The designation of an organisation as an FTO impairs its ability to collect funds from the diaspora in the US. Where an organisation does not depend on flow of funds from the diaspora in the US, it has very little impact on its operational capabilities.
The US started the practice of declaring foreign terrorist set-ups as FTOs in 1997. Since then, there has not been a single instance of any terrorist organisation withering away due to drying-up of funds because of its being declared an FTO. All organisations declared by the US as FTO continued to maintain their terrorist activities without any problem.
The US declared the Liberation Tigers of Tamil Eelam (LTTE) as an FTO in 1997. It had no impact on the activities of the LTTE. The LTTE was crushed 12 years later in May 2009 not by the US designation, but by the counter-insurgency operations of the Sri Lankan Army.
Since 1997, the US has declared the Harkat-ul-Ansar also known as the Harkat-ul-Mujahideen (HUM), the Lashkar-e-Toiba (LET) and the Harkat-ul-Jihad-al-Islami (HUJI) of Bangladesh as FTOs. The declarations have had no impact on their activities. They continue to be as active as before
This is because the jihadi terrorist organisations based in Pakistan, Bangladesh and Afghanistan get their funds not from the diaspora in the US, but from the diaspora in the Gulf, from so-called charitable organisations in Saudi Arabia and other Gulf countries and from the intelligence agencies sponsoring them such as those of Pakistan and Saudi Arabia. They also get their funds from the narcotics trade in the Af-Pak region.
Unless these real sources of funding are tackled, just designating an organisation as an FTO and making it illegal for persons in the US to help it financially will not help.
The US war of attrition based on precise intelligence, which has been effective against Al Qaeda in the tribal areas, has not been that effective against the Haqqani Network. Al Qaeda is perceived largely as an Arab organisation. Some Pashtuns have had no qualms over co-operating with the US against Al Qaeda as one saw in the case of the Pashtun doctor, now in Pakistani custody, who allegedly collaborated against Osama bin Laden. But the Haqqani Network is a Pashtun organisation. It has been more difficult to find Pashtun sources willing to collaborate against the leadership of the Network.
Only the Shias of Kurram, who have been suffering due to the atrocities committed by the Afghan Taliban and the Network, and the Tajik remnants of Ahmed Shah Masood’s pre-2001 organisation might be in a position to help in neutralising the Haqqani Network through ground and air operations. The suspicions between the US and the former followers of Masood have come in the way of such operations. The US has been reluctant to seek the co-operation of the Shias of Kurram because of their reported links with Iran.
New ideas, new operational methods and new allies are required to neutralise the Network without having to depend on Pakistan. The US has been bereft of such ideas, methods and allies. Designating the Haqqani Network an FTO alone will not help.
The US and other NATO forces have been facing problems in Afghanistan because of the mix of conventional and terrorist strikes adopted by the Afghan Taliban and the commando style complex terrorist strikes in which the Haqqani Network specialises. Unless an effective answer is found to the capabilities and techniques of the Afghan Taliban, there is unlikely to be an improvement in the ground situation in Afghanistan.
Only punitive pressure against Pakistan can help in neutralising the Haqqani Network. The Network operates from sanctuaries in North Waziristan and Kurram. It maintains close links with the ISI, which is well-informed regarding the location and movements of its leaders. The ISI is in a position to help the US in neutralising the Network, but is hesitant to do so as it looks upon the Network as its strategic ally for recovering its influence in Afghanistan after the withdrawal of the US and other NATO forces from there.
The US is not prepared to declare Pakistan a state-sponsor of terrorism for its collusion with the Network. Declaration of Pakistan as a State-sponsor of terrorism could entail follow-up steps such as a rupture of diplomatic relations with Pakistan, termination of all military-military and intelligence-intelligence co-operation and suspension of all economic and military assistance. No US government would be prepared to take such actions. The US has to tolerate Pakistan and find ways of getting along with it whatever the difficulties and consequences of such a policy.
In the absence of a capability to mount an Abbottabad style unilateral strike against the Haqqani leadership, the only transit option left to the US is to have the Network designated as an FTO. That is what it has done without any illusions that it will lead to the neutralisation of the Network.