The Pakistani government’s removal of a virulently anti-Shiite militant from its terrorism list at the very moment that an international money laundering and terrorism finance watchdog was deciding to put the country on a watch list highlights Pakistan’s struggle to come to grips with militancy. The decision by the Financial Action Task Force (FATF) that was reported by Pakistani media but has yet to be announced by the group itself also puts China’s ambiguous attitude towards Pakistani militants on the spot.

It further raises questions about attitudes of Saudi Arabian Crown Prince Mohammed bin Salman’s attitude towards Pakistani militants. Like China, Saudi Arabia has adopted contradictory attitudes towards Pakistani militants, supporting those that serve its geopolitical objectives while seeking to neutralize militants that either threaten its interests or are of little value to the kingdom.

Saudi Arabia and China paved the way for this week’s decision to put Pakistan on FATF’s grey list by acquiescing in February to a FATF decision to give Pakistan three months to clean up its act. The grey listing means that Pakistan's financial system will be designated as posing a risk to the international financial system because of “strategic deficiencies” in its ability to prevent terror financing and money laundering.

Pakistani officials downplayed the significance of the grey listing, noting that the country was able to float international bonds, borrow from multilateral bodies, receive or send remittances or conduct international trade when it was listed between 2012 and 2015. In March, then finance minister Miftah Ismail told the national assembly that the listing would not affect Pakistan’s economy and at best cause the country embarrassment. Pakistan, nevertheless, sought to evade listing by issuing this month a directive that strengthened its anti-money laundering and terrorism finance controls.

The government earlier cracked down on entities associated with Hafez Saeed, an internationally designated terrorist, who is believed to be responsible for the 2008 attacks in Mumbai, in which more than 160 people were killed. Pakistani officials suggested that they had evaded blacklisting by presenting a 26-point action plan that would address FATF’s concerns in the next 15 months.

The plan promised that Pakistan would share with FATF its steps to counter the Islamic State, Al Qaeda, the Taliban and the Haqqani network; efforts to halt the transfer of funds to militants via couriers; work to enhance the capacity of prosecutors; and moves against illegal money changers and cross border smuggling of currency. The Pakistani effort however did not stop the government from removing Muhammad Ahmed Ludhianvi, the head of Ahl-e-Sunnat Wal Jamaat (ASWJ), from its terrorism list on the day that FATF was discussing Pakistan in Paris.

ASWJ, which is fielding dozens of candidates for Pakistan’s July 25 elections, is the successor of long-banned Sipah-e-Sahaba, a virulently anti-Shiite group that has close ties to Saudi Arabia. “Some things are natural. It’s like when two Pakistanis meet abroad or someone from Jhang meets another person from Jhang in Karachi. It’s natural to be closest to the people with whom we have similarities… We are the biggest anti-Shiite movement in Pakistan,” Mr. Ludhianvi said in 2016 over a lunch of chicken, vegetables and rice. Mr. Ludhianvi sits at the intersection of both Pakistan and Saudi Arabia’s two-pronged attitude towards militancy.

Madrassas or religious seminaries operated by ASWJ in the Pakistani province of Balochistan that borders on Iran have benefitted from an injection of funds from the kingdom in the last two years, according to militants. The source of the Saudi funding remains unclear but is believed to have tacit government support despite Prince Mohammed’s propagation of an undefined form of moderate Islam, a cutback in Saudi funding of ultra-conservative Sunni Muslims worldwide, and the kingdom’s stepping up its economic cooperation with Afghanistan in a bid to isolate both Iran and the Taliban.

Saudi ambiguity is matched by a similar Chinese haziness in its attitude toward Pakistani militants. China’s sincerity will be put to the test when later this year the United Nations Security Council is likely to again debate designating Masoud Azhar, a fighter in the anti-Soviet jihad in Afghanistan in the 1980s and an Islamic scholar who is believed to have been responsible for an attack in 2016 on India’s Pathankot Air Force Station, as a terrorist. China has repeatedly vetoed Mr. Azhar’s designation. China shielded Mr. Saeed from being listed by the UN prior to the Mumbai attacks.

Men like Messrs. Saeed and Azhar serve China’s interest of keeping India off balance as well as the People’s Republic’s relations with the powerful Pakistani military, which it views as a more reliable partner than Pakistan’s unruly and rambunctious politicians. Complicating the equation is the fact that Chinese and Saudi selective support for Pakistani militants works at cross purposes.

China’s focus on India does not threaten Saudi interests but Saudi support of anti-Shiite militants in a region that is key to China’s US $50 billion Belt and Road-related investment in Pakistan could put Balochistan’s already fragile security at risk. The question is whether Saudi and Chinese acquiescence in FATF’s grey listing of Pakistan signals that the two countries may have second thoughts about their ambiguous approaches to Pakistani militants. If so, that may be the key to untying Pakistan’s knots in its struggle with militancy.

Courtesy

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