FATF: what next?

Is the noose really tightening around Pakistan? At the Financial Action Task Force (FATF) plenary last week, the country was squeezed by the Western block, even as its traditional allies seemed to withhold their support. The FATF has reportedly given Pakistan until June to agree to an action plan to weed out FATF objections, which, by the way, remain unclear as yet. (Read “FATF: Us against the world?” published February 26, 2018, for some background).

Instead of calming the public, the government’s silence is disturbing. Only the PM’s finance advisor went on-air last weekend and suggested that Pakistan might be put on a black-list – which has other pariah countries like Iran and North Korea on it – if an action plan was not agreed to by June. While that’s hardly reassuring, it is pertinent to ask: what will Pakistan do now? But first, let’s analyze what Pakistan is currently doing.

One may wonder why the government went about overplaying the fears when it could hurt its ability to raise foreign financing in precarious balance of payment situation. The question is: when the official FATF communiqué was silent on Pakistan, why was Miftah Ismail the first one to break the news of chances, albeit low, of Pakistan entering the black list? This is surely not the norm of PML-N when it’s dealing with a crisis.

Internationally, US might be over hyping the issue as the world giant exercises its political clout on Pakistan to run policies in Afghanistan aligned to US interest. As the US demands are in the military domain, and since the weakened civilian authority doesn’t have much say in that, the PML-N leadership might not be afraid of portraying an extreme scenario.

News reports suggest that Pakistan’s non-compliance is mainly on the issue of charities run by Hafiz Saeed. Since the interests of Hafiz Saeed and company are allegedly in Kashmir, the linking of his charities to the issue of financing of terrorism could be an objection from India.

However, the general perception of US unhappiness towards Pakistan is on Afghanistan and there is confusion on what Pakistan can do to appease US by having strict AML/CFT prosecution on Hafiz Saeed and company.
Barring US-India confusion, the more important point is whatever steps are required on AML/CFT in Pakistan or other hidden agendas are in the domain of the military, but the music is being faced by an elected, civilian government, which would no longer be in power in June.

Right now, it isn’t clear whether the state is tight-lipped or just clueless about what to do next or who should handle this? There is a crisis of leadership at home which is affecting the country’s affairs at home and abroad. Though it’s only a few months, the journey to June will be a long one. Amid considerable tension among state organs, it will be hard to discuss, leave alone develop consensus to resolve militancy-related issues.

Also note that the country is due a democratic transition midway through this year. As things stand, the ruling party is gasping for breath. There are dark clouds hanging over democratic continuity. If the PML-N retires on time, that will leave a caretaker government to plead Pakistan’s case to the FATF in June. But before that, it is unclear who will lead the charge in deciding Pakistan’s response vis-à-vis the upcoming FATF review. It is not enough for the government to simply blame India and the US for Pakistan’s FATF woes. With a belligerent US upping the ante, will Pakistan find enough international support to counter the American pressure next time?

The all-weather friend China may continue to face difficulties in supporting Pakistan at forums like the FATF. China wants to be seen as a responsible global power that abides by international rules. That reality should prompt a review in Pakistan’s foreign policy choices.

Facing tough odds, Pakistan will do better to stay calm and not react to the frenzy. Already, political and economic uncertainty is increasing. There is homework to do.

On one hand, the country needs to take remedial steps to be on the right side of the global community. And on the other, a renewed diplomatic effort is required to convey Pakistan’s progress to influential world capitals. In the meantime, deft economic management is required to shield the country’s growth momentum from disruption. But will there be a steady hand at the wheel?


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