After asking last month whether the media should be more positive about Pakistan – the comments on the whole seemed to suggest we should be, while not being blind to the risks– it was interesting to see that Malaysia’s top lender, Malayan Banking, had no such doubts.

 Maybank said it had bought a 15 percent stake in Pakistan’s largest listed lender MCB Bank for $680 million, the largest banking acquisition into Pakistan, as it bet on a bright economic future despite the recent political turbulence.  It said the acquisition would give it access to ”a high-growth and under-penetrated banking market with a large population”, and that it was confident about Pakistan’s political outlook.

Part of this is clearly due to the booming business in Islamic banking. Reuters Bahrain correspondent Mohammed Abbas, who covered a Reuters summit on Islamic banking and finance in February, tells me it is no surprise that a Malaysian bank would invest in Pakistan.  Pakistani bankers basically run the Islamic finance industry in the Gulf and say Pakistan has done a lot to encourage Islamic finance. Since Malaysia’s Islamic banking industry is one of the deepest and most developed, and since  Malaysian banks have been trying to build bridges with other Islamic lenders, Pakistan is an obvious place to go. ”Given how active Pakistanis are in the industry, the fact that Malaysia is finding Pakistan fertile for expansion is logical,” he says.

So what is to be made of this Maybank deal? Was it born simply out of the growth in Islamic finance, fuelled by the oil money washing into the Gulf, and a South Asian approach to banking?

Or was there a bigger shift here, one which looks beyond the United States and its battle against al Qaeda and the Taliban and its war in Iraq, into the financial flows of the future?

I noticed that Merrill Lynch’s Soofian Zuberi, who advised on the deal, said that Maybank and MCD are likely to seek future deals together and look for opportunities in Central Asia and the Middle East. “These are markets where there is a geographic and cultural proximity that both parties can work together on,” said Zuberi.
    
   

(Luke Baker is with the U.S. army in eastern Afghanistan) 

The snows have largely melted in the Hindu Kush and the high trails over the mountains between Pakistan and Afghanistan are once again passable. What’s more, Tehrik-e-Taliban’s leader, Baitullah Mehsud, looks like he may secure a peace deal with Pakistan’s new leadership, including the possibility of Pakistan’s security forces backing off from attacking his hideouts in South Waziristan.

To many observers, those two developments lead to a conclusion: any spring offensive by the Taliban against U.S. and NATO forces in Afghanistan could be that much more powerful this year, with Mehsud throwing his tactical weight behind the offensive without fear of being squeezed by Pakistan’s forces from behind.
 
The argument has a fair amount of logic on its side, but how likely is the whole scenario really?

On the Afghanistan side of the border, U.S. commanders seem unconvinced, even if they are not dismissing the possibility of some sort of offensive in the coming months. First, they say many of the traditional infiltration routes over the mountains have now been closed off or are under watch by special forces. Even if much of the border is likely to remain passable — there’s no way 16,000 or so U.S. troops could seal every mountainous nook and cranny along hundreds of miles of frontier — they are not expecting the overall rate of infiltration to change substantially from last year.

Secondly, rather than relations between U.S. forces and Pakistani troops breaking down in the wake of President Pervez Musharraf’s sidelining and the murmurs of a peace deal with Mehsud, they say cooperation remains strong. Senior U.S. officers meet once a month, face-to-face for what they call “border flag” meetings with senior Pakistani officers, sharing intelligence and building relationships. Junior officers have even more contact — they have exchanged mobile phone numbers with the other side and sometimes communicate by radio on a daily basis.

“I wouldn’t say it’s perfect all along the border, but generally relations are pretty good. Uneven but good,” one senior U.S. officer said this week to describe the ties.

On occasion U.S. forces need to seek and have received permission to cross into Pakistan’s territory to pursue militants, he said. American unmanned spy planes are not allowed to pass into Pakistan’s air space, but otherwise, relations seem to be sound.

Perhaps most crucially, U.S. officers say they have seen no signs yet of Pakistani troops pulling back from the border area — a demand Mehsud has made as part of any peace deal.

