—Admiral Michael Mullen,
Senate Armed Services Committee, September 22, 2011

With those carefully chosen words, the outgoing chairman of the Joint Chiefs of Staff blew away the increasingly shaky pretense that Pakistan is our ally, not our enemy. The statement carried all the more weight because Admiral Mullen, more than any other senior official in Washington, has been so heavily invested in cultivating relations with Pakistan. He has visited Islamabad 27 times since 2008 and worked hard to establish bonds of trust with General Ashfaq Kayani, his Pakistani counterpart. As he told the Wall Street Journal: “I have been Pakistan’s best friend. What does it say when I am at that point?”

It says that Washington is finally facing the fact that its policy of engagement has failed. Not all of Washington, to be sure: Some anonymous administration officials leaked word to the Washington Post last week that Mullen’s assertions were “overstated.” But their defense of Pakistan, if that’s what it was, can hardly mollify Islamabad. One of the officials quoted in the Post said of the Haqqani Network: “Can they control them like a military unit? We don’t think so. Do they encourage them? Yes. Do they provide some finance for them? Yes. Do they provide safe havens? Yes.”

Those “yeses” are an indication that Mullen was right: The Haqqani Network is a “strategic arm” of Pakistan’s intelligence service, the ISI, even if ISI generals can’t order them around like a platoon on the battlefield. The same might be said of the Quetta Shura Taliban, and for that matter Lashkar-e-Taiba and other Pakistan-based terrorist groups: All are ISI proxies, and, like the Haqqanis, they are killing Americans and U.S. allies.

Simply to acknowledge the point in public, as Mullen has done, is a major step forward​—​a welcome willingness to face difficult truths. The question now becomes what do we do about it. This is where all previous attempts to deal with the Pakistani menace have foundered because of the risk of retaliation. The Pakistanis have real leverage they can use against us. Half of all nonlethal supplies delivered by ground to Afghanistan​—​everything from diesel fuel to ice cream​—​comes on trucks from the Pakistani port of Karachi. Interrupt those supply lines, as the Pakistanis occasionally do to send a message, and the U.S. war effort in Afghanistan will suffer.

Moreover, even while aiding some terrorist groups, Pakistan has provided valuable cooperation against others, allowing U.S. armed drones, for example, to operate out of a Pakistani airfield to kill al Qaeda operatives. The Pakistanis have even mounted offensives into some tribal territories against groups such as the Tehrik-i-Taliban Pakistan (the Pakistani Taliban) which, unlike the Haqqanis or the Afghan Taliban, are seen as a threat to the Pakistani state. Presumably, if Washington were to come down hard on Pakistan, we could see a halt to the limited, yet still significant, antiterrorist cooperation we have been receiving.

In the past, Pakistani threats of retaliation were enough to convince U.S. officials to ignore Pakistani misbehavior​—​even incidents such as one in 2007, reported last week in the New York Times, where Pakistani troops fired on an American military delegation, killing one officer and wounding others. But Pakistan’s leverage is not as great as it once was. The death of Osama bin Laden and most of his senior lieutenants has badly hurt the capabilities of al Qaeda central, putting “the defeat of al Qaeda’s leadership and dismantlement of its operational capabilities in the region .  .  . within reach,” as Mullen told the Senate.

Nor is the Pakistani supply route as important as it once was for operations in Afghanistan. In recent years NATO has made a concerted effort to redirect supplies via the Northern Distribution Network running through Russia and Central Asia. This forces us to rely on some morally dubious regimes, but, bad as Vladimir Putin and the rest are, at least they’re not actively killing Americans, as Pakistan’s proxies are. There is also the possibility of a massive airlift to get needed supplies into Afghanistan. A shutdown of Pakistan’s supply line would still sting, to be sure, but it need not cripple combat operations in Afghanistan, and we can continue to reduce our logistical vulnerabilities. In any case, cutting NATO’s supply line would also kill a cash cow for Pakistan and inflict damage on its already battered economy.

So we should not let fear of reaction deter us from dealing with the menace Pakistan poses. The administration quietly decided this summer to withhold $800 million out of the $2 billion in U.S. security assistance to Pakistan. There is also talk that at long last the United States will formally designate the Haqqani Network a terrorist organization, opening up a variety of financial and diplomatic sanctions. These are welcome steps, but they do not go far enough.

What more could be done? For one thing, we could mount more unilateral strikes, using drones or Special Operations Forces against Afghan Taliban and Haqqani targets within Pakistan. The towns of Quetta and Miram Shah​—​headquarters, respectively, of the Afghan Taliban and the Haqqanis​—​have been off-limits to our Predators because we didn’t want to offend the Pakistanis. That could now change.

But while drone strikes could disrupt Taliban and Haqqani operations, they cannot defeat these groups, which are far bigger, better funded, and more entrenched than al Qaeda. To defeat them will require a rethink of Pakistan’s policy of supporting them, and while we cannot force Pakistan to change its strategic calculus, we can at least prod it in that direction by making clear that ISI’s murderous misbehavior will no longer be tolerated.

We should start treating ISI the way we treated the Iranian Quds Force in Iraq. To stop the Quds Force from targeting our troops via local proxies, we mounted a multi-pronged campaign that included everything from the arrest of Quds Force operatives, to diplomatic pressure, to economic sanctions. The same model should be employed against the ISI. Apply economic sanctions against its vast range of business interests. Limit the travel and freeze the assets of its leaders, starting with its current head, Lieutenant General Ahmed Shuja Pasha. A designation of the ISI as a formal state sponsor of terrorism might also be in order. No doubt the Pakistani military would react angrily to such steps, but many civilians in Pakistan​—​including President Asif Ali Zardari and Prime Minister Yusuf Raza Gilani​—​who chafe under heavy-handed military dominance might quietly welcome them.

We do not pretend that such steps would be cost free. But neither is the current policy of letting Pakistani proxies kill our troops and their allies with impunity.