It began with US President Donald Trump’s first bombastic tweet of the New Year, announcing that Pakistan has ‘given us nothing but lies & deceit, thinking of our leaders as fools. They give safe havens to the terrorists we hunt in Afghanistan, with little help. No more!’. The White House then froze over US$1 billion in military assistance to Pakistan and successfully pushed for Pakistan to again be placed on the Financial Action Task Force’s (FATF) watch list for states deemed non-compliant with regulations against terrorist financing, to be enforced in June 2018. Pakistan had previously been on the intergovernmental watchdog’s list from 2012–15, which limits a state’s access to funds within international markets.

The United States has long been unsatisfied with Pakistan’s selective efforts at combating militancy within its borders. Of particular concern to the United States are groups that use Pakistan’s mountainous and remote Tribal Areas as a base of operations to target NATO forces in Afghanistan, such as the Haqqani network.

Pakistan’s strategy is framed by its regional rivalry with India. Officials in Islamabad are concerned about warming India–Afghanistan ties and try to offset this by promoting Pakistan’s own strategic depth in Afghanistan via connections to militant groups — a position that rankles the United States. Similar to Islamabad’s relationship with Kashmiri militants, engagement with and support for these groups is a means of promoting and protecting Pakistani interests.

The FATF decision was a US-led endeavour backed by France, Germany and the United Kingdom, and it reflected broader US frustration with Pakistan’s counterterrorism efforts. This decision unusually comes at the tail end of a troop surge in Afghanistan as the United States re-engages in its military mission against the Taliban and groups fighting under the so-called Islamic State banner. This diverged from previous patterns within the US–Pakistan strategic alliance.

During periods of high engagement in South Asia (such as following the 1979 Soviet invasion of Afghanistan or its own invasion in 2001), the United States has been willing to overlook points of contention with Pakistan given its vital logistic and strategic importance. US forces in Afghanistan heavily rely upon Pakistani supply lines. This gives Pakistan greater leverage over their large Western ally in regards to extracting high levels of military and economic assistance, while still promoting its own national interests in relation to India. As the United States disengages from the region, these points of contention come to the forefront of the relationship. These disputes often lead to sanctions and arms embargoes, as was the case throughout the 1990s after the withdrawal of Soviet forces from Afghanistan in 1988. This shift in strategy could represent a desire by the US government to begin to re-evaluate its approach.

China’s role is perhaps the most consequential aspect for Pakistan. China, Turkey, Saudi Arabia and the Gulf Cooperation Council initially blocked the United States’ FATF proposal. Saudi Arabia dropped their objection due to US lobbying efforts. Beijing eventually followed suit and dropped its own objection, which allowed the FATF motion to pass.

This was a marked departure from China’s past behaviour towards its southwestern neighbour. Over the previous decades, Pakistan viewed China as its ‘all-weather’ ally and often used Chinese military assistance to counter-balance fluctuations and uncertainties with US aid. By 2016, China eclipsed the United States as the dominant supplier of military hardware to Pakistan. China is also currently constructing the China–Pakistan Economic Corridor, which connects the Western Chinese city of Kashgar with the Gwadar port on Pakistan’s Arabian coast and is expected to cost US$46 billion. And China has repeatedly used its position on the UN Security Council to protect Pakistani interests, especially against India.

China’s decision to withdraw its objection was the first time it opposed Pakistan in such a public diplomatic forum. This was reportedly brokered by the Indian delegation in exchange for New Delhi’s support for China playing a greater role in the FATF.

The FATF decision demonstrates that the leadership in Beijing, much like the leadership in the United States, perceives their alliance with Pakistan through a strategic frame and will ‘abandon’ their ally when it is strategically advantageous for them. With the United States potentially shifting their approach and new questions emerging about the reliability of their ‘all-weather’ ally, Pakistan finds itself in a difficult situation. This could incentivise Islamabad to quickly address the concerns raised by the FATF designation and thereby remove Pakistan from the watch list before it can do any further damage to Pakistan’s already struggling economy.

This episode could signify broader changes in the political equilibrium of South Asia and require Pakistan to alter its approach to allies and rivals. Only time will tell whether this is merely a temporary wrinkle or the beginning of a much larger shift.

Harrison Akins is a graduate research fellow at the University of Tennessee’s Howard H. Baker Jr. Center for Public Policy.