Those three factors alone may not rule out any spring offensive — certainly the Taliban remains strong across southern Afghanistan and shows no signs of weakening — but they hint that this year may not see the big spring offensive some have suggested.

The U.S. State Department has just released its 2007 report on terrorism worldwide and it doesn’t look like it is winning the war against al Qaeda seven years after the Sept 11 attacks. The group not only remains the biggest threat to the United States and its allies, but using the tribal areas of Pakistan it has rebuilt some of its pre-Sept 11 capabilities. And its top  leadership, especially Ayman al-Zawahri, has regained some of its control over the group’s operations worldwide, says the report.

It makes for sobering reading and some of the figures are worth recounting.

-  The number of what the report identified as terrorist attacks worldwide fell slightly in 2007, but the number of people killed in the attacks rose to 22,685, from 20,872 in the previous year which suggests that people around the globe were getting increasingly efficient killing other people, as Russ Travers of the National Counterterrorism Center put it.
  One factor contributing to the increased lethality of attacks: increased use of backpacks by suicide bombers that are easier to sneak into crowded areas.

- A 50 percent increase in suicide attacks worldwide over the previous year and this ranged from somebody as young as a 15-year-old boy to a 64-year-old man in the advanced stages of cancer, potentially the oldest.

 - Incidents fell slightly in Iraq, but still accounted for 45 percent of all attacks and 60 percent of all fatalities worldwide in 2007.

- Pakistan saw the grimmest change, a 100 percent increase in attacks, and injuries and fatalities quadrupled.

- A 16 percent increase in attacks in Afghanistan

- Well over 50 percent of those killed or injured were Muslims.

- 2,400 children were killed or injured in 2007 by suicide attacks, an increase of 25 percent.

 The one silver lining according to Oxford Analytica is that several radical groups, who are engaged in local conflicts, could be undermining al Qaeda’s appeal in some parts of the world by adopting its brand name.

Al Qaeda’s legitimacy rests on convincing supporters that it acts justly to defend Muslims against domination by foreigners. On current trends, this message may increasingly be undermined: as the State Department notes, several radical causes adopted al Qaeda’s ‘brand’ during 2006 and 2007, importing it into conflicts in Algeria and Libya as well as longer-established battlegrounds.

This insertion into intractable local conflicts — such as the confrontation between radical Islamists and the state in Algeria — is a key reason for the high share of Muslims in the global death toll from terrorism.

If al Qaeda’s potential supporters associate the group with the indiscriminate slaughter of their fellow practitioners — rather than daring assaults against US interests — its call to violence may no longer hit home.

Is that something the world can hold on to? Or is it a hopeless and unending cycle where the heavier the hammer used to crush the attackers, the more the backlash? Is it time to change tack?
 

India, Pakistan and even tiny Sri Lanka have all ignored U.S. concerns, and have hosted Iranian President Mahmoud Ahmadinejad over the past two days. It is a fleeting visit with less than five hours scheduled in Delhi, but it seems like a carefully calibrated piece of diplomacy tiptoeing around the elephant in the room.
 
For, as relations go, India and Pakistan have become bound up with the United States in ways that would have been unthinkable not very long ago. Islamabad is a frontline ally in Washington’s war on al Qaeda and the Taliban, India a growing strategic partner with whom it is pushing a far-reaching civilian nuclear deal that gives it de facto recognition as a nuclear state.

So what’s this dance with Iran, accused by the United States of sponsoring terrorism and seeking to develop nuclear weapons ? Some of it is down to economics : Iran holds the key to India’s energy  insecurity, as a piece in the Asia Times argues.

With oil prices skyrocketing, India’s thirst for cheaper imported gas has acquired a greater urgency than before and if this means jumpstarting the 15-year-old proposal to pipe gas from Iran through Pakistan, now estimated to cost $7.5 billion, so be it. Pakistan too needs the natural gas to meet its growing energy demand, as also the millions of dollars it will earn in transit fees.

And if history is any lesson, the “pipeline of peace” could promote security in the region with the costs of a conflict between India and Pakistan that much higher.

But is there also a desire to assert or rather be seen to be asserting independence of action in hosting Ahmadinejad at a time when tensions are rising again over its nuclear ambitions ?

