 We turn now from the report authors, the team that worked on the effort, to the folks who are the real experts in the region, the real specialists who have worked there, who have done years and years of service there, and this is a great opportunity to hear from them what they think about different groups, some of the phenomenon such as illicit financing, the movement of militants over borders, the larger political military impacts of the 2014 timeline, and some of the other areas in the region. This, of course, is about all of South Asia. You have the bios of our individuals here, and they are incredibly impressive, as you see. Let me just introduce to my left Stephen Tankow, and to his left Gretchen Peters, and then Ambassador Jim Dobbins, and we'll go in that order, and then I will moderate the question and answer session, and if speakers could keep their comments to around seven minutes, that would be great. I think it's clear that we have a lot of questions at the end, so we want to make sure that we cover all of them, so thank you again. Tom, thank you very much for the introduction. I'm going to try to keep my remarks to seven. I was given the seven to ten time frame, so you'll forgive me if I give a few minutes over. I've been asked to address how Pakistan's militant groups and its security establishment, respectively, might respond post 2014. Is there a slide deck in there? Yeah, I think we have a slide. Oh, great. Okay. And I think we're all familiar with the broad scenarios that could eventuate a political settlement, though that looks unlikely, an insurgency that continues along present lines, but doesn't escalate into a full-blown civil war drawing in other regional actors like India, or one that does. Because I can't sketch out all those scenarios and how everybody could respond in ten minutes, what I thought I'd do is just talk about some of the characteristics of Pakistani militancy and the state security policy that should inform how we think about this. If we could just go to the next slide. Thank you. This is a rough schematic of the various loci of activity for Pakistani and Pakistan-based militant groups, i.e. those that are not Pakistani that are based there. They're in yellow. It doesn't include every militant outfit. That's obvious. And none of these groups is a monolithic entity, nor does it include political activity. These are our loci of militant activity. And I just want to make a few points while I leave that up there for people to digest. First, the fluid nature of the militant milieu, which Tom and Stephanie talked about earlier, makes it more difficult for militants to unite behind any single cause. That's the good news and probably the last good news that I'll offer today. I'm sorry. The global jihadist loci there, as evidenced by the dashes, is peripheral for all of these groups, and I only include it for those that have targeted Western interests outside of Afghanistan and Pakistan. Third, every group is now active in Afghanistan, though that could change post-2014. Fourth, India, and especially Kashmir, still matter. Pakistan has been restraining its India-centric groups from launching massive terrorist attacks against India since 2008. And the Kashmir front is torpid. There are rumblings of activity there. It's too soon to know that that's a blip or a trend. What I think is important is that as Kashmir has declined and in lieu of attacks against India, Afghanistan has become a safety valve for a lot of these groups. Lashkarataba in particular, we saw an escalation there in 2010 as they were being restrained after the 2008 Mumbai blasts. Fifth, revolutionary jihad against the Pakistani state, and Tom and Stephanie both talked about that localization, is I would argue the greatest dividing line among militant groups in Pakistan. And it's a jihad that is also integrated with and infused by that sectarian militancy that Tom was discussing. Sixth, and finally, despite that divide, those who endorse revolutionary jihad against Pakistan, which I'll call anti-state groups, and Pakistan's proxies who eschew it, which I'll call pro-state groups. At the operational level, there's plenty of integration between the two, and that's also something that comes out in the report. And that means that anti-state groups can leverage the infrastructure of pro-state groups to fight against the state, which I think is very important. It makes sincere counterterrorism and counterinsurgency efforts by the Pakistanis more difficult. It also makes situational awareness of and control over pro-state proxies more difficult for the ISI. So that's the militant group. If we could go on to the next slide. This is just very briefly, you know, I think one key characteristics of Pakistan's security policy historically, and that's that it's always been India-centric and at the same time concerned about the integrity of the state. Internal cohesion is necessary to check Indian aggression abroad, and thus weakness at home puts the country at greater risk to external threats. Hence the quote from General Qayani there. At the same time, India as well as Afghanistan, and more recently in the eyes of some U.S., the U.S. are suspected of designs to dismember Pakistan from within again. Tom and Stephanie talked about the sanctuary in Afghanistan for TTP and other anti-state militants. And there's this sense from Pakistan's perspective now that it needs its own pro-state proxies not just to achieve geopolitical objectives abroad, but because it is now under attack from a proxy war as well. And this informs its continued use of a segmented approach regarding the treatment of militants. If we could just go to the next slide. This would look way cooler if it was actually in 3D, but I'm not that good with PowerPoint yet. And I want to just make a few points about each of these dimensions quickly. The first dimension obviously is the utility that militant groups offer. Abroad it's obvious that the geopolitical utility. Some of these groups are now offering assistance in terms of managing the insurgency at home. For example, the Haqqani network acts as an interface with the TTP. Laush Kretiba has been used to gather intelligence about anti-state militants and produce propaganda against revolutionary jihad. Some of these groups also make social welfare