Pakistan' Socio-economic Loss in War on Terror

Mukhtar Paras Shah

The Loss

February 4

�� The country with 180 million population is under immense pressure to provide food shelter and necessities to the general public in the wake of geo-strategic situation that has halted the process of peace and development in the region. When the leaders don’t deliver, the disillusioned people tend to take refuge in religion. This is one of the reasons as to why religious extremism is continuously on the rise in spite of billions of dollars of investment in war on terror. Distracted and disappointed with the state of affairs in the country as a result of the widening gap between the people and the policies, reactions such as terrorist attacks might continue to happen.

Impacts of War On Terror on Socio-economic Conditions of Pakistan

Impacts of War On Terror on Socio-economic Conditions of Pakistan ��

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Impacts of War on Terror on

Socio-economic Conditions of

Pakistan


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Dedicated to the people of Pakistan who have been struggling to

come out of chaos gifted by the geo-strategic confrontations in the

region with valor in their hearts and hope in their eyes


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This paper was written as part of a research assignment conducted at National Graduate Institute of Policy Studies, Tokyo in Japan.

The document was produced under the supervision of Prof. Kuzuo Takahashi who has contributed in the global peace and development in various

capacities since three decades. This publication may be reproduced free of charge in any format or

medium for research and private study. This is subject to it being reproduced accurately and not in a misleading context. The material must be acknowledged as copyright

and the title of the publication specified. Further information or free copies of this publication can be obtained by sending an e-mail to

[email protected];calling 0092 51 2274840; faxing a request at 0092 51 9213740 or by writing to the MPS, 14-Kyber Block,Gulshen e Jinnah,Islamabad, Pakistan.


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ABSTRACT

After ten years of continuous war in Pakistan, social fabric of the society has started

deteriorating. The country has faced an economic loss of around $60 billion that has badly

affected the macroeconomic situation in the country. The society has shown an ultimate

resilience in the wake of continuous suicide attacks and has not sided with religious

terrorism so far. However, frustration hangs heavy on them as hope for sustainable peace

and development is waning. It is high time for international strategists to understand the

psychology of a country with huge young population undergoing through war.


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Index Pages

1. Introduction 01

1.1 Reasons and Roots of Terrorism 02

1.1.1 Pakistan’s Strategic Concerns 04

1.1.2 Afghan Connection 05

1.1.3 Social & Religious Disorder 06

2. Typology of Terrorism 10

2.1 Image of War 11

2.1.1 Individual Perspective 11

2.1.2 National Perspective 12

2.1.2.1 Delivery of Services 13

2.1.2.2 Expenditure on War 14

2.1.3 International Perspective 15

2.1.3.1 Break up of US Assistance 16

3. Pakistan’s Loss 19

3.1 Casualties 19

3.2 Indicators of Poverty 27

3.3 Peace and Development 37

3.4 Psychological perils 39

3.5 Massive Displacement 43

4. Conclusion 47

4.1 Beneficiaries of Terrorism? 48

4.2 End Note 50

Mukhtar Paras Shah


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Introduction

There has been a lot debate on the volume of aid and assistance Pakistan has received in

lieu of military services rendered during the War on Terror (WOT). International key

stakeholders while putting the pressure on Pakistan Government to deliver more has never

missed the opportunity to remind to the ‘beneficiary’ country that United States has

extended them more than $12 billion aid for fighting this war against the Taliban. Pakistan

provided four types of services in this war; provision of military bases for the American

forces, exchange of intelligence, crackdown on suspects of Al-Qaeda and military offensive

against the Taliban on the borders with Afghanistan. The opportunity cost, if compared

with the gains received that Pakistan faced as a result of WAT has been manifold.

Indicators of Poverty during this period rose significantly signifying the impact of WAT on

the social sector. However no such consolidated attempt has been made so far to calculate

the total accumulative loss that Pakistan; an ally of the U.S.A has suffered because of its

involvement in the war that the west themselves interpret as a ‘shot-gun marriage’.

Socio-economic impact of this prolonged war on Pakistan has been the most alarming

factor. Hundreds of suicide bombings that occurred country wide inflicted huge damages to

physical infrastructure and expenditure incurred on Law and Order squeezed the economy

more than ever. Decline in commerce and trade resulted in trade deficits for consecutive

years where as consumer activity slowed down. The oil prices rose to new heights and

exerted more pressure on budget reserved for the social sector. Impact of WAT on health

services and education was noticed by the world with great concern. The military

achievements in the region were appreciated by the democratic regimes worldwide, while

schools, markets and hospitals were attacked and closed down. The economists in Pakistan

have not yet decided to calculate the effects of these social crises on natural surrounding

and resources in numerical terms. On the other hand international think-tanks in the U.S

have already been urging their government to rethink the aid mechanism as being

implemented in Pakistan.


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Reasons and Roots of Terrorism

Alternate History

“Terrorism is designed to create power where there is none or to consolidate where there is

very little”(Lindberg,2010). The "New Great Game" for securing energy resources in the

region that began after the breakup of the Soviet Union in 1991 is an attempt to create and

consolidate power and presence. It involves controlling the flows of energy resources north

to Russia, west to Europe, east to China, and south through Afghanistan. Turkmenistan, for

instance, has the world's fourth largest natural gas reserves, and Kazakhstan has largest oil

reserves in Central Asia. Reasons and roots of terrorism, though scattered everywhere, can

also be traced in oil politics with global powers as the protagonists.

U.S. supported a consortium led by American company "Unocal" to move natural gas

through Afghanistan, and negotiated with the Taliban to do so between 1997 to August

2001. This was the same Bush administration that saw the Taliban regime as a source of

stability for the proposed Turkmenistan Afghanistan Pakistan (TAP) pipeline. However

U.S. negotiations with the Taliban failed in August 2001, just before the Sept. 11, 2001

attacks in New York, and the Americans decided to handle the energy matters themselves.

Washington had been "pushing hard" for plans to build pipelines under the Caspian Sea

from Kazakhstan and Turkmenistan to Azerbaijan. The American influence is opposed by

Russia because it could mean a failure for Russian designs on a "strategic triangle" between

Russia, India and China. It is apparent that the great game over Caspian energy has taken a

dramatic turn. In the geopolitics of energy security, nothing like this has happened before.

The United States suffered a huge defeat in the race for Caspian gas. The question now was

as to how much longer Washington could afford to keep Iran out of the energy market.

