Al Qaeda group is operating on ransom money from the West

WASHINGTON — Dominik Neubauer stared into the camera, the steel barrel of an assault rifle pointed at his head.

A Yemeni “tribe” had taken him hostage, the 26-year-old Austrian student said in English, a tear rolling down his left cheek. If they aren’t paid a ransom, he continued, “they will kill me seven days after this video is published.”

In May, three months after the video appeared on YouTube, Neubauer was freed along with a Finnish couple who had also been kidnapped near an Arabic language school in Sana, Yemen’s capital. Multimillion-dollar ransoms were paid for their release, Yemeni and Western officials said.

The three were seized not by a tribe but by Al Qaeda in the Arabian Peninsula, the officials said — the group that has been trying for years to blow up U.S. airliners and overthrow the Western-backed government in Yemen. The ransoms went into the group’s coffers, according to the officials.

Over the last two years, AQAP, as Western officials refer to the group, has extorted $20 million in ransom money, according to an estimate by Alistair Burt, who until this month was the top British diplomatic official for the Middle East.

If those payments continue, “AQAP’s attack capability in Yemen and against its friends and neighbors will only strengthen,” he said at a recent diplomatic meeting in New York. Kidnapping has become the group’s single largest source of funds, U.S. and European officials say.

Much of the money comes with the complicity of Western governments that have rebuffed British and American exhortations not to pay ransoms, the officials allege. The governments of Finland and Austria said they did not provide ransom money to terrorists. But two Western officials, speaking on condition of anonymity to avoid publicly criticizing allied governments, said that those denials are for public consumption and that the size of the ransoms shows government involvement.

The Al Qaeda affiliate’s leader, Naser Abdel-Karim Wahishi, boasted of the money his organization brings in through kidnappings in a May 2012 letter to leaders of an allied group in North Africa. The document was found by Associated Press reporters in Mali.

“Kidnapping hostages is an easy spoil, which I may describe as a profitable trade and a precious treasure,” the letter said.

“Thanks to Allah, most of the battle costs, if not all, were paid from through the spoils,” the letter said, adding that “almost half the spoils came from hostages.”

Ransom money helped fund the group’s 2011 effort to seize and hold towns in southern Yemen, U.S. and European officials say. The money went to pay militants and the families of the dead and also to provide social services and infrastructure, the officials said.

Al Qaeda in the Arabian Peninsula turned to kidnapping in part because of successful Western efforts to crack down on its traditional funding sources, including money transfers from wealthy Persian Gulf Arabs, U.S. intelligence officials say.

In a speech last year to the think tank Chatham House in London, David Cohen, the top U.S. Treasury official in charge of disrupting the finances of terrorist groups, acknowledged the “gut-wrenching dilemma” faced by governments that know payment of a few million dollars could save the life of a citizen.

“We acknowledge this dilemma — this tragic choice,” he said, “but believe that so many lives are at risk of terrorist violence around the globe that the equation tips decidedly in favor of a ‘no concessions’ policy.”

“What you are doing is fueling the group,” said a senior Western diplomat, who was not authorized to speak publicly. “AQAP, with its ability to bring down aircraft — it’s incredibly dangerous to start funding that.”

The better course, the official said, is to attempt a military rescue or work with the Yemeni government to find tribal allies who can help negotiate a hostage’s release.

The official acknowledged that in some cases that course can lead to hostages being killed.

The problem exists beyond Yemen. The Yemeni group modeled its kidnapping operations after the lucrative practices of Al Qaeda affiliates in North Africa and Nigeria, the official said.

In June, the Group of 8 — Britain, Canada, France, Germany, Italy, Japan, Russia and the U.S. — issued a statement saying its members “unequivocally reject the payment of ransoms to terrorists.”

If that policy holds up, it would mark a notable shift for some nations. In 2010, the French government arranged for $17 million to be paid to free French hostages seized at a uranium mine in Niger, Vicki Huddleston, the U.S. ambassador to Mali from 2002 to 2005, said in a television interview in February.

The next year, France secured the freedom of three French hostages seized in Yemen by paying a ransom to Al Qaeda in the Arabian Peninsula, the first major kidnapping ransom netted by the group, the Western official said.

Two Yemenis with knowledge of the case — one a source close to the militant group, the other a tribal figure who has negotiated kidnapping ransoms — said the sum was $9 million.

French President Francois Hollande has taken a tougher line than his predecessor and refused to pay ransom money, the Western official said. Four French hostages have been held for more than two years in northern Niger. A French Embassy spokesman said France does not pay terrorists.

U.S. and British officials believe that American and British citizens are less likely to be kidnapped than other Westerners because it’s known that their governments won’t pay ransoms or bow to other demands and may instead attempt a military rescue, officials said.

But there can be a terrible cost. In 2009, the Al Qaeda group in North Africa executed a British hostage, 61-year-old plumbing firm manager Edwin Dyer, seized in the middle of a vacation, after its demands for the release of a Jordanian extremist held by the British were rebuffed.

A German woman and a Swiss couple taken in the same kidnapping were freed. A $4-million ransom was paid, according to the Algerian newspaper El Khabar.

ken.dilanian@latimes.com

Special correspondent Shuaib Almosawa in Yemen contributed to this report.