REPORTER: Chris Hammer
It's the holy month of Ramadan and Pakistan's religious schools, the madrassas, are on holidays. Most students have finished their exams and gone home, leaving behind a hard core of pupils who spend their days learning the Koran by heart.
There are up to 20,000 madrassas in Pakistan, nobody knows the precise number. Their defenders say they provide free education and welfare to the poor. Their critics in the West say they're a breeding ground for extremists.

STUDENT: Are they looking like extremists? They are students, they're very harmless men and very innocent men and they don't know what is going to be happening outside of the madrassa and what is going to be international events. They don't know and they don't have any linkages with any, you can say, extremism, terrorism.

That's true as far as it goes. Nobody accuses this particular madrassa of producing militants. Yet students here are taught that it's Islam, not the West, that's under attack.

DR SARFRAZ NAEEMI, PRINCIPAL, JAMIA NAEEMIA: The United States will attack on the Muslims country, not the Muslim country attack on USA. Firstly they attacked on Iraq and now, next time, he will try to attack on Iraq... Iran Iran - and then after he will try on Pakistan. We believe on this.

REPORTER: You believe that America will attack Pakistan?

DR SARFRAZ NAEEMI: Pakistan.

Islam lies at the very heart of Pakistan. It's a religious state, partitioned from India as a homeland for Muslims. So the concept of jihad is not restricted to mullahs and muftis - it's instilled throughout the society, including the military and intelligence establishment.
General Hameed Gul is the former head of the powerful and feared ISI, Pakistan's equivalent of the CIA.

GENERAL HAMEED GUL, FORMER DIRECTOR-GENERAL OF ISI: Let's say if George Bush was deadset on conquering the world, then obviously he would remove the resistance from wherever it comes. Now that resistance in the Islamic world, at least, will come from those people who study the Koran minutely and who believe it is an injunction from Allah almighty, that you have to resist tyranny and occupation and encroachment upon your freedom and this is definitely taught.

REPORTER: So do you believe that that's what America is doing then? That they're trying to weaken the madrassas or the ability of madrassas, not at the moment to produce militants, but to reduce their ability in the future?

GENERAL HAMEED GUL: That's right, that's right. I think you got the point. You see, they want to reduce the ability of the Muslim society to resist occupation.

HAFIZ MUHAMMED WASEEM: You learn the meaning of Koran. You learn the basic principles of Islam. You learn how to speak Arabic. You learn the meaning of Koran...

Hafiz Muhammed Waseem is an Australian/Pakistani dual national who lives in Sydney. He's visiting his grandfather who heads another Lahore madrassa. Muhammed studied here for years and can recite the Koran by heart. He explains that students here receive free board and tuition.

HAFIZ MUHAMMED WASEEM: Because we give them free accommodation, we don't charge them anything. They get free meals, we give them money as well. You know like we have a dole system in Australia, so anybody who's studying here full-time we give them money.

REPORTER: So, like Austudy?

HAFIZ MUHAMMED WASEEM: Yeah, like we pay for them. They don't pay anything. There is no admission fee, nothing, it's just free. Everything is free.

REPORTER: So where does that money come from?

HAFIZ MUHAMMED WASEEM: Different people they support, like sometime maybe the government as well. Or like, you know, there are a lot of people, we have thousands of people they are supporting us because they're - I mean their family is also studying here so they know that, you know, like their money is going to the right place.

Muhammad says it is disappointing madrassa students have become suspect in the eyes of the West. He says Islam is a religion of peace.

HAFIZ MUHAMMED WASEEM: In the whole world, like this is the present situation of the Muslim, you know. Like they've been shown like they are bad and this and that but in reality it's not like that. I mean, there are good people there are bad people as well, everywhere in the world.

Later I speak with Muhammad's grandfather. He says that amongst Pakistan's thousands of madrassas there are a handful of schools that actively promote jihad.

GRANDFATHER (Translation): There are two or four institutions like madrassas but they shouldn't be called madrassas. And they have mujaheddin. Those mujaheddin say "Our children, our sisters and our mothers are being persecuted. To counter this persecution, we should help the oppressed."
That's why, because of their religious passion, those people have some institutions to help them. There are just a few, and it's no big deal.

July's suicide attacks in London brought renewed attention on the madrassas. The bombers were Englishmen of Pakistani descent. It was reported at least one had visited a madrassa in Pakistan in the months before the attacks.

PRESIDENT PERVEZ MUSHAREFF: Banned organisations approach the public with a new name. Lock them up. They are banned organisations.