The Gwadar port built by Pakistan with Chinese assistance in its Baluchistan coast has

"serious strategic implications for United States and India as well". Indian Naval Chief,

Admiral Sureesh Mehta once said, that "being only 180 nautical miles from the exit of the

Straits of Hormuz, Gwadar, being bulit in Baluchistan coast, would enable Pakistan take


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control over the world energy jugular and interdiction of Indian tankers”. The United States

may not be oblivious to this development and may have tried to counter the frustration

resulting from Russia's designs to keep control on the oil and gas in the region."

Four months after the U.S. ordered its troops into Afghanistan to remove the Taliban

regime, China and Pakistan joined hands to break ground in building a Deep Sea Port on

the Arabian Sea. Beijing was already wary of the strong U.S. military presence in the

Persian Gulf, which supplies 60% of its energy needs. It was now alarmed to see the U.S.

extend its reach into Asian nations that ring western China. Having no blue water navy to

speak of, China feels defenseless in the Persian Gulf against any hostile action to choke off

its energy supplies. This vulnerability set Beijing scrambling for alternative safe supply

routes for its energy shipments. The planned Gwadar Deep Sea Port was one such

alternative for which China had flown its Vice Premier, Wu Bangguo, to Gwadar to lay its

foundation on March 22, 2002. The Gwadar port project, however, is billed to crown the

Pakistan Navy into a force that can rival regional navies. (Niazi, 2007)

The secret goal of People's Republic of China is to not to indulge in any war or conflict for

at least 20 more years. They want to defeat the world powers on economic fronts. But

United States has always its own designs. It would like to drag China into a war to hurt its

economic growth and now this can only be done by occupying the port that Chinese has

built. In view of this people and the analysts in Pakistan connect U.S designs with recent

political unrest in Baluchistan Province with nationalist leaders talking about separation

from the federation. Is there a nexus?

Central Asia's energy game is intensifying. China has grabbed the spotlight with a high-

profile push into Kazakhstan's energy market. Meanwhile, India, another country with a

growing appetite for oil and gas, is working diligently to make energy inroads in the region.

The Kremlin also has a grand strategy. Moscow would be keen to ensure that Russian and

Chinese interests are harmonized in Central Asia. Does the United States like it? Why

Turkey is offering to mediate between Iran and the United States on oil trade would

perhaps give you a hint about American frustrations in the region.


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Evidence of Beijing's rising influence came August 22, when the country's largest state-

owned oil company, China National Petroleum Corp. (CNPC) announced that it was

acquiring Petro Kazakhstan, a Canadian firm that is one of Kazakhstan's major energy

producers, for $4.2 billion. Pending shareholder approval, the deal would establish a solid

Chinese presence in Kazakhstan, which sits on China's western border.

It has already been ten years since American’s bombardment in Khyber Pakhtunkhwa

started. Baluchistan's nationalists with Gawadar as their home are already seeking

American assistance to secure "rights and democracy". The religious militia groups in

FATA have mysterious financial resources at their disposal that help them to convince the

public that they are on the winning side. The matrix of global terrorism is unfolding in and

around Central Asia and South Asia.

Pakistan’s Strategic Concerns

‘The geo-strategic position of Pakistan in South Asia often seems to dictate the direction of

the policy framework’. At various occasions during the course of history an economic prop

has been offered to support the crumbling economy of this poverty stricken country in

exchange of military services rendered for the international requirements. Pakistan in Post

9-11 era has once again struggling to change a crisis into an opportunity while continues to

perform Herculean tasks of maintaining law & order situation in FATA and Afghanistan.

The developing geo-strategic map has once again flashed Pakistan in the limelight. This

country rests just in between the 1.5 billion people of China and an equally big economy of

India; both striving to reach each other in terms of trade and energy. Moreover Pakistan has

the world’s largest reserves of quality number one coal sufficient to cater for our energy

needs for another hundred years. The deep sea port at Gawadar on the one hand makes the

country dream about the financial and trade centered prospects that can connect the world

to Central Asian markets and on the other hand it has generated an international interest in

the area that can be said as one of the causes of international interference and military


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unrest in the territory. These geo-strategic developments happening on this side of the

world have unleashed forces that have put Pakistan in the eye of the storm.

Those who do not agree with the role of third world countries in international politics

continue to blame that guns are being given more importance over butter. The security or

development debate has never ended among the intelligentsia of this country. The

proponents who argue that Pakistan’s security is more important than its development are

not huge in number but their arguments carry weight when they say that Pakistan has a

Hobson’s choice in this debate.

Afghan Connection

Proxy war against the Soviet Union fought in Afghanistan by the religious fighters on

behalf of United States in the 1970s was the beginning point of culture of terrorism in and

around Pakistan. (Burki, 2009) The military dictator during this time in Pakistan, General

Zia-ul-Haq was the main protagonist in the war against the ‘infidels’. He cultivated and

cultured trends towards “Islamization of society” that eventually led to proliferation of

intolerant religious groups. During his reign the religious groups such as Lashkar e Jhangwi,

Jaish e Muhammad came into being and started propagating Wahabism and Deobandi

school of thought. These religious groups had been active in warfare in Afghanistan against

the Soviet Union with the support of United States and their leaders were projected as

heroes when Soviet Union ultimately went down after a long war.

After the break-up of Soviet Union, thousands of proxy war foreign fighters engaged in

Afghanistan either went back to their respective countries or started their own political

agendas on both side of borders of Afghanistan and Pakistan. Since United States had no

plan for them in their exit strategy, it created a lot of discomfort for the militia groups.

Those who were trained to fight the ‘infidels’ found new targets in their respective milieus.

In Pakistan and Afghanistan the realization gained force that all those evils that they were

told to seen in Soviet Union were considerably present in their respective governments as

well. United States support for autocratic and non-democratic regimes ultimately invited


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the wrath of forgotten militias who joined their hands to re-emerge in terrorist organizations

such as Al-Qaida and Taliban.

