26 Febreaury, 2018: Pakistan’s Trouble is finally coming true. After the FATF (Financial Action Task Force), an international watchdog on terror financing and money laundering has not announced its decision — to place Pakistan on the terror-financing watch list. The motion, however, seems not to have been rejected. Pakistan’s Trouble thus started at the financial front inside of Pakistan and not externally from India or Afghanistan or Iran.
The FATF session in Paris concluded on Friday. It had reviewed proposals that included putting Pakistan back on a list of countries which have failed to prevent terrorist financing. Britain and the United States had moved-in a motion to place Pakistan on the FATF terrorist-financing watch list. If the proposal was adopted as a resolution, it would place Pakistan on the dangerous FATF grey-list of “jurisdictions with deficient anti-money laundering regimes”. Pakistan is no stranger to the list, it was previously on the FATF watch list from 2012 to 2015.
Pakistan’s Trouble: Over Confidence
Pakistan’s Foreign Minister Khawaja Asif said in a tweet late Tuesday that “our efforts paid” off — the task force reached “no consensus” and proposed a three-month pause. Interior Minister Ahsan Iqbal tweeted today, cautioning against speculation on the matter until there is official confirmation of the FATF decision. The spokesperson for Foreign Office Dr. Muhammad Faisal, during the weekly press briefing in Islamabad today, said Pakistan had serious concerns over the motion moved by the US and United Kingdom at the FATF, Radio Pakistan reported.
Dr. Faisal claimed that most US concerns over deficiencies in steps taken to curb money laundering and terror financing had already been addressed in 2015 when Pakistan exited the grey-list. He added that Pakistan’s name being taken off the grey-list was an acknowledgment of the country’s “robust mechanism” against money-laundering and terror financing, which he claimed was in line with international standards.
Prior to the FATF’s official decision, Foreign Minister Khawaja Asif on Wednesday had taken to Twitter to announce that Pakistan has been given a three-month reprieve.
Mr. Asif had tweeted that Pakistan’s “efforts have paid (off)” during a Tuesday meeting on the US-led motion, suggesting there was “no consensus for nominating Pakistan”. He suggested a “three months pause” and asked for the resolution to be discussed in Asia Pacific Group, which is also a part of FATF. “Grateful to friends who helped,” Asif had added. On the same day as Asif’s tweet, The Wall Street Journal had named China, Turkey, and Saudi Arabia as the ‘friends’ who had come forward to rescue Pakistan, saying that the three countries had blocked the US’s motion to put Pakistan on the list. Mr. Asif had believed that Pakistan’s trouble had ended.
The strength of the comment was the belief that Saudis would not back off their objection to the resolution. Saudis required help in consolidating the regime of new Crown Prince. Terming it as one of the rarest disagreement between Riyadh and the Trump administration, the Wall Street Journal citing officials involved in the process reported that Saudi Arabia joined Turkey and China in a move to block the US-led attempt. Trump administration has also been trying to reverse the reprieve to Islamabad and pressuring the Kingdom of Saudi Arabia (KSA) and other countries to withdraw their support to Pakistan.
Pakistan had also pinned on hopes that China will not leave their friends in a disadvantageous position. However, the Saudis backed down on US pressure and China dropped its opposition on the matter. Turkey succumbed to the US threat on technological and fianncial aid. The Chinese withdrew their objection on persuasion by India.
Pakistan’s Trouble: Failed Manoeuvres
In the days preceding to the FATF plenary session this week, the government took control of three dispensaries run by Hafiz Saeed’s Jamaatud Dawa (JuD) and the Falah-i-Insaniyat Foundation (FIF) in a rural area near the capital.
Additionally, President Mamnoon Hussain on Feb 9 quietly promulgated an ordinance amending the Anti-Terrorism Act, 1997 with regards to proscription of terrorist individuals and organisations to include entities listed by the United Nations Security Council (UNSC) — in a move that would end a longstanding ambiguity over the status of the JuD and FIF by firmly placing them on the list of proscribed groups.
On Thursday, ahead of the FATF’s outcomes, a White House deputy press secretary, Raj Shah, expressed Trump administration’s displeasure over the efforts so far made by Pakistan against terrorism. He told reporters that US President Donald Trump is not “satisfied with progress when it comes to Pakistan”.
