Pakistan’s exit from FATF list puts India on the spot

US Acting Asst Secy of State Alice Wells  met Pakistan’s Interior Minister Ijaz Shah, Islamabad, Jan. 20, 2020

The media reports that in the Indian estimation there is “a 75 per cent chance” of Pakistan exiting the ‘grey list’ of the Financial Action Task Force (FATF) at the plenary of the international body on February 16 in Paris are a significant upgrade of the earlier expectation in Delhi that Islamabad was hanging on the abyss, perilously close to being ‘black-listed’ for money laundering and terror financing. 

Quite obviously, it can no longer be kept from public view that the ground beneath the feet of Indian diplomacy has been shifting in the recent months, largely due to the US-Pakistan rapprochement. Delhi is grudgingly making adjustments to the compelling reality. 

True to form, Indian media would prefer to attribute to China all good things that may happen to Pakistan — and, of course, to the US all good things that happen to India. Thus, Delhi says the vast improvement in Pakistan’s FATF standing is due to ‘heavy lobbying by China and with the help of a private consultant who is an FATF veteran’.

There is a mental block in acknowledging that Pakistan might indeed have made efforts to improve its FATF standing. The FATF is a technical body and comprises countries that have a mind of their own.

Greater realism is needed on the part of Delhi to admit that Pakistan’s standing has been steadily improving in the 39-member grouping since the FATF’s 2015 statement which identified it as having made significant progress in improving its regime and had noted that Islamabad had established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had previously identified.

The 2015 report decided to exempt Pakistan from the FATF’s monitoring process. According to Pakistani media reports, in February 2018, the FATF had found serious deficiencies in the country’s anti-money laundering and combating financing of terrorism regimes and gave Pakistan a 27-point action plan to exit the grey list. And in October last year, Pakistan was given another warning to show full compliance by the forthcoming plenary meeting in Paris in February. 

The Pakistani reports claim that the sticking points have significantly narrowed down to two areas, namely, cash couriers and convictions in terror financing cases where Pakistan could still be deemed non-compliant,  necessitating its continuance in the so-called ‘grey list’ for yet another 3-6 months. Significantly, PM Imran Khan personally took up the matter with President Trump at their meeting in Davos this week. 

This cautious optimism was also reflected in the meeting on Monday in Islamabad between the Minister for Interior Ijaz Shah and the visiting the US delegation led by Alice Wells, Acting Assistant Secretary of State where the latter “applauded the progress” made by Pakistan “despite the scarcity of resources.” 

The sea change in the situation around Pakistan has policy implications for India. If the FATF lets Pakistan off the hook, which is to be expected, it would signify a big boost to Pakistan’s standing in the fight against terrorism. Delhi, on the other hand, loses the propaganda advantage.

The mellowing in the US attitude has already removed the cutting edge of the FATF pressure on Pakistan. The Indian officials had thought that the FATF was like a Damocles’ sword hanging on Pakistan’s neck. But now it dawns on them that chopping off the Pakistani head was not on the American mind.

It may or may not be a coincidence that the softening of the US posture is taking place in the backdrop of the successful Afghan peace negotiations where Pakistani help was of critical importance. Clearly, a full-fledged resumption of US aid and investment in the Pakistani economy in the period ahead cannot be held hostage by the FATF affair. A clearing of the deck is becoming necessary. In President Trump’s evaluation, US has never been as close to Pakistan as it is today. 

All this once again highlights that India and the US have never really been on the same page in regard of terrorism. The US stance is pragmatic while the Indian stance is dogmatic. The US is realistic in making assessments regarding Pakistan’s record on terrorism while India focuses on coercive diplomacy.     

India’s position on dialogue with Pakistan is becoming increasingly untenable. Pakistan’s FTAF moment highlights the Indian predicament. Delhi is rejecting third-party mediation in Kashmir but in the same breath also vows not to bilaterally engage with Pakistan to resolve differences peacefully through dialogue. At this rate, India’s gripe about terrorism will be seen by the international community increasingly as a matter of irritable bowel syndrome on account of its own body ailments. 

However, the present government is perfectly pleased with the perpetuation of the enemy image of Pakistan, which helps it to derive advantages in domestic politics especially during election time. Pakistan is the favourite whipping boy of the ruling elite. Equally, to borrow the famous line from President Trump, the ‘swamp’ won’t allow a policy rethink either — the swamp in Indraprastha is a protected wetland; the Deep State breeds in it, spawns in it.