Political Unrest in FATA

Political Administration system in Federally Administered Tribal Areas (FATA) was

introduced by the British during their colonial rule and it was a huge success. They studied

the territory and the people for a considerable period of time and then concluded that

controlling the tribal society directly would be disastrous keeping in view the cultural

values of the place. In view of this finding, they decided to rule this area indirectly through

the Maliks and the Political Agents who were in fact local tribal leaders. Both these

positions became institutions in themselves with the passage of time and helped in

maintenance of law and order in the territories. They worked as the administrators as well

as the spokesmen of their tribe. This arrangement served the British and thus it continued

for many years to come. (Kamal, 2009)

When Pakistan came into being in 1947, the interaction of people hailing from FATA with

the other adjoining areas increased. It was no more a closed society and appropriate

modifications should have been made in view of new situations. But the rulers continued

ruling the territory through British made FATA regulations. This created unrest among the

communities in interaction with each other and further more socio-economic development

in these areas also could not take off. Imagine the psychology of millions of people in a

territory who were not considered part of a regular Pakistan and continued to be ruled by a

torn piece of British Legal Framework.

All along this period, Pakistan had been foaming anger at the India remaining engaged on

the eastern borders. But when dynamics change, the policies also change. Russian invasion

of Afghanistan changed the priorities altogether providing another proof that foreign policy

of this country is framed not by policy makers but by the geo-strategic situation in which

the nation finds itself one fine morning after every ten years. The response in Afghanistan

against the Soviet invasion is said to be spontaneous. It erupted in Herat where the locals


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started fighting the Super Power by hurling stones at the army tanks from the hill tops.

Suddenly United States and Pakistan became friends in this backdrop and both started a

Jihad against the Soviet Union.

It is not known whether Soviets really wanted to reach the hot waters or not but what we

know is that five million people were killed and two million were wounded in that bloody

war. Out of those who fled their homes, three million reached Pakistan and their arrival was

to imprint undeletable marks on the future face of Pakistan. Refugee camps were

established every where and the immigrants made Pakistan their home. People received

them with open arms and ethnic Sunni groups were among those who settled in Kurram

Agency and Waziristan Agency.

Tribal areas of Pakistan had been very possessive about their privacy and culture and they

witnessed this process of history taking place with astonishment in their eyes. (Ross, 2009)

However they didn’t raised their eyebrows because sudden focus on this war had created

economic avenues for them they could not ignore. Had they been already socio-

economically developed and well off, they might have not involved into drug and

Kalashnikov culture. But since they had no option, they went on to collect the benefits of

war. Some forty thousand mujahedeen were trained by those who had decided to wage

jihad and gave them weapons that they had never carried even in their dreams. They were

still carrying the rocket launchers on their shoulders when United States called it a day on

the demise of Soviet Union. The jihad was over and no body turned their heads to look

back towards those forty thousand mujahideen with rocket launchers on their shoulders

who had learnt the tactics of fighting for money and jihad one at the same time. The fault

committed by the victorious armies of United States and Pakistan was that they did not

devised any policy for those recruits whom they had abandoned without giving any notice.

This was against the rules of business.

Then the dynamics once again changed with the big bang of 9/11. This time the policy of

the United States was to fight with their own recruits of the 1980s. This time the agenda of

the people and the state was different and thus the conflict started that has destroyed both


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the hopes and the homes of the poor people who had dreamt of a peaceful and prosperous

country. Islamabad at this time was being ruled by a ruler who had the conviction that he

was always right and he tried to rule the country according to his whims and whimsical.

When jihad wagers saw the infantry heading towards them, they entered the boundries of

Pakistan. Mullah Umar managed to escape on a CD 70 motorbike from amongst the

cobweb of radars and missile attacks. United States could not catch him. The hundreds of

militants got organized and sent messages to all who could help them in this hour of need.

There were plenty and they came in multitudes from North and South and East and West;

they came from neighboring countries and from Arab lands. New benefits of war arrived in

volumes sufficient enough to recruit new mujahideens now from Punjab and Sind. They

collected together and made the local FATA people their hostage. Did any body tried to

figure out the difference between the captive and the captors when they bombed in Bajaur

and Swat?

The hostages cried and looked towards Islamabad for help. They decided to send the army

there and FATA people received them by sprinkling flower petals on them. They had

thought that army was coming there to protect their boundaries but army had other plans.

They started holding jirgas and distributing water pumps and electricity poles in the tribal

areas. This was the work of Maliks and Political Agents and they had been well trained and

equipped for that kind of work. This policy had negative effects and the local people

eventually raised their weapons aiming at those who had deprived them of their culture and

sanctity. The tribes were never in favor of Taliban but the wrong moves taken by the army

made them the militants as well. Now army has two enemies on the same front; one whom

they had left unattended in the 1980s and secondly those whom they tried dictate the lesson

of development and democracy through guns and roses.

During this episode in FATA, around 800 Maliks and local leaders were been killed. More

than 25000 families left Bajaur Agency where not a single structure of infrastructure

remained intact. More than 70000 people fled from Swat and more than 30000 displaced

people were in the refugee camps in their own country. A total number of 3.6 million


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people were displaced in the conflict (USAID,2010) The displacement of people at a large

scale without any alternate plan has resulted into a huge and unprecedented collateral

damage. While common people have been forced to leave their homeland, the militants are

also being chased from one agency to another. Impact of additional forces USA is

considering to send in Afghanistan would be more troublesome as people and the militants

would now run to hide and take refuge in other cities of Pakistan and this would be very

dangerous.

Social & Religious Disorder

Period following the war in Afghanistan in the 1980s is characterized by confusion and

misunderstandings. Around 30 million Afghan refugees in Pakistan refused to go back to

their country. Drug trafficking and arms smuggling were the two specific businesses run by

Afghan immigrants and no specific measures could be taken to stop the cancer that spread

around the country so rapidly. Religious organization had an easy access to high technology

armaments that they have been using against Soviet Union. Religious organizations had

already developed international linkages with the help of their foreign comrades in war and

it resulted into inflow of ‘donations’ and funds to some of the Madrassahs.

(Kolodziej,2010) Social fabric of Pakistani society had visibly changed from liberal to

more religious under their influence. Majority of the people, who did not favor this change,

looked with awe and gloom towards their leaders in politics who were equally confused.

They did not know how to stop the Islamization of society at the hands of the

fundamentalist groups who had been asked to fight against Soviet Union and India in the

name of Islam.