contributions or have domestic political value. Tom talked about Laush Kretiba and its potential political value. It also has a robust above social welfare organization. And even some anti-state groups can have some utility to the Pakistani state as well. Second dimension is the perceived threat that these groups pose. And there's of course a fear of pushing those pro-state groups up in the right, further over on the threat spectrum. But there's also groups that don't necessarily offer a whole lot of utility, but aren't bothered, right? Because, well, you're facing a pretty robust insurgency from groups in the bottom left there. And so guys in the middle that maybe don't do a whole lot for us, we don't want to do a whole lot to them either because we don't want to make things worse for ourselves. And then the third dimension is a question of perceived level of situational awareness and control that the ISI has over these groups. So what does that mean post-2014? I'll just leave that up there and come back to a couple of those scenarios that I highlighted at the beginning and use that to just tie things up. In the event of that insurgency in Afghanistan along present lines, we're likely to see greater atomization among Pakistani militants as the one target that everybody agrees on draws down. But that's not going to negate the operational integration that is taking place. We'll see, though, more debates, right? Should we focus externally or internally? And if externally, should we focus against Afghan state and residual Western force? Or should we, you know, for the India Central groups, should we reorient towards India? There will also be, I would argue, probably some discussions among some of those groups that are active in domestic politics. Should we take those opportunities and pursue that further and what does that mean for us in terms of militant activity? Now, as I said, a settlement looks unlikely. I'm happy to get into what that might look like during the Q&A. For now, I'll simply say that it's not certain that, you know, all of the militants currently fighting in Afghanistan would buy into a settlement. Beyond that, much of what I just sketched out still holds true. In the case of escalating violence in Afghanistan that drew in regional actors, I think we could expect to see more spillover attacks against India. We could also potentially see New Delhi and Kabul providing to TTP and associated militants there the type of support that Islamabad already suspects they receive, in which case Pakistan could find itself facing a durable cross-border jihadist threat along the lines that it has historically supported against, you know, other countries. And in all cases, to highlight the point that Tom and Stephanie made about sanctuary, that's going to be very important. I think it's obvious with anti-state groups. I just want to make a point about pro-state ones, which is sanctuary for factions of pro-state groups like Lashgri Taiba, which is carving out space in Kunar and Nuristan, reduces ISI awareness of their activities further. That increases plausible deniability for factions within those groups, for their leaders, and ironically, for the Pakistani state itself, since it can now more conceivably claim, hey, that plot that happened, that was actually cooked up outside our borders. Let me just conclude with a few key takeaways. First, the obvious. No outcome in Afghanistan is going to bring the insurgency in Pakistan to an end in the near term, nor is Pakistan going to dismantle its militant infrastructure in the near term. As a matter of fact, I would argue that the ongoing insurgency in Pakistan makes it less likely that it will take action against pro-state groups for all those reasons that I've outlined. Second, Pakistan's internal and external challenges, arguably weak in its position vis-a-vis the militant groups on its soil. Specifically, that triage approach that it's taking constrains its policy options. It locks the establishment further into a reactive rather than a forward-leaning posture, making it more difficult for the country to handle either its geopolitical or its domestic challenges. So you have a bit of a vicious circle going on there. Finally, I just want to conclude by saying none of this means that a crisis is by any means assured. I don't want to sit here and be accused of saying that the sky is falling. What I'm saying is that Pakistan's approach to and the dynamic nature of the militant milieu, coupled with the regional tensions that are likely to ensue as the US draws down, contribute to the risk of a destabilizing incident, or at the very least, make it less likely that we'll achieve stability in the region in the short term. Thank you. Thank you, Steve. Under Gretchen Peters. A lot of discussion here today about political instability, about militancy in Pakistan. Obviously, there have been comments on the criminality side. But I'd like to take the conversation more deeply into that realm, because I personally believe that the criminal threats emanating represent as big a threat to the United States as militant issues. And I want to go back to make a comment on some of the final comments of the last panel to say that I think that this predatory behavior, the criminal activities that the militant groups increasingly engage in, do present an incredible opportunity that could be exploited by the United States and its allies and our local partners if we took advantage of them. I can't tell you the number of times that I have gone into communities in the border areas between Afghanistan and Pakistan and started asking people about the extortion, the kidnapping, the drug trafficking, and had somebody say to me, finally a Gora lady who understands what Gunda bastards they are. Which means finally a white person who understands what mafia assholes they are. So anyway, in Islam, no one is reviled like the thief. This is a point that gets forgotten over and over again, drug trafficking, kidnapping, extortion. These are not just illegal activities in our world. They are haram in Islam and forbidden. And we're not taking advantage of an incredible opportunity to rebrand these militants, not as freedom fighters, not as people who are there to establish an Islamic caliphate across what used to be Khorasan. They're