A major CIA effort launched last year to hunt down Osama bin Laden has produced no significant leads on his whereabouts, but has helped track an alarming increase in the movement of Al Qaeda operatives and money into Pakistan’s tribal territories, according to senior U.S. intelligence officials familiar with the operation.

In one of the most troubling trends, U.S. officials said that Al Qaeda’s command base in Pakistan is increasingly being funded by cash coming out of Iraq, where the terrorist network’s operatives are raising substantial sums from donations to the anti-American insurgency as well as kidnappings of wealthy Iraqis and other criminal activity.

The influx of money has bolstered Al Qaeda’s leadership ranks at a time when the core command is regrouping and reasserting influence over its far-flung network. The trend also signals a reversal in the traditional flow of Al Qaeda funds, with the network’s leadership surviving to a large extent on money coming in from its most profitable franchise, rather than distributing funds from headquarters to distant cells.

Al Qaeda’s efforts were aided, intelligence officials said, by Pakistan’s withdrawal in September of tens of thousands of troops from the tribal areas along the Afghanistan border where Bin Laden and his top deputy, Ayman Zawahiri, are believed to be hiding.


Little more than a year ago, Al Qaeda’s core command was thought to be in a financial crunch. But U.S. officials said cash shipped from Iraq has eased those troubles.

“Iraq is a big moneymaker for them,” said a senior U.S. counter-terrorism official.

The evolving picture of Al Qaeda’s finances is based in part on intelligence from an aggressive effort launched last year to intensify the pressure on Bin Laden and his senior deputies.

As part of a so-called surge in personnel, the CIA deployed as many as 50 clandestine operatives to Pakistan and Afghanistan -- a dramatic increase over the number of CIA case officers permanently stationed in those countries. All of the new arrivals were given the primary objective of finding what counter-terrorism officials call “HVT1" and “HVT2.” Those “high value target” designations refer to Bin Laden and Zawahiri.


The surge was part of a broader shake-up at the CIA designed to refocus on the hunt for Bin Laden, officials said. One former high-ranking agency official said the CIA had formed a task force that involved officials from all four directorates at the agency, including analysts, scientists and technical experts, as well as covert operators.

The officials were charged with reinvigorating a search that had atrophied when some U.S. intelligence assets and special forces teams were pulled out of Afghanistan in 2002 to prepare for the war with Iraq.

Arduous search

Nevertheless, U.S. intelligence and military officials said, the surge has yet to produce a single lead on Bin Laden’s or Zawahiri’s location that could be substantiated.


“We’re not any closer,” said a senior U.S. military official who monitors the intelligence on the hunt for Bin Laden.

The lack of progress underscores the difficulty of the search more than five years after the Sept. 11 attacks. Despite a $25-million U.S. reward, current and former intelligence officials said, the United States has not had a lead on Bin Laden since he fled American and Afghan forces in the Tora Bora region of Afghanistan in early 2002.

“We’ve had no significant report of him being anywhere,” said a former senior CIA official who, like others interviewed for this article, spoke on condition of anonymity when discussing U.S. intelligence operations. U.S. spy agencies have not even had information that “you could validate historically,” the official said, meaning a tip on a previous Bin Laden location that could subsequently be verified.

President Bush is given detailed presentations on the hunt’s progress every two to four months, in addition to routine counter-terrorism briefings, intelligence officials said.


The presentations include “complex schematics, search patterns, what we’re doing, where the Predator flies,” said one participant, referring to flights by unmanned airplanes used in the search. The CIA has even used sand models to illustrate the topography of the mountainous terrain where Bin Laden is believed to be hiding.

Still, officials said, they have been unable to answer the basic question of whether they are getting closer to their target.

“Any prediction on when we’re going to get him is just ridiculous,” said the senior U.S. counter-terrorism official. “It could be a year from now or the Pakistanis could be in the process of getting him right now.”

In a written response to questions from The Times, the CIA said it “does not as a rule discuss publicly the details of clandestine operations,” but acknowledged it had stepped up operations against Bin Laden and defended their effectiveness.


“The surge has been modest in size, here and overseas, but has added new skills and fresh thinking to the fight against a resilient and adaptive foe,” CIA spokesman Paul Gimigliano said in the statement. “It has paid off, generating more information about Al Qaeda and helping take terrorists off the street.”

The CIA spies are part of a broader espionage arsenal aimed at Bin Laden and Zawahiri that includes satellites, electronic eavesdropping stations and the unmanned airplanes.

Pakistan pullout

Current and former U.S. intelligence officials involved in the surge said it had been hobbled by a number of other developments. Chief among them, they said, was Pakistan’s troop pullout last year from border regions where the hunt has been focused.


Just months after the CIA deployed dozens of additional operatives to its station in Islamabad -- as well as bases in Peshawar and other locations -- Pakistani President Pervez Musharraf announced “peace agreements” with tribal leaders in Waziristan.

Driven by domestic political pressures and rising anti-American sentiment, the agreements called for the tribes to rein in the activities of foreign fighters, and bar them from launching attacks in Afghanistan, in exchange for a Pakistani military pullback.

But U.S. officials said there was little evidence that the tribal groups had followed through.

