The government of Pakistan signed an agreement on Monday with Taliban rebels to trade "Shari'a-for-peace." The arrangement comes after Pakistani authorities essentially lost control of the once-idyllic Swat Valley - the "Switzerland of Pakistan" - in the Northwest frontier province. Under pressure from Washington, Pakistan dispatched 12,000 troops in what turned out to be a failed campaign to pacify a region terrorized by 3,000 Taliban fighters. The Islamists had destroyed hundreds of schools (where girls were being educated or boys were learning secular subjects); intimidated foreign teachers, beheaded policemen and murdered journalists. Hundreds of thousands of civilians fled the province. There are disturbing, though unsubstantiated, reports that India may be supporting the Taliban in both Pakistan and Afghanistan - another example, if true, of "the enemy of my enemy is my friend" aphorism. Most of Swat, roughly 100 miles from Islamabad, is in Taliban hands. Authorities also hold little sway in the tribal areas of North and South Waziristan. In short, while Pakistan is a nuclear power and has a seat in the UN, it is arguable whether it is a genuinely sovereign state. The Shari'a-for-peace accord was reached between authorities and Taliban "moderates" led by Sufi Mohamed. What impact the deal will have on his more radical son-in-law, Maulana Fazlullah, remains to be seen. In theory, the deal bolsters "moderate" Taliban and removes Shari'a law as the battle cry of the extremists. The theocratic rules to go into effect, authorities insist, will be a gentler, kinder version of Shari'a, compared to the Afghanistan strain. The most positive spin on the deal is that it will end lawlessness and replace an unresponsive civil court system. Outlawing television, public entertainment and shaving would be a small price to pay. President Asif Ali Zardari, whose wife Benazir Bhutto was probably assassinated by Taliban types in December 2007, has approved the Shari'a-for-peace deal. So, reportedly, did the Awami National Party, a secular Pashtun grouping. The Pashtun ethnic group comprises 15 percent of Pakistan's population, and 42% (a plurality) of Afghanistan's. The Taliban is predominantly Pashtun. BUT MANY Pakistani modernizing elites are distressed. "This deal shows that the Pakistan military has in fact been defeated by the militants; that we are now incapable of retaining control of vast tracts of our own territory," commented a News of Pakistan editorial. The decision to trade Sharia-for-peace appears to reflect a bad trend in the Muslim (and Arab) world whereby radicals stick to their guns, and moderates capitulate. Even if the Taliban could be satiated with "just" Afghanistan and Pakistan, these vast lands would become - even more than they already are - safe havens and launching pads for terrorism against "the infidels." Indeed, reports claim that Osama bin Laden is currently not in some cave but in the village of Parachinar, near the Pakistan-Afghanistan border, in an area that's seen Sunni-Shi'ite strife. US envoy to Pakistan and Afghanistan Richard Holbrooke, who is just completing a tour of the region, called the Swat deal proof that India, the United States and Pakistan "all have a common threat now." If only that were true. If only matters were that clear-cut. The US is doing its best to keep up appearances. Anne W. Patterson, America's ambassador to Pakistan (who sometimes appears in public wearing a head covering), oversees the delivery of millions of dollars in US aid. At the same time, the US military (starting in the last months of the Bush administration) is employing unmanned aircraft to strike at terrorist targets inside the country, with the tacit approval of Pakistani authorities. WHEN Pakistan's top general. Ashfaq Parvez Kayani - the man who controls Islamabad's nuclear arsenal and presumably still makes the final call in the shadowy Inter-Services Intelligence Agency - arrives in Washington next week to meet Obama administration officials, there will be much to talk about: the release from house arrest of A.Q. Khan, and the serious proliferation risk he continues to be; the Shari'a-for-peace deal; and Pakistan's culpability in the Mumbai attacks. Between Iran's quest for nuclear weapons, the power vacuum in Pakistan-Afghanistan, and the need to preserve relative stability in Iraq, the administration will, no doubt, want to prioritize its Middle East agenda accordingly.