Following the bombs, the West renewed its criticism of the madrassas and Pakistan President Pervez Musharraf announced he would reign them in.

PRESIDENT PERVEZ MUSHAREFF: Stop it immediately.

Ejaz ul-Huq, son of the former military dictator General Zia ul-Huq is Pakistan's religious affairs minister.

EJAZ UL-HUG, RELIGIOS AFFAIRS MINISTER: Yes, there was a little bit of pressure which was built from outside because there were so many articles and so many news reports coming out that, you know, these people that went to Pakistan, they went to a madrassa which is totally false.

It remains unclear whether the bomber Shehzad Tanweer ever did visit a madrassa during his time in Pakistan. If he did, it was only for a day or two. Many Pakistanis are outraged by the suggestion madrassas are in any way connected to the London bombings.
I drive to the village of Tanweer's uncle, 50km outside Faisalabad, the one place in Pakistan I know for sure he did visit. But when I get there, I find the uncle is away and his house closed up. These neighbours declined to be interviewed, saying that after the bombing the ISI detained them, interrogated them and beat some of them, telling them not to speak to journalists. In the whole village only this one old woman had the courage to defy the power of the intelligence service and speak on camera.

OLD WOMAN (Translation): That pious man died. He was young. He prayed five times a day. He used to fast on Fridays. He used to fast on Thursdays as well. He was a good boy.

The reforms announced by General Musharraf included the banning of foreign students, modernising the curriculum and making the madrassas inform the authorities what their sources of income were. It all sounded terrific, but now the signs are that little or none of the reforms will actually be implemented. Ejaz Haider is a prominent journalist specialising in security issues. He says the madrassas may well have been used to funnel money to extremist groups.

EJAZ HAIDER, JOURNALIST: If you don't know who's funding the madrassas then any number of dubious characters can actually pass the money on to the madrassas and there's also the possibility of money laundering through the madrassas.

But now the Government has backed down from its stated policy of making the madrassas reveal their sources of income.

EJAZ HAIDER: The part of the deal which has been - or the original orders which has been watered down - deals with the finances of the madrassas. They now, under the new deal of the government, may not identify their donors.

The madrassas say they were afraid any information on donors would have been handed over to the Americans and donations would have dried up.

DR SARFRAZ NAEEMI: If America say that you transfer all this information about the donors to the Pentagon, the government doesn't have so much strength it can deny.

The government will now ask the madrassas to submit audited accounts, but they won't have to reveal the sources of their income after all.

EJAZ UL-HUG: We don't want to put 17,000 odd madrassas into jeopardy by pushing them to a corner and everybody giving, revealing every penny that they receive. There are almost 1.5 million students which are being looked after in these madrassas. The government is not paying them anything at all and they spend a lot of money and this money is all coming through the philanthropists who are supporting these madrassas, you know, which is charity basically.

The madrassas free education and boarding have proven popular well beyond Pakistan's own borders. Until now thousands of foreigners, including many Australians, have come here each year. Foreigners like Fahan, from New York. He condemns terrorism.

FAHAN, STUDENT: And the suicide bombing is not part of Islam and none of these teachings have been taught in our schools and in our books. The only things which are taught are the words of Allah and the words of ... which is love and affection between Muslim and people.

Despite such protestations, Fahan and other foreigners have now been banned from the madrassas under the government's reform program. The last are meant to leave by the end of the year, much to the disappointment of students like American Nori Eli Khan, a teenager from Georgia who has been boarding at a madrassa for 14 months.

NORI ELI KHAN, STUDENT:How would you feel if you studied here like the six-year Ali course, you studied here out of - five years out of the six years and they told you to go back to your country and you only have one more year left to become a full Ali. And then all those five years are wasted because you have to go back to your country.

But here, too, the government is reconsidering, saying it will again let students come if they have the proper documentation. For now though, everyone must go, with one important exception.

EJAZ UL-HUG: Except for the ones who are Afghan refugees. Now they, since they have nowhere else to go, and they're legal refugees in Pakistan, so if there is any madrassa close to the camps where the refugees are staying then we allow them to go and study over there.

Many of these refugees, of course, are sympathetic to, or members of, the ousted Taliban regime.

EJAZ UL-HUG: See people are confusing al-Qa'ida with Taliban. People are confusing al-Qa'ida with the other organisations which were into the freedom fighting struggle, like in Palestine, in Kashmir. This is going to continue. It is indigenous, basically, within the places wherever the freedom movement is going.

