Pakistan’s de facto finance minister has reacted angrily to US pressure over Islamist extremism and the financing of terror, but is still considering new measures to curb money laundering in a bid to fend off international sanctions. Miftah Ismail, the finance adviser to the Pakistani prime minister, has told the Financial Times he is “not worried” if the US cancels all its aid to his country as the two allies argue publicly over whether Islamabad is doing enough to tackle domestic extremism.
“We are the sixth or seventh-largest country in the world, and have the seventh-largest standing army in the world,” Mr Ismail said in an interview in his office in Islamabad. “We’re not going to compromise on our security interest, on our national interest, based on a few hundred million dollars, I promise you that.” As President Donald Trump has recommitted to the Afghan war, he has also tried to push Pakistan to do more to tackle the Taliban and affiliated groups, in part by cancelling military aid and threatening further sanctions.
But both US and Pakistani officials say this approach has not yet worked, with Islamabad remaining defiant in the face of threats from Washington. Mr Trump shocked Pakistan earlier this year when he tweeted that his country had given the country more than $33bn in aid over 15 years but received “nothing but lies and deceit” in return. That tweet was followed by an announcement that the US would suspend $2bn in military aid in an effort to push Islamabad into further action against domestic extremists. Congress is currently considering a bill that would see civilian aid also brought to an end.
Since then, US officials have worked hard to persuade their Pakistani counterparts to take the kind of action that could see aid restored, such as arresting Taliban leaders and freezing their bank accounts. Far from improving relations, however, senior politicians in Islamabad say they are being “lectured to” and “bullied”, and have told the FT that relations are at an all-time low.
The deterioration in the relationship could threaten US efforts to end the war in Afghanistan, with Washington hoping that Islamabad can both support US troop movements and help bring elements of the Taliban to the negotiating table. While much of the negotiation is being done behind closed doors, Mr Ismail’s comments are a rare public admission of the frustration felt by his government over its treatment at the hands of the Trump administration. Islamabad was particularly incensed by the US-led push to name and shame Pakistan as failing to stop terrorism financing at a recent international meeting in Paris. Members of the Financial Action Task Force, which includes the US, UK, Russia and China, have proposed placing Pakistan on its “grey list” of countries which are not doing enough to tackle terror funding.
Islamabad has until June to come up with a plan, which Mr Ismail said would involve prosecuting more people for terror financing and carrying out raids on illegal money changers. But he expressed anger at the way in which the negotiations were handled in Paris. Accusing Washington of teaming up with New Delhi, he said: “I think that America and India probably together were just focused on embarrassing Pakistan.” Asked why the US would want to embarrass its ally, he said: “Some guy wakes up early in the morning and tweets; I don’t know what the f*** he tweets.”
Mr Ismail is also weighing up several anti-money-laundering measures that he hopes will help persuade the international community not to take further sanctions. They include forcing holders of foreign currency bank accounts to declare the source of deposits over $100,000, as well as a one-time amnesty for Pakistanis to declare offshore wealth to authorities. But he insisted that Pakistan’s biggest mistake was failing to get its message across to its international partners. “Pakistan is doing all we can to improve the security situation in the region but maybe the world is not seeing our narrative [as] we want.”