predators that are praying more off of their own communities than causing trouble to us. And we failed to recognize that. Anyway, that was just a brief aside. I'd like to look at Pakistan's economic numbers. I'm going to try and go very quickly because there's not much time. But I think if you start looking at Pakistan's macroeconomic and microeconomic numbers, it starts to become apparent that the country is in really serious, seriously dire shape economically. It's failed to reach every major economic growth target set by the IMF and the World Bank for the past five years running. Problematic security and natural disasters are endemic. And a messy political situation has stalled effective policy responses to these problems, in particular with regards to energy. The energy crisis has caused Pakistan's textile industry, which is the country's largest export sector to contract by more than $1 billion. The FDI is down by 50%. Fixed investment has fallen to 10.9% of GDP. External debt is now up at $130 billion, more than 65% of GDP. Inflation has been in double digits since 2008. And the rising commodity prices and brownouts have sparked riots across the country. These are hitting the poorest people in Pakistan, the hardest. Some economists estimate that as many as 28 million Pakistanis have been driven into extreme poverty because of the economic problems that are occurring in that country. This is also a country, as General Flynn mentioned, he mentioned this issue more globally, but it's a country with an enormous youth bulge. Fully one-third of the population is under 15 years of age, which means that Pakistan needs to sustain 7% growth or more every year simply to accommodate the new entrance to its job market. In fact, growth currently is currently about half of that. And the country also has one of the lowest tax basis in the world. Pakistan now actually has a lower tax base than Afghanistan. That is an impressive target. Here's another impressive statistic. Here's another one. Pakistan actually has fewer actual taxpayers than Guatemala, a country with 14.3 people. OK, this is 14.3 million people. Sorry. So we're looking at a country that is unable to sustain itself. The economy should, by all reasonable projections, be in a complete free fall. Many parts of the country don't have electricity for 18 hours a day. There are riots. There are all sorts of reactions to this problem. However, what we see is a surprising resilience to the economy. There are certain activities taking place which often gets described in the media and in academia as a sign that Pakistan is actually more resilient than we think. I think it's a sign that we should be even more worried about Pakistan than we think. And that is because these indicators tend to point to large-scale illicit activity taking place. We know that corruption is rampant. We know that it reaches the very highest levels of government. We know that the informal economy, the gray economy, is estimated to be about more than three-quarters of the nation's GDP, and about 54 million workers are employed in that sector. So some of what I'm going to talk about today, the numbers that I'm looking at, are not necessarily related to criminal activity per se. It's just gray market activity. But the fact that it exists in the gray market means that the government does not collect tax on it, which means that the government can never fund itself and stabilize. Now, one thing that I think is extremely interesting that's going on in Pakistan is the surge in remittances coming from other countries. It has quadrupled since 2001, surging 20% in the first 11 months of fiscal year 2012 to more than $13 billion. Now, there has not been a correlated exit of Pakistani workers. There has not been a equivalent rise in salaries of Pakistani workers abroad to explain this. So something else is going on. The state bank of Pakistan claims that it credits the apparent increase in remittances to its much more streamlined efforts to better regulate what money is coming back. And there's no doubt that that is part of the story. However, this is a country that can't even keep its streetlights on in most parts of the country. So I'm a little bit skeptical about their sudden capacity to better regulate financial flows, particularly since the remittances are growing highest from places like the UAE, which have been tracked for more than three years. Last year, they grew from the UAE by 70%. Again, I'm not suggesting that this is all illicit money coming into the country. It's quite clear that there are extensive tax evasion efforts going on by just regular people in Pakistan to move money out of the country and send it back through this remittances scheme. However, it is apparent that some of the exchange houses and Hualadars that are closely connected, both to extremist groups, militant groups, to drug trafficking organizations, to transnational criminal organizations like D Company are sending immense amounts of money back and forth through the remittances system. Meanwhile, deposits, advances, and assets in Pakistani banks are up 269%, 268%, and 209%, respectively, since 2001. Why is that happening? There is no legal way to explain why bank deposits are going up so fast in a country whose economy is tanking. It doesn't make sense. Pre-tax bank profits last year posted a 9,991% growth. That only takes place when there is a huge amount of criminal activity taking place. And what's more interesting is the amount of money that is moving through banks in the fatah, in Qaibar-Pakhtunwa, and Baluchistan. These are places west of the Indus. There is not a lot of economic activity taking place, manufacturing, et cetera. However, last year, 2 trillion rupees, upwards of $20 billion, passed through the clearinghouses of banks in those parts of the country. Outpacing, in some cases, the banking activity that took place in Lahore and Karachi and other major financial centers. I spoke to an extremely worried bank official from the Bank of Punjab who told me in June of 2011 there were more cash deposits in their tiny branch in Landi Kotal than across all of their banks in Lahore. $70 million in cash was deposited in their bank in Landi Kotal. Nobody is watching, besides me, I don't think anybody is watching this and trying to figure out