US, China Support Helps Pakistan Escape FATF Blacklist

US, UK, France and China were among countries that helped Pakistan escape Financial Action Task Force sanctions.

(From Left to Right) Chinese President Xi Jingping, Pakistan Prime Minister Imran Khan and US President Donald Trump.

(Photo: The Quint/Shruti Mathur)

India has once again learnt the oldest lesson of foreign policy— “There are no permanent friends or enemies, only interests.” It is these that have persuaded a clutch of countries who India has been cosying up to, to stand aside as Pakistan once again escapes more stringent sanctions by the Financial Action Task Force (FATF).

Reports say that in the FATF’s Asia Pacific Joint Group meeting that concluded in Beijing on Thursday, Pakistan was deemed ‘largely compliant’ on the 22 commitments it had made to improve its performance for combating money laundering and terror financing.

Among the countries that gave Pakistan the pass, howsoever temporary they may claim it is, were the US, UK, France, Germany, Australia, New Zealand and Japan. Islamabad, of course, had the strong support of host China, as well as Malaysia and Turkey.

The Modi government, which has made the cornering of Pakistan its main foreign policy goal, is chagrined, to say the least. While many Indian commentators have squarely blamed the China-Malaysia-Turkey troika for helping Islamabad stay out of the blacklist, the fact is that a significant role has been played by the US in helping Pakistan.

Things came together for Islamabad in just the week that the Beijing meeting was scheduled, and you can be sure it was no coincidence.

US Offers to Mediate on Kashmir Again

Earlier in the week, the top US official dealing with South Asia, Assistant Secretary of State Alice Wells, was in Islamabad where, according to Pakistani officials, at a meeting where she was briefed on the FATF issue, she praised Pakistan’s efforts to implement the FATF’s 27-point action plan.

Then, two days before the meeting, President Donald Trump met Pakistan Prime Minister Imran Khan in Davos. He told the media “We have never been closer with Pakistan than we are right now.” 

And to add insult to the Indian injury, he had once again raised the issue of mediating on the Kashmir issue. “We’re talking about Kashmir… if we can help, we certainly will be helping,” he added.

The subtext to this turnaround was revealed by Imran Khan when he said that “Both of us are interested in peace… and an orderly transition in Afghanistan with talks with Taliban and the government.” Reports say that Islamabad is proving instrumental in brokering a ceasefire deal in Afghanistan that is currently being worked out in Doha with an official US team led by US Special Envoy Zalmay Khalilzad.

According to reports, Khan personally lobbied with Trump on the FATF issue and also spoke to leaders of countries like UK, Germany, France, Australia and New Zealand prior to the FATF regional meeting.

When he had assumed office, Trump had attacked Pakistan and its support for terrorists. He had criticized the US $ 33 billion in aid that the US had given to the country over the past 15 years. Now that the US has resumed dialogue with the Taliban with a view to exiting Afghanistan, the US has once again discovered the value of Pakistan.

As a result of the Beijing decision, Pakistan could even be removed from the grey list and placed in the ‘white list’ at the upcoming plenary meeting of the FATF in Paris in mid-February. 

The more likely outcome, however, is that it will continue to remain in the grey list till June or September 2020, but in any event it is unlikely to slide into the blacklist, something that India has been fervently hoping for. Such a development would have been disastrous for the already fragile Pakistani economy.

Pakistan Still in FATF Grey List

It may be recalled that in June 2018 the FATF had found serious deficiencies in Pakistan’s anti-money laundering measures and plans to combat financing of terrorism, and gave Pakistan a 27-point action plan to work on if it wanted to be removed from the grey list.

In its last plenary meeting in October 2019, the FATF had expressed satisfaction over just 5 points of the 27-point action plan, and kept Pakistan on the grey list till February 2020.

To avoid the blacklist, Pakistan needs the support of 3 countries which it has always had, but to come out of the grey list it needs 12 more votes out of a total of 39 in the plenary meeting.

Speaking on Thursday, the Chinese foreign ministry spokesman said that “Pakistan has made great efforts to strengthen its domestic counter-terrorism financing system with visible progress.” But the country that really matters here is the US.

According to Pakistani newspapers, a large delegation led by the Minister for Economic Affairs Hammad Azhar had told the joint group of the FATF that 500 terror financing related cases had been registered in Pakistan, and some 55 convictions achieved. Not only had defaulting banks been penalized, but mandatory currency declaration processes had been implemented in all the airports of the country. 

Prior to this, a 120-page reply along with a 500-page annexure had been sent to the joint group detailing the progress on the 22 points.

Among the visible steps taken by Islamabad was the arrest and trial of Lashkar-e-Tayyeba chief Hafiz Muhammad Saeed. Earlier this month, he pleaded “not guilty” at an in-camera hearing in two terror financing cases against him. The counter-terrorism department of the Pakistan government had registered 23 FIRs against him and his accomplices and arrested him in July 2019.

This is an indicator of the potential power of the FATF process. Saeed is a UN-designated terrorist with a US $ 10 million American bounty on him. But what the bounty and the UN designation did not achieve, the FATF seemed to have achieved. Pakistan can, and has played around with its domestic law when it comes to dealing with terrorists like Saeed.

Likewise, the international community and India have shown that they are toothless in dealing with a terrorist like Saeed. But when the country that hosts him is threatened with larger economic pain, it is reacting.

But the Beijing meeting has also brought out clearly the limit of the legal processes and the salience of geopolitics in the situation. When it comes to interests, states don’t care whether they are molly-coddling terrorists, or environmentalists.

For India, which put an unconscionable amount of faith in the US and its friends in corralling Pakistan, the developments are a bitter lesson. But, as the philosopher George Santayana said, those who do not learn from history are doomed to repeat it. The bottom line, as Sanjaya Baru noted in an article last month, is that Modi’s policy of not engaging Pakistan, may have run its course.

(The writer is a Distinguished Fellow, Observer Research Foundation, New Delhi. This is an opinion piece, and the views expressed are the author’s own. The Quint neither endorses nor is responsible for them.)