A new act appears to be unfolding in the Pakistani theater of the absurdities but actually it is just a repeat show, not a new script.
FATF Watch List
The global paradise of terrorists has been put in a state of suspended animation by the Financial Action Task Force (FATF), a global body established in 1989 aiming to set benchmarks to promote effective implementation of legal, regulatory and operational mechanisms for countering money laundering, terror financing and other related threats that undermine the integrity of global financial system. The FATF maintains ‘grey’ and ‘black’ lists of countries with weaker systems to counter and combat money laundering and terror financing. However, the FATF does not have the authority or power to take any action against countries that don’t comply with the desired standards.
But getting listed on the FATF watch list has the potential to impact a country’s international transactions, because they come under greater scrutiny. Being in the ‘grey list’ means that Pakistan would find it tougher to access funds from the international markets. It was removed from the grey list in 2015 after being there for three years but its inaction pulled it back in. Now if Pakistan does not prepare a comprehensive action plan to eradicate terrorist financing by June and convince the FATF about its effective implementation it would find itself promoted to the ‘black’ list of willful violators! That would mean almost total isolation from the global financial world.
Pakistan – A Global Liability
The manner in which Pakistan was re-inducted in the ‘list of shame’ reinforces the fact that the world community sees Pakistan as an avoidable liability rather than a reliable and responsible ally for a peaceful global order. In the first discussion in the Paris meeting China, Turkey and Saudi Arabia (representing the Gulf Cooperation Council, as it’s not a full member) opposed the move to place Pakistan on the watch list. But the US pushed for another discussion and convinced the Saudis to vote for the move in return for a full FATF membership. This left only two opponents – China and Turkey – one less than the required three members to stall a move.
At this stage, the Chinese opted out as they did not want to “lose face by supporting a move that’s doomed to fail. Pakistan ‘appreciated’ the Chinese position and ‘thanked’ Turkey for “continuing to support Islamabad against all odds.” Mark the phrases ‘lose face’ and ‘against all odds’ here! However, Pakistani experts know that grey listing means a ‘major setback for Islamabad’s efforts to improve its global image’.
Looking at past conduct it would be naïve to think that the ‘grey listing’ can force Pakistan to embrace demeanors of the modern civilized world or realize its folly of hobnobbing with jihadis. If the rogue nation recently took some cosmetic steps against terror financing it was just to fool the international community. In 2015 when Pakistan was removed from the watch list was expected to show its intent and ability to “fully implementing the UNSC Resolution 1267” on UN-designated terrorists and get out of the ‘grey’ color. It is not clear why Pakistan has been allowed to breathe easily till June before it is re-inducted into the hall of shame. Given the fact that the jihadi virus has already dangerously penetrated and spread into the Pak society it rightfully deserves a permanent place in the ‘black’ list, although even that would not change its conduct.
In reality, the FATF, Donald Trump, Prophet Mohammad or even Allah can’t cure the disease Pakistan is so affectionately in love with!!
Impact on Pakistan
Although the “grey listing” does not invite legal or penal procedures, it may still cripple Pakistan’s economy particularly its banking sector and force foreign banks to reconsider operations on its soil and further push the country into global isolation. Pakistan would find it difficult to raise funds, pay debts and access global markets. It would also be harder for foreign investors and companies to do business in Pakistan. A decline in foreign transactions and foreign currency inflows could lead to further widening of Pakistan’s already large current account deficit (CAD). Just in 2013, Pakistani economy had to be bailed out by the IMF. It can’t keep doing it endlessly.
Global financial institutions would be wary of transacting with Pakistani banks and some might want to even avoid Pakistan altogether depending upon their risk perceptions. Amid intense pressure from global financial regulators like the FATF, banks have been retreating from high risk countries in recent years. The level of due diligence by banks is already high in countries like Pakistan. The financial sector might take a hit if the Standard Chartered (the largest international bank in Pakistan with 116 branches) as well as Citibank and Deutsche Bank, which mostly deal with corporate clients, might decide to pull out.
But Pakistan’s self inflicted misery also brings cheers elsewhere. China would love to extend its financial ‘helping hand’ and bring Pakistan another step closer to being its future colony. It helps China in two important ways: It counters the US influence in Asia by weaning Pakistan away from it and it would enable it to use Pakistan and its Jihadi gangs more effectively against its emerging Asian rival India.
Ostrich Mindset of Pak Leadership
Reflecting its juvenile mental status, Pak leadership has been bragging as usual. The financial adviser of the prime minister boasted, the ‘grey list’ isn’t such a big issue after all and nothing really will happen to Pakistan and claimed that country’s macroeconomic fundamentals are ‘strong’ and the stock market had risen by three percent even during 2015! All he was implying was that the color of the list was not ‘grey enough’, at least for now!
Such bravado is understandable because general elections are due this summer and it can’t afford to tell the citizens that country’s economy is heading towards doomsday. Knowledgeable people and experts of course see through such silly bravado but they don’t count in the rougue state.
The mastermind of the 2008 Mumbai terror attack, terrorist Hafiz Saeed (with a $10 million US bounty on his head) had recently floated a political party and publically challenged the Pak government to put him again under house arrest. Pak army men were seen paying money to another powerful gang of fundamentalists that blocked the national highway for several days. Such is the clout of terrorists and fundamentalists in the nation, now more correctly famous as terroristan or jihadistan.
As the Trump administration changed its Pakistan policy and started demanding concrete action against terrorists on its soil, Islamabad started playing its ‘thicker than blood relation with China’ and ‘You can’t allow me to fall’ cards. But now both the US as well as the Chinese doles will come with much bigger premiums. It is also revealing to note that Pakistan recently reversed its policy and agreed to send its troops to fight for the Saudis in the war-torn Yemen!
Isn’t it what is called the ‘blood money’? It puts Pakistan in league with North Korea that sends its citizens as slave labors to Russia and earns money.
But, days of free doles are now gone for international mendicants, even for those wearing suicide jacket carrying nuclear bombs!