US Treasury takes on terrorism: Non-kinetic warfare that works


America’s foreign policy challenges are mounting. From North Korea and Iran to ISIS and Russia, the news cycle churns with reports of new threats and new concerns.

President Donald Trump has called for an increase in defense spending. Congress went even further than Trump expected, in recognition of the challenges that lie ahead. But somehow, Congress and the administration may be poised to cut funds from an office on the front line of America’s most important battles: the U.S. Treasury.

{mosads}Treasury’s Office of Terrorism and Financial Intelligence (TFI) has been the non-kinetic first response of the last three presidents when faced with a new crisis. TFI wields a variety of financial national security tools, from targeted sanctions on individuals and companies to broader punishments on banks and jurisdictions. Presidents Bush, Obama and Trump have all relied on these tools consistently, which has made TFI a crucial noncombatant command.

Sometimes TFI’s measures are a stopgap until new policies are formed, but oftentimes they become the strategy, itself. Consider TFI’s footprint today:

  • Tensions with North Korea are soaring. TFI has issued several tranches of sanctions aimed at Pyongyang’s ballistic missile program, proliferation networks and illicit finance mechanisms, with many more to come.
  • The Trump administration has a tough, new Iran strategy. TFI will figure prominently in that strategy, particularly after the designation of the Islamic Revolutionary Guard Corps, which controls roughly one-third of the Iranian economy, and other policies designed to halt Iran’s support for terrorism across the Middle East.
  • Meanwhile, the war against the Islamic State is entering a new phase where TFI figures to play a key role. Sure, the so-called Caliphate is collapsing, but the terrorists are now scattering across the globe, making the interconnected global web of funding channels more crucial to shut down than ever.

Yet, right as TFI gets set to fight these crucial battles, its funding may be cut. In fiscal year 2017, the office had 421 employees with a budget of $123 million. The new 2018 budget has the office slated to shrink to 386 employees, with a budget of $116 million.

Of course, $116 is not chump change. But now is not the time to scale back on TFI funding or manpower. Not while there is still a chance of gaining financial leverage on some of these nasty actors.

Treasury’s new undersecretary for TFI, Sigal Mandelker, is slated to appear before the House Financial Services Committee’s subcommittee on Terrorism and Illicit Finance on November 8. Legislators will get an unclassified account of the strategies that TFI is set to deploy on a range of tough issues. And even if the sensitive issue of the budget is not discussed, the challenges of significantly ramping up the sanctions programs on Iran and North Korea with fewer resources should become abundantly clear, given the hard work that lies ahead.

Treasury’s task is even harder in the wake of congressional sanctions on actors like Hezbollah and Russia. Those sanctions are incredibly important to our national security interests, but have unintentionally burdened TFI with additional paperwork that figures to draw analysts away from their core job of targeting America’s enemies with sanctions.

Even if the subcommittee sees fit to allocate some additional funds to TFI after next week’s hearing, the battle will not be over. Treasury will then need to make its case to the Office of Management and Budget (OMB), the White House office that holds the purse strings and oversees Trump’s efforts to streamline our bloated bureaucracy.

OMB’s job is not easy. Paring back the federal government is long overdue, and there are 4 trillion reasons to cut funds wherever and whenever possible. That even includes some of the offices involved in sanctions, such as the Coordinator for Sanctions Policy office, which was cut by Secretary of State Rex Tillerson in a State Department overhaul (with sanctions responsibilities now being absorbed by the Office of Policy Planning).

But the White House can reduce federal waste without cutting across the board. Sanctions and other financial tools promise to play a crucial role in America’s foreign policy challenges for the foreseeable future. Now is not the time to cut corners on a program so vital to our national security.

Jonathan Schanzer, a former terrorism finance analyst at the U.S. Department of the Treasury, is senior vice president at Foundation for Defense of Democracies.

Tags Donald Trump Rex Tillerson
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