Maulana Sufi Mohammed, a radical cleric who was freed last year after spending six years in jail for leading 10,000 Pashtun tribesmen in opposition to the U.S. invasion of Afghanistan in 2001, has begun a new campaign. He is leading a peace march through the strategic Swat Valley in an attempt to persuade his son-in-law, Maulana Qazi Fazlullah, to accept the government's offer of a cease-fire and enforcement of an Islamic system of justice in the valley.
The fact that Mohammed has embraced the government's offer is a sign of how fully Islamabad has capitulated to the demands of extremists in the region. And the fact that the peace deal has not yet been accepted by Fazlullah, who leads the Swati contingent of the Pakistani Taliban and is closely allied with Al Qaeda, is a sign of how radicalized some of the region has become.
Pakistan's concessions to the Taliban in the Swat Valley, located just 80 miles north of Islamabad, are a watershed in the country's steady slide toward chaos. The situation there has added to the prevailing sense of public gloom in Pakistan that the Taliban is rapidly making inroads into the world's second-largest Muslim nation -- and the only one armed with nuclear weapons.
Fazlullah's men have fought bloody battles with the army over the last two years, finally driving it out and taking control of most of Swat last year. The fighting has led to about 1,200 civilian deaths and the forced exodus of an estimated 350,000 people out of a population of 1.5 million. Fazlullah has blown up 200 girls schools, hanged policemen, set up Sharia (Islamic law) courts and established a parallel government.
Now, rather than order the army to retake Swat, the Pakistan People's Party government in Islamabad led by Benazir Bhutto's widower, President Asif Ali Zardari, and the Awami National Party (ANP), a Pashtun secular party that runs the provincial government of the North-West Frontier Province, have capitulated to the Taliban's demands in order to avoid more violence.
While the government insists the legal change will allow only a limited application of Islamic justice through the local courts, the Taliban interprets it as allowing the full application of Sharia, affecting all aspects of education, administration and law and order in the region.
However the deal may be interpreted, it is an unmistakable defeat in the country's losing battle against Islamic extremism. Even though the military regime of former President Pervez Musharraf entered into several controversial, short-lived cease-fires with the Pakistani Taliban in the Pashtun tribal belt, Musharraf's army never conceded major changes in the legal or political system. Even in Afghanistan, where the Afghan Taliban controls several provinces, the Kabul government has never conceded the writ of the state, insisting that such provinces remain contested.
Zardari has to sign off on the deal, and the cease-fire may not last. Still, this is the first time the government has surrendered an enormous area of northern Pakistan to extremists, who will govern by a separate set of laws. Moreover, the Taliban is unlikely to stop in Swat. Even Mohammed, who is viewed as a moderate in comparison with his son-in-law, has vowed to impose Sharia across Pakistan and has denounced democracy as an evil, Western model. The psychological blow to public morale has been devastating.
In the North-West Frontier Province city of Peshawar, the ANP has been besieged by Taliban suicide bombers, who have vowed to eliminate the party's ministers and members of parliament. The threats have left the party divided and unable to govern, despite overwhelming support in last year's general elections from secular and democratic Pashtuns, who voted to oust a regional government of Islamic fundamentalists installed by Musharraf.
Fazlullah's strategy has been influenced by Al Qaeda and other extremist groups. The groups would like to create a new haven in the Pakistani heartland so they can move away from tribal areas adjoining Afghanistan, where increasingly successful attacks by U.S. drones have made survival difficult.
And the extremist threat doesn't stop with the Swat Valley. The Pakistani Taliban ultimately hopes to conquer all of Pakistan. Already it has made inroads into the largest province of Punjab and in the southern industrial city of Karachi, where it is facilitated by multiple Pakistani extremist groups that have spent two decades fighting in Indian Kashmir or are masters of urban terrorism.
The army is demoralized and overstretched, and has declined to accept U.S. offers to retrain its regular forces in counter-insurgency because it still perceives a much larger threat from its traditional enemy, India.
The Swat crisis will further weaken an already devastated Pakistani economy, which faces increasing joblessness, inflation and capital flight. Moreover, several hundred thousand Pakistani migrant laborers are being forced to return home from the Arabian Gulf countries because of the global recession. Many of these workers are Pashtuns and, with no jobs at home, some will inevitably become Talibs.
The Obama administration has promised Pakistan $1.5 billion a year for the next five years to be spent on social programs, but it is difficult to envisage when the U.S. Congress will make such large sums available and what fresh conditions it will impose -- conditions that the Pakistani state may be incapable of fulfilling.
The crisis comes just as the Obama administration has to conceive of a new strategic policy toward Afghanistan and Pakistan before the NATO summit on April 2.
Afghanistan, despite dramatic advances made by the Taliban as a result of neglect by the Bush administration, requires obvious common-sense policies -- a comprehensive increase in foreign troops, money, development and reconstruction by the international community and real efforts to get the Afghan government and army on their feet.
For Pakistan, the U.S. and its allies have far fewer policy options. Large injections of money are desperately needed to give the government and the army the time and space to reestablish the writ of the state. Nevertheless, the question being asked in Washington and other capitals, as well as by millions of Pakistanis, is whether the government and the army have the will and the capability to do so.
Ahmed Rashid is a Pakistani journalist and the author of "Taliban." His latest book is "Descent into Chaos: The United States and the Failure of Nation Building in Pakistan, Afghanistan and Central Asia."