Saturday, October 25, 2008

Pakistan's deep crises

See my comments on this in a previous post, here

Time and Money Running Out for Pakistan
By Omar Waraich, Time, October 22, 2008

You wouldn't want to be the President of Pakistan: Even as the military finds itself embroiled in a war against militants that much of the country's elected leadership (and even more of the electorate) opposes, it's hard even to keep the lights on as the limits of the country's electricity supply mean daily blackouts in major cities. The economy, meanwhile, is in a perilous state, with inflation running rampant, the currency having lost a third of its value, and foreign currency reserves reduced to the point that they can finance no more than six weeks of imports. Pakistan, in fact, is in danger of defaulting on its substantial foreign debt if it can't get help either from its friends or from the IMF — and the price of such help will be politically unpopular: a stepped up effort against the Taliban and, perhaps, some tough domestic economic reforms.

No wonder, then, that the forthcoming U.S. National Intelligence Estimate (NIE) on Pakistan reportedly makes "bleak" reading. The NIE represents the consensus of the 16 U.S. intelligence agencies, and according to a McClatchy newspapers report, an official familiar with the contents of the document that will brief the next President says it warns that Pakistan has "no money, no energy, no government". Washington's primary concern remains al-Qaeda, which John Kringen, the CIA's director for intelligence, recently described as being "resurgent" and "well-settled" in Pakistan's tribal areas. But the presence of Bin Laden's group is enabled by an indigenous militant insurgency — the Pakistan Taliban — and Pakistani leaders remain divided over how to respond to this challenge.

President Asif Ali Zardari and his seven month-old civilian government have given priority to combating militancy, and having abandoned failed negotiations with the Pakistan Taliban, the army is currently fighting militants in the notorious arms manufacturing town of Darra Adam Khel, the scenic Swat Valley, and most visibly in the Bajaur tribal area. Although the U.S. NIE reportedly criticizes the Pakistan army for a "reluctance" to launch an all-out confrontation with the militants, military spokesmen point out that the Pakistan army has lost over 1,500 troops since it began confronting militants on its own soil. And they see the tide turning in their favor in the ten-week-old military operation in Bajaur, where they say the Taliban last week offered negotiations — a sign, say government officials, that the militants' resolve is weakening. "It was the first time that the government rejected an offer of peace," says Mehmood Shah, a former chief secretary for Pakistan's tribal areas.

Pakistani officials are also encouraged by the emergence of tribal militias who have turned on the Taliban. "We cleared them out of our area in a week," says Akhunzada Chettan, a lawmaker from a part of Bajaur, and there have been similar successes in Dir and, reportedly, Lakki Marwat. These developments are significant, officials say, because in the past the tribes had feared that the army would fail to protect them.

Although the current offensive in Bajaur and other areas has been applauded by Washington, Prime Minister Asif Zardari is having a harder time convincing his own people of the wisdom of waging war on the militants. While some had hoped that last month's horrific terror attack on the Marriott Hotel in Islamabad would rally the nation to fight militancy, instead divisions have only deepened. Recent opinion polls still find a majority of Pakistanis opposed to their government's support for Washington's "war on terror" — despite their anger at the recent wave of suicide bombings, these Pakistanis believe the attacks are a consequence of Pakistan waging "America's war".

Zardari had hoped that holding a parliamentary debate on how to respond to militancy would help make the campaign "Pakistan's war" and give the military political support for its actions. But after more than two weeks of behind-closed-doors deliberations, parliament unanimously adopted a resolution urging a resumption of dialogue with the militants, and an end to military operations "as early as possible". Although the parliamentary debate reflected the power plays of a political culture in which parties rarely put the national interest above their own, it also reveals a profound difference in perspective even within the ruling coalition — Zardari's allies in the religious Jamiat Ulema-e-Islam party demanded an end to military operations against the militants.

"The military wants political back up, and the government is supporting them, but I do not expect all the parties to unite," says military analyst Hasan Askari-Rizvi. "The political leaders seem too interested in settling scores against each other."

The absence of a consensus on fighting the militants compounds Zardari's difficulties in tackling the economic crisis he inherited — a crisis that, in turn, threatens to deepen the militant challenge. Rising world oil and food prices have sent the inflation rate soaring to 25% (and as much as four times that on basic foodstuffs), while the political uncertainty over the past 18 months fueled extensive capital flight that has weakened the rupee and depleted forex reserves. A failure to increase the capacity of electricity production now plunges Pakistan's main cities into darkness for up to ten hours a day, with longer periods in rural areas. Industrial output has shrunk with employers now laying off employees they can no longer afford to keep. And Pakistanis have begun to take their anger to the streets. In parts of Lahore on Monday, scores of protesters laid siege to the local office of the electricity utility, ransacking the building and burning their electricity bills. The mounting economic crisis is likely to fuel social unrest — "The general mood is one of despair," says Yousuf Nazar, a leading economic commentator. And despair and anger among Pakistan's poor are likely to swell the ranks of the militants.

The bleak economic situation has prompted Pakistan to desperately seek aid from such long-term allies as Saudi Arabia, Britain, the U.S. and China. Despite Zardari flying to those countries in recent weeks to make his case, he has yet to secure the loans needed to avoid a default on Pakistan's debt. Pakistani officials insist that they have no intention of defaulting, and the Pakistani rupee rose this week amid signs that the International Monetary Fund might step in to rescue this frontline state in the war on terror. The IMF confirmed Wednesday that it would soon enter discussions with Pakistan over ways to assist its economy. But help from the international community will almost surely be conditional on a more robust effort against the militants — an option that raises political problems for Zardari — and also on economic reforms that might prove unpopular. There are clear and challenging downsides to any of the choices available to Pakistan's leadership right now. And playing for time may not be an option in the face of that dwindling pile of foreign exchange reserves.

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