Pakistan's decision to cut a deal with the Taliban in the country's northwest region is a setback in the war on terror — a move that effectively creates another haven for insurgents.

The Pakistani government has tried to put the best face on this move, calling it a mere truce. But it's a capitulation, pure and simple. The government agreed to allow the Taliban to impose a form of Islamic law on the Swat Valley area.

This has essentially legitimized the Taliban reign of terror.

Public officials have been beheaded. Girls' schools have been shut down. Women have been barred from leaving their homes without escorts by male relatives.

This setback is an additional challenge to the Obama administration, which rightly sees Afghanistan and Pakistan as a single problem.

President Obama has ordered the deployment of 17,000 more troops to Afghanistan, but U.S. goals there can't be realized until the havens in Pakistan are dealt with.

Richard Holbrooke, Obama's special envoy to the region, says the challenge in Afghanistan is even greater than in Iraq. As in Vietnam, our troops in Afghanistan face an enemy supported by sanctuaries in a neighboring country beyond the reach of U.S. ground forces.

The Obama administration is conducting a review of policy in the region, expected to be completed in April. But it is clearly time to step up U.S. efforts, while putting more pressure on Pakistan to deal effectively with the militants.