what is going on. It's extremely worrisome. The money is pouring into these banks, getting sucked down in Karachi, and then pumped through the Karachi Stock Exchange into the global financial system. And I think our banking community needs to be concerned about this as well. This has been very destabilizing for Pakistan and the region. It could be very destabilizing for the United States as well. The Karachi Stock Exchange, another place I would love to know more about, has, I mean, again, think back to the numbers I was talking about, about FDI being down, manufacturing grinding to the halt. The Karachi Stock Exchange last year showed 49% returns, making it one of the five best performing stock markets in the world. And I can tell you that a lot of bankers in Karachi legitimate ones are concerned that it has essentially been taken over by criminal networks who are pumping large amounts of narcotics and other illicit money, not just from Pakistan, from around the world that's coming in there to be laundered. There has been astonishingly little investigation into what this means. But the anecdotal stories are worrisome. And by talking about, there was a very good article last week that Reuters did talking about the Karachi Stock Exchange. And it ended by describing a man who purchased more than $10 million worth in stocks in cash in a single transaction. And his address was a notorious Karachi slum known to shelter senior Taliban leaders. So again, I'm not suggesting that necessarily was Mullah Omar or somebody like that. But there needs to be more investigation of what is going on in Pakistan's financial markets and to trace that money as it comes back into the global financial system. Thank you. Superb. Thank you, Gretchen. Fantastic. Excellent. Ambassador Dobbins. Thank you. Well, this certainly isn't a good news panel. The report, the excellent report that brings us together today, did seem to me to be quite balanced and thoughtful and even did seem to contain one element of possible good news, which was that the withdrawal of American and Western forces from Afghanistan might lead militants in the region to refocus their attentions internally rather than externally. And I think that's worth examining. There certainly is a somewhat, perhaps, a wishful thinking on the part of those who are advocating and pushing for NATO withdrawal from Afghanistan that Western forces are a provocation and incitement to militancy and that militancy will be reduced as the result of the reduction in Western presence. And I think that's probably true up to a point. On the other hand, we did run a natural experiment in which we ignored both Afghanistan and Pakistan between 1989 and 2001 and saw a significant growth in militancy, particularly militancy directed externally against the United States. And so I think we have to be somewhat cautious about assuming that our presence is necessarily the catalyst for these kinds of developments. We also have, of course, the example of Iraq. And I think it's probably true that with the withdrawal of American forces from Iraq, there haven't been any attacks directed on the United States or on American interests derived from Iraq that I'm aware of. However, there has been a significant export of militancy from Iraq into Syria. And I think over the longer term, that's also going to potentially be quite a serious threat to our own security and interests in the region. I do think that it's, of course, possible that if the Taliban were able to essentially abandon their sanctuary in Pakistan and move lock, stock, and barrel into Afghanistan, that could relieve some of the pressures within Pakistan itself. It would appear that the success of counterterrorism operations and the attendant diplomatic pressures have increased pressures within Pakistan. That is to say Pakistan has traditionally externalized its militancy. And it's finding it harder to do so. It's harder to do so with respect to India because of the threat of a nuclear confrontation. And therefore, it has apparently reined in significantly its militant groups operating against India. And of course, NATO operations in Afghanistan also limit its ability to, and political pressures from the United States, limit its ability to externalize its militancy vis-a-vis Afghanistan. And if the departure of Western forces could reduce that inhibition, I do think, however, that there's another element of the current debate, which again, I think, is largely based on wishful thinking. And that is the idea that we can cease to do counterinsurgency in Afghanistan, but successfully do counterterrorism. And I think that's an accurate proposition as long as somebody else is doing counterinsurgency successfully. The current narrative is that counterinsurgency as defined by David Petraeus and his famous manual worked at least temporarily in Iraq, but it really wasn't applicable in Afghanistan. And I think that's not quite accurate. I think that we're abandoning counterinsurgency in Afghanistan not because it doesn't work, but because it's too expensive to do with Americans. A million dollars per soldier per year is more than we can afford. And we're willing to accept the higher risks that are attendant in saving a lot of money and trying to do counterinsurgency with Afghans, who are a lot cheaper. And so this is what the transition in Afghanistan is really all about. We're only going to be able to do counterterrorism in and around Afghanistan if somebody else does counterinsurgency successfully. And therefore, I think we're going to need to keep a presence of an American military diplomatic economic presence in Afghanistan at a sufficient level to allow the Afghan government and forces a chance to do counterinsurgency successfully. And I would note that counterinsurgency isn't necessarily about defeating insurgents. It's about preventing them from achieving their objectives. Their objectives are to either seize part or all of a country. And as long as you deny them that objective, they're failing. They're not succeeding, even if the insurgency goes on indefinitely, which some do, although most do tend to end within a decade or two. The transition in Afghanistan that most people have focused on, of course, is the transition from an American and NATO-led combat operations to Afghan-led