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Has Pakistan tamed its spies?

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An agency that once fostered militants is showing success in fighting them. Now comes the $25 million question: Can the ISI help find bin Laden?

This is how bad it was for terrorist hunters before Sept. 11: after weeks of dangerous surveillance work along the Afghan border, Egyptian investigators visiting Pakistan last summer with the permission of that country's government finally tracked down their quarry, a close associate of Osama bin Laden named Ahmad Khadr, who was wanted in connection with the 1995 bombing of the Egyptian embassy in Islamabad that killed 15 people. The Egyptians surrounded the safe house in the Pakistani frontier city of Peshawar where Khadr, an Egyptian Canadian, was hiding. All that remained was to notify General Mehmood Ahmed, then Pakistan's chief spymaster, so that his spooks could burst in and arrest Khadr. Ahmed promised swift action.

It was swift--but not in the way the Egyptians expected. That night the Pakistani security forces never turned up. Instead a car with diplomatic plates roared up to the Peshawar house. As the Egyptians watched, a gang of Taliban spilled out, grabbed Khadr and then drove him over the Khyber Pass to Afghanistan, beyond the Egyptians' reach. The Pakistani spy agency, known as Inter-Services Intelligence, had betrayed the Egyptians. "The next day the ISI called up and said, 'So sorry, the man gave us the slip,'" a diplomat recalls. "It was a lie."

Since Pakistani President Pervez Musharraf threw in his lot with the U.S. after Sept. 11, he has been wrestling to gain control over the 10,000-strong ISI, a group of soldiers, field agents, sneaks and tens of thousands of additional informers so formidable and independent its critics call it "a kingdom within a state." The stakes for Musharraf and the U.S. are high. Transforming the organization from one that has abetted Islamic militancy to one that combats it is fundamental to both Washington and Islamabad as they struggle to impose moderation on a radicalized part of the world. The preliminary signs are that Musharraf, despite many obstacles, may actually be succeeding in taming the ISI.

"We're quite pleased with the cooperation we've got from them," says a U.S. official in Washington. A Western diplomat in Islamabad says, "There's grudging compliance. They're saluting Musharraf and obeying him."

For the ISI to sign on to Washington's war against terrorism is quite a switch. Until Sept. 11, the organization was suspected of propping up the Taliban and by extension its al-Qaeda guests in Afghanistan, although Pakistan hotly denies this. As Washington mops up after the war in Afghanistan, pursuing the surviving remnants of bin Laden's terrorist web, the ISI's cooperation is particularly critical. Western intelligence sources in Islamabad say hundreds of al-Qaeda operatives are still hiding out in Pakistan. Last week, according to tribal elders, some 40 U.S. commandos set up base in the Pakistani town of Miramshah, following reports that bin Laden might be holed up nearby in either north Waziristan or the Tirah valley. Officially, Pakistan's government, sensitive to popular anti-American sentiment, denies that U.S. special forces crossed into its tribal borderlands. Whether or not U.S. troops are on the ground, Washington must depend, at least in part, on Pakistani intelligence to flush out remaining fugitives. The working deal is this: the American hunters provide electronic surveillance and whopping rewards for information; the ISI supplies the human intel, the spies and informants who actually know who is where.

So far, the arrangement has worked well. When suspected terrorists have been collared by the ISI along the Afghan border, they have been turned over to the FBI for joint interrogation at safe houses in Peshawar and at Kohat, near the tribal borderlands. The ISI has grabbed about 300 al-Qaeda agents in recent months. Most are Yemenis, followed by Saudis and Palestinians; all were given one-way tickets to the U.S. detention center in Guantanamo Bay. It was an ISI tip-off last month that enabled the feds to put a tracking device on a car that led them to al-Qaeda's chief of operations, Abu Zubaydah. His capture was the most damaging blow so far against bin Laden's outfit.

Hunting down al-Qaeda agents is just one of Musharraf's challenges. ISI has also backed Muslim rebels in Kashmir, a disputed territory that both India and Pakistan claim as their own. Five months ago, violence by the guerrillas escalated tensions between India and Pakistan and nearly led to full-scale warfare. The President must also rely on the agency to crack down on sectarian extremists who operate within Pakistan proper--zealots have killed more than 70 people this year, including two Americans and three others in an Islamabad church in March--even though the ISI is believed to have kept up indirect links with these groups in the past.

And Musharraf needs the ISI's loyalty for his own survival. Popular anger against America runs high in Pakistan because of civilian casualties caused by U.S. bombing in Afghanistan and Washington's stalwart support of Israel in its conflict with the Palestinians, who, like most Pakistanis, are mainly Muslims. With Musharraf firmly allied with Washington, the fury extends to him as well. Western diplomats say the threat of assassination is ever present for Musharraf. He packs a silver-plated derringer in his chest pocket and always leaves his presidential office in an armor-plated Mercedes, using two others as decoys. The ISI is in charge of "the chief's" security.

The first move Musharraf made to tame the ISI was dumping its chief, Ahmed. He and the President were close friends and fellow plotters in the 1999 coup that brought Musharraf to power. But the intelligence chief proved too radical for Musharraf's purposes. Former comrades of Ahmed's say he experienced a battlefield epiphany in the Himalayan peaks during a 1999 summer offensive against India and began to pursue his own Islamic-extremist agenda. At a Cabinet meeting, he once yelled at an official, "What do you know? You don't even go to prayers."