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Typology of Terrorism

Anti-US Terrorism

Militants have an argument. They opine that Pakistan is the only country that came into

being on religious grounds. The political leaders at the time of establishment of Pakistan

had injected hope in the minds of the people that establishment of a separate country for

Muslims would ensure better economy, security and liberty for them. Islam was

accordingly announced as the state religion but focus on war all along the history of the

country could neither have peace nor development in their new found identity. This state of

affairs naturally disillusioned the people at large. People started thinking that fault was in

political leadership who had not been able to enforce the basic Islamic principles of

‘equality, prosperity and fraternity’ in the society. This explains the augmentation in

slogans to Islamize the society and rise of religious parties under the banner of Muttahida

Majlis e Amal (MMA) during the Musharraf era. With this setting as the background, the

drama is being performed at the stage of WOT and role players continue to enter and exit

providing catharsis as well as tragic relief to the audience in the world.

Pakistan as a state itself became a target for terrorists as well as religious parties as soon as

it joined the U.S alliance for War on Terror (WOT) after attack on twin towers in 2001.

United States’ support for another military regime under General Musharraf, this time for

fighting against Taliban; their former allies in war against Soviet Union made

establishments working for Pakistan and U.S, vulnerable targets.

Sectarian Terrorism

Pakistan has a 1400 kms long porous border with Afghanistan. On both sides of the border,

live the Pashtuns who are frequently visitors to each other’s territories. A good number of

people living in this area had gone to Gulf as laborers and workers. There they had the

opportunity to get acquainted with ‘Wahabi’ version of Islam. Similarly, many Arab

fighters engaged in the war against Soviet Union had been following same version of Islam. Ouster of Taliban from Afghanistan by the United States led them to take refuge in Pashtun


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Sunni areas on the border of Pak-Afghan border. Al-Qaida is believed to have connections

with the religious outfits such as Lashker e Tayyba, Jaish e Muhammad, Sipah e Sihaba and

Lashkar e Jhangvi in Pakistan.

Sunni version of Islam propagated by these intolerant religious groups has been in

confrontation with ‘Shia’ version of Islam sponsored by Iran; another neighboring country

in Pakistan. Militancy like insanity has no particular direction. The militant religious

groups belonging to both the schools of thoughts had been involved in sectarian clashes

targeting each other since the proxy war against Soviet Union. Their multidimensional and

erratic fight with each other and with United States and Pakistan has affected the peace and

development in the country badly.

Image of War

The intricacies of war have only created more complexities. People view the volatile

situation with much uncertainty. Theories of war and explanations to resolve the issue vary

from person to person and from group to group. However, perspective of common citizens,

Pakistan’s official policy and international discussion on the subject can give us three

different perspectives.

Individual Perspective

It is very important to understand the ordinary people’s interpretation of WOT as it is based

on their first hand experiences and interactions. They tend to believe in conspiracy theories

and usually connect the worsening of situation with the political past of the country.

Detailed account of an alternate history based on these arguments is given at the end

portion of this paper. However, it would be pertinent to mention the following observations

that explain the response of common citizens living in the conflict region of Pakistan.

a. Usually people who cannot afford education expenses for their children are inclined

to send their children to madrasahs where they not only get free education and

residence but also bread and butter. Many people believe that if GOP had given due


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emphasis and importance to proliferation of education in the last sixty years, the

terrorist networks in ‘madrasahs’ would not have developed.

b. It is widely believed that United States is using WOT as a ploy to ensure its

existence in the region. They argue that U.S first bombarded Iraq in order to find the

Weapons of Mass Destruction (WMD) and then went on to hunt for Osama bin

Laden (OBD) in Afghanistan. Neither WMD nor OBD was the target and real

reasons of U.S invasion were to secure strategic assets in both the regions.

c. It is also believed that India and United States both are among the sponsors of WOT.

When Pakistan Army pushed the militants out of Bajaur Agency in 2008 after a

strong battle, high tech weapons of Indian origin were found in big quantity from

the Taliban hideout armament depots. Stories about American links in militant

organizations in Baluchistan are also considered open secrets.

d. Financial aspect of terrorism is another very important feature that needs to be

studied form individual perspective. An ordinary laborer, who if luckily gets a day

long job in construction or agriculture sector, may get Rs.300 as his wage. On the

other hand Militia War Lords invite the local people to join their ‘Lashkar’ for a

monthly pay of Rs.10000 along with clothes to wear and an impressive gun to hold.

They also get a promise to ‘enter heaven’ for joining this holy war against the

‘infidels’. The ordinary poor people are obliged to join the militia lashkars for all

the reasons and if they don’t, they get killed by the militia terming them as spies.

Some war lord militias have their lashkars with strength of thousands. Similarly,

children of around 16 years old are trained as suicide bombers. They are convinced

that waging war against the military and the government is holy and they also

promise to look after their families and parents after their ‘martyrdom’ in suicide

attacks (New America Foundation, 2010). After they perform their tasks

successfully, their families are given around Rs. 1.0 million as the compensation.

The question of the questions is that who are financers of these religious militia war

lords who distribute huge amount of money among the recruits and among the

families of suicide bombers who perform the ‘holy task’.


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e. Majority of the people in Pakistan are peace loving and are very concerned about

the way religion is being used by the militants to serve their vested interests. They

consider that religion should be a personal matter not to be used to provoke hatred

among the people and humanity at large. However, they tend to not express their

voices openly in the fear of being labeled as blasphemous at the hands of only a

handful of militants.

National Perspective

GOP has been on the horns of dilemma all along this war and that may be the one reason

why analysts term Pak-US alliance in WOT as the ‘gunshot marriage’(Tellis, 2008).

Officially Pakistan has acceded to almost all the plans and strategies being forwarded by

the U.S to fight war against terrorism. But since it has been an extremely unpopular

decision, they have never been able to convince the public that United States is in the

region to fight against the militants. They have also failed to stop ‘friendly fire’ from the

NATO forces that killed hundreds of innocent people during the raids without

discriminating between the militants and local population. Severe economic turndown in

the country’s economy has also made the government defensive that has no mechanism in

place to ensure education and employability of 100 million people in Pakistan who are

under the age of 25 years. Main focus of the government has been on services being

extended on WOT and country’s economic resources have been diverted to meet the vague

targets. A more detailed description of the same is as under.

