“ Behind Pakistan’s aid convoys and religious missions lies a murky war playbook—where charities mask terror pipelines, cartels fund proxy wars, and Kalashnikovs settle political scores.”
………Lt Gen A B Shivane (Retd)
In the shadowed alleys of diplomacy and deception, Pakistan has long played a duplicitous role—projecting itself as a frontline state in the war on terror while covertly enabling it. Behind the facade of democratic governance lies a ruthless machinery where jihad is not merely ideology but enterprise—a sustainable, cash-rich model of strategic warfare. Pakistan’s hybrid warfare toolkit integrates charitable fronts, illicit financial flows, and militant proxies, enabling the state to project coercion while maintaining plausible deniability. This is not a story of rogue actors; it is the story of a rogue state and the Pak Army a state within the state.
The Deep State Within the State
In the smoke-filled corridors of global counter-terrorism forums, Pakistan has presented itself as both a victim and a partner. But beneath this diplomatic masquerade lies a darker, deeper truth: the country’s military establishment has industrialized jihad into a war economy. The Inter-Services Intelligence (ISI) doesn’t just tolerate terrorist networks—it manages them like portfolios.
These networks—nurtured, funded, and deployed at will—serve as extensions of Rawalpindi’s foreign policy. They bleed India in Kashmir, secure ‘strategic depth’ in Afghanistan, purge minorities at home, and provide just enough chaos to justify international sympathy and financial bailouts. From the Taliban’s resurgence in Kabul to targeted killings in Kashmir, the fingerprint of Pakistan’s deep state is unmistakable.
Weaponized Diversity: The Five Faces of Pakistan’s Jihad
This terror ecosystem is hydra-headed. It is designed not for ideology but for versatility—each faction is calibrated to specific geostrategic objectives. First are the global jihadis like Al-Qaeda and ISKP who use Pakistan as a springboard. Second, the Haqqani Network and the Afghan Taliban thrive in Pakistani sanctuaries, especially Quetta and North Waziristan. Third, are India-focused groups such as Lashkar-e-Taiba (LeT), Jaish-e-Mohammed (JeM), and Hizbul Mujahideen (HM), recruited, trained, controlled and launched across the Line of Control under Pakistan ISI tutelage. Fourth, the Tehrik-e-Taliban Pakistan (TTP), both threat and asset, nurtured till it backfired, is used as a justification to demand Western aid. Fifth, sectarian militias like Sipah-e-Sahaba carry out internal cleansing, further destabilising Pakistan while projecting a need for state control.
Each is a tool in Pakistan’s hybrid war doctrine. Each is cultivated and pruned to fit an evolving narrative; from the ‘good Taliban’ to the ‘bad TTP,’ from Kashmiri “freedom fighters” to anti-Shia “defenders of faith.” This isn’t ideological chaos; it’s strategic orchestration.
The Fauji Foundation: A Civilian Mask for a Military Empire
Established in 1954 as a welfare initiative for retired servicemen, the Fauji Foundation has morphed into a sprawling economic empire encompassing over 50 companies across fertilizers, cement, insurance, and banking. Despite its ostensible welfare mandate, its structure resembles a monopolistic conglomerate shielded from transparency and oversight.
Fauji Fertilizer alone dominates over 80% of Pakistan’s domestic fertilizer market, generating PKR 272 billion in revenue in 2022–23, according to Pakistan’s Economic Survey and SECP filings. However, only a minuscule 3%–5% of profits are channelled into actual welfare programs. These entities operate outside parliamentary scrutiny under ‘strategic security exceptions’, allowing the military to redirect resources discreetly to non-state actors under the guise of corporate autonomy.
Beyond fertilisers and finance, the Fauji Foundation’s empire intersects with the darker corridors of narcotics and illicit finance. Pakistan’s strategic location within the Golden Crescent has enabled the military via convoys, naval assets, and paramilitary checkpoints, to manage the logistical backbone of the regional heroin trade, as highlighted in UNODC’s 2023 report. Transport hubs linked to retired officers now embedded in Fauji-linked boards serve as key nodes in these networks. This drug economy fuels militant outfits like Lashkar-e-Taiba and Jaish-e-Mohammad, with entities like the Falah-e-Insaniyat Foundation receiving PKR 1.3 billion from Fauji-associated companies. Askari Bank under Fauji control is cited for systemic failures, laundering proceeds through military-run housing schemes and offshore channels. As international watchdogs like FATF and the UN Sanctions Monitoring Team have noted, such networks thrive behind the shield of “institutional immunity,” blending military privilege with transnational organised crime.
