Treasury undersecretary Stuart Levey told a Senate panel that the Saudi government has not taken promised steps to stop wealthy donors from bankrolling al-Qaida and other terrorists through Saudi charities, which are awash in cash thanks to the oil boom.

"Saudi Arabia today remains the location where more money is going to terrorism, to Sunni terror groups and the Taliban than any other place in the world," Levey said.

In fact, the terror-funding pipeline is flowing nearly as strong as it was before 9/11 thanks to the bonanza in Arab petrodollars.

Levey says he and other counterterrorism officials are frustrated with official efforts to persuade the Saudis to crack down. He says there's a reluctance to directly criticize a supposedly close U.S. ally.

Both ends of Pennsylvania Avenue are content to continue playing footsie with these two-faced sheiks under the diplomatic table. The answer seems to be more carrots and no stick at all.

In fact, despite hearing Levey's bombshell testimony, Congress is rubberstamping a proposed White House deal to export $20 billion in arms to the Kingdom and other Arab states, including smartbomb technology that could be used to harm a real ally like Israel.

Some argue the U.S. has little leverage over the Saudis due to the oil crisis. They have us over a barrel, and if we press them too hard, they may balk at helping us influence OPEC.

Riyadh's oil minister recently rebuffed President Bush's plea for price relief, and even blamed him for the energy crisis.

Yet Bush is expediting the sale of $123 million worth of coveted smart-bomb kits to the Saudis. Previous carrots, including Saudi membership in the WTO and more than 20,000 new Saudi student visas, clearly have not worked to produce the results we need to protect the homeland.

Under questioning by senators, Levey revealed the Saudi government still has not set up a financial intelligence unit or charity oversight commission to track terror funding as it promised to do more than six years ago after 15 of its citizens attacked America.

Nor has it prosecuted al-Qaida financiers such as Yasin al-Qadi, a wealthy Saudi businessman who shows up on both the U.S. and U.N. terror blacklists.

Al-Qadi remains free, still a prominent figure in the Kingdom.

Riyadh also has failed to prosecute several other Saudi donors and charities tied to al-Qaida. Their money is flowing into terrorism operations in both Iraq and Pakistan, as well as mosques and madrassas used to spread radical Wahhabism, including to U.S. shores.

The White House assures us exporting high-tech arms to Saudi is in our interest, since it will serve as a counterweight to the military power and posturing of Iran, a Shiite rival neighbor now meddling in neighboring Iraq.

Geopolitically, that makes sense. But in the meantime, will Saudi dispatch its air force to drop smart bombs on the al-Qaida camps in Pakistan it's helping to bankroll? The CIA director just warned that al-Qaida is training a new breed of Western-looking terrorists at those camps to attack the U.S.

In exchange for their arms deal, will the Saudis do more to stop the smuggling of cash and suicide bombers into Iraq? A recent Pentagon report showed Saudi aid to the Iraqi insurgency dwarfs that of other Muslim nations, including Iran.

It has become painfully obvious that the Saudis are playing a dangerous double game of privately supporting Islamic terror while claiming to be our friends. How many times will Washington allow this nation to be betrayed?

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