Delivery of Services

The establishment in Pakistan has always felt proud of playing an international role as a

frontline state during the course of history. After 9/11 once again it was portrayed that

Pakistan was being entrusted with a global responsibility of immense importance. It was

argued that Pakistan’s military being one of the best armies in the world has another

opportunity to prove its sinews of war. The details of tasks and services required from

Pakistan in WAT were not shared with the civil society and the Parliament. The public


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statements issued by the Ministry of Interior (MOI) time and again only said that Pakistan

will not allow the foreigners to use its land and all the actions will be taken and undertaken

by the Pakistani forces. It was argued that payment made in lieu of the military services

was badly needed to support the economy and to protect its own territories from the foreign

forces present at the frontiers of the country .

After nine years of war in Pakistan the political scene in USA changed in 2009. Senator

Robert Mendez, who heads the Senate Foreign Relations Subcommittee on International

Assistance, stated before the Congressmen that US aid to Pakistan was not working. Mr.

Mendez’s vision in fact reflected the change in policy that seemed to come with the new

President of United States; Barrack Obama. Another Senator Tom Harkin during the

discussion in the Congress said that ‘the administration of George.W.Bush had thrown

billions of tax-payers dollars down a rabbit hole’.

Expenditure on War

Total spending all over the country during the tenure of WOT dramatically increased. Only

in the first half of the fiscal year 2008-09, Rs 42.175 billion were spent on improving the

law and order situation. The major spending of Rs15.962 billion on law and order was

made by Punjab during the period. The federal government’s spending stood at Rs 12.745

billion whereas Sind spent Rs 8.101 billion, NWFP Rs 3.225 billion and Baluchistan Rs

2.142 billion. The total amount spent on maintaining law and order situation from 2001 to

2009 is Rs. 1,850,391 million.

It only indicates that amount spent under this head is the opportunity cost. This unavoidable

burden that increased pressure on the national exchequer can only be defined and bracketed

as an economic loss that otherwise would have been spent on the social development needs

of the people. It was because of the situation in FATA and Swat that the respective

provincial governments in the country had to allocate extra resources to protect the citizens

and infrastructure from the terrorists who were forced to react in other parts of the country.


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Official reports state that almost 70% of the areas of NWFP are hit by militancy where

mobilizing and equipping the police has cost the government Rs.7.4 billion in the year

2008-09. Federal Government has pledged Rs.5.0 billion for security related expenditures

and Rs.3.30 billion for raising elite force in NWFP. The administrative cost of the elite

force per annum has been Rs.200 million that is borne by the provincial government. This

is an established fact that the frontier government faces a severe financial crunch because of

the lower than budgeted revenue receipts from the federal government and an

unprecedented surge in spending on law and order. The Government of NWFP has

suffered an average of Rs.6.0 billion cost on account of WOT and the total amount spent by

the provincial government up till now is said to be around Rs.54.00 billion.

It has been reported that no additional budget has been given to Frontier Corps in NWFP

who is presently engaged in fighting with the militants. Their fighters are living in tents in

the war zone and have not been given equipments other than helmets and bullet proof

jackets. However according to the estimates of the F.C a loss of $ 1.0 billion has occurred

to the organization during operations undertook to maintain the law and order situation in

the agencies.

International Perspective

International media and governments have most of the time been very skeptical about

Pakistan’s role in WOT. (Tellis, 2007) It is rather unfortunate that huge sacrifices made by

Pakistan Army and Pakistani Police who not only captured and killed thousands of

militants but also worked as human shields in order to protect ordinary citizens for all these

ten years have not been acknowledged at the international level. Whenever Pakistan Army

makes an offensive against the Taliban or militants, the development is viewed with a grain

of salt as if there is lack of sincerity among the ranks. Among all the countries in the global

alliance against WOT, Pakistan has suffered the most. The 9/11 episode that triggered this

global offensive against militants was never repeated again as lives of ordinary citizens

have been saved by taking strict security measures. Rarely a day passes when there is no

terrorist attack and as they say, every day 9/11 is repeated in Pakistan. There is definitely


16

something rotten and wrong. Either the Intelligence agencies have been playing double

game by having links with both militants and the U.S as the allegations are or the

international community is oblivion of the disaster they are creating for the years to come

by neglecting the contribution of a front line state in WOT. Whatever may be the big game,

one thing is for sure that there is little understanding about the plight of the ordinary

citizens who have been facing death and destruction for the last ten continuous years.

Break up of US Assistance

United States has provided funding and assistance to Pakistan’s Ministry of Interior; the

Anti-Narcotics Force; the Frontier Corps in the FATA, NWFP, and Balochistan; and others.

It has also provided funds for the maintenance, support, and operating expenses of the

Border Security Program-established Ministry of Interior Air Wing based in Quetta,

Balochistan. The Air Wing, with three fixed-wing surveillance aircraft and nine Huey II

helicopters, was intended to permit monitoring and interception of terrorists, drug

traffickers, and other criminals operating in remote areas .The Government Accountability

Office, the investigation arm of Congress revealed in February 2009 that United States

spent $12.3 billion since 2002 aiming to end the “terrorist threat” on Pakistan’s border with

Afghanistan.

After the September 11, 2001 terror attacks, Washington lifted nuclear-related sanctions on

military sales and training, pumped in more than US$1 billion in aid, paid US$600 million

for the use of Pakistani air bases and corridors, rescheduled US$3 billion worth of debt and

promised to write off a further US$1 billion. In June 2003, President Bush hosted President

Musharraf at Camp David, Maryland, where he vowed to work with Congress on

establishing a five-year, $3 billion aid package for Pakistan. Annual installments of $600

million each, split evenly between military and economic aid, began in FY2005.The

statistics available in the Pakistan’s Finance Ministry indicate that Pakistan did not receive

any amount from the United States in respect of reimbursement of bills after May 2008.


17

The Pak-US relations have been based almost entirely on security. The US has reportedly

transferred approximately $10 billion in assistance to Pakistan since 9/11, out of which

only 10 per cent has gone to development, while bulk of money has been channeled

through military for military. Around 60 per cent of the aid went to coalition support

funding, 15 per cent as security assistance and the remaining 15 per cent went to direct

budget support. However, the US has been critical about Pakistan’s role in war on terrorism

and has from time to time ‘demanded more efforts’ from the Pakistani side.

Recently the US has added some preconditions with the aid given to Pakistan. In

December 2007, the $515billion Omnibus Defense Appropriations Bill passed by the

House of Representatives has conditionalities attached with it in terms of Pakistan’s

performance in the war on terrorism and correcting its record on democracy, human rights,

media freedom and independence of the judiciary. The $300million Foreign Military

Funding Programme has also been placed under conditions requiring State Department’s

certification on three specific issues.

