The Federally Administered Tribal Areas (FATA) are not at all alien to wars, military campaigns, massive displacements and internal strife, but the last few years have seen unprecedented and prolonged challenges to state authority. With the massive involvement of Pakistan’s military and paramilitary troops in all FATA Agencies, rising US drone strikes, scores of terrorist attacks all over the country and collapse of the government machinery, FATA seems almost like a lost cause. Security threats from the border region are being felt internationally, causing the US president to declare the Afghanistan-Pakistan border region as “the most dangerous place on earth”. The fact that the tribal areas possess unique geographical, political and administrative conditions that have brought the situation to the present level is mostly overlooked by experts and observers. It is of course the poorest and least developed part of Pakistan with a literacy rate of only 17 percent, including 3 percent for women, with per capita income around $ 250 and about 66 percent of households living below the poverty line. There have been varying estimates about FATA’s rapidly growing population from 3.5 million (1998 census) to seven million by different experts but the notable feature is the uniformity of the population, which all belongs to the different tribes of the 40 million Pashtuns scattered on both sides of the border. The total territory stretches to 2,400 kilometres, which has administratively been divided into seven Agencies and six Frontier Regions, governed through an informal system of collective responsibility. The doctrine of collective responsibility has been challenged a number of times in the superior courts and found in contradiction with Islamic law, the constitution, as well as human rights. Normal state institutions of taxation, law enforcement, courts and administration are not present and all judicial, administrative and development functions are supervised by a French prefect-type office by the title of ‘Political Agent’. The natives of the tribal areas, the Pashtuns, though tribal and parochial as a group, have proved agile and entrepreneurial in keeping all political and economic activities outside state control. The uniform yet physically inhospitable environment ensures invisibility for terrorists, especially the foreign jihadis, to blend into the local population and make the detection task impossible. A vibrant and effective black economy exists in FATA owing to tax evasion and illicit smuggling facilitated by the Afghan Transit Trade (ATT). The World Bank has estimated the overall value of this “stealth” economy in Pakistan to be over $ 30 billion, which is one of the highest in the world and protects local livelihoods from outside pressures. The Hawala system, which handles on average $ 4.6 billion of foreign remittances, is at the heart of this informal economy that has been found to be robust and defying inflationary pressures and adverse exchange rates. Drug trafficking is a lucrative source of income in the tribal areas and according to casual estimates, as much as a quarter of the drugs produced in Afghanistan pass through the border areas. The FATA region is historically abundant in arms and ammunition but in the last two decades, illegal and highly sophisticated weaponry has tilted the balance in favour of non-state actors against the state. The political economy of the tribal areas is further facilitated by the presence of a reasonable road network, telecommunication facilities and financial institutions in the area. The tribal areas, though lacking a formal education system, have a sizeable presence of mostly foreign-funded madrassas, which by some estimates cater to around 33 percent of school-aged children and ensure a steady supply of volunteers. There is a consensus among scholars as well as practitioners that following the insurgency and terrorism in the last decade, the erstwhile governance system has totally collapsed, leaving the area at the disposal of mullahs-turned-warlords and local/foreign militants. During the 1980s, around 35,000 Muslim radicals passed through the FATA area to wage jihad against the Soviet ‘infidels’ and the war left behind experienced fighters, training camps, substantial military equipment, a transnational network of organisational relationships and above all the self-confidence of victory over a superpower. Several thousand Arab-Afghans established their bases in the provinces of Kunar, Nuristan and Kandahar bordering Pakistan and spilled over to FATA after the Operations Enduring Freedom and Anaconda launched by NATO forces in 2001-2002. The Tehrik-i-Taliban Pakistan (TTP) was established by 40 militant commanders, having the strength of 40,000 fighters on December 14, 2007, and subsequently these Taliban militias have also emerged in North Waziristan, Kurram, Orakzai, Mohmand and Bajaur Agencies. Pakistani and its international partners have faltered in most of the available options to counter insurgency and terrorism, i.e. targeted strikes, military offensives, border control, law enforcement, negotiations and public diplomacy. The Pakistani government has however shown willingness and ability to use forcible means through the military to extend control over the region but after struggling to hold the areas, it had to enter into agreements with the militants on their terms. The state resorting to indiscriminate force, economic blockades and appeasement is only found to be helping the terrorists’ cause and has resulted in fuelling the militancy. The US is also continuing with ‘hard intervention’ in the hunt for al Qaeda and the Afghan Taliban through Predator and Reaper drone strikes, which have resulted in killing many high value targets but at the cost of substantive collateral damage. The drone strikes are hugely unpopular and a major cause of rising anti-American sentiment. Many counter-insurgency experts, most notably David Kilcullen, have openly questioned the efficacy of drone strikes and there is now an increasingly shared belief that the political costs of these attacks exceed the tactical gains. As a part of the ‘soft intervention’, the US has also committed $ 750 million for FATA development as well as proposed Reconstruction Opportunity Zones (ROZ) but the programmes have mostly been non-starters. If war is a bad enough experience for FATA, the worst is still to come with no institutions to ‘hold’ the areas cleared by the military. Swat is turning out to be quite a success story in attaining normalcy and the turnaround against militancy but the same scenario is nowhere to be seen in the tribal areas. Most of the operational and tactical achievements will be compromised and thwarted due to disregard of the dynamics and conditions that made the area a source of insecurity in the first place. The matter has not been helped by the lack of political will as well as lagging counter-insurgency capacity of Pakistan to bring the FATA region into the mainstream and increase the state’s presence there. Political, administrative and legal reforms are thus inevitable but have been a victim of the status quo, vested interests and anachronistic social structures. There can be a difference of opinion on the nature and extent of reforms but the present vacuum coupled with the fertile conditions for terrorists can be catastrophic for the polity of our entire country. The writer is a Fulbright-Humphrey Fellow at the Maxwell School of Syracuse University, New York, USA. He can be reached at uriaz@syr.edu