Fazlullah mounted a violent two-year campaign to enforce Islamic Shariah law in the northwestern district of Swat, opposing education for girls and beheading opponents until the government ordered in thousands of troops.
The 40-minute video, a copy of which was obtained by AFP, shows Fazlullah talking with a group of people whom he called suicide bombers and firing shots with a Kalashnikov assault rifle. Shot at an unknown place and time, the video was released Thursday. Fazlullah, who has a government bounty on his head, remains at large.
"The government and the military are against us and you should target them," Fazlullah, who looked quite healthy in the video, told his followers. He ridiculed the government's claim that it had restored peace in Swat, saying, "the army committed worst terrorism by killing innocent people in Swat".
"We do not concede defeat... it was our tactical retreat and part of our strategy," he said, adding: "We are still active." For two years the Taliban paralysed much of the valley by promoting a repressive brand of Islamic law before a major military offensive last year in the districts of Buner, Lower Dir and Swat.
Many of the estimated two million people who fled have now returned to their homes in and around Swat and are trying to rebuild their lives, but skirmishes, threats and tensions have remained. Swat has been held up as a success story in Pakistan's fight against Taliban and al Qaeda-linked militants by local and US officials, who praised the offensive for apparently ending a two-year local Taliban insurgency.
Fazlullah also criticised the government for recently holding a peace festival in Swat and "promoting vulgarity and obscenity". He is also shown embracing at least 10 fidayeen -- suicide bombers -- in the video, who were said to be ready to "accomplish their mission".
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