combat operations. But I think the more delicate, the more difficult, the more dangerous transition is a transition from Karzai-led Afghanistan to somebody else-led Afghanistan, a transition which will more or less coincide with the military transition. There are Afghan presidential elections next year. I think the international community and probably most American commentators are going to focus on the process. The Afghans will focus more on the outcome. We're going to focus on whether the elections are regular, whether they're marked by fraud and irregularities. And the Afghans are going to focus more on who wins and whether that person is capable of holding the country together in the manner that Karzai has largely succeeded in doing. I think polling from the last presidential election is illustrative. Polls that were taken after the 2009 presidential election showed that most Afghans thought that there had been high degrees of fraud and irregularities, and most Afghans were quite satisfied with the result. The last thing they would want would be a clean, fair, indecisive election, which resulted in the victory of somebody who had a narrow political base. And the presidential electoral system allows even advances the likelihood of that kind of prospect. You have a two-round system without somebody of Karzai's name recognition and patronage network in the race. You'll have 30 candidates. None of them may get more than 10% of the vote the first time around. So two candidates, both of whom have very narrow constituencies, will compete in the second round. One of them will mathematically win. But he may well be a candidate who has no more than a 10% constituency. We complain and are concerned. And Afghans are complaining and are concerned about the level of corruption in that society. But I think we have to understand that in large measure, it's corruption that holds that country together. In a country with very weak, formal institutions, it is the patronage network that Karzai has successfully built, which allows him to project influence into the Tajik, Uzbek, Khazara, Pashtun communities well beyond the reach of the formal institutions of government. And so as you look to the outcome of the presidential election next time, as opposed to just the process, the question is, can somebody either inherit or replicate that kind of patronage network to complement the formal institutions of government, which have been built up significantly over the last decade, but which remain quite limited and quite weak in order to hold all those constituencies together. And I think that more than the military transition is the one we have to keep an eye on. I don't think the Afghan army is going to run away in 2014. But the Afghan government could begin to disintegrate if the electoral process doesn't produce a result that most Afghans regard as satisfactory. Thank you, Ambassador. And thank you, Gretchen and Steven. Those were fantastic presentations. Very, very substantive. Thank you. Let's start off now with questions. I'm going to try to choose people who have yet to ask a question. I think this gentleman here can start. Hi. Andrew Smith, an independent researcher from Australia. My question relates to Hindu militancy in India. And one of the things that we have seen over the last few years is that Hindu politicians have attracted criticism for not being as vocal as many would have wanted in condemning Hindu militancy. We've seen it, for example, 2002 in Gujarat. We now see some of those politicians who have survived the subsequent investigations, now potentially moving to positions of national leadership. Is there a possibility that if someone like Narendra Modi, for example, who may run it, make a run at national leadership shortly, actually is successful? Well, that will embolden the Hindu militants. And then we might see a deterioration in the situation, perhaps even getting to group-on-group violence as distinct from group-on-group population violence. Sure, absolutely. I'll offer a couple of comments. We did look at some of these issues in time. And again, especially when we looked at the Indian Mujahideen in Semi as well, the Babri Mosque incident in 1992, and then Gujarat in 2002, which you pointed out, remained persistent issues. And on both sides, a rallying cry for some of the extreme Hindu fanatics. I was reminded while there that Hindu nationalism is fine, but it's the Hindu fanaticism. That's a problem. And now with Narendra Modi heading towards potentially the prime ministership in the concerns revolving Gujarat and his leadership at the time, do raise some very uncomfortable questions. Your question is, will it inflame Hindu nationalism to have someone such as Narendra Modi head to the senior level of leadership? I think for a certain, is that the nature of your question? OK, great. Yeah, I think certainly. I mean, there's no doubt that any time you're an individual leader who is inspired several groups like this, RSS and others, that you do inflame this. You do push them to perhaps engage in bolder activity because they feel that they have top cover, in that what they've done in the past, not punished, was right, and therefore they can continue with what they were doing. I'll just offer a few additional thoughts. I was, and I should note, one of the ways that I ended up having the honor and the privilege to work on this is that Tom and I were both sort of heading to India at roughly the same time to look at some similar issues. So it was quite a useful partnership. And I was looking at the evolution of Indian Islamist militancy last year, and much of that is in response, of course, to communal violence. I mean, there are socioeconomic grievances, but the primary driver for the Indian Mujahideen network and the wider Indian Jihadist network is in response to communal violence. The Babri Mastred in 1992, when it was destroyed, and then, of course, the riots that you mentioned in 2002. There have not been, since Gujarat, there has been, and Gujarat came at, I would say, sort of the, was the peak after 20 years or more of escalating communal violence. And since then, there have not been riots along the same scale, and there have been efforts by both communities and by the Indian state to sort of try to tamp down that communal settlement. But