Rogues No More?

Thi

s is how bad it was for terrorist-hunters before Sept. 11. After weeks of dangerous surveillance work along the Afghan border, Egyptian investigators finally tracked down their quarry, a close associate of Osama bin Laden named Ahmed al-Khadir who was wanted for bombing the Egyptian embassy in Islamabad in 1995, killing 15 people. The Egyptians had surrounded the safe house in the Pakistani frontier city of Peshawar where al-Khadir, an Egyptian Canadian, was hiding. All that remained was to notify Pakistan's then chief spymaster, General Mehmood Ahmed, so that his spooks could burst in to arrest al-Khadir. Ahmed promised swift action.

It was swift, but not in the way the Egyptians had expected. That night last summer, the Pakistani security forces never turned up. Instead, a car with diplomatic plates full of Taliban roared up to the Peshwar house, grabbed al-Khadir and drove him over the Khyber Pass to safety in Afghanistan—beyond the Egyptians' grasp. Put bluntly, the Pakistani spy agency, known as the Inter-Services Intelligence (ISI), 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."

	Should Pervez Musharraf continue to rule Pakistan for the next five years? Yes No Not Sure

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. Transforming the organization from one that abetted Islamic militancy to one that combats it is fundamental to both Musharraf and the U.S. But it's a daunting task. Even by the shadowy standards of spy agencies, the ISI is notorious. It is commonly branded "a state within the state," or Pakistan's "invisible government." It has sponsored Muslim rebels in Indian-held Kashmir, and propped up the Taliban and by extension its malevolent Arab guests in Afghanistan—though it denies these charges. Its tentacles stretch into Pakistani politics, courts and everyday life. It is much feared; a venal whisper from an ISI informer can destroy a career or lead to arrest—or worse.

The preliminary signs are that Musharraf, despite many obstacles, is actually succeeding in taming the ISI. He has put trusted men into key antiterrorism posts, and the ISI's field agents around the country are carrying out their new orders. Says one Western diplomat: "There are no rogue elements in the ISI. The discipline's too strict for that."

These days, what the ISI does and does not do is more critical than ever. Intelligence sources in Islamabad say that hundreds of al-Qaeda operatives are still hiding in Pakistan. To hunt them down, American investigators need the ISI. Last week, according to tribal elders, about 40 U.S. commandos set up base in the Pakistani tribal town of Miramshah near the frontier with Afghanistan, following intelligence reports that bin Laden might be holed up nearby. Officially, Pakistan denies that U.S. special forces crossed into its tribal borderlands. Whether American troops are on the ground or not, Washington must depend, at least in part, on Pakistani intelligence to flush out remaining fugitives.

Meanwhile, Musharraf must also resolve some knotty issues that go beyond the hunt for bin Laden. To ensure Pakistan's stability, he must rely on the ISI to crack down on sectarian extremists, who have killed more than 70 people this year. Yet elements in the agency are believed to have maintained shady connections with these groups. Then there's the matter of the Pakistani leader's own survival. Many Pakistanis are angry with America these days, over the civilian bombing casualties in Afghanistan and Washington's support of Israel in its conflict with the Palestinians, who like most Pakistanis are mainly Muslims. With Musharraf firmly allied to Washington, diplomats say the threat of assassination is ever present. The President packs a silver-plated derringer in his chest pocket and only leaves his office in an armor-plated Mercedes, using two others as decoys. Musharraf relies on the ISI for his security. He has found other uses for the group, too. In the run-up to the referendum in April to extend his term as President, he is using ISI officials to cajole some local politicians over to his side, by appeals to their nationalism.

Musharraf's first step in reining in the ISI was to dump its chief, Ahmed. He and the President were once close friends and fellow plotters in the 1999 coup that brought Musharraf to power. But former comrades say that Ahmed experienced a battlefield epiphany up in the Himalayan peaks during the 1999 Kargil offensive against India. After that, he began to pursue his own radical Islamic agenda. At a Cabinet meeting, he once yelled at an official: "What do you know? You don't even go to prayers."

More worrying than these outbursts was Ahmed's sympathy for the Taliban. When the President sent him down to Kandahar last Sept. 17 to persuade Taliban leader 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-talk reached Musharraf, who replaced him as ISI boss with General Ehsan ul-Haq, a trusted friend and ex-military intelligence chief who shares Musharraf's more Westernized views. His orders were to weed out "the beards," as the Islamic extremists are nicknamed inside the agency, and make the ISI more obedient to the President. "For us, Sept. 11 was a blessing in disguise," says one senior official. "We were scared that the religious extremists would dominate the country."

Of course, the old ISI helped create that extremist danger. Since nationhood in 1947, Pakistan has tried through war and guile to pry the remainder of Kashmir, a former princely state with a Muslim majority, away from India. Borrowing a page from the cia's proxy war—backing local mujahedin against the occupying Soviets in Afghanistan—the ISI began in 1989 to encourage Islamic militant outfits inside Pakistan to cross over the mountains and snipe at Indian troops in Kashmir. As a combat tactic, it was brilliant: on any given day, more than 300,000 Indian troops are busy chasing 2,000 Kashmiri militants up and down the Himalayas.