First, preventing Al-Qaeda from operating in Pakistan, second, preventing Taliban from

using Pakistani territory to launch attacks inside Afghanistan and third, restoration of

democracy (Aljazeera Center for Case Studies/Publication 2009) But 96 percent of this aid

is used to reimburse 120,000 troops in the counter terrorism missions, has shown very little

success. In the years since September 2001, Pakistan has received nearly $1.5 billion in

direct U.S.security-related assistance (Foreign Military Financing totaling $970 million

plus about $516 million for other programs). Congress also has appropriated billions of

dollars to reimburse Pakistan for its support of U.S.-led counterterrorism operations. Some

80% of Defense Department spending for coalition support payments to “Pakistan, Jordan,

and other key cooperating nations” has gone to Islamabad. At $4.75 billion to date,

averaging more than $80 million per month, the amount is equal to more than one-quarter

of Pakistan’s total military expenditures. The Bush Administration requested another $1

billion in emergency supplemental coalition support funds for FY2007, however, H.R.

1591, passed by the full House on March 23, 2007, called for only $300 million in such


18

funds. The Administration also has requested another $1.7 billion in coalition support for

FY2008. In justifying these requests, the Administration claims that coalition support

payments to Pakistan have led to “a more stable Pakistan-Afghanistan border area.”

Major U.S. defense sales and grants in recent years have included advanced aircraft and

missiles. The Pentagon reports Foreign Military Sales (FMS) agreements with Pakistan

worth $836 million in FY2003-FY2005. In-process sales of F-16 combat aircraft raised the

FY2006 value to nearly $3.5 billion. In June2006, the Pentagon notified Congress of a

planned FMS for Pakistan worth up to $5.1 billion. The deal involves up to 36 advanced F-

16s, along with related refurbishments, munitions, and equipment, and would represent the

largest-ever weapons sale to Pakistan.The United States has not accurately tracked about $6

billion it gave to help the Pakistani government fight terrorism since 2001.


19

The Loss

Casualties

Hundreds of suicide bombings that occurred country wide inflicted huge damages top

physical infrastructure and expenditure incurred on Law and Order squeezed the economy

more than ever. While according to the Pakistan Institute for Peace Studies report there had

been 1,442 incidents of terrorist attacks, political violence and border clashes in 2007 and

the causalities suffered as a result of military operations and terrorist attacks in western

part of Pakistan are more then 3,448. The total human losses suffered in Pakistan from

2003-2007 are 67701. There were 3,599 casualties from 1,503 terrorist attacks and clashes

in the year 2007 alone.

To analyze the situation for the year 2008, newspaper reported incidents have been

collected for each month and the result is:

Apart from ‘War on terrorism’ there is rise of the new breed of Taliban in Pakistan which

has resulted 6,715 causalities due to bomb blasts.

1 Annual Report PIPS/2008


20

Suicide Attacks

Assaf Moghadan, an associate professor at the Combating Terrorism Centre (CTC), an

independent research institute at the West Point military academy in the US, found that

Pakistan suffered the sharpest rise in suicide attacks 12.9 per cent of all attacks between

July 2007 and June 2008, up from 3.14 per cent in the previous 12-month period.

Moghadan examined the 1,944 suicide attacks that took place between 1981 and June 2008

and found that between July 2007 and June 2008 58.2 per cent of attacks took place in Iraq

and 36.6 per cent in Afghanistan and Pakistan, compared with 69.3 per cent in Iraq and

25.1 per cent in Afghanistan and Pakistan the year before. During the first half of last year,

198 suicide attacks took place, suggesting a total of less than 400 for 2008, Moghadan

writes in the January issue of CTC Sentinel. This compares to 535 for 2007, the deadliest

toll in the last nine years.2

Security Personnel

The officials claimed that the security personnel were ambushed for at least 192 times;

there had been 39 bomb blasts and 28 suicide attacks in the country after the Lal Masjid

operation.3 Only Frontier Corps conducted 231 operations against the militants in Bajaur

Agency, Kurram Agency and South Waziristan. In these operations Frontier Corps alone

lost 425 security officials whereas around 1087 F.C peace keepers were injured. Around

2200 militants were killed in Bajaur Agency alone whereas total number of militants killed

by the Frontier Corps alone is more than 6000 as given in the table.

Around 84 “intelligence driven” drone attacks were made in Pakistani territories that killed

more than 500 people.4 All those killed in these unmanned plane attacks were not the

actual targets but still no compensation has been worked out for the families of the dead

and injured in the tribal areas. The estimate of compensation if paid to the dead and injured

in these foreign attacks in the tribal regions of Pakistan is around Rs.1976 million.

2 ANI 3 D.G.ISPR Briefing November, 2008 4 Capital Talk; Geo Investigative Report; Dated 17 March, 2009.


21

Comparative Levels of Violence in Pakistan, 2003-08

Year Civilians Security Force

Personnel

Terrorist Total

2003 140 24 25 189

2004 435 184 244 863

2005 430 81 137 648

2006 608 325 538 1471

2007 1523 597 1479 3599

2008 2155 654 3906 6715

Source: Institute for Conflict Management Database

On the other hand, the total loss for the US since 2001 up till February 2008, in terms of

human casualties in Afghanistan and Pakistan has been four hundred5 , which raises

questions regarding the cost of war on terrorism for Pakistan. Approximately 1,400

Pakistani security forces members have lost their lives since 2001 in the US led War

against Terror.

But there is no sense of loss for Pakistan among the senators as well as Pentagon. They

always comment on the performance of Pakistan signifying the importance to do more.

Following extract from a defense strategic report would be sufficient to explain the US state

of mind: 5 Herald Tribune/April 2008


22

“The GAO found that Pakistan received about $3.7 million each year for to operate a fleet

of fewer than 20 vehicles for the country's Navy. The GAO said the United States paid for

"vehicle damage" and "cost of vehicles repaired" without any explanation of the difference

between the two.6”

Expenditure Incurred on Payment of Compensation

Government of Pakistan released a grant of Rs.340 million to NWFP for distribution to the

victims of suicide bombing and other acts of terrorism at the rate of Rs.0.300 million for

the heirs of those died and Rs. 0.100 million for those who were injured from 2006-2009.

An amount of Rs.194.1 million has been paid to the heirs of 647 dead whereas Rs.144.1

million were distributed among the 1441 injured victims. The total break of the details are

given in table 3.