of course, when you talk to interlocutors in India, they will say that there is concern beneath the surface that there is an event that could spark that. In terms of those efforts to tamp it down, I do think it's important to note that the National Investigative Agency, which was established several years ago by the Indian government, has begun to look into incidents of Hindu, or what is called saffron terrorism. Some Jota Express being one of them, Mecca Maastrad being another. Incidents that initially were sort of hung around the necks of Indian Islamists and since there has been a corrective. And in line with that, there has also been an attempt, and here I think the Indian media is to be commended for sort of pushing for prosecution of at least some of those involved in Gujarat. And there have been attempts to prosecute some, although of course not Modi. What it would mean if he were to come into power, certainly it could embolden some Hindu extremists. It could also embolden some Islamist extremists. And I think probably elements on both sides would seek to capitalize that and one would worry about the potential tit for tat escalation of violence. But that said, this is something that at least when I talk to folks in India that they take quite seriously and people in both communities do try not always successfully to try to keep a lid on it. Front right, and then to the back. Thank you. This morning we've had a long list of factors, strategic factors from corruption. Can you identify yourself in your organization? I also work for the British Embassy. A long list of factors, strategic factors, criminality, corruption, the youth bulge, unemployment, and D. Stephanie spoke about the regionalization of the militant threat and the ideology. With all that in mind is potentially the greatest threat and outcome and individuals' loss of confidence and faith in the nation state. And if you unpick that statement, is the militant clever enough to realize that the nation state is potentially the center of gravity of the international system? And that is exactly why he's attacking it. I think, I guess to your water point, I would say yes, that what you have in my view is not just in Afghanistan and Pakistan, but in a variety of places around the world is a situation where there's usually a small elite who benefit tremendously from an economic standpoint, from a standpoint of the power that they have over these communities from a sustained state of instability. So we look at a place like Pakistan or Afghanistan as states that are, if not, veering towards a failing situation. And yet within those very unstable environments, there are power brokers who are benefiting immensely, both from a financial standpoint and in terms of the control they have over the communities, the constituencies that they control. And I guess from my perspective, it's always important to try and see who is benefiting from a current, from a situation that appears to be not going so well. Because that to me explains why it continues to be in the state that it's in. You know, most insurgents are trying to seize a nation state, not destroy or dismantle it. Transnational militants are parasites, essentially, that feed on those insurgencies. They attach themselves to the insurgencies in order to recruit, to gain adherence and to gain credibility. They may have broader ambitions, certainly Al Qaeda, for instance, has a broader ambitions that transcend any particular nation state. So I think you have to make a distinction. The Taliban is not trying to dismantle the Afghan state, it's trying to seize the Afghan state. But other transnational militant groups have broader objectives of the sort that you've suggested. Actually, the best way of marginalizing militants when you can do it is to support the insurgents rather than to try to suppress them. That's what we did in Bosnia, that's what we did in Kosovo, that's what we did in Afghanistan in the 80s, of course. It's what we did in Iraq and Ambar in 2007. And there isn't an insurgent in the world who wouldn't rather have American support than Al Qaeda support if they're offered the choice. It's what we did in Libya, it's what many people are urging us to do in Syria. But we don't always have that luxury or that choice. We're not going to support Hamas, for instance. And therefore, suppressing that particular insurgency becomes the only alternative. But I would make that distinction between militants and insurgents. It's an excellent question. And as we look to the next phase of the study, it's particularly important. When the arms spring erupted two years ago, it looked like a repudiation of part of Al Qaeda's MO and focusing not on insurgents, of course, on terror groups like Al Qaeda, removal of leadership under the banner of extremist Islam using violence. Well, here it didn't happen that way in Tahrir Square. But pretty quickly, we have unmet expectations and you have the opportunity for a group like Al Qaeda to say authoritarian leadership was not successful and this new democracy is not successful. There is a third way. And change absolutely is being driven from the transnational element. We quote Moises Naim in our report who talks about this diminution of power for states. And that's so much of their state reaction and capabilities and life is driven by transnational phenomenon. I think that's here to stay. Next question. Yeah, all the way in the back. Yes, Britt Mitchell, Pastor Britt Mitchell from the Renaissance Institute. This question is for Ms. Peters. About three weeks ago, four weeks ago, we here at CIS had the new Inspector General from Afghanistan here to tell us how many billions of dollars have evaporated from the rebuilding effort in Afghanistan. My question is, is it possible that a huge amount of the money sitting in the banks and stock markets in Pakistan is nothing more than trans-border of our corrupted money? Yes, every time I get on a plane and fly out of Kabul, I want to climb down into the luggage section and look for my tax dollars. I think that... Flight to Dubai, right? Yeah, I've, this is something that I've actually been up on my soapbox for some time now about it. I think that our, the development efforts, well-intentioned as they were in Afghanistan and in Pakistan have been so mismanaged