Hoping to enlist help for Iraq from the so-called international community, the Treasury Department, which serves admirably at the frontlines of America’s war on terror, may be going to bed with terrorists.

Washington has teamed up at the United Nations with the Saudi-backed International Development Bank, which lists as clients two Palestinian Arab funds that support families of Hamas terrorist suicide bombers.

The Treasury Department does a terrific job listing entities that support terrorism, banning Americans and pressuring others from doing business with them. It also is attempting to help Iraq become financially viable — a goal that brought a deputy treasury secretary, Robert Kimmitt, to the United Nations on Friday for a meeting of the International Compact with Iraq.

“The Iraqis have done their part,” Mr. Kimmitt told reporters. “The question now is what will the international community do?”

The United Nations has shied from any significant activity in Iraq since the 2003 war. But on Friday, more than 100 representatives attended the Iraq compact gathering, which was presided over by Adel Abdul-Mahdi, the Iraqi vice president. A senior U.N. official, Ibrahim Gambari, was designated as the compact’s co-chairman. The World Bank and the International Monitory Fund are among the leading financial institutions involved.

One of last year’s compact founders is the Saudi-backed IDB, which operates under Shariah laws that forbid interest-based loans. Recently it has been attempting to strengthen ties to U.N. agencies and other international organizations.

At a press conference last November, I asked an IDB vice president, Amadou Cissé, about ties to terrorism. In response, Mr. Cissé, a former prime minister of Niger, said IDB has maintained a top AAA Moody rating for the last four years and that the bank’s board of directors’ annual report is publicly available.

A publicly available organizational chart on the IDB Web site details how the bank finances two Palestinian Arab entities, Al Aqsa and Al Quds funds. The funds, according to a Jerusalem Center for Public Affairs researcher, Jonathan Halevi, were established at a February 2000 meeting of Arab finance ministers, who pledged $693 million for the two entities.

One of the goals of the funds, according to documents translated from Arabic by Mr. Halevi, was providing “aid to families of shahids,” or martyrs, as suicide bombers are called. The IDB was the conduit by which that funding — by March 2002 it reached $680 million — was passed on to the two funds, which are controlled by Hamas.

Al Aqsa and Al Quds funds are not listed by the Treasury Department as terrorist-supporting entities, a spokeswoman for the department, Ann Marie Hauser, told me by e-mail yesterday. “We’ve designated other entities with similar names,” she added, but such names are “extremely common in the Muslim world.”

“It will be a cold day in hell before the Treasury Department designates any major Saudi entity involved in support for terrorism,” a New Jersey-based attorney, Gary Osen, who is working on several terror-financing cases, told me. “From a geopolitical standpoint, it’s impossible for the administration to do so.”

Washington needs Riyadh’s help on Iran as well as on Iraq; hence the compact, which was created last year by the Iraqi government and the United Nations to obtain help from neighboring countries. The idea, I was told, came from Prime Minister Blair of Britain, but it was adopted by a former U.N. deputy secretary-general, Mark Malloch Brown.

The Saudis and other Gulf countries, however, are loath to support an Iraqi government dominated by Shiite politicians they see as Iranian puppets. Also Arab politicians find it much easier to pledge support for the likes of Hamas than for Iraq.

Nevertheless they attended the Friday meeting, which U.N. reporters were told was not a pledging exercise, but rather a promotion of good governance in Baghdad through such projects as a five-year plan for rebuilding Iraqi institutions.

Five-year plan? I thought even the most adamant Marxist regimes have done away with those. I also thought anyone watching recent oil-for-food-related federal criminal trials should be wary of the combination of money, Iraq, and the United Nations.

The Treasury Department, meanwhile, should be aware that enlisting the likes of the IDB to aid Iraq creates the impression — as the director of the American Center for Democracy, Rachel Ehrenfeld, put it — that “one of its hands doesn’t know what the other is doing.”