The decision by the Financial Action Task Force to place Pakistan on its ‘grey list’ despite our best efforts to convince the international body that we are taking steps to curb terror financing is a massive political embarrassment for the country. Not only will we suffer the economic effects that come from being tarred as a risk to the international financial system, we now know that very few of our allies are ready to stick their necks out for us when faced with international pressure. Of the 37 countries that originally voted on the proposal to place us on the grey list in February, only China, Turkey and Saudi Arabia voted in our favour. The support of three countries would have been enough to defeat the proposal but Saudi Arabia changed its mind after it was offered full FATF membership by the US. After that China too opted out of defending us since it could see the direction in which the political tides were heading. Clearly it was the US that was behind the move all along, and it was even willing to bribe countries initially supporting us to get its way.
US anger with Pakistan has little to do with the state of Pakistan’s financial affairs and everything to do with its perceived or real refusal to toe the line on its Afghanistan policy. While the hypocrisy of the US needs to be noted, Pakistan also needs to look onward. We never did anything substantial to disrupt the finances of militant groups like the Lashkar-e-Jhangvi and Jamaatud Dawa until the FATF appeared determined in its hostility. Even when militant groups were banned, they simply changed their names and operated as before. It is only after the FATF voted to grey list us in February that we began to take action against these groups. The offices and bank accounts of the Jamaatud Dawa and other groups were seized but that has not proven enough to convince the FATF. Now it is being reported that Pakistan will have to curb the smuggling of currency by terror groups across the Afghanistan border, ban certain groups and freeze their accounts as well as ensure compliance with international standards for every banking transaction. Only then is there a chance that it will be removed from the grey list. The last time the FATF greylisted Pakistan, back in 2012, it took three years to convince the body that we were meeting its expectation. Now, with the US and its allies more hostile towards us than ever, Pakistan could face an even longer spell in financial purgatory.