and there has been so little oversight and there has been this mistaken focus of flooding money to the most unstable regions instead of putting money into the areas where we could control what is actually going on has meant that predictably our adversaries and other corrupt power brokers in those areas have started extorting those projects and the money is pouring out of the country. In some areas, I looked into this particularly closely in the Haqqani areas doing the Haqqani study that I did with SOCOM and the West Point CTC and it was there were jaw-dropping numbers of jaw-dropping amounts of money that were disappearing from projects. The Coast Gardez Highway, the so-called $2 million mile highway where at least one security contractor allegedly with ties to the brothers that run the Haqqani network had received payments from the Lewis Berger Group of more than $1 million in cash. So that's just one example and you find this over and over and over and over again. I think that as a nation, particularly at a time of fiscal crisis, there are better ways that we could be spending our money. We are enriching and empowering the enemies that we seek to defeat. We are sustaining a predatory system and we are probably doing more harm than good. There is little evidence. In fact, there have been some very good studies done by the DOD itself that show that SERP funding and other development efforts in the most unstable regions have failed to win the hearts in mind, have failed to bring the type of stability and economic prosperity that we hoped that they would bring and I think we need to be a lot more careful about our development funding in other parts of the world, particularly in places like the Middle East. It's been known for some time among academics and others who study this issue that new regimes from South Africa to Russia to Cambodia to Afghanistan and Iraq are incredibly vulnerable to corruption and organized crime and I'm extremely worried about what we're gonna see emerging in Egypt, Tunis, Libya, Syria if it ever stabilizes and so this mentality that we will throw money at a situation and it will get better is a bankrupt theory and we need to start spending our money more wisely and developing metrics that show the positive effects that our development funding is having. Let me, I take the point and I think it's true that international funding has certainly fed corruption in Afghanistan but it's done a lot of other things too and I think it's important to put this in some perspective. At RAND we recently did a look at 20 societies that had undergone some form of international military intervention since 1989 and we rated them based on a number of indices. We used the Freedom House Index for democratization. We used IMF figures for economic growth. We used the World Bank Index for government effectiveness and we used the UNDP Index for human development which is a combination of standard of living, health and education and each of these indices rate every country in the world every year and so we looked at what had changed in these 20 countries over 10 years and generally among all of them they grew faster than most countries that weren't emerging from conflict so their indices actually improved quicker than most other countries. Of those 20 countries in terms of democratization, Freedom House put Afghanistan about in the middle, about a 20% improvement in democratization. Economic growth, Afghanistan was the second highest of all 20 countries. In government effectiveness rather remarkably it was the second highest of all 20 countries and in human development it was the highest of all 20 countries and this is evident in figures like infant mortality, longevity, education and in particular in literacy. Literacy in Afghanistan will literally triple over the next 10 years assuming the children that are in school today remain in school. Today, three quarters of Afghan households have telephones and most of them have access to TV, not necessarily their own, nearly all of them have radios. They have hundreds of TV and radio stations, a free media that's not interfered with so the money's bought a lot of things besides corruption. Okay, yes. Hi, I'm Phil Walker of the State Department. My question's for Mr. Tankle but I certainly welcome others to comment. It's on the Indian Mujahideen and I'm just curious, wondering if you comment on the structure and the ties. In terms of structure there's a difference of opinion whether it's solve a large grouping or separate cells and in terms of ties just relating it back to your previous presentation on whether there's ties back to Pakistan or to the LET. Thank you. Thank you very much for your question. So my sense of the I am which I think is probably one of the less well understood militant entities in South Asia and even when one speaks to Indian intelligence officials, they'll say we actually have a better understanding of Pakistani groups than we do of our own indigenous networks in some instances. So with that sort of caveat out there, my sense from having studied the I am now for a while is that we should see it not as a group. I tend to look at the Indian Mujahideen as a label for a network of modules that has a loose leadership and that loose leadership moves between Pakistan and the Gulf with maybe one or two commanders on the ground and familial relationships are important. The Bhaktal brothers as the name of the two leaders of the I am now and their cousin in India is seen as the sort of the on the ground commanders. So I think I would say label for a network of modules with a loose leadership sanctuary in Pakistan but moving into the Gulf back and forth. And I would also say I think it's also important to ask the question of what that means with regard to support from external actors and command and control. And that's important in particular because if the Indians perceive I am a tax to be sort of directed by ISI then you respond differently than if you think you have a problem that is perhaps homegrown, just watered and fertilized by your neighbor, right? My sense is that the group was able to regenerate thanks to, first of all it built and then after a counter-terrorism crackdown in 2008 it was able to regenerate thanks to external support from Pakistan and perhaps from La Shkretiba