Mfr Nara- T4- Dos- Grappo Gary A- 10-30-03- 00585

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Memorandum

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Event: Interview of Gary A. Grappo Type of Event: Witness Interview Date: 10/30/03 Date memo prepared: 10/31/03 Special Access Issues: None Prepared by: Serena Wille Team Number: 4 Location: 9-1 I Commission Classification: Setl et Participants - State: Gary Grappo, 10 Brooks, Esq. Participants-Commission: J. Roth, S. Wille On October 30,2003, we interviewed Gary Grappo, Director, Office of Regional and Economic Affairs (REA), Bureau of Near Eastern Affairs (NEA), State Department, for approximately 2 Y2 hours. This memorandum provides a summary of what we . consider the most important points covered in the interview, but is not a verbatim account. The memorandum is organized by subject and does not necessarily follow the order of the interview. All information in this memorandum was provided by Grappo during the interview unless explicitly stated or indicated otherwise . Grappo held the position of Director, REA, from July 2001 through October 31, 2003. His new assignment, beginning November 1,2003, is as DCM, Riyadh, Saudi Arabia. Grappo began his State Department career in 1985 and was initially posted to Nicaragua ('85-'87), Portugal ('87-'90), and the Soviet desk in DC ('90-'92) .. After a special 7ili floor assignment from '92-'93 and Arabic language training from '93-'95, Grappo spent three years in Jordan as the economic counselor ('95-'98) and three years in Muscat, Oman as the DCM ('98-01). Organizational

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Grappo described REA as the office in NEA where all the "random" issues, i.e., issues not specific to anyone country, end up. NEA covers the region of Northern Africa from Morocco to Egypt (excluding Sudan), the Arabian peninsula, the Levant, Iraq, and Iran. The bureau does not cover Turkey. REA covers such issues as the multinational force in Sinai, regional economic and commercial affairs, human rights, environmental, narcotics, human trafficking, counterterrorism, and the like. (U) Prior to 9111, Grappo does not believe the office did much on terrorist financing although it was involved in money laundering, which was treated like any other economic issues. Grappo does not recall doing anything on terrorist financing for the two or so months after his arrival and before 9/11. From 9/11 - MaylJune 2002 Grappo spent about 80% of his time on counterterrorism, the vast majority of which was on counterterrorist financing (CfF). His deputy, Lee Litzenberger, also spent most of his

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,.SECRET time on CTF. In the summer of2002 NEA's approach to counterterrorist financing transitioned from a regional one to a country-specific one and the work was shifted from REA to the country desk officers. Middle Eastern countries were being dealt with on an individual basis and programs and policies were tailored to a single country. Grappo's involvement with counterterrorist financing dropped to about 10% and consisted of addressing broader issues (e.g., how does the EU deal with the Middle East on terrorist financing) or answering his colleagues' questions. At this point Lee Litzenberger and Patrick Hafeman (sp?), an economic officer at NEA, were the main point people in NEA oil counterterrorist financing. ~ After initial interagency meetings immediately post-9/11 at the NSC, the interagency responsibility shifted to Treasury with David Aufhauser (GC, Treasury) as the head of the NSC's PCC on terrorist financing (PCC). Within the State Department, the issue was recognized as broader than the Middle East and therefore the Office of Economic and Business Affairs (EB) took the lead on CTF and Tony Wayne (AJS, EB) served as the main State representative. It was clear that EB would work with and lean on both Office of the Coordinator for Counterterrorism (S/CT) and NEA. Grapponoted that there was a great deal of coordination and cooperation among EB, S/CT, and NEA on the issue of terrorist financing. Wayne took Grappo to those PCC meetings when the Middle East was discussed, which was most of the time. Rarely, DAS Jim Larocco or AlS Bill Bums (both ofNEA) would attend in lieu of Grappo. Grappo noted that his office never did anything on terrorist financing without first consulting Frank Taylor, the Coordinator for Counterterrorism and his folks at S/CT. ~ Interagency Policy and Issues

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Grappo acknowledged that he USG does not presently have enough resources devoted to this issue. The intensity of the issues is such that a single individual cannot both train other countries and investigate the issues. (U)

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• Grappo led the first interagency group to Saudi Arabia in December 2001. I His trip followed upon a trip by AlS Bill Bums in November 2001, at which time Bums delivered a list of general and specific questions to the Saudi government regarding terrorist financing. Bums reported to Orappo that the Crown Prince had encouraged the USO to send over a working group. I

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Grappo's

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deputy, Lee Litzenberger,

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went on all the other trips.

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