Pakistan has a new civilian government which has pledged to pursue a more independent course, including in the fight against al Qaeda, than followed by President Pervez Musharraf.

India’s government is under pressure from its communist allies who think it has gone too far in seeking warmer ties with America and risks losing its independence of action. In any case, New Delhi has been acutely sensitive of being seen as anything other than a fiercely independent nation.  

What of Sri Lanka ? Perhaps the island has had enough of lectures on human right violations and veiled threats to hold back assistance if it continues to seek a military solution to the insurgency by Tamil Tiger rebels. Iran will probably abjure such admonitions.    

Update - Since filing this blog,  Taliban commander Baitullah Mehsud has said he is pulling out of the peace deal with the government after it refused to withdraw the army from tribal lands on the Afghan border. So were the sceptics right all along? And what does this mean for the government’s new strategy?

On the same subject, here is an interesting piece in the Christian Science Monitor comparing Pakistan’s policy to that of the United States in Iraq. “Americans can hardly complain that Pakistan is on the verge of a deal with jihadists,” it says. “The US has already done a similar deal with Iraqi Sunni terrorists. In both cases, a prime goal is simply to isolate Al Qaeda.”

No doubt many more twists and turns are yet to come before the picture becomes clearer.

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Pakistan’s impending deal with the Mehsud tribes to end hostilities in South Waziristan could either turn out to be the door to a wider peace along the troubled corridor with Afghanistan or a strategic blunder with consequences not just for Pakistan, but for Afghanistan and beyond including the West.

Is Pakistan ready for it ? How far have the country’s new civilian leaders — who had pledged a radically different approach to the northwest region considered the haven of the Taliban and al Qaeda — thought it through?

Newspaper editorials, military experts and blogs are debating those questions both in Pakistan and a world away in the United States, Britain and even Canada, which worries whether its troops in Afghanistan will end up paying a price.

The 15-point agreement, according to a draft that has appeared in the media, essentially calls for an end to militant activity and an exchange of prisoners in return for the gradual withdrawal of the Pakistani military from parts of South Waziristan. There would be no more attacks or kidnapping of military and government officials, roads will be opened and the Frontier Corps, the local security force, will be allowed free movement.

More importantly, the Mehsud elders have also promised to expel all foreign militants from their territory starting within a month and the Pakistani government hopes to replicate the agreement in other parts of the region as well, aiming to drive the wedge deeper between the home grown elements and al Qaeda.

Baitullah Mehsud, leader of the umbrella group Tehrik-i-Taliban Pakistan (Taliban Movement of Pakistan) has already announced a ceasefire and threatened to string anyone violating it upside down in a bazaar. So far so good although there was a car bombing on Friday near a police station in North West Frontier Province. The Taliban said it was in retaliation for a police shootout and the ceasefire remained in place.

The government justifies the policy change saying it believes negotiations, significantly increased development aid for the tribal region and legislation designed to eventually integrate it with the rest of Pakistan offer the most effective strategy for turning the population there against al Qaeda.

In any case the military option has been tried, and it hasn’t produced results ; the military has lost hundreds of soldiers in the fighting, it has brought forth a spate of suicide bombings, and the operations have been deeply unpopular across the country.

Indeed, even the U.S. Congress’ investigative arm, the Government Accountability Office (GAO) in a report this month accused the Bush administration of failing to develop a comprehensive strategy to prevent — let alone decisively defeat — the al Qaeda leadership that fled to Pakistan after U.S.-led forces chased it out of Afghanistan more than six years ago.

The report, which was based on intelligence reports and interviews with U.S. diplomats and military and intelligence officers, found that Washington had relied too heavily on President Pervez Musharraf and the Pakistani army to deal with al Qaeda and that virtually all of the nearly six billion dollars in aid Washington had provided to help Pakistan fight al Qaeda and the Taliban in the tribal areas had gone to the military, while only a tiny fraction was earmarked for economic and other forms assistance for the largely Pashtun population there.

So then where is the rub ? The main criticism is that Pakistan might be buying peace for itself, while letting the militants devote their energy to the fight against U.S. forces in Afghanistan which they say is the “mother of all the problems there.”
There is no mention in the draft agreement of ending cross-border attacks into Afghanistan.