Of more concern than these outbursts was Ahmed's sympathy for the Taliban. When the President sent him to Kandahar six days after Sept. 11 to persuade Taliban chief Mullah Mohammed Omar to hand over bin Laden, the spymaster instead secretly told Omar to resist, an ex-Taliban official told TIME. Word of this double cross reached Musharraf, who on Oct. 7 replaced Ahmed as ISI boss. He put in Lieut. General Ehsan ul-Haq, a trusted head of military intelligence who shares Musharraf's more Westernized outlook. His orders from the President were to weed out "the beards," as Islamic extremists are called in the ISI, and make the group more obedient to the President. The top officers were reshuffled. "For us, Sept. 11 was a blessing in disguise," a senior official said. "We were scared the religious extremists would dominate the country."

Of course, the ISI helped create that extremist danger. Since becoming a nation in 1947, Pakistan has tried with war and guile to pry away the part of Kashmir, a former princely state with a Muslim majority, that is in India's hands. Borrowing a page from the cia's proxy war against the Soviets, which used the mujahedin in Afghanistan, the ISI in 1989 began encouraging Islamic-militant outfits inside Pakistan to cross over the mountains and snipe at Indian troops in Kashmir. As a guerrilla tactic, it was brilliant. On any given day, more than 300,000 Indian troops are busy chasing 2,000 Kashmiri and Pakistani militants up and down the Himalayas.

But there have been side effects. These militants are sowing terror inside Pakistan too, attacking religious minorities and the occasional foreigner. The blowback began after these religious warriors shifted their training camps to Afghanistan. There the extremists, recruited from radical mosques and seminaries around Pakistan, fell in with al-Qaeda. For them bin Laden's messianic vision of Islam defeating the infidel world was compelling. Moreover, he had lots of cash.

Pakistani extremist groups such as Jaish-e-Muhammad shared terrorist camps near the Afghan towns of Khost and Kandahar with al-Qaeda, according to Western diplomats and foreign intelligence officials in Islamabad. The Pakistanis provided al-Qaeda agents a network of safe houses in Pakistan to facilitate their transit in and out of Afghanistan. They also vetted new recruits for al-Qaeda and laundered terrorist funds through a global network of illegal money changers. It was no surprise to foreign spooks that the ISI let the Egyptian-Canadian Khadr escape from Peshawar. He knew too much, they say, about the ISI's alleged ties with al-Qaeda.

Similarly, the ISI had no interest in catching bin Laden before Sept. 11. According to U.S. officials, in early 1999 the U.S. pressed the Pakistanis to establish a snatch team that could go into Afghanistan to grab the al-Qaeda chief. The Pakistanis did set up a commando unit, under the aegis of the ISI and with training by the cia. But a U.S. official familiar with the operation says that in the end the Pakistanis didn't do "squat."

Even after Sept. 11, Pakistani loyalties were still divided. According to Western diplomats, at least five key ISI operatives--some retired and some active--actually continued helping their Taliban comrades prepare defenses in Kandahar against the Americans. Even now, with all the ISI's changes, none were punished for their disobedience. Midway into the U.S. campaign in Afghanistan, the Pakistanis were still allowing military and nonlethal supplies to flow across the border to the Taliban.

While the ISI appears to have turned its back on the Taliban and its extremist comrades, it hasn't completely abandoned ties to militants. Activity has been suspended in the training camps that once fed the Kashmir rebellion, militants say. But the ISI seems unwilling to make an irrevocable breach with the guerrillas, in the event it later decides to rev up its clandestine support of them, according to foreign diplomats. The seven main suspects still at large in the kidnapping and murder of Wall Street Journal correspondent Daniel Pearl last January all had indirect links with the spy agency through the Kashmir conflict, according to Western diplomats. Now they're on the run. A Pakistani police investigator in the case remarked acidly, "It seems inconceivable that there isn't someone in ISI who knows where they're hiding." Maulana Masood Azhar, leader of the Jaish-e-Mohammad militant group to which most of the kidnap suspects belong, is under what a diplomat dubbed "country club" arrest at his home in Bahawalpur. Despite Musharraf's Jan. 12 ban on five extremist groups, most of their firebrand leaders were recently set free, a move that perplexed diplomats in Islamabad. "We didn't have enough proof to charge them," a Pakistani official said with a shrug.

Even with the ISI helping the U.S. against al-Qaeda, conditions in the tribal territory favor the terrorists. There are few roads into the terrain's soaring mountains. Gripes a Pakistani official: "If we get a lead, it takes four days to send an agent up into the villages, and by then the suspect's gone." That problem should be solved this June after Pakistan takes delivery of a fleet of U.S. helicopters and airplanes for border surveillance. Even still, tribesmen remain hostile to the U.S. presence. After the antiterrorist forces raided a seminary in Miramshah, shops closed and mullahs urged tribesmen to kill Americans on sight. So far, nobody has paid heed to the mullahs.

In the meantime, Pakistani tribesmen near the border have all the tools to help an al-Qaeda fugitive. In Miramshah, not far from what is said to be the U.S. commandos' new base, locals are offering a complete fashion makeover: for $100 a fugitive gets his beard shaved and a new set of clothes, plus help in slipping through checkpoints on the roads to major Pakistani cities. "These al-Qaeda are willing to pay a lot--and in dollars," a tribal shopkeeper marveled. The U.S. is offering dollars too--$25 million for bin Laden's capture. But while the ISI may be on board in the battle against al-Qaeda, the tribesmen's natural affinity with the terrorists still remains an obstacle.



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Cover Date: May 6, 2002

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