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Report: Iraq insurgency pays its own way

Story Highlights

• New York Times story says criminal activity, ransoms provide funding
• Information comes from classified government report, paper says
• White House does not confirm existence of report
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WASHINGTON (CNN) -- The insurgency in Iraq is financially self-sustaining, pulling in millions of dollars a year from illegal activities and ransom payments, The New York Times reported on its Web site Saturday.

The White House refused to confirm the existence of the classified report upon which the Times said it based its article.

The Times reported that groups responsible for insurgent and terrorist attacks raise $70 million to $200 million a year. As much as half of that comes from oil smuggling and other criminal activity such as counterfeiting, while as much as $36 million annually comes from ransoms paid by foreign governments in exchange for the release of kidnap victims. (Watch rockets launch from Sadr City Video)

The Times said the report was completed in June by an interagency government working group investigating the financing of insurgent groups in Iraq. The group's existence was confirmed to the Times by a Bush administration official, the newspaper reported. The newspaper said it obtained the report from American officials in Iraq.

The report concludes that the assets of former Iraqi President Saddam Hussein and his regime are no longer a significant source of funding for insurgent groups, at least partly because a U.S.-led international effort has frozen a large portion of those assets.

White House spokesman Alex Conant told CNN in a written statement he would not comment on classified documents. But, he said, "Our work with the Iraqi government to deter and disrupt illicit and terrorist financing is ongoing and goes hand-in-hand with the need to establish law and order in Iraq. This is an ongoing effort that brings with it challenges unique to the situation in Iraq -- especially given the use of a variety of practices [including kidnapping] to raise money."

The government, Conant said, "has been engaged in an unprecedented effort to cut off the funding of terrorism around the world since 9/11, with great disruptive effect. It is now harder, costlier and riskier for al Qaeda and like-minded terrorists to raise and move money around the world."

While he would not directly confirm the existence of the interagency group, Conant said the National Security Council coordinates U.S. efforts to address issues related to insurgent financing. "Our efforts in Iraq are led by CENTCOM and Treasury, with close participation and assistance from other departments and agencies."

The Times quoted several security and intelligence consultants who said the report's vagueness underscores how little the American intelligence community knows about Iraq's insurgency groups.

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The New York Times says Iraq's insurgents use crime and ransoms to fund bombings such as this one in Sadr City.

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