The ‘grey list’ notice by the Financial Action Task Force, an intergovernmental body, should be a cause of concern to Pakistan. Adverse impact to its already precarious economy apart, a formal ‘terror funder’ branding would do its image no good. Downgrading by the global lenders, IMF, World Bank and ADB, and by risk-rating agencies such as Moody’s and Standard and Poor’s, may follow. The cascading effect could be farreaching.
Islamabad may find accessing funds from the international markets tough. A downslide in foreign currency inflow, in turn, would widen Pakistan’s gaping CAD deficit. Nations failing to comply with the FATF standard measures to fight money laundering and terrorism attract grey and black listing. So Pakistan on the grey list would hopefully bring some relief to New Delhi and Kabul. Heightened terror activities and infiltration attempts across the Line of Control have led to incessant exchange of fire in the recent months, at a great human cost.
In Afghanistan, the terror export from Pakistan has not only kept Kabul on its toes, but also put the US troops stationed there at constant risk. Little wonder, this time the US initiated the FATF move to grey list Pakistan. When Pakistan was similarly put on the FATF watch list between 2012 and 2015, the US had deemed it fit to wangle an IMF loan for Islamabad to reduce the blow. Pakistan was, subsequently, removed from the grey list in 2015, to little avail.
Nothing changed; Pakistan was back to business, nurturing terror outfits on its soil as state policy against India. The current notice is likely to push Islamabad more on to Beijing’s lap. But any financial relief from China will not come as aid, but as debt. Besides, a terror-ridden Pakistan may not be conducive for Beijing’s big investment plans. Not to mention the hardship Pakistani private domestic investors are likely to face globally. Can these multiple fallouts persuade Pakistan to dismantle its terror structures? If it does, South Asia may become a better place and Pakistan a better destination.