Pakistan losing territory to radicals

In this valley of orchards near Afghanistan, 90 police hid along the banks of a riverbed in March, preparing to arrest the powerful Pakistani cleric Maualana Fazlullah. Informants said the target, charged with terrorism, would soon appear with a modest contingent of followers. Instead, Mr. Fazlullah rode into sight on a white horse, surrounded by hundreds of people.

When the officers advanced, brandishing tear gas and batons, word flew through the town. Thousands more supporters turned out to further protect Fazlullah. The officers backed off in an incident that shocked the country, exposing as it did the state's powerlessness to apprehend a wanted terrorist.

Such scenes are common in the tribal agencies of Waziristan, where the Taliban hold sway under a controversial truce signed with the government in September. But Swat is not Waziristan: It rests squarely in the North West Frontier Province (NWFP), a government-administered area long considered beyond such lawlessness.

The rise of Fazlullah exposes the economic and political failures fanning extremism even in these areas, and hints at the consequences, both for Pakistan and the international community, if the province continues down a path of deprivation. Allow him to persist, many observers say, and others will be emboldened to roll back the state's policies of moderation – small but symbolically important gains in women's empowerment, girls' education, and religious tolerance.

"My opinion is, if you take him out today, there will be a reaction," says Asfandiar Amir Zeb, a former mayor of the district of Swat. "Leave it for a month, there will be a bigger reaction. If you leave it for six months, you won't be able to catch him."

Many observers insist that, if the government openly supports a movement against Fazlullah, ordinary citizens will take up the call. Liberal forces abound throughout Pakistan's frontier with Afghanistan, but they lack leadership and support from the central government.

"The majority of people are liberal. But there is no institution for the liberals. The government schools, to some extent, but they are very [few]," says Wajid Ali Khan, a former member of the provincial assembly from the Awami National Party.

Fazlullah signals a dangerous tipping point: He is the local leader of Tehreek-e-Nafaz-e-Shariat-e-Mohammad (TNSM, or The Movement for the Enforcement of Islamic Laws), an armed militia that fought in Afghanistan alongside the Taliban. Police say he commands thousands of followers, is stockpiling weapons, and has growing links to Al Qaeda – all of which could turn the area into another terrorist haven. The urgency of the issue was underlined in April, when a British court sentenced five suspects to life for plotting attacks in Britain. Many of those sentenced received jihad training in Malakand, a district adjacent to Fazlullah's.

Many are poor

From the vantage of the cosmopolitan capital, Islamabad, Pakistan is one of the most rapidly growing economies in Asia. But Swat, home to 1.5 million, is a reminder that the frontier has long been deprived of that wealth. The gradual death of an agrarian way of life in Swat, following increased mechanization and a series of land reforms that undercut sharecropping, has promoted the wealth of a few at the expense of thousands. With little local industry, residents of Swat have some of the lowest incomes per day in the province, a formula for discontent.

Local officials in Swat complain they haven't received development funds from the federal government in more than two years. "If I had money, I would give [the city] a vision for development. But I don't have any money," says a frustrated Jamal Nasir Khan, a mayor of Swat based in Saidu Sharif, the district capital. Mr. Khan says he'd like to build more schools and health facilities for the area's population, 49 percent of whom live below the poverty line and 61 percent of whom are illiterate.

It is a problem repeated throughout the NWFP. "Since 1977, there has been no attempt at regional equality," says Karachi-based economist Kaiser Bengali.

Although NWFP has some of the highest rates of poverty, illiteracy, and violence in Pakistan, it received just $34 million in federal aid and development grants in 2006, compared with Punjab's $210 million – even though Punjab, by many accounts, already has the healthiest economic indicators in Pakistan.

"In some villages, the largest employer is the jihadis," Mr. Bengali adds.

Swat is a startling example. Because unemployment is high, Fazlullah is able to summon hundreds of volunteers – who receive meals in exchange – to help build his new madrassah in Mingora, the city of 175,000 where he lives. Situated along the Swat River, the large religious school will someday offer poor students of this city, which has no university, a free education in Fazlullah's ultraconservative brand of Islam. Aides say proudly it will cost nearly $2.5 million, suggesting that while Fazlullah's audiences may generally be poor, he has wealthy patrons.

Since he began preaching two years ago, Fazlullah has drawn more than 15,000 weekly to his Friday prayers. His vision of militant Islam reaches thousands more in the valley by way of his illegal radio station, which he used until recently to warn parents not to send their girls to school. Few parents seem to have heeded that warning, but the government still intervened in May, striking a compromise in which officials would look the other way if Fazlullah stopped preaching against girls' education.

"Tell me, what wrong have I done? I am preaching religion, and religion is not terrorism," Fazlullah says in a brick room on the site of his new madrassah, surrounded by bearded aides.

People turn to cleric for justice

Aside from work, many also turn to Fazlullah for justice. "We are making compromises between rival parties and ending enmities," says Fazlullah.

Fazlullah's growing legitimacy exposes the void left by a justice system that is collapsing in the NWFP. Unlike North and South Waziristan and other parts of the Federally Administered Tribal Areas (FATA), state law technically applies here. But successive layers of bureaucracy – colonial, modern, secular, religious – have made justice, once free and quick, slow and more expensive.

"There is no local justice, no economic justice. Corruption is a bigger problem than you imagine," says Shah Salam Khan, a lawyer of the district high court, mentioning payoffs to judges and police.

In calling for sharia, or Islamic law, what residents really seek is good governance often neglected by the state, says Ayesha Siddiqa, a political analyst in Islamabad. It's a troubling analogy to North and South Waziristan, where local reports say that the Taliban have established their own courts and hospitals, offering services neglected by the state.

And, as in those areas, Taliban violence has surged throughout the NWFP in the past year, suggesting that it, too, is becoming a haven for militancy. Nine criminal cases, including the charges of terrorism, have been filed against Fazlullah. The police say they suspect that he's formed links with terrorist groups like Jaish-e-Mohammed, which is suspected of collaborating with Al Qaeda in a spate of attacks, including a bombing last March in Karachi that killed an American diplomat. He denies these links.

Yet the police say they cannot arrest Fazlullah. "We are ready to go after him anytime. But there are national activities," says Mohammad Yameen Khan, the district police officer of Swat, referring to President Pervez Musharraf's sacking of the country's chief justice, which has spawned growing protests. "You don't want to open too many fronts. The forces are committed elsewhere, in the burning places," he adds, referring to neighboring areas witnessing Taliban-related violence.

Officials, cleric cut a deal

In late May, despite the cases against him, Fazlullah signed a peace deal with local officials, agreeing to prevent his followers from running militant camps in return for keeping his radio station.

Many observers say that the state is simply not interested in taking down the Fazlullahs of Pakistan.

"These people remain a good tool of policy in the region, in Afghanistan … as well as internally," says Ijaz Khattak, a professor at the University of Peshawar. "If other liberal parties become stronger, they will challenge the regime. These people are there to stop them."

• First of three parts. Wednesday: A city fights back against extremist voices.