Why the U.S. Sounded the Bank Alarm

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Security czar Tom Ridge: In the end, Abu Zubaydah's threat couldn't be ignored

Abu Zubaydah, the master Al Qaeda strategist wounded and captured in a gunfight in Pakistan last month, has made it abundantly clear to the American military and intelligence personnel who visit his hospital bed that "he isn't a big fan of ours," a U.S. official says sardonically. So last week, when the Palestinian fanatic, on the mend at a secret U.S. facility overseas, declared that among the next targets of Osama Bin Laden's terror cells would be U.S. banks along the Eastern seaboard, the Americans were inclined to wonder if he was merely taunting them. "He's a smart guy," says one US official familiar with Zubaydah's remarks. "If he could screw with our heads, he probably would."

Nevertheless, when the interrogators' report reached official Washington overnight Wednesday it prompted a series of White House meetings and secure teleconferences among top Bush appointees, including Attorney General John Ashcroft, Treasury Secretary Paul O'Neill, CIA director George Tenet and homeland security director Tom Ridge, as well as senior career officials at the Pentagon, FBI and CIA. (FBI director Bob Mueller was in San Francisco; executive assistant director Dale Watson and counter-terrorism division chief Pat D'Amuro represented the FBI at the White House sessions.)

Skepticism of Abu Zubaydah's motives still ran deep, with officials debating, as one put it, "How do you we know he's not just jerking us around? You can make a case either way." Moreover, the banking community wouldn't take kindly to a yet another warning. One issued the previous Monday and based on a hoax perpetrated by a Dutch teenager, had shut some banks' doors.

On the other hand, while Zubaydah had made vague allusions to other potential attacks against the West, his only specific reference was a threat to banks in the Northeastern U.S. And the notion of attacking banks was bolstered, says an official, by "cryptic references to banks" gleaned by U.S. intelligence from separate, highly sensitive sources focused on Al Qaeda networks. Also, on Wednesday, April 17, the Middle East Broadcast Corp. broadcast a new videotape of Osama Bin Laden in which he gloated over the damage done to the U.S. stock market and economy by the September 11 attacks.

Finally, the officials had to take into account the fact that over the next week, the streets near the World Bank and International Monetary Fund buildings in downtown Washington would teem with anti-globalism activists protesting the organizations' spring meetings. What if a few Al Qaeda operatives managed to infiltrate the crowds and set off explosions near the international lending agencies or other financial institutions? There was no intelligence that such a plot was in the offing, but it was plausible enough that no one could guarantee that it wasn't.

Top administration hands went "round and round", says one, all day Thursday and into Friday morning, "These kind of things are not done lightly or taken lightly," says an official. "You don't know whether you're playing into the hands of somebody's who's gaming you."

In the end, a compromise was struck. The FBI would issue an alert carefully hedged with disclaimers about the sources' credibility and lack of specific targets and timing. The color of the alert level would stay where it was, at "yellow." Despite these precautions, the warning, issued about 1:30 p.m. Friday, cast a pall over the stock market during afternoon trading and provoked more complaints about vague, useless security warnings.

This may not be the last scramble Abu Zubaydah sets in motion. He is said to be recovering nicely from multiple gunshot wounds, suffered as he tried to escape a strike force of Pakistani security officers, supported by FBI and CIA personnel who had tracked him to Faisalabad in central Pakistan.

"He is receiving excellent medical care," says an official. He's said to be surly but willing to engage with the Americans holding him. Why? U.S. officials insist he's not being subjected to duress and is not heavily drugged. Still, "we have our ways," one official says.

But so does Abu Zubaydah.