Secondly, deals with militants in both North and South Waziristan have been tried before, with disastrous consequences. A report by the International Crisis Group said Musharraf’s 2006 North Waziristan agreement was directly responsible for creating a safe haven for al Qaeda’s leadership in Pakistan.

And finally there is an issue of principle. Pakistani defence specialist Ikram Sehgal argues that while “all militants are not terrorists”, he says “one cannot (and should not) negotiate with terrorists. Baitullah Mehsud is a terrorist.”

In a posting this week, the blog fiverupees says Pakistan must pause and consider if it is ready to face the consequences of another 9/11 or 7/7 , but this time originating directly from the areas it is supposed to control.

In the comments on our blog earlier this month Pakistan: Breaking Down the Stereotypes one thing stands out – that people in Pakistan are tired of it being portrayed as a failed state and blame the western media for focusing too narrowly on suicide bombings rather than the achievements and attractions of the country.

You can read all the comments here and I am reproducing some below:

“Pakistan has always been portrayed in the media as a failed or dangerous country. In reality, this is totally absurd and false. The recent elections in Pakistan proves my point. They are progressive, they want peace and most of all they mean business.” - Posted by arif

“It is quite unfortunate that Pakistan has now become a synonym with suicide bombings and militancy, however, it is more than that. A thriving economy, booming telecom, construction , financial and IT market, Pakistan offers a lot more than what is on the news” - Posted by Kashif

“Pakistan is the best country in the world. It has everything. Beautiful country, beautiful people.. powerful military, fastest growing economy, best relations with other countries (other than communist India), awesome food.. what else does one need?” - Posted by Ahsan.

These comments encouraged me to put up the following video, mostly of the moutains in the north, which is one of the most popular videos of Pakistan on YouTube.  The accompanying music is a little bit dated, but photos are worth a look. I also e-mailed Waseem Khan Jadoon, who posted the video, to ask about it and he made the following comment:

“I uploaded this video because I want to show the world that we Pakistanis are not terrorists. Stop spreading propaganda against Pakistan especially western media. Promote peace and harmony in the world rather than hatism towards different religions and regions.”

Of course, as a journalist watching this video, I see not only my favourite part of the world, but also glaciers melting because of global warming; the divided former kingdom of Jammu and Kashmir, the potential for fights between India and Pakistan over water from Kashmir’s rivers; and the obvious tensions of an area that lies between India, Pakistan and China.

So are our commenters right that the media is too negative about Pakistan? Or are we simply trying to highlight the risks in the years ahead?

The rising cost of food that is stirring unrest in the developing world may have one positive spin-off: Afghanistan’s opium farmers, attracted by high wheat prices, may be turning to legal crops.

The Financial Times quotes a recent commander of British forces in Helmand, the heartland of the country’s drugs trade, as saying there is anectodal evidence of such a switch in the southern province. With wheat prices at record highs farmers are calculating they will make money planting the crop, says Brigadier Andrew MacKay.

But he adds, though, that this doesn’t mean that the tide has turned in the fight against the drug industry in Afghanistan, producing 93 percent of the world’s opium which is processed to make heroin and exported around the world.

Afghanistan’s opium crop is forecast to shrink by as much as half this year after 2007’s record harvest, but then this fall is not so much the result of international anti-narcotics efforts but mainly because of an unusally cold and dry winter that has disrupted germination of seeds.

The U.N. Food and Agriculture Organisation also cautions against reaching hasty conclusions, arguing that the profits from planting opium poppies are still high, so there might not be a very compelling incentive for farmers to make the change.

Also, looked at in another way, high food prices might actually drive desperate farmers to grow more opium to feed their families. Already Afghanistan, largely reliant on imports of wheat and flour, is reeling under the impact of high global prices and people have taken to the streets to protest.

It is suffering even more because Pakistan, which too is faced with a food problem, has restricted the flow of flour to its neighbour. A full-blown food crisis could be the spark for a national uprising in Afghanistan which has not yet happened despite some of the policies that the West has adopted, says abu muquwama, a blog which focuses on insurgencies and tactics to counter them.