The ISI’s Parallel Foreign Office
This machinery is managed with chilling efficiency by Pakistan’s ISI, often described as a ‘state within a state.’ According to the European Foundation for South Asian Studies (EFSAS), the ISI disburses between $125–250 million annually to terrorist outfits. These funds cover everything from suicide mission bonuses to pensions for the families of “martyrs” and logistical support for cross-border infiltrations.
Operatives are on payroll. Porters and handlers are contracted. Routes and safe houses are mapped. The ISI doesn’t outsource terror—it operationalizes it. Like a transnational corporation, it runs spreadsheets of death with bureaucratic precision.
Charity Begins with Jihad: The Zakat–Jihad Nexus
Perhaps the most insidious enabler is the Zakat economy. Religious alms, especially during Ramadan, are siphoned off to fund terror under the guise of charity. In 2024 alone, over PKR 600 billion was donated domestically and by diaspora communities. Much of it flowed to jihadist proxies like Jamaat-ud-Dawa (JuD) and Al-Rasheed Trust, which continue to operate under pseudonyms despite international sanctions.
These groups wear dual masks distributing flood relief in Sindh one day and sponsoring armed jihad in Kashmir the next. A 2017 report by Pakistan’s own Financial Monitoring Unit (FMU) detailed how over 200 terror outfits operated within Pakistan’s borders, funded through a blend of alms, extortion, drug smuggling, and kidnapping.
Heroin as Geopolitical Currency
The terror economy is further sustained by narco-dollars. The integration of heroin trafficking into statecraft dates back to the Zia-ul-Haq regime. Today, Pakistan remains a major conduit for Afghan opium, which is smuggled through Karachi and Balochistan to fund groups like the Haqqani Network and Lashkar-e-Taiba.
The Taliban’s control of Afghanistan has revived this pipeline. Heroin proceeds are converted into clean cash, laundered through hawala networks, and injected into terror operations and political lobbying abroad. Meanwhile, Pakistan positions itself as a counter-narcotics ally, reaping international funds while safeguarding smuggling routes.
Pakistan’s Cash-Driven Terror Economy
Cash is the lifeblood of Pakistan’s terror infrastructure. According to a 2024 Terrorism Monitor report, jihadist networks primarily use Rs. 1,000 and Rs. 5,000 denominations, facilitating anonymous, untraceable transactions. With over 7% of the world’s unbanked population, Pakistan’s informal economy is tailor-made for terror finance.
Confessions from operatives like Lashkar’s Tunda underscore this dependence: “Big bills are kings who do anything for us.” Far from being an administrative lapse, this economic opacity is deliberate—designed to keep terror cash invisible and state complicity deniable.
Counterfeit Rupees: Economic Warfare by Proxy
Pakistan’s terror strategy doesn’t stop at bullets and bombs—it includes economic sabotage. The Fake Indian Currency Network (FICN), reportedly linked to Pakistan’s state presses, floods Indian markets with mint-quality counterfeit notes. The objective is threefold: fund operations, induce inflation, and psychologically destabilize.
Intelligence reports have traced these notes back to secure government facilities, proving that this is no freelance forgery. It is economic warfare, calculated to weaken India from within.
Global Enablers: Diaspora Donors and Western Guilt
Beyond Pakistan’s borders, a network of global enablers diaspora donors, Gulf benefactors, and Western NGOs feed the jihad economy, sometimes unknowingly, often wilfully blind. Many diaspora communities in the UK, North America, and the Gulf contribute funds under the belief they are supporting humanitarian causes. But these funds often land in the war chests of jihadist groups.
Investigations by the Middle East Forum and others have revealed how Western aid—particularly post-disaster relief—has been rerouted to terrorist front organizations. USAID-funded programs have, in some cases, directly aided groups linked to LeT and JeM, despite repeated warnings.
FATF Grey Listing: Cosmetic Punishment, No Reform
Pakistan has appeared on the Financial Action Task Force (FATF) grey list three times since 2008. While this has led to temporary dips in foreign investment and increased scrutiny, it has never forced real reform. The reason is clear: the costs of international censure are outweighed by the benefits of a terror-driven foreign policy.