“For the first time, we’re holding Pakistan accountable for its actions. We’ve seen modest progress in terms of Pakistan’s actual acknowledgment of these concerns, but President Donald Trump is not satisfied with progress when it comes to Pakistan,” said Shah while answering a question at the press briefing about the US South Asia policy.
The FATF, an intergovernmental body based in Paris that sets global standards for fighting illicit finance, had previously warned Islamabad it could be put back on the list without further efforts to crack down on the flow of funds to militants. As we stand today Pakistan is on the grey-list and will face financial hardships.
Pakistan’s Trouble: Impact
Pakistani officials and diplomats say being put on the FATF watchlist could deal a blow to Pakistan’s economy, making it harder for foreign investors and companies to do business in the country. Thus increasing Pakistan’s trouble especially in election year.
International Image hit:
This fresh Pakistan’s trouble will hit its image drastically at a global level. Being put back on greylist will translate into a “major setback for Islamabad’s efforts to improve its image”, according to Dawn, a leading Pakistani Newspaper.
Higher Transaction Costs:
FATF is known to maintain greylist of countries which have weak measures to counter and combat money laundering and terror financing. It does not have the authority or power to impose any sanctions on the countries listed in it. The actual cost escalation is because of increase in unnecessary scrutiny on international transactions.
Increased cost of Business:
It is feared that punitive action would be taken against Pakistan if it is found to be complicit in terror financing. Such an action would increase Pakistan’s trouble, jacking up the cost of doing international and domestic business.
This Pakistan’s Trouble will hurt Pakistan’s economy ‘very badly’:
Pakistani officials and diplomats have already told news agencies that being included in the FATF watchlist will surely destroy Pakistan’s economy. It will make it harder for foreign investors and companies to do business. “If you’re put on a terror watchlist, you will be made to go through (greater) scrutiny,” Pakistan’s former counter-terrorism chief, Khawaja Khalid Farooq, told Reuters. “It will hurt the economy very badly, and increase Pakistan’s trouble,” he added.
Increase in cost of borrowings:
Officials fear that if Pakistan was put on the FATF monitoring list, it would be harder and more expensive for the country to borrow money from international debt markets, news agencies have reported. Pakistan Finance ministry officials feared a global downgrading by credit agencies. This will make Pakistan harder or more expensive for Pakistan to raise debt in international markets.
Snapped Banking Links will increase Pakistan’s Trouble:
Already only two foreign Banking organizations are functioning in Pakistan. The prospect of Pakistan being placed back on the global terrorist financing watchlist, they will be forced to go back and check risk to reward analysis. The only banks Standard Charted Bank and Citi Bank may also pull out.
Foreign banks will avoid Pakistani Banks:
With Habib Bank has already been fined in the US for its role in terror funding. Now if Pakistan is again put on the greylist then world banks will start to avoid interacting with their counterparts in Pakistan.
Pakistan’s Trouble with the current deficit:
If the foreign transactions decline, this will impact the foreign currency inflows. This will result in widening of Pakistan’s current account deficit. Already Pakistan had to be bailed out in 2013 when it experienced the balance-of-payments crisis.
Points to Ponder during Pakistan’s troubled times:
People of Pakistan are now going to pay for the sins committed by the politicians who have been elected by them. The sins were perpetrated by the jihadi forces which are being backed by ISI and ISPR. Pakistan is loosing out to those who are managing top echelons of government and Pakistan Army. We have given out our land to the Chinese for their OBOR, we are accepting their currency, their language. Chinese are marrying Pakistani women. We are sending our Army to Saudi Arabia to help in their internal war. We are helping Islamic countries around the world with our advanced science and technology and they are turning a blind eye to Pakistan’s troubles. What are we getting in return?
It is time for people of Pakistan to vote taking due diligence during the years general elections. Already the motion is adopted and Pakistan is going to face larger isolation on the financial front which will directly affect the people of Pakistan. If voted wisely the people may not have to face it again.
Finally, people of Pakistan should come to know who is actually responsible.