While living in Delhi after 9/11, and in particular after India and Pakistan nearly went to war over an attack on the Indian parliament on December 13, 2001, one of the questions that cropped up frequently was about how much the Pakistan army had been permeated by hardline Islamists. In other words, how much sympathy did the army feel for al Qaeda and Taliban militants that then General Pervez Musharraf had pledged to fight?

Several years later, while researching a book on the Siachen war, I had occasion to travel with the Pakistan army and assess the Islamist question up close.  My impression was that the Pakistan army was not driven by religious fanaticism. Yes, it exhorted its soldiers to embrace “shaheed”,  or martyrdom,  in the name of Allah.  But it was otherwise remarkably similar to the Indian army. Both relied on a blend of nationalism and loyalty to their fellow men in the same unit; both found recruits in the mountains and rural villages who could be inculcated with a spirit of “ours not to reason why”; both counted on officers to lead from the front. Men did not go into battle dreaming of death. An officer who thinks only of killing himself is of little use to a professional army, which needs men who are above all sane, who can remain focused and objective, who know the difference between suicide and getting killed.

My Pakistan army minder on my trip to the Siachen war zone was clearly religious, respected prayer times, and did his best to explain to me the teachings of the Koran. But he probably expended more energy telling me off for smoking –  particularly on the world’s highest battlefield where the air is so thin that it can be difficult to walk — much as my minder during a tour of Siachen on the Indian side had done.

So I thought I had settled the Islamist question — at least in my own mind — until August 2007, when more than 200 Pakistani soldiers in South Waziristan in Pakistan’s tribal areas were taken captive by Islamist militants without firing a single shot.  During a visit to Delhi shortly afterwards, I discovered that people from the Indian army were as surprised as me — accustomed as they were to seeing their rivals on the Pakistan side at least make a show of fighting. Had the Islamists so permeated the Pakistan army that its soldiers had gone soft? 

Pakistan army expert Brian Cloughley addresses this question in his book ”War, Coups and Terror”, a review of Pakistan since 1971 and due to be published next month.  His conclusions make interesting reading.

While he recognises that the Pakistan army includes “some religious extremists among its officers and soldiers”, he says the promotions system overseen by President Pervez Musharraf made sure that officers were promoted on the basis of professional competence rather than religious devotion.

The rub came in the Federally Administered Tribal Areas (FATA) next to the Afghanistan border, where religious ideologues had affected the morale and efficiency of the military. ”There is evidence that some soldiers have been so influenced by religiosity as to have doubts about their being regarded as Shaheed in the event of being killed in conflict with fellow Muslims who are held (by extremist clerics) to be engaged in fighting against infidels,” he writes. “This has resulted in incidents of refusal to take part in operations in the tribal areas, which indicate a serious malaise.”

Cloughley quotes the following from a source that he is unwilling to identify, but I think is worth reproducing here:

“Statements [by terrorists captured during an army operation] and [other sources] leads to one inevitable conclusion, that deep in their hearts . . . [some of the] troops have sympathies for AQ/Taliban who, in their perception are fighting a holy war against non-Muslims now occupying  Afghanistan.  This feeling has got further impetus and strength because of the US invasion and occupation of Iraq and a partisan approach towards  the Palestinian issue.  Print and electronic media, anti-US sentiments among the general public, bitter criticism by opposition leaders of our government’s policy regarding Afghanistan [and] support to the Coalition (US) forces in combating terrorism . . .  and the anti-Islam propaganda by the west, have further reinforced the perception of the common man that Muslims all over the world are being victimised.  These feelings have obviously . . . penetrated the rank and file of the Army despite our best efforts that whatever we are doing is in the overall best interests of the country.  Having identified this weakness, we now need to apply all our command and leadership skills to educate our troops on the logic and necessity of what we are doing.”

Cloughley tries to take a positive view of this by saying that at least the problem was recognised by those in command and that  action was being taken to address it. But he adds that Pashtuns — the ethnic group who live on both sides of the Pakistan-Afghanistan border and who make up about a fifth of the regular army – had sometimes shown reluctance to engage militants both out of a disinclination to kill fellow tribesmen and antipathy against fighting fellow Muslims. ”Another factor is the widely-held belief that the counter-insurgency war in FATA … is not being conducted on behalf of Pakistan but is waged at the behest of the United States.”

