WASHINGTON (AP) - Pakistan is scrambling to steer clear of a global watch list for terrorism financing, the latest U.S. pressure tactic to get its difficult ally to crack down on militants crossing the border to fight in Afghanistan.
The Trump administration already has suspended security money to Pakistan and imposed sanctions on Pakistan-linked militants. Its latest campaign, backed by several European nations, is to add the South Asian nation to a watch list of the Paris-based Financial Action Task Force, an intergovernmental organization that combats money laundering and terrorist financing.
Pakistan was on the list from 2012 to 2015. With new signs that its economy is entering choppy waters, the return of the designation could further deter foreign investment and hurt Pakistan's access to international financial markets.
In a pre-emptive move, the Pakistanis on Wednesday began seizing assets and funds belonging to Islamic charities linked to a radical cleric, Hafiz Saeed. He was freed by Pakistani authorities in November on a court order, but the U.S. has a $10 million reward on his head.
Pakistan has also amended a decades-old anti-terrorism law to allow authorities to act against outlawed charities, groups or individuals blacklisted by the U.N. Security Council.
"This suggests that Islamabad recognizes the very real negative economic consequences of getting put on the watch list," said Michael Kugelman, a senior associate for South Asia at the Wilson Center think tank in Washington. "It's a reputational blow when it happens, and banks and investors get nervous."
Pakistan has taken other action, including seizing assets of the Jamaat-ud-Dawa and Falah-e-Insaniat charities, which the U.S. has accused of having terror links. But Kugelman said he doubted Pakistan would undertake bigger changes to address American concerns over long-standing links to Taliban fighting the U.S.-backed government in Afghanistan.
"Pakistan has quite rigid interests that entail maintaining ties to the terrorists that Washington wants it to turn over or eliminate. So it won't go out and sever all ties to terror groups on Pakistani soil or shut down all their facilities," he said.
Pakistan's cooperation is seen as key to the success of Trump's Afghanistan policy, unveiled last summer, to turn around the 17-year war. Trump has accused of Pakistan of "lies and deceit" by providing sanctuary to militants, which Pakistan denies. The U.S. has suspended at least $1.2 billion in security assistance, plunging relations to perhaps their lowest point since Osama bin Laden's killing by U.S. commandos near a Pakistani garrison in 2011.
Foreign Ministry spokesman Mohammad Faisal charged that the move to put Pakistan on the FATF watch list was politically motivated to hamper the nation's economic progress. He said the U.S. and Britain submitted a letter to the FATF on Jan. 20 seeking that downgrade even as Pakistan's efforts to enforce sanctions on terror groups were still being assessed. France and Germany also advocate putting Pakistan on the watch list, he said.
The State Department said the FATF would determine "appropriate next steps regarding Pakistan" at a plenary session next week but declined to specify any action the U.S. is proposing.
Daniel Markey, a South Asia expert at the School of Advanced International Studies at John Hopkins University said the downgrade would be primarily symbolic, demonstrating the Trump administration's intent to ratchet up the pressure.
"It suggests that more serious moves could be coming," Markey said, noting the U.S. could exercise similar pressure if Pakistan seeks a bailout from the International Monetary Fund. That's a possible scenario after national elections in July because of Pakistan's widening current account deficit and an overvalued currency.