Back in the grey?

Is Pakistan on the FATF ‘grey list’ or not? This confusion continued into the weekend after contradictory reports in the media. The FATF statement issued after the Paris meeting made no mention of Pakistan, seeming to confirm that Pakistan had managed to escape international sanction for its alleged failure to regulate terrorist finance. As a result, celebratory tweets were sent out by top government officials. But then on Thursday evening Advisor on Finance Miftah Ismail claimed that rumours that Pakistan would be placed on the list in three months were indeed true. The reasons to believe Ismail are strong since he had been leading Pakistan’s international diplomatic efforts to prevent the country from being put on the grey list. It is believed that some of Pakistan’s strongest allies, China and the Gulf States, decided not to oppose the measure in the second round of voting. Both betrayals will hurt, especially after many had seen Pakistan’s decision to send troops to Saudi Arabia as an act of appeasement before the vote.

If confirmed, Pakistan needs to reflect seriously about the consequences of its inaction against terrorist finance. The failure to curb terrorism finance is something that the country accepts internally. There have been constant pleas within the government apparatus to come up with measures to combat the free flow of terrorist finance. But these efforts remain beset by contradictions. Currently, the offending entity seems to be the free operation of Lashkar-e-Taiba and its charity wing. The group was able to launch a political party this year – and has not faced action from the state akin to a serious clampdown. Cosmetic action has continued to be taken, which is why the international community remains unconvinced by the presidential ordinance putting Pakistan’s terrorist organisation list in compliance with the UN list and the recent seizing of LeT assets. The optics are not convincing. However, there is little evidence that Pakistan is doing worse that it was in 2015 when it was taken off the grey list. To some, the motivation to put Pakistan on the grey list seems more political, with the US looking to show us that it can still exercise international muscle. From all appearances, it seems that the US has won this round – with the FATF deciding that Pakistan has three months to put its house in order. The panic seen in the stock markets on Friday is premature. What can probably be said without hesitation is that the country has some grace period, despite losing the support of key allies. Having been on the grey list before, Pakistan knows that much of the cost is in external business transactions. This will be troubling at a time when Pakistan’s exports have continued to fall and the country is actively seeking international investment. We must do what we can to avoid international censure in the intervening three months – but the crackdown on terrorist finance must be done in all honesty for our people.