As long as exporting instability brings strategic depth to Afghanistan, bleeding India by a thousand cuts, and consolidating domestic power, Pakistan will continue to prioritize jihad over jobs and sabotage over stability.
A State Addicted to Jihad
Pakistan’s addiction to jihad is not ideological—it is institutional. It is the default doctrine of its military, the operational language of its intelligence agencies, and the business model of its clerical elite. It has monetized religious charity, normalized economic crime, and globalized terrorism.
From Mumbai to Pulwama, Kabul to Karachi, the cost has been borne by civilians—blown apart in market squares, ambushed on highways, slaughtered in temples and mosques. Each attack is a ledger entry in Pakistan’s war economy.
What Must Be Done
Enough euphemisms. The international community must confront Pakistan not as a problematic ally, but as a state that industrializes instability. A robust, coordinated response is imperative.
Pakistan must be re-listed on the FATF Grey List with a clearly defined roadmap to blacklisting. Front charities linked to terror must be shut down and their assets frozen. All foreign aid must be digitized and monitored. ISI operatives implicated in narco-terrorism and financing must be sanctioned individually. Most importantly, a multilateral Financial Intelligence Task Force must be created to intercept and dismantle the Zakat–hawala–terror funnel.
Conclusion: Ending Islamabad’s Strategic Duplicity
South Asia cannot know peace while Islamabad monetizes militancy. Its terror economy—run with ideological cynicism and operational precision threatens regional stability and global order alike. Every Zakat donation, every fake currency note, every heroin shipment across Balochistan carries more than contraband—it carries complicity.
The world must act, not with appeasement, but with consequences. Only then can the architecture of Pakistan’s industrial jihad finally be dismantled.
References
- United Nations Office on Drugs and Crime (UNODC), “World Drug Report 2023”
Highlights Pakistan’s role as a major conduit in heroin trafficking, especially within the Golden Crescent.
URL: https://www.unodc.org/unodc/en/data-and-analysis/wdr2023.html - Financial Action Task Force (FATF), “Follow-Up Report: Pakistan 2022–2023”
Documents Pakistan’s persistent non-compliance in curbing terror financing and the limited impact of a greylisting.
URL: https://www.fatf-gafi.org/en/publications/Mutualevaluations/FUR-Pakistan-2023.html - European Foundation for South Asian Studies (EFSAS), “Pakistan’s ISI and the Terror Industry” (2023)
Details ISI’s financial and operational support to jihadist groups, estimating annual expenditures of up to $250 million.
URL: https://www.efsas.org - U.S. Department of the Treasury, “Designation of Terror Support Networks in Pakistan,” Press Release, 2023
Provides evidence of ISI-backed terror logistics and links with LeT, JeM, and narcotics-funded operations.
URL: https://home.treasury.gov/news/press-releases - Pakistan Financial Monitoring Unit (FMU), “Suspicious Transaction Report Summary 2017–2021”
Indicates over 200 terror-linked entities operating within Pakistan using a blend of religious charity and criminal activity.
URL: https://www.fmu.gov.pk - Middle East Forum, Sam Westrop, “Charity and Terror: How Western Funds Support Jihad in Pakistan,” 2022
Analyzes misuse of zakat and humanitarian donations by Western NGOs, redirected to terror fronts.
URL: https://www.meforum.org - International Crisis Group, “Pakistan’s Jihadist Proxies: Still the Army’s Strategic Assets?” Report No. 297, 2023
Investigates continued patronage of LeT, JeM, and Taliban by Pakistan’s military despite global censure.
URL: https://www.crisisgroup.org - Pakistan Economic Survey 2022–23, Ministry of Finance, Govt of Pakistan
Provides data on Fauji Foundation’s revenues and market dominance, especially in the fertiliser and insurance sectors.
URL: https://www.finance.gov.pk/survey/chapter_23.html - The Hindu, “Fake Currency Network Traced to Pakistan’s Government Presses: Indian Intelligence Reports,” 2022
Offers detailed investigation into FICN, implicating Pakistani state infrastructure in printing fake Indian currency.
URL: https://www.thehindu.com - Global Financial Integrity (GFI), “Illicit Financial Flows to and from Developing Countries: 2023 Update”
Highlights hawala, trade mis-invoicing, and laundering of narco-terror proceeds through Pakistan-linked networks.
URL: https://gfintegrity.org
