Pakistan has admitted that the 26/11 Mumbai terrorists did, indeed, come from Pakistan. The Pakistanis have arrested many of those involved in planning the attack, and say they will prosecute. But time will tell, as in the past, Pakistan has gone through the motions, and soon let the terrorists out of jail. There are a lot of Pakistanis who support Islamic terrorism big time, and some of them are senior government officials. Pakistan has not been able to deal with this problem, and prefers to pretend that widespread popularity of Islamic terrorism does not exist.
Although Islamic terrorism has been defeated, although not completely eliminated, in Indian Kashmir, violent demonstrations (against Indian rule and non-Moslems in general) continue. In Pakistan, Iran is getting more hostile in its complaints about religious killings in Baluchistan. Over a hundred Shia Pakistanis are being killed a year in southwest Pakistan. Some of the tribal rebels are killing Shia Iranians across the border as well. But the murders of Pakistani Shias are basically a terror campaign, attempting to drive Shia out of the region. This kind of intolerance is common in many parts of Pakistan, and the Taliban problem is just part of it.
The Pakistani government now says that it underestimated the Taliban threat. The current government only came into power last year, the first elected government in a decade. The civilian politicians had apparently assumed that the problems in the tribal territories were not all that serious. But they are pretty serious, because for the first time in centuries, someone (in this case the Pakistani government) is trying to impose outside control on the Pushtun tribes. While much is made of this being a Taliban problem, it is actually a tribal problem. The tribes do not want to lose control over their own affairs. But at the same time, the tribes do not agree on what to do with the Taliban (which is a religious movement infecting several, but not all, tribes).
In Pakistan's Swat valley (northwest of the capital), the Taliban agreed to negotiate a peace deal. This was in response to an army offensive that was doing a lot of damage to the Taliban. This is a standard Taliban ploy, to get the army to halt its operations. The Taliban will go through the motions of obeying the peace terms, but will soon go back to their terrorist ways. In the past year, there have been over 600 terrorist attacks in Pakistan, most of them in the tribal territories, against government officials (including soldiers and police.) The tribes cannot control all of Pakistan, but they are capable of driving the government out of the tribal territories. The government can stop this if they forget about the "Indian threat" (of an invasion the Indians have no intention of launching) for the moment and concentrate most of the armed forces against the tribes. This would be bloody and expensive and the government would rather not. But peace deals with the tribes don't work either. The government fears that a major offensive to gain control over the tribal territories would turn into a civil war.
In the last week, there have been more missile attacks by U.S. UAVs, killing about 40 terrorists. Pakistan continues to officially protest these attacks (as violations of Pakistani sovereignty), but in practice approve because the American effort is killing hundreds of al Qaeda and Taliban personnel. The attacks are terrorizing the terrorists, who have lashed out at locals, killing suspects (largely innocent) for being spies.
India is having some success with its offensive against Maoist rebels groups in central and eastern parts of the country. The Maoists are getting weaker because of this, with more senior Maoists surrendering, or getting killed. This has caused some Maoist groups to offer peace negotiations.
February 11, 2009: Pakistani police raided several terrorist safe houses in Quetta, the largest city in Baluchistan. Five suicide bombers were arrested, along with over fifty suspects.
February 10, 2009: In Pakistan, the army is attacking Taliban forces in Bajaur, along the Afghan border. Multiple Taliban safe houses and locations are being attacked.