Geopolitics

'The Divorce' - Why The U.S.-Pakistan Marriage Of Convenience Is Over

Analysis: The 10-year alliance between the US and Pakistan has always been shaky. But a year of bitter disputes have put the final nail in their partnership, leaving Pakistan to set out in search of new "friends," including age-old rival

A US army helicopter flies through Pakistan's Swat valley in 2010  (expertinfantry)
A US army helicopter flies through Pakistan's Swat valley in 2010 (expertinfantry)
Fredric Bobin

ISLAMABAD - We shouldn't be afraid of the word "divorce": the U.S.-Pakistan relationship is over. The two countries, allied in the war on terror for a decade after the Sep. 11 attacks, are now rethinking their relationship after a year of endless disputes. Their new relationship isn't antagonistic. But it's no longer an alliance, a term used to describe that special friendship where countries unite their security interests.

This shift is very important. Pakistan is playing a key role in the Afghan war and will be essential to any future peace scenario. By redeploying its diplomacy away from the United States towards new partners, Pakistan will also be changing the regional balance of power. A new geopolitical map of South Asia is in the works, more diverse and complex and probably more unpredictable as well.

2011 was an awful year for U.S.-Pakistan relations. It kicked off badly and ended even worse. On Jan. 27, CIA agent Raymond Davis shot and killed two Pakistani civilians in the middle of the street in Lahore. He claimed self-defense, but the case was never solved. It was the first rift in the relationship between Washington and Islamabad. Pakistani nationalists and Islamist circles used the shootings as a reason to criticize the growing presence of the CIA in their country – especially near Pashtun tribal areas in the northwest, where Afghan insurgents have set up their sanctuaries.

The Bin Laden factor

The aftermath of that incident hadn't yet settled when a new problem rocked the relationship. In the wee hours of May 2, U.S. Navy seals killed Osama Bin Laden in a raid on his home in Abbottabad, a Pakistani military town north of the capital Islamabad. The difference in the reaction of both countries was a caricature of the strategic misunderstanding that the so-called alliance was facing.

The mere fact that Bin Laden was able to find refuge so close to Pakistani barracks seemed to confirm Washington's worst suspicions. If nothing else, it was proof of that the the Pakistani military's secret service, the Inter-Services Intelligence (ISI), lacks credibility. The ISI was already deemed highly suspicious for its murky relationships with jihadist groups, and for being manipulated into serving Islamabad's geopolitical interests on the regional scene (Indian Cashmere, Afghanistan). In Pakistan, where the ISI's duplicity has always been denied, the reaction was patriotic: the American raid was viewed as an insult, an unacceptable "violation of national sovereignty."

On Sept. 22, Mike Mullen, then Chairman of the Joint Chiefs of Staff, added fuel to the fire by making a very strong accusation. He claimed the Haqqani network, (an Afghan insurgent group operating in Afghanistan from its Pakistani sanctuary in North Waziristan) was acting in some cases as the "real arm" of the ISI. Given the Haqqani network's threats against U.S. interests in Afghanistan, Admiral Mullen's claim all but implied the ISI was declaring war on the United States.

A real battle broke out between the two armies on Nov. 26 in Salala on the explosive Afghan-Pakistani border. That day, 24 Pakistani soldiers died. So too did the post-9/11 alliance. "For us, the reaction was ‘enough is enough"," says Fazal-ur-Rahman, a researcher at the Institute of Strategic Studies in Islamabad (ISSI).

Breaking up

From the Davis case to the Salala incident, it was all about retaliation. Pakistan expelled U.S. military advisors, banned access to its Shamsi air base from which many U.S. drones were taking off, and prevented logistic supplies for NATO troops in Afghanistan from transiting through Pakistan. Washington, for its part suspended about $800 million worth of financial aid to the Pakistani Army. The breakup was official.

"The damage to the relationship is deep and durable," says a European diplomat. In Pakistan, it's time for some introspection regarding the strategic convergence of the two countries outside of tactical accommodations. Pakistanis are finding it hard to swallow that Washington has been using their country as a pawn in its global game.

