Pakistan losing territory to radicals

"In some villages, the largest employer is the jihadis," Mr. Bengali adds.

Swat is a startling example. Because unemployment is high, Fazlullah is able to summon hundreds of volunteers – who receive meals in exchange – to help build his new madrassah in Mingora, the city of 175,000 where he lives. Situated along the Swat River, the large religious school will someday offer poor students of this city, which has no university, a free education in Fazlullah's ultraconservative brand of Islam. Aides say proudly it will cost nearly $2.5 million, suggesting that while Fazlullah's audiences may generally be poor, he has wealthy patrons.

Since he began preaching two years ago, Fazlullah has drawn more than 15,000 weekly to his Friday prayers. His vision of militant Islam reaches thousands more in the valley by way of his illegal radio station, which he used until recently to warn parents not to send their girls to school. Few parents seem to have heeded that warning, but the government still intervened in May, striking a compromise in which officials would look the other way if Fazlullah stopped preaching against girls' education.

"Tell me, what wrong have I done? I am preaching religion, and religion is not terrorism," Fazlullah says in a brick room on the site of his new madrassah, surrounded by bearded aides.

People turn to cleric for justice

Aside from work, many also turn to Fazlullah for justice. "We are making compromises between rival parties and ending enmities," says Fazlullah.

Fazlullah's growing legitimacy exposes the void left by a justice system that is collapsing in the NWFP. Unlike North and South Waziristan and other parts of the Federally Administered Tribal Areas (FATA), state law technically applies here. But successive layers of bureaucracy – colonial, modern, secular, religious – have made justice, once free and quick, slow and more expensive.

"There is no local justice, no economic justice. Corruption is a bigger problem than you imagine," says Shah Salam Khan, a lawyer of the district high court, mentioning payoffs to judges and police.

In calling for sharia, or Islamic law, what residents really seek is good governance often neglected by the state, says Ayesha Siddiqa, a political analyst in Islamabad. It's a troubling analogy to North and South Waziristan, where local reports say that the Taliban have established their own courts and hospitals, offering services neglected by the state.

And, as in those areas, Taliban violence has surged throughout the NWFP in the past year, suggesting that it, too, is becoming a haven for militancy. Nine criminal cases, including the charges of terrorism, have been filed against Fazlullah. The police say they suspect that he's formed links with terrorist groups like Jaish-e-Mohammed, which is suspected of collaborating with Al Qaeda in a spate of attacks, including a bombing last March in Karachi that killed an American diplomat. He denies these links.

Yet the police say they cannot arrest Fazlullah. "We are ready to go after him anytime. But there are national activities," says Mohammad Yameen Khan, the district police officer of Swat, referring to President Pervez Musharraf's sacking of the country's chief justice, which has spawned growing protests. "You don't want to open too many fronts. The forces are committed elsewhere, in the burning places," he adds, referring to neighboring areas witnessing Taliban-related violence.

Officials, cleric cut a deal

In late May, despite the cases against him, Fazlullah signed a peace deal with local officials, agreeing to prevent his followers from running militant camps in return for keeping his radio station.

Many observers say that the state is simply not interested in taking down the Fazlullahs of Pakistan.

"These people remain a good tool of policy in the region, in Afghanistan … as well as internally," says Ijaz Khattak, a professor at the University of Peshawar. "If other liberal parties become stronger, they will challenge the regime. These people are there to stop them."

• First of three parts. Wednesday: A city fights back against extremist voices.

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