Will Pakistan ever learn?

Pakistan has managed to escape the Financial Action Task Force’s blacklist yet again. It needed three votes to stay out of the blacklist and China, Turkey and Malaysia obliged by voting in its support. Pakistan has been on the FATF’s radar for several years. It was on its grey list between 2008 and 2015. Then, in June 2018 again, the FATF, the global anti-money laundering and anti-terror financing watchdog, put Pakistan on the grey list. Pakistan was given an action plan of 27 items on which it was expected to act to avoid being blacklisted. Almost 16 months later, Islamabad’s performance on the FATF action plan is at best deplorable. Of the 27 items, it has acted on just five. Pakistan should have been blacklisted. However, geopolitics often determines decisions of member-states in global forums. It came to Pakistan’s rescue in the FATF. China, Pakistan’s close ally, has been supporting Islamabad in international forums whenever the latter’s support to anti-India terrorism comes under global censure. Till recently, Beijing blocked India’s campaign in the UN Security Council to get Jaish-e-Mohammed chief Maulana Masood Azhar designated as a terrorist. On Friday, China, which currently heads the FATF, voted to block Pakistan’s inclusion in the FATF blacklist.

This does not mean that Islamabad is off FATF’s radar. In a strongly-worded statement, it has made it clear that Pakistan “needs to do more” and “faster.” Islamabad has been given time till February 2020 to clean up its act, failing which it will be blacklisted. Pakistan needs to wake up to the fact that the FATF has given it a lifeline, which is likely to be withdrawn should Islamabad fail to deliver on the 27-point plan by February. Pakistan’s economy is already in a grave crisis. FATF’s blacklisting, which would cripple Pakistan’s imports, exports, remittances and access to international investment and funding, would deepen the crisis.

Success of the China-Pakistan Economic Corridor is important for China’s economic and strategic interests. Hence, Beijing is keen to ensure that the Pakistani economy stays afloat. This underlies China’s vote to rescue Pakistan at the FATF. However, this is a short-sighted move as Pakistan’s terrorist infrastructure and the consequent violence by extremist outfits is deterring foreign investors and banks from investing in its economy. Getting Islamabad to choke off funding to this infrastructure will benefit Pakistan and China, too.