Despite controversy, CIA funds to Pakistan’s intelligence service deemed crucial

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WASHINGTON — The CIA has funneled hundreds of millions of
dollars to Pakistan’s intelligence service since the Sept. 11, 2001, attacks,
accounting for as much as one-third of the foreign spy agency’s annual budget,
current and former U.S. officials say.

The Inter-Services Intelligence agency also has collected
tens of millions of dollars through a classified CIA rewards program that pays
for the capture or killing of wanted militants, a clandestine counterpart to
the rewards publicly offered by the State Department, officials said.

The payments have triggered intense debate within the U.S.
government, officials said, because of long-standing suspicions that the ISI
continues to help Taliban extremists who undermine U.S. efforts in Afghanistan
and provide sanctuary to al-Qaida in Pakistan.

But U.S. officials have repeatedly opted to continue the
funding because the ISI’s assistance is considered critical: Almost every major
terrorist plot this decade has originated in Pakistan’s tribal belt, where ISI
informant networks are a primary source of intelligence.

The White House National Security Council “had this
debate every year,” said a former high-ranking U.S. intelligence official
involved in the discussions. Like others, the official spoke on condition of
anonymity because of the sensitivity of the subject. Despite deep misgivings
about the ISI, the official said, “there was no other game in town.”

The payments to Pakistan are authorized under a covert
program initially approved by then-President George W. Bush and continued under
President Barack Obama. The CIA declined to comment on the agency’s financial
ties to the ISI.

U.S. officials often tout U.S.-Pakistani intelligence
cooperation. But the extent of the financial underpinnings of that relationship
have never been publicly disclosed. The CIA payments are a hidden stream in a
much broader financial flow; the U.S. has given Pakistan more than $15 billion
over the past eight years in military support and civilian aid.

Congress recently approved an extra $1 billion a year to
help Pakistan stabilize its tribal belt at a time when Obama is considering
sending tens of thousands of additional troops to Afghanistan.

The ISI has used the covert CIA money for a range of
purposes, including the construction of a new headquarters in Islamabad. That
project pleased CIA officials because it replaced a structure considered
vulnerable to attack; it also eased fears that the U.S. money would end up in
the private bank accounts of ISI officials.

In fact, CIA officials were so worried the money would be
wasted that the agency’s station chief at the time, Robert Grenier, went to the
head of the ISI to extract a promise that it would be put to good use.

“What we didn’t want to happen was for this group of
generals in power at the time to just start putting it in their pockets or
building mansions in Dubai,” said a former CIA operative who served in
Islamabad.

Officials said the CIA has routinely brought ISI operatives
to a secret training facility in North Carolina, even as U.S. intelligence
analysts try to assess whether segments of the ISI have worked against U.S.
interests.

A report distributed in late 2007 by the National
Intelligence Council was characteristically conflicted on the question of ISI
ties to the Taliban, a relationship that traces back to Pakistan’s work with
Islamic militants to oust the Soviets from Afghanistan.

“Ultimately, the report said what all the other reports
said: that it was inconclusive,” said a former senior U.S. national
security official. “You definitely can find ISI officers doing things we
don’t like, but on the other hand you’ve got no smoking gun from command and
control that links them to the activities of the insurgents.”

Given the size of overt military and civilian aid payments
to Pakistan, CIA officials argue that their own disbursements — particularly
the bounties for suspected terrorists — should be considered a bargain.

“They gave us 600 to 700 people captured or dead,”
said one former senior CIA official who worked with the Pakistanis.
“Getting these guys off the street was a good thing, and it was a big
savings to (U.S.) taxpayers.”

A U.S. intelligence official said Pakistan has made
“decisive contributions to counterterrorism.” “They have people
dying almost every day,” the official said. “Sure, their interests
don’t always match up with ours. But things would be one hell of a lot worse if
the government there was hostile to us.”

The CIA also directs millions of dollars to other foreign
spy services. But the magnitude of the payments to the ISI reflect Pakistan’s
central role. The CIA depends on Pakistan’s cooperation to carry out missile
strikes by Predator drones that have killed dozens of extremists.

The ISI is a highly compartmentalized intelligence service,
with divisions that sometimes seem at odds with one another. Units that work
closely with the CIA are walled off from a highly secretive branch that has
directed insurgencies from Afghanistan to Kashmir.

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“There really are two ISIs,” the former CIA
operative said. “On the counterterrorism side, those guys were in
lock-step with us,” the former operative said. “And then there was
the ‘long-beard’ side. Those are the ones who created the Taliban and are
supporting groups like Haqqani.” The network led by Jalaluddin Haqqani has
been accused of carrying out a string of suicide attacks in Afghanistan,
including the 2008 bombing of the Indian Embassy in Kabul.

Pakistani leaders, offended by questions about their
commitment, point to their capture of high-value targets including accused
Sept. 11 organizer Khalid Shaikh Mohammed, as well as the price their spy
service has paid.

Militants hit an ISI base in Peshawar on Friday in an attack
that killed at least nine people. In May, a similar strike near an ISI facility
in Lahore killed more than 20 people. Gen. Ashfaq Kayani, who served as ISI
director before becoming military chief, has told U.S. officials that dozens of
ISI operatives have been killed in operations conducted at the behest of the
United States.

A one-time aide to former Secretary of State Condoleezza
Rice described a pointed exchange in which Kayani said his spies are no safer
than CIA agents when trying to infiltrate notoriously hostile Pashtun tribes.

“Madame Secretary, they call us all white men,”
Kayani said, according to the former aide.

CIA payments to the ISI can be traced back to the 1980s,
when the Pakistani agency managed the flow of money and weapons to the Afghan
mujahedin. That support slowed during the 1990s, after the Soviets were
expelled from Afghanistan, but increased after the Sept. 11 attacks.

In addition to bankrolling the ISI’s budget, the CIA created
a clandestine reward program that paid bounties for suspected terrorists. The
first check, for $10 million, was for the capture of Abu Zubaydah, a top
al-Qaida figure, the former official said. The ISI got $25 million more for
Mohammed’s capture.

But the CIA’s most-wanted list went beyond those widely
known names. “There were a lot of people I had never heard of, and they
were good for $1 million or more,” said a former CIA official who served
in Islamabad.

Former CIA Director George J. Tenet acknowledged the
bounties in a little-noticed section in his 2007 memoir. Sometimes, payments
were made with a dramatic flair.

“We would show up in someone’s office, offer our
thanks, and we would leave behind a briefcase full of $100 bills, sometimes
totaling more than a million in a single transaction,” Tenet wrote.

The CIA’s bounty program was conceived as a counterpart to
the Rewards for Justice program administered by the State Department. The rules
of that program render officials of foreign governments ineligible, making it
meaningless to intelligence services such as the ISI.

The rewards payments have slowed as the number of al-Qaida
operatives captured or killed by the ISI has declined. Many militants fled from
major cities where the ISI has a large presence to tribal regions patrolled by
Predator drones.

The CIA has set limits to how the money and rewards are
used. In particular, officials said the agency has refused to pay rewards to
the ISI for information used in Predator strikes.

U.S. officials were reluctant to give the ISI a financial
incentive to nominate targets, and feared doing so would lead the Pakistanis to
refrain from sharing other kinds of intelligence.

“It’s a fine line,” said a former senior U.S.
counterterrorism official involved in policy decisions on Pakistan. “You don’t
want to create perverse incentives that corrode the relationship.”

Via McClatchy-Tribune News Service.

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