“Everything was undermined by the so-called peace agreement in north Waziristan,” said a senior U.S. intelligence official responsible for overseeing counter-terrorism operations. “Of all the things that work against us in the global war on terror, that’s the most damaging development. The one thing Al Qaeda needs to plan an attack is a relatively safe place to operate.”


Some in the administration initially expressed concern over the Pakistani move, but Bush later praised it, following a White House meeting with Musharraf.

The pullback took significant pressure off Al Qaeda leaders and the tribal groups protecting them. It also made travel easier for operatives migrating to Pakistan after taking part in the insurgency in Iraq.

Some of these veterans are leading training at newly established camps, and are positioned to become the “next generation of leadership” in the organization, said the former senior CIA official.

“Al Qaeda is dependent on a lot of leaders coming out of Iraq for its own viability,” said the former official, who recently left the agency. “It’s these sorts of guys who carry out operations.”


The former official added that the resurgent Taliban forces in Afghanistan are “being schooled” by Al Qaeda operatives with experience fighting U.S. forces in Iraq.

The administration’s concern was underscored when Vice President Dick Cheney and Deputy CIA Director Stephen Kappes visited Musharraf in Pakistan in February to prod him to crack down on Al Qaeda and its training camps.

The Pakistani pullback also has reopened financial channels that had been constricted by the military presence.

The senior U.S. counter-terrorism official said there were “lots of indications they can move people in and out easier,” and that operatives from Iraq often bring cash.


“A year ago we were saying they were having serious money problems,” the official said. “That seems to have eased up.”

The cash is mainly U.S. currency in relatively modest sums -- tens of thousands of dollars. The scale of the payments suggests the money is not meant for funding elaborate terrorist plots, but instead for covering the day-to-day costs of Al Qaeda’s command: paying off tribal leaders, hiring security and buying provisions.

Contributors mobilized

Al Qaeda in Mesopotamia, as the network’s Iraq branch is known, has drawn increasingly large contributions from elsewhere in the Muslim world -- largely because the fight against U.S. forces has mobilized donors across the Middle East, officials said.


“Success in Iraq and Afghanistan is the reason people are contributing again, with money and private contributions coming back in from the Gulf,” said the senior U.S. counter-terrorism official. He added that Al Qaeda in Mesopotamia also has become an effective criminal enterprise.

“The insurgents have great businesses they run: stealing cars, kidnapping people, protection money,” the counter-terrorism official said. The former CIA official said the activity is so extensive that the “ransom-for-profit business in Iraq reminds me of Colombia and Mexico in the 1980s and ‘90s.”

U.S. officials got a glimpse of the Al Qaeda leadership’s financial dependency when American forces intercepted a lengthy letter Zawahiri sent to now-deceased Iraq insurgent leader Abu Musab Zarqawi in 2005. In the letter, Zawahiri alluded to financial difficulties, saying “the lines have been cut off,” and asked Zarqawi for fresh funds.

“We need a payment while new lines are being opened,” Zawahiri wrote, according to a translation released publicly by the U.S. government. “So, if you’re capable of sending a payment of approximately one hundred thousand, we’ll be very grateful to you.”


The payments appear to have given Al Qaeda leaders in Iraq new influence in the organization, officials said. In particular, officials noted that Zawahiri appears to have abandoned his effort to persuade Sunni Arab insurgents not to divide Muslims by striking Shiites, and has more recently moved closer to sanctioning such bloodshed.

U.S. officials believe they had Zawahiri in their sights on at least one occasion. Acting on reports that Zawahiri was to attend an Al Qaeda gathering in a remote village in northwest Pakistan in January 2006, the CIA launched a missile strike on the compound, missing Zawahiri but killing a senior Al Qaeda operations commander. U.S. officials believe Zawahiri changed plans at the last minute.

Within months of that strike, the CIA began sending dozens of additional case officers to Afghanistan and Pakistan.

The impetus for the surge is unclear. Several former CIA officials said it was launched at the direction of former CIA Director Porter J. Goss, and that the White House had been pushing the agency to step up the effort to find Bin Laden.


But the CIA disputed those accounts, saying in its written statement that “this initiative was and is driven solely by operational considerations.” The effort, according to CIA spokesman Gimigliano, grew out of an assessment in mid-2005 in which “the agency itself identified changes in the operational landscape against Al Qaeda.”

Several months before the surge, the CIA disbanded a special unit known as “Alec Station” that had led the search for Bin Laden. At the time, the move was seen as a sign that the hunt was being downgraded, but officials said it was a prelude to a broader reorganization.

The surge included what one former CIA official described as a “new breed” of spy developed since the Sept. 11 attacks. These so-called “targeting officers” are given a blend of analytic and operational training to become specialists in sifting clues to the locations of high-value fugitives.

The CIA’s ability to send spies into the tribal region is limited, officials said.


“We can’t go into the tribal areas without protection,” said the former CIA official who was involved in the planning of the surge. “For the most part they have to travel with [the Pakistan intelligence service] and their footprint is not small because they’re worried about getting shot too.”

Instead, the effort is designed to cultivate sources in the outer perimeters of the security networks that guard Bin Laden, and gradually work inward.

The aim, another former CIA official said, is “to find people who had access to people who had access to his movements. It’s pretty basic stuff.”

greg.miller@latimes.com