The US Government has been warned that Saudi Arabia is turning a blind eye to fundraising for the al-Qaeda network of Saudi-born militant Osama Bin Laden.

A new report by a prominent foreign policy committee stresses that the US will not be able to win its war on terrorism unless it confronts Riyadh over the issue of funding from individuals and charities within Saudi Arabia.

As long as al-Qaeda retains access to a viable financial network, it remains a lethal threat to the United States

Council on Foreign Relations

The New York-based Council on Foreign Relations calls on the Bush administration to put more pressure on Saudi Arabia and other countries which it says are failing to deal with the problem.

However, senior US officials have described the report from the independent, bi-partisan committee as flawed, and say the Saudis are being co-operative.

BBC Middle East analyst Roger Hardy says the dilemma for the Saudi princes is that clamping down on Islamic charities as hard as the Americans would like, would mean confronting Saudi Arabia's conservative religious establishment.

'Lack of will'

The Council on Foreign Relations' task force set out to evaluate the effectiveness of US efforts to disrupt terrorist financing after the 2001 attacks.

It said that after a strong start, the administration's current efforts are "strategically inadequate" to protect US security.

The al-Qaeda network has been "disrupted but it has certainly not been destroyed," the report said.

"And as long as al-Qaeda retains access to a viable financial network, it remains a lethal threat to the US."

Saudi Arabia: Turning its back on terror funding?

Al Qaeda's fundraising works through a foundation of charities, non-governmental organisations, mosques, websites, intermediaries, facilitators and banks.

The report said US efforts to curb terrorism financing are impeded "not only by a lack of institutional capacity abroad but by a lack of political will among our allies".

"The current administration appears to have made a policy decision not to use the full power of US influence to pressure or compel other governments to combat terrorist financing more effectively," it said.

Key European countries lacked sufficient staff to track and curb funding for terrorists.

New, dedicated body

There was also a wide gap over the definition of terrorism. For instance, the Hamas and Hizbollah Islamic groups are, for the most part, not blocked by Europeans from fundraising.

The new study recommended the appointment of a special assistant to the president to compel various US Government agencies to work together.

On an international level, it also suggested that Washington should help create a new international organisation dedicated solely to curbing terrorist financing.