The U.S. anti-terrorism strategy in Pakistan neglects the black market-related funding of terrorist organisations (in particular massive cigarette smuggling). This situation is made possible by the underdeveloped Pakistani State, which is a consequence of an undertaxed Pakistani economy, itself a consequence of unfair globalized world trade.
The U.S. anti-terrorism strategy in Pakistan has been predominantly military and intelligence-based for over 15 years. When the Obama administration proposed US $860 million in aid for Pakistan for the 2016-2017 fiscal year, almost one third was solely dedicated to providing the country with military hardware. Currently, the question of recommencing the “drone war” in Pakistan under the Trump administration is being discussed by U.S. media. This is yet another example of an unbalanced approach to security issues around the Pakistani-Afghan border area.
On the one hand, the valid one, U.S. authorities easily raise extremely large investments to confront terrorist organisations and various other armed groups. Either they handle the confrontation through military might, for instance drone strikes (from 2004 to 2016) or directly arm the military so that they handle the confrontation by themselves, for instance the National Action Plan including current “Operation Zarb-e-Azb” in Pakistan. On the other hand, the flawed one, Washington does not pay enough attention to the resources of terrorist organisations which are rooted in black money and massive smuggling. U.S. officials seem to have forgotten an elementary rule of the art of war: cut off your enemy’s supplies and he will no longer be able to fight.
Indeed, focusing on military confrontation against Pakistan-based terrorist organizations, while neglecting this black-market issue, is like cutting off heads of the Hydra with the US as Hercules. These severed heads will continue to be swiftly replaced as long as the underlying economic issue remains unaddressed. This issue is unbalanced globalization. Pakistan is a poor nation. Since there are no global rules to make international trade fair and human development-based, the country had to transform its entire production apparatus into a “low cost economy”. This means the lowest possible wages for the working population, an underdeveloped social system, and the lowest possible taxes. But if you are neither a country with strategic resources such as Saudi Arabia, nor a tax haven plundering the fiscal resources of countries around the world like Luxembourg; an undertaxed economy inevitably brings about an underdeveloped State, leading to underdeveloped administration, police, taxation, and judicial systems. Thus trafficking can easily thrive.
Take the example of tobacco smuggling. One fifth of cigarettes in Pakistan come from the black market. The vast majority of stock is produced locally, especially in two major tobacco growing regions. One is Khyber Pakhtunkhwa, formerly known as North West Frontier Province. The other is Azad Kashmir, which is in the Pakistan-ruled part of Kashmir. Most contraband cigarettes are produced by legitimate factories, alongside registered production, or by small sites entirely dedicated to the black market; generally family workshops. And as with any large, clandestine economic system, this one nurtures criminal groups, armed groups, terrorist organizations, and systemic large-scale corruption throughout its network. Parts of the Pakistani tobacco contraband system have grown so powerful that they allowed a kind of “nicotine-state” to develop within the country.
In Federally Administered Tribal Areas (FATA), almost 20 percent of the revenue of terrorist organisations comes from cigarette smuggling. In the Khyber Agency, which is a subpart of FATA, tobacco contraband factories are controlled and extorted by the ISIS-affiliated jihadist group Lashkar-e-Islam, however, transportation along roads and checkpoints are controlled by Pakistani militaries and “moderate” Taliban groups. In other words, terrorism, endemic corruption and cigarette trafficking are deeply entwined: it is no coincidence that the Khyber Agency is simultaneously a tobacco growing region, a territory where one can find a key mountain pass between Pakistan and Afghanistan called the Khyber Pass, and a strategic area for Pakistani military strategies against Taliban forces.
Perhaps it is time for the U.S. authorities to move to a more balanced approach that would admit that the spread of terrorism in Pakistan, funded by black money, is also made easier by the free-trade related context of unfair globalization. This would necessitate a new strategy, under which State-building and aid to economic development are as important as purely military action, instead of being merely supplementary.