The financial implications have been worked out on the basis of source of information

received from all DCOs in NWFP. However the provision of Rs.340 million caters for the

half of the payment made to the civilians who died or injured in suicide attacks. Some 950

dead and 1800 injured civilians have not been made payments yet. Around Rs.500 million

are required in NWFP alone to distribute the pending amount of compensation to the

victims and their families. This makes it clear that around Rs.900 million are to be made

available by the government for payment to the victims of suicide bomb blasts. Who

knows that if there were peace this amount would have been spent on the education, health

and economic empowerment of the people?

6 Report submitted to Congress by Defense Department 2008


23

S.No District No of

Dead

Payment to

heirs

No of

Injured

Payment to

injured

Total Amount

Paid (Rs. m)

1 Peshawar 34 10200000 139 13900000 24100000

2 Charsada 01 300000 16 1600000 1900000

3 Mardan 01 300000 00 00 300000

4 Malakand 05 1500000 03 300000 1800000

5 L/Dir 02 600000 07 700000 1300000

6 U/Dir 12 3600000 12 1200000 4800000

7 Swat 503 150900000 1055 105500000 256400000

8 Buner 12 3600000 08 800000 4400000

9 Kohat 04 1200000 11 1100000 2300000

10 Hangu 02 600000 06 600000 1200000

11 Tank 01 300000 15 1500000 1800000

12 D.I.Khan 38 11400000 142 14200000 25600000

Grand

Total

647 194100000 1441 144100000 338200000

Year Wise Cost of War

The total volume of loss that Pakistan incurred on account of economic factors in one year

i.e. F/Y 2001-02 was estimated as $ 2.669 billion. The breakup of those factors can be seen

in Table: 3 and it clearly indicates that this estimate was a conservative one that did not


24

include primary information about the loss. In 2001 the focus was only on macro level

estimates because it was assumed that the situation on WOT will diffuse in a short span of

time. As the WAT spread its tentacles, whole of the country started bearing the brunt of the

situation in the following years. The economic cost and non-economic loss multiplied many

fold in the following years. The volume of direct and indirect loss to the economy rose to

$ 6.264 billion by 2007-08. For the F/Y 2008-09 it has been projected to rise to $ 7.3 and is

likely to rise further. The year wise cost of war as projected by the GOP is given in the

following tables.

The official position given by Ministry of Finance is that the losses are around $ 34.522

billion and this calculation takes into account Pakistan’s affected exports, prevented inflows,

slow economic activity, reduced tax collection and expenditure overruns. However main

volume of loss occurred to the places and people in sectors that have not been documented.

This research paper has made an attempt to highlight areas where the loss has occurred to

the economy. Finance during WOT

WOT caused severe turmoil in Pakistan on all economic fronts. The country suffered series

of shocks since 9/11 tragedy in 2001 that put an extra responsibility on a feeble economy.

An analysis of fiscal years from 2001 to 2009 presents an interesting study for those who

believe in the pro-poor theories of Amrita Sen. The economists governing the country in

this era successfully raised the economic indicators presented an average growth rate of 7%

which was considered second highest in Asia. However the fruits of this economic boom


25

never trickled down to the users and consumers of this economy. The critics are of the view

that the economic growth in Shaukat Aziz era was result of non-development and consumer

oriented outburst in the leasing and banking sector. The real economy remained untouched

from the best performing stock market in the region, successful launch of sovereignty

bonds in the international capital market and foreign direct investment that touched close to

6% of the GDP. Real economic stability never evaporates in one day but it evaporated as

soon as the regime changed in Pakistan from the most trusted ally of United States Pervez

Musharaf to ‘unpredictable’ but democratic powers in the country.

The signs of macro-economic instability had started to appear even when Shaukat Aziz was

still the Prime Minister of Pakistan. The stock exchange crisis of 2007 made it clear to the

investors and the public that rise and fall of the stocks was fictitious and was being

maneuvered by some influential key players in the market. The chairman of Securities

Exchange Commission resigned in protest when he was rendered helpless after he tried to

unmask the reasons behind the mysterious stock exchange crash. The Steel Mill


26

Privatization also gave another jolt to the economic stability when it was unearthed that the

country’s most valuable asset was being thrown away for peanuts. It was in this

background that Supreme Court of Pakistan took cognizance of the economic scams and

initiated probe that rang alarm bells in the power corridors in Islamabad.

The Stock Exchange Crash

The behavior of the KSE; the most bullish stock exchange of Asia during the years 2008

and 2009 remains to be studied carefully. It became extra-sensitive to minute developments

happening on the socio-political front. Resignation of President Musharraf immediately

gave the confidence to the investors and the index rose to 100 points within a matter of

minutes. But when hopes for peace deal in tribal areas faltered, the stocks once again

became prone to setbacks on daily basis. The business clearly affected after every suicide

blast and every news on the WAT front exerted its pressure on the depleting stocks. Around

$600 million were drawn from the stock business immediately after the new democratic

government sworn in. According to the estimate made by national brokers a loss of $37

billion occurred only in four months i.e from April 2008 to August 2008.

Inflation during the conflict

Inflation during 2002 picked up somewhat on account of rupee depreciation and an increase

in utility prices. The oil prices rose to new heights and exerted more pressure on budget

reserved for the social sector. This oil price hike resulted in a very high budget deficit

which was financed by excessive borrowing from the State Bank of Pakistan. This

monetary growth of no less than 19% in 2008-09 has in fact been held responsible for

unprecedented inflation in the country. Market Economy’s GDP rose to new heights as a

result of huge consumer activity in the banking and leasing sector during Shaukat Aziz era

but Real Economy Indictors reflecting the quality of life sharply fell. It was a strange kind

of growth rate that pulled the graph up to 8% but long queues of the poor in front of the

utility stores to get subsidized food items only hinted at the anomalous situation. Pakistan


27

suffered huge loss in the wheat crisis from 2006-09 because of the flour smuggling to

Afghanistan.

According to an assumption the full-year loss to the economy in 2002 was that of $1 billion

and this amount multiplied many times as the terrorism gained force in the tribal areas by

2008.

