Home Global Village Economic impacts of Pakistan being placed on terror watch list

Economic impacts of Pakistan being placed on terror watch list

Economic
  • 163
    Shares

News Analysis |

Seeking diplomatic success, Pakistan sent Adviser to Prime Minister on Finance Dr. Miftah Ismail to attend the six-day meeting of Financial Action Task Force (FATF) which is underway in Paris.

The US is seeking to put Pakistan on a list of countries that financially aid terrorism and presented a resolution to place Pakistan on a global terror financing ‘watch list’.

Miftah left for Paris along with the a joint secretary-level official of the Ministry of Finance, Director General Financial Monitoring Unit, and representatives from the State Bank of Pakistan (SBP) which aim to fight the case for Pakistan in a hostile environment where reportedly, other than Kingdom of Saudi Arabia and China none of the members is willing to favor Pakistan.

The US is pressurizing Pakistan with all it has, having seen that they have not been able to cower Pakistan, to do what they want, after stopping US aid they are now using the FTAF as a tool.

Before landing in Pakistan for a day, Miftah was in Europe for a week where he had gone to convince the FATF members that Pakistan had taken adequate efforts to root out the terrorism and remain compliant with global anti-money laundering and terror financing requirements.

Read more: Does the growth in FDI depict the true picture of Pakistan’s…

The FATF is expected to discuss important issues to ensure safety and security and to protect the integrity of the global financial system. The meeting in Paris will involve more than 700 delegates from the 203 jurisdictions of the Global Network, which also includes the United Nation (UN), the International Monetary Fund (IMF) and the World Bank (WB).

Being placed on the list can have disastrous implications on Pakistan’s economy, coupled with the fear that once Pakistan is put on the list, it would be very difficult to take Pakistan off this list.

Earlier this week, the US State Department Spokesperson Heather Nauert expressed deep concerns about Pakistan’s ability and intent to uproot terrorism-related activities from its soil and lamented Pakistan for its inability to implement anti-money laundering regulations and anti-terrorist financing.

The US and UK joined hands to put forward the motion against Pakistan and also persuaded Germany and France which are now co-sponsoring the move. From February 21 to 23, the plenary meeting will take place that will focus on counter-terrorism financing.

It is the latest US pressure tactic to force and crack down Pakistan on allegedly helping militants crossing the border to fight in Afghanistan and India. It seems the diplomatic efforts of India have been successful in persuading the US and EU countries to put Pakistan on the global terrorist-financing watch-list.

The deep penetration of terrorists in Pakistan, revealed by Kulbushan, but long suspected by the Pakistani establishment, has been a concern for Pakistan. India is using US power in every forum to put Pakistan under pressure.

It may only prove to be a symbolic move suggesting future tougher sanctions could be in the offing if Pakistan fails to comply with the US demands. After suspending its $2 billion aid, the US expects to force Pakistan to cut ties with the militants operating in Afghanistan and Indian Held Kashmir (IHK).

Read more: Government thinking of taking out even more debt! More misery for…

Pakistan’s Economic Woes

The Pakistani economy has failed to revitalize itself on the backdrop of widespread corruption, higher cost of energy, weak trade facilitation and obsession with debt-financed growth.

Currently, Pakistan’s economy faces acute challenges.  Foreign Direct Investment (FDI) has declined by 3% in the last 7 months, and the twin-deficit along with the soaring debt to GDP ratio has been haunting Pakistan for some time now.

Colossal Impact of Expected Sanctions

With the expected sanctions from the US, the economy could further enter choppy waters and would further augment the problem. It could discourage the investors and FDI can dip more and Pakistan will struggle to generate access to international markets.

Legal risk may convince the potential investors to opt out of the investment. By placing Pakistan on the grey list, it will restrict the financial aid to the country. Moreover, Pakistan will be prevented from exporting certain goods.

The expected dividends of the CPEC related projects, helping China achieve a westward trade route away from the US patrolled Malacca straits and its positive impact on Pakistan’s ailing economy has frightened India and its allies, who wish to bolster India against China.

Pakistan’s booming banking industry could get a hit as the decision could heighten the risk profile of the country negatively affecting financial transactions with Pakistani banks.  

Read more: Pakistan’s geostrategic environment and its impact on the economy

Is Blacklisting Charities Linked to JuD too late a move?

Last week Pakistan amended the anti-terrorism law in an apparent lackluster effort to regain the trust of the international community. Pakistan blacklisted the charities linked to Jamaat-ud-Dawa (JuD) leader Hafiz Saeed.

Knowing the huge economic repercussions of this move, Pakistan amended a section of the Anti-Terrorism Act (ATA) 1997 to enable the authorities to move against individuals and organizations prescribed by the United Nations Security Council (UNSC).  

The federal government issued the notification to seize all the moveable and immovable assets of the organizations named in the UNSC sanctions list. Punjab government swiftly seized assets and funds belonging to Hafiz Saeed’s Jamat ud Dawa (JuD) and its welfare wing the Falah-i-Insaniat Foundation (FIF).

America’s Fear

The expected dividends of the CPEC related projects, helping China achieve a westward trade route away from the US patrolled Malacca straits and its positive impact on Pakistan’s ailing economy has frightened India and its allies, who wish to bolster India against China.

The deep penetration of terrorists in Pakistan, revealed by Kulbushan, but long suspected by the Pakistani establishment, has been a concern for Pakistan. India is using US power in every forum to put Pakistan under pressure. The US is pressurizing Pakistan with all it has, having seen that they have not been able to cower Pakistan, to do what they want, after stopping US aid they are now using the FTAF as a tool.


  • 163
    Shares

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.