But the side effects were devastating. These militants sowed terror inside Pakistan, too. The blowback started when these holy warriors shifted their training camps over to Afghanistan. There, these Islamic extremists, recruited from radical mosques and seminaries around Pakistan, fell in with al-Qaeda. For them, bin Laden's apocalyptic vision of Islam was compelling—plus he had lots of cash. As one Western diplomat explains, "There was this large militant pool, with men drifting from one outfit to another."

On a practical level, Pakistani extremist groups such as Jaish-e-Mohammad shared terrorist camps near the Afghan towns of Khost and Kandahar with al-Qaeda, according to Western diplomats and intelligence officials in Islamabad. In turn, bin Laden's agents relied on these comrades to provide a network of safe houses for al-Qaeda agents as they crossed Pakistan on their way to and from their Afghan headquarters. The ISI also vetted new recruits and laundered terrorist funds through the hawala global network of informal money changers. Says Ahmed Rashid, author of Taliban: Militant Islam, Oil and Fundamentalism in Central Asia: "All these Pakistani groups were closely linked to the ISI through Kashmir." It was no surprise to foreign spooks that the ISI let al-Khadir escape from Peshawar. They believe he knew too much about the agency's ties with al-Qaeda.

Nor was catching bin Laden a top ISI priority. 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 the commando unit, under the aegis of the ISI and with training by the cia. But according to one U.S. official familiar with the operation, in the end the Pakistanis didn't do "squat."

Even after Sept. 11, Pakistani loyalties were still divided. At least five key ISI operatives—some retired, some active—stayed on to help their Taliban comrades prepare defenses in Kandahar against the Americans. None has been punished for this disobedience. And in New Delhi, Indian intelligence agents insist that during the battle for the Taliban bastion of Kunduz, Musharraf persuaded the U.S. to allow Pakistani C-130 planes to airlift out between 300 to 1,000 of its pro-Taliban fighters before American jets poured fire onto the northern Afghan town. Both Washington and Islamabad deny this happened. What is well documented is that even halfway through the U.S. campaign in Afghanistan, Pakistani officials were still allowing military and nonlethal supplies across the border to the Taliban.

No longer is that true. The ISI is now actively supporting the U.S. "We've joined out of conviction, not compulsion," says a government official. This change has been noted gratefully in Washington. "We're quite pleased with the cooperation we've got from them," says a U.S. official. A Western diplomat in Islamabad concurs, "There's grudging compliance. The ISI is saluting Musharraf and obeying him." This required a 180 turn for Pakistani spooks. Former friends such as the Taliban and homegrown jihad outfits became the new enemies. "Overnight, our strategic assets," as one top Islamabad official puts it, "had become liabilities."

Still, by and large, the ISI has snapped into line with U.S. requests. When suspected terrorists are collared by the ISI along the Afghan border, they are turned over to the fbi for joint interrogation at safe houses in Peshawar and Kohat, near the tribal borderlands. In all, 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—the most damaging blow so far against bin Laden's outfit. The American hunters supply the electronic surveillance and fat rewards for information, while the ISI provides the human intel.

But a lot more could be done. The ISI wants to keep its militant "assets" should it decide to rev up its clandestine support for Kashmiri combatants, say Western diplomats. (For now, activity in guerrilla training camps inside Pakistan is suspended, militant sources say.) And some of these assets are downright dangerous. For example, the seven main suspects still at large in the kidnapping and murder of Wall Street Journal correspondent Daniel Pearl in January all had indirect links with the spy agency through the Kashmiri conflict, according to Western diplomats. Now they are on the run, and as one investigator remarks acidly, "It seems inconceivable that there isn't someone in the ISI who knows where they're hiding." Maulana Masood Azhar, leader of the Jaish-e-Mohammad militant group to which the kidnapping suspects belonged, is under "country club" arrest at his home in Bahawalpur, a diplomat reports. Despite Musharraf's Jan. 12 ban on five extremist groups, most of their firebrand leaders were recently set free, a move that perplexed Islamabad diplomats. "We didn't have enough proof to charge them," explains a Pakistani official.

The old-boy network with the ex-Taliban also persists. In Peshawar, thousands of empty Pakistani passports were stolen last December, and many are now thought to be in the pockets of Taliban and al-Qaeda fugitives. Several senior Taliban commanders, including former Interior Minister Mullah Abdul Razzak, are living openly in the southern Pakistani border town of Chaman with their wives and families. Western diplomats express frustration over this, but they reckon Pakistan may be saving the ex-Taliban clergymen, who still have backing in southern Afghanistan, as a political option in case the interim Kabul government of Hamid Karzai unravels.

Even with the ISI's help, conditions in the tribal territory still favor al-Qaeda. There are few roads into these mountain labyrinths, and as one Pakistani official gripes, "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 should improve this June once Pakistan takes delivery of U.S. choppers and planes for border surveillance. A thornier problem for the American and ISI trackers is the tribesmen's natural affinity for bin Laden, his combative vision of Islam and the lure of big bucks from fleeing al-Qaeda fighters.

In Miramshah, not far from the U.S. commandos' new base, locals are offering a complete fashion makeover for fugitives. For $100, your beard is shaved off, you get a new set of clothes and smugglers will slip you through the checkpoints on the roads to major Pakistani cities. "These al-Qaeda are willing to pay a lot more—and in dollars," one tribal shopkeeper marvels. But even shorn of his beard and sporting Western gear, it will be hard for bin Laden to avoid detection if he is hiding in Pakistan—now that the ISI has joined the chase.