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Although concerns about madrasa-trained jihadists largely focus on Pakistan's border regions and Afghanistan, violence has threatened the internal stability of Pakistan.
In 2006, Karachi was rocked by three separate suicide bombings, which killed a U.S. diplomat and the leader of a prominent Shia political group, and wiped out the entire leadership of a Sunni militant group that was locked in a struggle for control over mosques with Sunni rival.
"Exploiting Karachi's rapid, unplanned and unregulated urbanization and its masses of young, disaffected and impoverished citizens, the madrasa sector has grown at an explosive rate over the past two decades," says the report.
The madrasas are accused of capitalizing on the climate of lawlessness in Karachi to encourage illegal activities ranging from land encroachment to violent attacks on rival militant groups.
However, some experts say their role in the violence is exaggerated. "In fairness to the madrasas, they are not capable of teaching utilitarian subjects, because the teachers are simply not trained for it," Anatol Lieven, a senior research fellow at the New America Foundation, told IPS.
Musharraf, who at times has promized tough action against the madrasas, has only made a half-hearted effort to control religious extremism in Pakistan, possibly due to his dependence on the religious right, specifically Jamiat Ulema-e-Islam (JUI) which runs the largest network of madrasas associated with Deobandi, a radical Islamic movement.
The ICG points to the absence of a single Pakistani agency with the authority to regulate the madrasa sector, specifically its money flows, as a crucial failure in every one of Musharraf's attempts to curb radical Islam in Pakistan.
To date, most plans to counter radical Islam in madrasas have focused on reforming the madrasa system through the curricula, usually in the form of requiring a range of non-religious courses to be taught alongside the existing religious courses.
Instead, the ICG suggests government and donor funding should be shifted towards increased support and reform of the public school system and away from reforming a madrasa system that has consistently refused to cooperate with government policies.
Focusing on removing sectarian, pro-jihad and anti-minority curricula may find a more responsive audience in the public school system, which depends largely on public funds for survival.
However, such a policy would require large sums of time and money to implement. "You can't just take people off the street and say you're a teacher. They need training," said Lieven.
The report recommends that the government of Pakistan adopt an "effective, mandatory, and madrasa-specific registration law," establish a madrasa regulatory authority, stop treating madrasa certificates as the equivalent of degrees issued by boards of education and universities, and take "effective action against all extremist groups and parties."
The ICG hinges their policy prescriptions on the likelihood of free and fair elections marginalising religious parties and bringing greater political influence to national level moderate parties.
However, some analysts don't believe Musharraf has incentives for free and fair elections or that a smoother democratic process would improve the political situation in Pakistan.
"The Pakistani political system runs on patronage, and there isn't enough patronage to go around," said Lieven.
The report does acknowledge that the international community should use foreign aid to support the public school system and make financial support contingent on the holding of free and fair elections in Pakistan.
Although the ICG recommendations focus on the necessity of democratic transparency and open elections, Lieven points to the dire economy in Pakistan as one of the sources of Islamic extremism in Pakistan.
"It is important that anyone who emerges from the Pakistani education system, madras or public school, have jobs to go to," he said. "Unless you can find jobs for people who come out of the system, including the madrasa system, you won't greatly reduce the threat (of extremism)."
Comments? Send a letter to the editor.Albion Monitor March
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