In a statement on February 28, 2008, the Financial Action Task Force (FATF) voiced concern about the existing deficiencies in Pakistan’s counter terrorist financing and anti-money laundering system. While acknowledging some progress, the FATF noted that the shortcomings in Pakistan’s national legal framework constituted a money laundering/terrorist financing vulnerability in the international financial system.

Pakistan today presents the picture of a nation at war with itself. It is not very often that one sees the armed forces of a state pounding its own citizens with helicopter gunships and heavy artillery. The inferno that had been ablaze in South Waziristan and North Waziristan for some time has now engulfed all the seven agencies of the Federally Administered Tribal Area (FATA) and the flames from FATA have set almost the entire North West Frontier Province (NWFP) on fire.

As the time for the election draws near, the tribal frontier is getting hotter with each passing day. Suddenly rumour mills are active that the new Army Chief is bypassing Musharraf in his interactions with the Americans and is going to allow them some foothold in Pakistan. Americans are now claiming that the Afghan resistance is on the wane and the “level of violent activity in the eastern provinces is down about 40 per cent.”

The assassination of Benazir Bhutto on December 27, 2007 at an election rally in Rawalpindi raises serious doubts about Pakistan’s peaceful political transition to an era of democratic politics. Eight years of Musharraf’s rule has seen growing fundamentalism, political instability and ethnic disaffection. It was thought that reverting to a troika system would bring about the right balance between a democratically elected leader and the Army, which would help arrest disenchantment and address instability.

While the assassination of Benazir Bhutto has worsened the political turmoil in Pakistan, it has also left in disarray the US policy of attempting to nudge this crucial ally towards a democratic and stable future. The United States underwrote the deal between Pervez Musharraf and Benazir Bhutto in the hope that her return to power would lend legitimacy to the former’s increasingly unpopular rule. In Bhutto and her party, the US found moderation and cosmopolitanism – a counterforce to the growing religious extremism in the country.