the Hajj year toward the end of October 
and you can bet that there will be Haqqani network 
representatives there fundraising and collecting money. So this 
is really a time-sensitive issue as well.
    Mr. Connolly. When you say ``there,'' you mean Mecca, 
    Mr. Dressler. Correct. In terms of holding the Pakistani 
Government responsible, you really have to look at the 
relationship between the Pakistani Government, the PPP 
government and the military and who controls what and who has 
influence over whom. When you peel back that relationship, I 
think it becomes pretty clear that the PPP government is 
probably fairly limited in terms of what they can do against 
the Haqqani network. When it comes to the relationship between 
elements of the ISI and the Haqqani network, it really runs the 
gamut. I think there is current and retired is typically the 
way that you hear it phrased in the media. And in a classified 
hearing, you could probably get you know perhaps a little bit 
better fidelity on that relationship. But sufficient to say 
that there is an element of support there that has endured over 
the past 30 years, as Gretchen mentioned in her testimony. This 
is a longstanding relationship. And as long as the Haqqanis are 
roughly pursuing the same objectives in Afghanistan as the 
Pakistani security services then that relationship will 
continue unless somebody forces it to be broken.
    Mr. Connolly. Ms. Curtis.
    Ms. Curtis. So as Ms. Peters pointed out, the ISI doesn't 
have complete control over the network but at the same time the 
network could simply not survive if the Pakistanis were to 
crack down. And if there is any organization in the world that 
can influence the Haqqani network, it is the Pakistan 
intelligence service. So I think that even if they don't have 
complete control----
    Mr. Connolly. You will forgive me, Ms. Curtis. But I think 
that is being overly generous. The fact of the matter is, the 
Haqqani network operates with impunity in certain parts of 
Pakistan with the absolute knowledge of the ISI, in fact 
arguably with their protection. They are not under house 
arrest, right?
    Ms. Curtis. That is right.
    Mr. Connolly. So it is an open secret what is going on. And 
the real proposition--I guess the question I am asking--and I 
understand that it is difficult--but presumably, there is one 
government. And if we want to accept the proposition that while 
in the case of Pakistan, it is a multiheaded hydra and what can 
we do, then we are going to have to accept the proposition, 
which I find unacceptable, that the Haqqani network is going to 
continue to operate with impunity in Pakistan and across the 
border with the protection of an arm of the Pakistani 
Government. It seems to me we have to wrestle that issue to the 
ground if this relationship with the Government of Pakistan is 
to proceed in any kind of healthy normal fashion. It is an 
unacceptable proposition to our Government and ought to be. And 
I think we have just made it even less acceptable with this 
long desired designation.
    And that is really what I am asking you to respond to. You 
can certainly disagree with my proposition if you wish. But 
from my point of view, there are some serious truths here that 
have to be dealt with.
    Does anyone on our panel take issue with my 
characterization that the Haqqani network operates with 
impunity inside Pakistan and across the border and with the 
protection of the ISI?
    Ms. Curtis. No, sir. I agree with you.
    Mr. Dressler. I don't take issue with that either, sir.
    Ms. Peters. I don't take issue with that either. I think 
the relationship is not always smooth but----
    Mr. Connolly. I have been married 36 years. My relationship 
isn't always smooth.
    Ms. Peters. Exactly. It is like a marriage.
    Mr. Connolly. I appreciate the point. But yeah. But one 
final question, if I may, Mr. Chairman. What is your 
understanding--given the fact that we are drawing down from 
Afghanistan and the fact that we had the attack in Kabul, 
active participation by Haqqani, what does it mean once we are 
gone in Afghanistan in terms of the broad playing field for 
Haqqani and what we might expect from them in the Afghan 
    Mr. Dressler. Just briefly, sir, I think the concern is 
that the Haqqani network, the threat from the network inside of 
Afghanistan is not sufficiently addressed either by us or that 
the Afghan security forces are not capable of addressing the 
threat and that it grows and it spreads as it currently is and 
that at that point these relationships that persist in North 
Waziristan will eventually make its way even in greater 
strength than it currently is in Afghanistan so you will have 
safe havens in Afghanistan with al-Qaeda. So basically 
replicating what you see in North Waziristan throughout areas 
of Afghanistan.
    So it is a fair point, and I think a counterterrorism 
footprint after 2014 certainly is a start. But whether or not 
it is going to be sufficient is a difficult question. There is 
ISR, a lot of other things that need to be there. And it is 
very difficult to retake a district center with a fighter plane 
or something like that. So I mean it is a concern for sure.
    Mr. Connolly. Mr. Chairman, thank you.
    Mr. Royce. Thank you, Mr. Connolly. We want to thank our 
witnesses for coming down and giving their testimony today. We 
are going to be following up with you on some of the 
suggestions that you made today at this hearing.
    Our hearing stands adjourned.
    [Whereupon, at 4 o'clock p.m., the subcommittee was 


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     Material Submitted for the Hearing RecordNotice deg.