FATF: Pakistan’s Achilles Heel

Did India concede ground to ensure China dropped its objection to the United Nations Security Council (UNSC) listing Jaish-e-Mohammed chief Masood Azhar as a global terrorist?  The finger of suspicion points at the imminent proceedings of the Paris-based Financial Action Task force (FATF). 

China’s Xiangming Liu takes over as president of the FATF on July 1, 2019 – just in time to save Pakistan from being blacklisted. Did China, Pakistan’s all-weather ally, drive a bargain at the UNSC last week to keep Pakistan out of the blacklist at the FATF’s scheduled October 2019 meeting in return for Masood Azhar’s listing? 

The FATF’s Asian affiliate will later this month evaluate the progress Pakistan has made in 29 specific areas of terror financing and money laundering where the FATF says Pakistan is in violation of its guidelines. 

The Imran Khan government says “Naya” Pakistan is determined to root out terrorism emanating from Pakistani soil and that most of FATF’s concerns have been taken care of. 

No one in the FATF — or in Pakistan itself — believes that. Terror financing continues unabated. Money laundering through routes in Afghanistan and the Middle East to fund terror groups has not reduced. The listing of JeM’s Masood Azhar as a global terrorist by the UNSC is merely symbolic. The Lashkar-e-Toiba’s Hafiz Saeed was designated a global terrorist by the UNSC way back in 2001. He has been untouched by the Pakistani authorities and continues to preach jihad against India.

Masood Azhar is currently under the protection of the Pakistani army’s ISI. Islamabad says the UNSC listing will be implemented in all key areas, including imposing an arms embargo on Azhar and freezing his assets. 

Since the JeM’s weaponry and funds come surreptitiously from the Pakistani Army, neither the arms embargo nor the asset freeze will alter the status quo. For the JeM, it is terror as usual. 

Pakistan’s real fear is not the occasional UNSC listing of the terrorists it arms, funds and protects. Its real fear is blacklisting by the FATF. Already on the greylist, Pakistan simply cannot afford to be blacklisted. The only two countries currently on the FATF’s blacklist are Iran and North Korea. Blacklisting of a country cuts off all global financial aid and loans, imposes sanctions on the country’s banks, and cripples its economy. Iran and North Korea are examples of how FATF blacklisting (along with other US-specific sanctions) have devastated their economies. 

Pakistan has been warned by the FATF that unless it shows real progress on ending terror financing, blacklisting by the watchdog body at its October 2019 meeting could follow. Pakistan’ fragile economy, already beset by low foreign exchange reserves, a depreciating rupee and a bloated current account deficit, could collapse if FATF blacklisted it. Islamabad has therefore spent the past several months working on a strategy to avoid this financial Armaggedon. The strategy has two prongs. 

First, package “Naya” Pakistan as a break from the past. Prime Minister Imran Khan has promised action against all terror groups operating from Pakistan. Shortly after Masood Azhar was designated a global terrorist, Pakistan’s foreign office spokesman Mohammad Faisal declared piously: “The UNSC decision entails travel restrictions, asset freeze and arms embargo. Pakistan is a responsible state and we will take responsible action.” 

This charm offensive is aimed squarely at the FATF and the United States. Talks between US special envoy on Afghanistan Zalmay Khalizad and the Pakistan-created Taliban terror organisation have recently run into a wall. 

This is the second prong of Pakistan’s strategy: leverage its influence over the Taliban to reboot negotiations and offer US President Donald Trump a rapid exit from Afghanistan he seeks for US and NATO troops. 

The two-pronged strategy thus relies on deception and blackmail. Deception because “Naya” Pakistan is a mirage. Blackmail because the Taliban is Pakistan’s bargaining chip with a US President desperate to end the country’s 18-year war in Afghanistan. Will the Pakistani strategy work? In the short term, yes. In the medium and long term, no. 

Consider why: China will shortly head the FATF and sell the false “Naya” Pakistan narrative to members of the FATF to ensure Islamabad is not blacklisted in October. This though, will prove a pyrrhic victory for both Pakistan and China. Lulled into complacency by the China-headed FATF’s enforced generosity, terror groups in Pakistan will attack targets in India and Afghanistan with renewed vigour. 

The drawdown of US and NATO troops will allow the Taliban free rein. If it is part of the new Afghan government following elections scheduled for later this year, Afghanistan will join a select group of countries ruled by a terror group. 

For Pakistan, a Taliban-controlled Afghanistan constitutes the “strategic depth” it craves. But habits die hard. And bad habits die harder. Ordinary Afghans haven’t forgotten the last time the Taliban was part of the government in 1996-2001. They despise the Taliban and Pakistan in equal measure. India hasn’t forgotten Taliban rule either. In 1999, the Taliban played a venal role in helping the ISI-backed Harkat-ul-Mujahideen hijackers of Indian Airlines Flight 814 in Kandahar to free Masood Azhar from an Indian jail.  

A return to “old” Pakistan is therefore guaranteed with help from its Taliban terror partners. The reprieve for Pakistan from the FATF could prove both temporary and illusory. 

The writer is an author and publisher