Having been a loyal partner to the United States during the Cold War, Pakistan believes it hasn't been paid back for its efforts. It has never gotten over the fact that America has always tried to spare India's feelings despite its pro-Russian stance at the time. Every time a conflict broke out between India and Pakistan (1965 and 1971) the United States refused to pick a side, and even went as far as freezing arms deliveries to Islamabad. In the late 1970s, Pakistan's nuclear program made the relationship worse and triggered American sanctions.

It took a major geopolitical event to rehabilitate Pakistan in American eyes: the 1979 Soviet invasion of Afghanistan. At the time the United States was quick to set aside its nuclear worries. President Ronald Reagan restarted military aid to Islamabad. The priority at that time was to use Pakistani sanctuaries to beat the Red Army in Afghanistan. Ten years later, with the Russian troops out, it was the end of the honeymoon. Pakistan lost its strategic interest in Washington's eyes, which imposed a new round of sanctions, justified by a conveniently rediscovered nuclear program. A slap in the face for Islamabad.

The same cycle was repeated right after 9/11. President George W. Bush downplayed the nuclear issue and asked his Pakistani counterpart President Pervez Musharraf to support NATO in eradicating jihadist pockets in Afghanistan and on the border with Pakistan. With the help of a generous aid package, Pakistan seemed willing to help. In reality, they continued to discretely support the Afghan insurrection, seeing the Taliban as useful "proxy combatants' to fight Indian influence in Afghanistan.

Strategic differences became clear: India, not jihadism, was the Pakistani Army's number one enemy. It's that contradiction, long hidden under tactical arrangements, that has just been exposed.

The ferocious battles of 2011 should end soon. "The crisis has reached its peak, it can't get any worse," says Abdullah Khan, director of the Conflict Monitor Center. In Islamabad, it's time to rethink the relationship. "We must reassess the terms of the engagement," says Imtiaz Gul, director of the Center for Research and Security Studies (CRSS). "They will no longer be decided by the U.S." After months of difficult discussions, on April 12 the Pakistani Parliament passed a resolution determining the framework of normalized diplomacy.

Time for new alliances

The new resolution paves the way for the end of the NATO embargo. Lawmakers have just one requirement: there can't be any arms or ammunition in the NATO stocks transiting through Pakistan to Afghanistan (a condition that was already in place before the embargo). But the issue is still tricky: Islamist groups have already warned they would physically oppose any new transit, whatever the type of goods being transferred. Parliament also requires the United States to stop its drone attacks on tribal areas. But Washington is showing no signs of backing down on that issue.

The question is how long Islamabad can arm-wrestle with Washington. With a struggling economy, can Pakistan do without the American civilian and military aid (an estimated $2 billion a year over the past decade)? Pakistanis deny the reality of these numbers, saying they've hardly gotten any of the promised funds. "American aid to Pakistan is a myth," says Fazul-ur-Rahman.

Either way, the United States can influence the Pakistani economy, if only through the International Monetary Fund, whose loans Pakistan desperately needs. It is therefore vital for Pakistan to find new partners: Europeans – especially the French – are suddenly becoming very interesting. The less politically correct Iran – and its gas – is also a target of Islamabad's attention. "Today, there is a real Iranian appeal for Pakistan," says a European diplomat.

Their relationship has improved since the tense period following the 1979 Islamic Revolution when Shia activism exported by Tehran went head-to-head with Pakistani Sunni extremism. China is also seen as a precious alternative to the United States.

But most surprisingly, archrival India is slowly becoming a key partner. Never has there been so much talk about liberalizing trade between the two neighbors. And the contradiction is not as obvious as it seems. "Pakistan cannot afford to fight on two fronts," explains the European diplomat. "If Pakistan's western border with Afghanistan blows up, the eastern border with India must be peaceful."

The end of the U.S.-Pakistani relationship is a game changer. And the region is evolving, one new partnership at a time.

Read the full article in French in Le Monde.

Photo - expertinfantry

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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