Cloughley also says that missile attacks blamed on U.S. Predator drones targeting al Qaeda leaders hiding in Pakistan’s tribal areas had further angered the army, since they also killed civilians. Yet at the same time, the army had found itself caught in the middle, facing itself a steep rise in suicide attacks directed against military targets, in retaliation for its operations on the border. Though I have seen only one advance chapter of Cloughley’s book, it makes an interesting read, highlighting as it does one aspect of the phenomenally complex challenges faced by Pakistan in battling Islamist militants.
 

The United States, beginning with President George W. Bush himself, has this past two weeks trained its crosshairs on Pakistan, warning that another Sept. 11,  if it were to happen, would most likely not be plotted out of Iraq, Afghanistan or even Iran,  but Pakistan.

Like the steady drumbeat that has often preceded major moves by the administration, the threat from Pakistan’s Federally Administered Tribal Areas, considered the home of the top ranks of al Qaeda, has been articulated from the White House, at Congressional hearings and abroad.

Al Qaeda “won’t go away quietly in the night”, having found sanctuaries in ungoverned places, tribal areas and the Frontier Province of Pakistan, FBI director Robert Mueller said in the latest remarks on the matter, according to Pakistan’s Daily Times.

The issue is starting to create ripples, both at home in America and quite obviously in Pakistan, although for different reasons. For Bush critics at home, the barrage of statements is an admission, at the very least, that America is tied down in Iraq when it should be focusing on the threat along the Pakistan-Afghanistan border. At worst, it’s an admission that American blood and treasure have been spent in the wrong place.

In Pakistan, the reaction is measured but concern over U.S. intentions is unmistakable.

“That the Americans are up to mischief is also evident from their extraordinary interest in the internal politics of Pakistan and formation of the government, which they are desperately trying to influence to suit their own objectives,” Pakistan Defence says in a posting arguing that Washington, faced with a strong new national coalition government in Islamabad, had stepped up covert and public pressure.

Raids in Pakistan’s tribal areas have already been carried out by U.S. drones,  the News said, warning that any further U.S. intervention in region will aggravate the considerable problems there, including the legacy of the militant armies set up to fight the Soviet invasion of Afghanistan.
 

A crack has opened in the cast-iron rules surrounding Pakistan’s madrasas, and cricket, South Asia’s favourite sport, has rushed in.

Students from 24 religious schools in Islamabad, including the hardline Lal Masjid (Red Mosque), have been taking part in the past week in a cricket tournament organised by the city authorities as part of measures to regulate and revamp the schools. The students swapped their shalwar kameez for track pants and T-shirts, and sticks for cricket bats.

By all accounts, the games have been successful as enthusiastic crowds of skull-capped and turbaned students thronged the grounds to watch their schoolmates play with teams drawn from other schools, some of them from different sects who have often clashed in the past.

One blogger wrote that the games were a ray of light during a week clouded by a resurgence in political violence. Women students also took a break from their rigid, dawn-to-dusk schedules to take part in a badminton tournament held alongside the cricket contest.

Change was coming to the madrasas, but it would take a lot of doing before the schools shed their image as breeding grounds of extremism, Pakistani blogs and newspapers said. Indeed, some students from the Red Mosque said they had come to the tournament against the wishes of their teachers who said it was “unIslamic” because it was being covered by television channels.

Others said it was not cricket but a conspiracy against the seminaries.

The Lal Masjid, in the heart of Islamabad, was the scene of a bloody battle last year when troops stormed the mosque to put down a Taliban-style student movement, triggering in turn a wave of suicide bombings and blasts throughout the country culminating in the assassination of former Prime Minister Benazir Bhutto.

The assault on the mosque after a long siege was widely seen as the turning point in the war against militancy. The mosque has since opened and Islamabad officials, prodded by a new civilian government, are hoping to introduce maths, science and computer studies in the madrasas in the capital after the cricket success.