Pak trips on free run

G Parthasarathy 

The Financial Action Task Force (FATF), set up in 1989 by the G7 countries, and with headquarters in Paris, acts as an “international watchdog” on issues of money laundering and financing of terrorism. It has 37 members, including all five permanent members of the Security Council, and countries with economic influence all across the world. Two regional organisations — the Gulf Cooperation and the European Commission — are members of the FATF. Saudi Arabia and Israel are observers. India became a full member of the FATF in June 2010. The FATF is empowered to ensure that financing of UN-designated terrorist organisations is blocked. It has the power to publicly name countries not abiding by its norms, making it difficult for them to source financial flows internationally.

Pakistan is particularly vulnerable to pressures from this task force as the Afghan Taliban, Haqqani network, LeT and JeM — all internationally designated terrorist groups — operate from its soil. Pakistan has long claimed that it has done its best to prevent terrorism emanating from its soil. It has also averred that there is no firm evidence against the LeT and the JeM, even after these groups have publicly acknowledged that they were promoting terrorism in India. Pakistan has also rejected evidence like wireless transcripts of conversations of Jaish terrorists involved in the Pathankot airport and the vast evidence available internationally of the Lashkar role in the Mumbai 26/11 attack. The Americans and their allies have focused attention primarily on Pakistan support for the Haqqani network in Afghanistan. 

Pakistan has believed that sooner, rather than later, the Americans would cut their losses and withdraw from Afghanistan, leaving the country open for a Pakistan-backed Taliban takeover. President Donald Trump, however, made it clear that he was determined that the US would not “lose” in Afghanistan. He is augmenting the US troop presence and moving fast to strengthen the Afghan armed forces, including its air force. American economic assistance to Pakistan has been placed on hold. In addition, the US has mobilised its NATO allies to take a tougher line on Pakistan. The NATO allies are also expanding their deployments in Afghanistan. More recently, the US has initiated moves to get the task force to place Pakistan on its “grey list” at its next meeting in June.

The American effort in the FATF on Pakistan funding of terrorist groups predictably ran into problems initially. Pakistan had mobilised support from China, the Gulf Cooperation Council led by Saudi Arabia, Turkey and quite evidently Russia to counter the American-led move. Islamabad banked on Russian support, given the bonhomie that Russian foreign minister Sergei Lavrov manifested when he invited his Pakistani counterpart Khawaja Asif to Moscow on the eve of the FATF meeting. Further, despite parliamentary opposition, Pakistan declared, just over a week before the FATF meeting, that it would be deploying additional troops in Saudi Arabia. It clearly expected Saudi support in the FATF after its decision was announced. The Lavrov bonhomie led the inexperienced Khawaja Asif to proclaim hastily and prematurely that Pakistan had succeeded in prevailing over moves to place it on the FATF “grey list” involving monitoring of its international financial flows. 

The Americans responded immediately to these developments. Saudi Arabia and the GCC fell in line with American demands for the FATF to act against Pakistan. European powers like the UK, Germany and France remained steadfast in their determination to corner Pakistan. Russia quietly receded to the background. Recognising that its support for Pakistan would leave it isolated in the FATF, where it was aspiring to become its vice-chairman at the forthcoming FATF session in June, Pakistan’s “all-weather friend” China pulled back its support for Pakistan. The only country that steadfastly continued supporting Pakistan was Turkey, whose egotistic President Recep Erdogan would certainly not win an international popularity contest today!

Pakistan will now have to provide a detailed action plan on actions it proposes to take on curbing funding for UN-designated terrorist groups. It would then be placed on the FATF grey list, where its financial flows would be subject to intense international scrutiny. Pakistan would, thereafter, be placed on the FATF “black list” if it fails to present a credible and comprehensive action plan to the FATF by June. This would virtually end any prospect of it receiving adequate financial flows. There has been disappointment, anger and frustration in Pakistan at the FATF decision. Hardly anyone in Pakistan is prepared to publicly advise that it is time for Pakistan’s rogue army to end support on its soil to armed terrorist groups, acting against India and Afghanistan. While Pakistan recently claimed it had closed Lashkar offices, it was soon found that only the gates of these offices were closed, while routine activities continued inside.

In these circumstances, India should urge members of the European Union and Japan to join the US and end providing concessional credits to Pakistan. Given its precarious foreign exchange position, Pakistan will inevitably have to go to the IMF for a bailout in a few months. Institutions like the IMF, World Bank and Asian Development Bank need to be persuaded to withhold providing concessional credits to Pakistan, even if it takes some token measures to claim it has acted against UN-designated terrorist outfits. India should urge that no concessional credits should be provided to Pakistan till it dismantles the infrastructure of terrorism on its soil irrevocably. China will not follow suit; but its “aid” for the China-Pakistan Economic Corridor will only increase Pakistan’s already heavy debt burden.

The withdrawal of Chinese support in the FATF has shaken the Pakistan establishment’s belief that Chinese support to “contain India” has no limitations. China recognises that backing Pakistan unconditionally in the FATF would not only earn it the ire of the mercurial Donald Trump, but would also sully its image internationally. At the same time, this does not mean that there will be any change in China’s policies on issues like declaring Jaish chief Masood Azhar an international terrorist. Moreover, we should also clearly recognise that President Trump’s actions are primarily in response to Pakistan’s support for the Haqqani network in Afghanistan. They are not highly or significantly focused on Pakistan-sponsored terrorism on Indian soil. That is a battle that will have to be fought primarily by us.