as well. And that certainly there are instances in which the I am does what either LAT or ISI might direct it to do but that doesn't mean that it also doesn't do things on its own, right? So you do what we tell you to do but maybe you also do a bunch of other stuff that we don't tell you to do. And therein lies one of the potential dangers in terms of India's response. The final point that I would make in terms of that looser network issue is there is some indication that because the networks haven't fully regenerated that whereas by 2008 LAT and I am networks were somewhat distinct that again those two streams are crossing and that raises questions for what we might see post 2014. In particular, I will point to the concern that if the ISI were to exercise control over the I am they could seek to use the Indian Mujahedin as a proxy while quote making progress by reigning in the LAT. I don't necessarily think we're there yet but I point that out as just something to keep your eyes on going forward. We have time for one more question in the middle. Thank you. Marco Bulma, thank you very much for your comments. Your organization, please. Very interesting, University of Maryland. I'd like please to pick up an issue largely this morning we've heard about what can broadly be characterized as the human terrain but we know in the last 10 years that the physical terrain has been affected by not just natural disasters but also elements that are now perceived to be part of the climate change trend and we know those are going to be going forward. Largely, we haven't heard about that overlay and you all come from different backgrounds. I'd like to pick up please on one issue really on your comments Gretchen which is to do with energy and power security in Pakistan and we know that the Indus River Treaty is a very interesting mechanism in that despite all the conflict that mechanism still stands at times it's more effective than at others. Does it potentially represent a way to be able to move forward? We know that not all the necessary actors are part of that treaty but what we do know is that as we move forward water is going to be one of the central issues for governance of any of those nations. Would the panel like to pick up on that from your various perspectives? Thank you. I think there's no doubt that water is going to be a major flash point regionally not just between India and Pakistan but also between Afghanistan and Pakistan and also within Pakistan between the province that I still call the NWFP and the Punjab. This is a, they're serious scarcities and issues of cleanliness as well on the Indian side. I think it was two years ago or three years. Not, it wasn't the recent Khomeila but the one before that a number of holy men refused to swim in the Ganges because they said it was too filthy, it was too polluted and there was a study that came out again I think it was two or three years ago saying that the holy river which supplies one in every 20 people on the planet with their water for drinking, for cleaning, for irrigation was essentially going to dry up within another half century. So this is a very, very critical issue. We've seen lots of melting up on the glaciers up in, up around the Siachen glacier in other areas that has even affected the Indian and Pakistani military outposts that are up there. So I have no doubt that it's going to be that's a very serious issue and in the meetings that used to go on between the cross-border diplomacy that used to go on between India and Pakistan settling some of those water issues was always foremost in between them even and that's what Kashmir is about essentially. Kashmir is a conflict over water. So I absolutely agree that it's a critical issue to understand for that region. Ambassador, I'll just, I'll pick up on that. You know, I don't know that I would say Kashmir is all about water but I think certainly water is a major factor in Kashmir and there was even a moment a few years ago where people were talking about water as the new Kashmir, right? As, okay, this is now gonna be the new driver of conflict between the two countries. I will just make a couple of quick points off of that. One is internally within Pakistan, this is certainly another potential driver of instability in general and a potential issue for various actors to try to appropriate for themselves within a domestic political context. Geopolitically that also of course has consequences because, and this comes back to, you know, the points that Tom and Stephanie and others were making earlier about the involvement of some militant actors in the political space in Pakistan. If they are able to appropriate that issue for themselves that not only has domestic consequences they are able to polarize a debate with India. We saw that with Jumat Dadawa, the above ground organization for Lashkar-e-Taiba holding marches several years ago saying, you know, an end to Indian water terrorism. You know, and of course that dovetailed with the Pakistani military wanting that on the agenda, one worries. One wonders about that sort of Kota Reminis timing there. The final thing I'll say, I think it's always nice to end these things on an optimistic note. You know, is that for all of those, you know, I think sobering points there's also opportunities. As you said, the Indus Water Treaty has endured and there have been conversations certainly by civil society groups on both sides of the border about how they could look at this from a ecological, environmental, scientific perspective that sort of, that tries to not necessarily, you know, break through, but just to sideline the politics for the moment and use that as an ability for scientists on the both sides to come together and speak a language that everybody can agree on that is more objective and less subjective. You know, and to the degree that Indians and Pakistanis are able to do that, I think that is, you know, to the good. Ambassador, any final comments? Okay. Before we thank our panelists, let me thank you, the audience for all of your good questions, your participation right to the end. And let me thank again my colleagues who played such a strong role, my partners on this. Thank you very much. And we welcome you back to join us for the next event. And let's thank our audience. Thank you.