FATF- Pakistan’s Diplomatic Confusion


This past whole week has been considered as a daunting ride for both Pakistani Government and Foreign Office as far as the status of Pakistan in Financial Action Task Force’s (FATF) list is concerned. There have been more speculations about the current status of Pakistan in FATF Listing than any PSL cricket match. The media of our ‘beloved neighboring country’ India, as usual, has been exaggerating and declaring Pakistan in FATF’s Grey list without any official confirmation while many of our Pakistani media including our very dear Foreign Minister were arguing otherwise. It has now become probable that Pakistan would be declared in the Grey-List of FATF in June this year. This is certainly not very good news for Pakistan in any way possible. But before drilling further as to why Pakistan has come to this cross-road situation, let’s first understand what the FATF is and why it is extremely important not to be in “FATF’s Grey-List”.

The FATF is an intergovernmental body that headquartered in Paris, France. This body makes sure that all the member countries are implementing every designated international convention. It further works to criminalize money laundering from countries and help the relevant authorities to stop the proceeding of money laundering. The FATF also makes sure that the information of the customers transferring money is recorded whether this transfer is made via any financial or non-financial institutions. It has also installed a Financial Intelligence Unit which scrutinizes each and every financial transaction and take due actions against any suspicious transaction. This body works in a nucleus with every investigating team internationally that is examining and prosecuting money laundering.

Last week in the eleventh hour, Pakistani Government sent its special delegation under the leadership of Mr. Miftah Ismail the advisor to the Prime Minister of Pakistan on Finance to negotiate and convince the personnel of FATF not to include Pakistan in FATF’s Grey-List. There can be a huge blow to the economy of Pakistan if it is situated in Grey-List of FATF in June this year.

According to the financial experts, if Pakistan is placed on the watch-list, each banking transaction of the country with rest of the world would be highly scrutinized. The cost and process of the opening letter of credits (LC) for international trade process would be enhanced. It would further depreciate the overall economic and financial ratings of the country on various international credit rating agencies. This would in effect surge the overall cost of borrowing for the Government from various financial institutions including IMF, Paris Club, and World Bank. For example, Pakistan has been borrowing from many financial institutions and countries by issuing Eurobond. It would be a very difficult situation for the country and the rate of borrowing would surge exponentially if it is on the watch-list. Furthermore, it would be very difficult for the foreign companies to do business in Pakistan and these foreign companies would be reluctant to add investment in the country. Currently, there are 11 countries which are heavily examined and scrutinized by FATF including North Korea, Ethiopia, Yemen, Syria, Iraq, and Iran. Pakistan was also highly watched on being in the Grey-List of FATF during 2009 to 2015.

On the last resort, the Government of Pakistan did some cosmetic measures to please its “Friends” in FATF. Just a day before the meeting of FATF, a presidential ordinance was issued and approved in amending the anti-terror legislation to add all the individuals and groups on UN-lists in the national listings of the proscribed groups and individuals. Furthermore, a hasty announcement was made to deploy a certain number of Pakistani troops in Saudi Arabia. This was an effort to gain the confidence of Gulf Cooperation Council at the voting process of FATF. Similarly, a report was also presented by Pakistani delegation at the meeting of FATF in Paris plenary to show the progress made by Pakistan in implementing and introducing all the measures put forward by FATF.

Now here comes the main question as to why Pakistan has come to this crossroad. There are many reasons and a large number of small but persistent incidents which lead to this big disaster. First of all, Pakistan is actually a victim of dirty politics being played by its neighbors and the USA. The USA keeps on blaming Pakistan for helping the terrorists to flourish in Afghanistan but at the same time, USA is consistently running its back-door diplomacy with Taliban. Similarly, it was the USA think tanks which coined the term ‘Good Taliban’ and ‘Bad Taliban’. In the recent survey conducted by BBC, it was revealed that Taliban are actually controlling approximately seventy percent of the total territories of Afghanistan. In numerous cases, Afghan Security Force is not being able to secure its own territories or provide the basic security to its countrymen. How Pakistan can be blamed for everything happening in Afghanistan and Afghan Government has always been considered as innocent.

The core issue lies with the diplomacy of Pakistan. For the past few years, the foreign department has been completely ignored and diplomats have been installed on keys positions on the basis of personal likes and dislikes. Key diplomatic assignments have been brutally given to incompetent personnel. There are large numbers of Pakistani diplomats who are either inappropriate or ignorant of the current international scenario. There must be a cleansing of the Pakistani diplomacy at all levels and they must be aligned with the national and international strategic policies of Pakistan. Last but not the least, Pakistan instead of developing non-state actors as strategic assets must now develop its all-state actors in accordance with its national ideology, geopolitical position and shifting the paradigm of a superpower at international level.




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