One such organisation is Lashkar-e-toiba banned in Pakistan, the US and Australia. I drive past its former headquarters in Lahore. It's a hive of activity, collecting this mountain of aid for the victims of the Kashmir earthquake. I need to be careful, the group believes it's blasphemous to make images of the human face. Its members have been known to smash cameras and attack photographers. It's renamed itself as Jamat-ud-Daawa but keeping the same spiritual leader Hafiz Mohammed Sayeed.
Later I interview the group's spokesman Yahya Mujahid previously the spokesman for Lashkar-e-toiba. In an unprecedented concession he agrees to appear on camera, but only in profile. He says Jamaat-ud-Daawa and Lashkar-e-toiba are not the same thing.

YAHYA MUJAHID, (Translation): Even before Lashka-e-toiba was banned it became Jamat-ud-Daawa in Pakistan. The chief of Jamat-ud-Daawa is Professor Hafiz Muhammad Sayeed. Lashka-e-toiba was operating under his name. He said quite emphatically they have no connection with Lashka-e-toiba. Lashka-e-toiba is doing jihad for the Kashmiris. And it has been handed over to a Kashmiri executive body. They run it. And that executive body is looking after it. They are responsible for running it. They also run the organisation in Indian-controlled Kashmir.

EJAZ HAIDER: They are not known to have been involved in either sectarian attacks or any other kind of terrorist attacks inside Pakistan or outside Pakistan.

Ejaz Haider says Lashkar-e-toiba has been engaged in jihad in Indian-controlled Kashmir and the West is wrong to equate this with terrorism or, for that matter, with the madrassas.

EJAZ HAIDER: The focus of madrassas for Pakistan's internal security is very important and which is what we're trying to do here because we've seen a spate of suicide bombings and other bomb attacks in Pakistan, that have been traced to these militant groups whose activists actually come from the madrassas, but to look at madrassas as a phenomenon, which is likely to become a major threat for the Western world, is, I think, is misplaced.

Yet this remarkable video footage obtained by Dateline demonstrates how coordinated the militant groups can be and how closely allied they can be to the military and intelligence establishment.
It's filmed at a madrassa near the Afghan border in 2001, about a month after the September 11 attacks and shows young mujaheddin being trained by a Pakistan army officer.
Inside, various religious leaders are gathered to swear solidarity with Afghanistan's Taliban regime under banners that make their intentions clear.

BANNERS (Translation): "We curse the Russian, American, Indian alliance". "The real goal of the infidel fight against Osama bin Laden and the Taliban is to stop sharia law." "We salute the greatness of the sacred martyrs of the Afghan jihad."

This was at a time when the US was preparing to invade Afghanistan with the stated support of Pakistan. Amongst the luminaries at the table are Hafiz Muhummad Sayeed, leader of Lashka-e-Toiba. Also present is Maulan Azhar Masood. He'd been held in an Indian prison until militants hijacked an Indian plane and demanded his release. And also seated at the top table is General Hameed Gul, former director-general of Pakistan's state intelligence agency, the ISI.
General Gul draws a very distinct line between the terrorists who target Western capitals and the mujaheddin who fight against what he describes as an Indian-controlled government in Afghanistan or for the Islamic cause in Kashmir.

GENERAL HAMEED GUL: Again Pakistan has no business to stop the Kashmiris from crossing over the Line of Control from one side to the other, because it is their land, their rivers, their forests. And if they are using their territory to liberate their nation, who are we to erect, start erecting wires there and who are we to tell them that you don't cross and that you are militants or that you are extremists or that you are terrorists. It's a diabolical nonsense.

PRESIDENT PERVEZ MUSHAREFF: Let this be a progressive, enlightened forward looking...

There are many in Pakistan's military, particularly amongst the younger officers, who agree with General Gul. Already President Musharraf has survived two assassination attempts by army elements who believe he has become too pro-Western. So his declaration that the madrassas will be regulated was a brave move, or it would be if it was ever carried out.
The truth is powerful elements within Pakistan's military and intelligence community continue to support the militants - not to attack the West, but to fight the dirty wars against India and in Afghanistan. They're looking ahead to the time when the Americans may no longer be fighting in their region.

GENERAL HAMEED GUL: Americans are going to lose this war. They are fickle minded, they are a young nation, they are raw, they are arrogant, they are heady and they're imperialistic.

The West wants Pakistan to clean up the madrassas, but the problems go far deeper than religious schools. Not only is jihad seen as legitimate amongst large sections of Pakistani society, the military is happy to manipulate this to pursue its objectives in Kashmir and Afghanistan. President Musharraf has told the West what it wants to hear, but for now, fundamental reform of the madrassas and the militants remains elusive.

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