China Votes Against Pakistan in FATF Meeting

Spearhead Analysis – 22.03.2018

By Shirin Naseer
Senior Research Analyst, Spearhead Research

The Pakistani Prime Minister’s Advisor on Finance, Miftah Ismail confirmed Pakistan’s place in the Financial Action Task Force (FATF)’s watch-list, which is set to be released this June. The FATF’s grey list includes states that according to FATF standards lack effective regulations to combat terrorism financing. While China, Turkey, and Saudi Arabia initially resisted US pressure to add Pakistan to the list, China and Saudi Arabia during the final phase of FATF meetings lifted their objections to Pakistan’s inclusion.

Most shocking for Pakistan was perhaps China’s decision to withdraw support for its long-standing ally. China has previously, for the sake of its broader regional and international interests, kept confrontations with Pakistan on its policies and alleged inaction or slow action against terror groups, such as the Jamaat–ul–Dawa’s (JuD) and Jaish-e-Mohammad, behind closed doors.

Subsequently, China’s decision to abandon its position was shocking for several policy analysts. It seems China is now more than willing to start using regional and international public forums to voice its position and issues with Pakistan’s anti-terrorism policy.

Arguably, the September BRICS summit last year had warned of this change in stance; the summit marked China’s growing openness to the idea of using a public forum to share its concerns on Pakistan’s anti-terrorism policy. The BRICS summit, which comprised of Brazil, Russia, India, China and South Africa, called several alleged Pakistan-based militant groups a threat to regional security. There was no immediate comment from Pakistan on the BRICS resolution. India of course welcomed the Chinese decision, which for many observers was seen as China taking a stand against Pakistan for the first time.

According to reports, during the FATF meeting it was actually after talks with India that China was persuaded to rethink its position on its ally Pakistan. Despite shock and feelings of betrayal voiced by several Pakistani media outlets on China’s decision to side with the US in the FATF, China’s change of stance should in retrospect perhaps not come as too big of a surprise.

Frustration with Islamabad and its policy on combating terrorism has been slowly but surely growing among all of Pakistan’s neighbors; China in this case is no different.

According to the ‘Financial Times’, China may also have been quietly holding talks with Baloch militants to protect its $60 billion worth of investment in the China-Pakistan-Economic Corridor (CPEC) project. While it is still unclear whether China’s decision to contact Baloch militants has Pakistan’s approval, this move can still be taken as a clear sign of mounting anxiousness in Beijing with the way Islamabad is so far handling its policies on combating terrorism in the Baluchistan region. 

China’s decision during the FATF meetings may then be viewed as more of a reflection of its own growing impatience with Pakistan’s alleged inaction, rather than diplomatic pressure from India. Apart from China’s increasing economic stakes in the CPEC project, China’s recent move in the FATF meeting may also have been motivated by the fact that China has also lost several of its workers to terror violence in Pakistan.

China’s decision to withdraw support for Pakistan is largely Beijing signaling to Islamabad that if progress on curbing terrorism continues to remain slow, the country stands to face, in addition to international isolation, opposition from one of its most significant and closest allies. China’s stance hence in this regard is clear; Pakistan must align its policies with Beijing’s security and economic interests. Islamabad can no longer expect unconditional support from Beijing. Pakistan has a three-month long reprieve before a final decision is made, and its implications begin to settle in. Pakistan must take into account all stakeholders in devising a security policy which ensures Pakistan is not grey-listed for too long a period of time. Immediate steps need to be taken to assure the international community of Pakistan’s seriousness towards combating terror groups—this will not only address China’s concerns but will also be in Pakistan’s own interest.

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