Indicators of Poverty

Indicators of Poverty during this period rose significantly signifying the impact of WOT on

the social sector. The opportunity cost that Pakistan has faced as a result of WOT has been

manifold if compared with the gains received. The fiscal and monetary behavior during

these nine years fluctuated dramatically and the soaring inflation rate only raised the

suspicion about the nature of decisions that were taken on economic front. However no

such consolidated attempt has been made so far to calculate the total accumulative loss that

Pakistan has suffered because of weak economic indicators and fluctuating economic trends.

Since 2001, losses of $5 billion have been estimated in foreign direct investment, more than

$5 billion in exports and $5.5 billion in privatization. Travel advisories have been issued

against Pakistan by the United States and other major allies in the war on terror, which has

resulted in a reduction in the number of intending investors, foreign buyers interested in

taking part in the privatization of major national assets. Economists world wide have been

trying to make estimates about cost of war in Israel and in the United States. The practice

is that they focus on macro-economic indicators. An analysis of the situation in Pakistan in

WAT has been as under:

Exports

As soon as Pakistan announced to fight the terrorist in FATA and adjoining areas, a

considerable increase in freight charges to and from Pakistan due to the perception that the

country is in a war zone. The international air passenger carriers discontinued their business

in Pakistan that in fact led to reduction in air cargo capacity. At the same time, domestic


28

textile and garment manufacturers suffered cancellations of export orders and a sharp drop

in new orders stemming from weaker external demand, partly based on importers’ anxieties

that manufacturers would not be able to maintain their existing production schedules. In

F/Y 2001-02 country suffered a sharp decline in exports that resulted in the loss of $ 1.4

billion. 7 In 2003 the Ministry of Commerce started voicing their frustration over the

situation that the country did not receive favorable access to the US and EU markets for its

exports contrary to its expectations as an ally in WAT. The estimate of loss that Pakistan

suffered due to fall in exports in the F/Y 2002-03 rose to $1.5 billion.

Trade Deficit

Pakistan’s Balance of Payment situation continuously remained under stress during the

period of WOT. Military reimbursement bills were hardly sufficient to cover imports of

goods and services. Pakistan’s credit worthiness in the international markets could not

trigger up-gradation of Pakistan’s sovereign ratings. Decline in commerce and trade

resulted in trade deficits for consecutive years where as consumer activity slowed down.

The flight of capital and sharp decline in Foreign Direct Investment immediately after

February elections were the lowest in the history. Pakistan’s trade deficit increased to $20.9

billion in the twelve months period up to December 2008. It had a very negative impact on

the current account balance. In the third quarter of 2008, it reached six percent of GDP, the

highest level among the Asian Countries. The deteriorating current account put pressure on

the exchange rate which fell by close to 30 percent, one of the most precipitous falls among

the countries of the emerging world. Inflation at nine percent and interest rate close to 14

percent has been the highest in the region in the year 2008-09.

Foreign Direct Investment

As soon as Pakistan joined the WOT as an U.S ally, an immediate loss of $0.3 billion was

noticed on the FDI front. The situation continued to cast shadows making it impossible for

the investors to exploit opportunities offered by the trade authorities. In 2008, Pakistan's

7 Ministry of Finance Estimates


29

economic outlook has taken a dramatic downturn. Security concerns stemming from the

nation's role in the WOT have created great instability and led to a decline in FDI from a

height of approximately $8 billion in 2006 to $2.3 billion for the fiscal year 2008-09.

Concurrently, the insurgency has forced massive capital flight from Pakistan to the Gulf.

Combined with high global commodity prices, the dual impact has shocked Pakistan's

economy, with gaping trade deficits, high inflation and a crash in the value of the Rupee,

which has fallen from 60-1 USD to over 80-1 USD in a few months. For the first time in

years, it may have to seek external funding as Balance of Payments support. Consequently,

S&P lowered Pakistan’s foreign currency debt rating to CCC-plus from B, just several

notches above a level that would indicate default. Pakistan’s local currency debt rating was

lowered to B-minus from BB-minus. Credit agency Moody’s Investors Service cut its

outlook on Pakistan’s debt to negative from stable due to political uncertainty, though it

maintained the country’s rating at B2.The cost of protection against a default in Pakistan’s

sovereign debt trades at 1,800 basis points, according to its five year credit default swap, a

level that indicates investors believe the country is already in or will soon be in default.8

As indicated earlier, Pakistan requested its western friends including Friends of Pakistan

(FOP) to compensate Islamabad by extending it market access, debt swaps, oil facilities on

deferred payments and development aids but no helping hand was offered to prop up the

economy engaged in fighting a proxy war.

Privatization

The national debt also came under severe pressure in the aftermath of the 11 September

attacks. Pakistan was at the risk of default in payment of debt premiums. The situation also

resulted into a shortfall in revenue collections due to a slowdown in imports. Loss of

investor confidence and the depressed state of the domestic stock market led the

Government to defer its privatization program, which was expected to bring in $500 million

in 2001.9 Actual private capital inflows also declined considerably below the Government's

8 Economy of Pakistan/March.2009;Wikipedia 9 Marshuk Ali Shah; Country Director ADB;PRM during a speech made at NDU on June 04,2002.


30

initial projection of some $600 million. Although the economy gained somewhat from the

removal of the remaining nuclear test-related sanctions, enhanced debt relief, and increased

access to concessional aid, these were bound to be felt only with a lag.

Industrial Output

Pakistan’s manufacturing sector recorded the weakest growth in a decade during the

outgoing fiscal year 2007-08. Overall manufacturing posted a growth of 5.4 per cent during

the first nine months of the current fiscal year against the target of 10.9 per cent and 8.1 per

cent of last year. Large-scale manufacturing, accounting for 69.5 per cent of overall

manufacturing registered a growth of 4.8 per cent in the current fiscal year 2007-08 against

the target of 12.5 per cent and last year’s achievement of 8.6 per cent. From 2000-01, the

large-scale manufacturing sector as a result of a fast expanding economy, moved from one

peak to another and reached its zenith at 19.9 per cent in 2004-05. During the last three

years the large-scale manufacturing sector is showing signs of moderating along with a

subsequent slowing down of the economy and has registered a growth of 4.8 per cent

during the current fiscal year. But inadequate adjustment to the losses from terms of trade,

combined with a possible slowdown of exports earnings and foreign capital flows has

almost certainly reduced investment and growth. The loss in industrial output in F/Y 2001-

02 was calculated by MOF around $ 0.113 billion. Alone in F/Y 2001-02 the expenditure

overruns ran into $ 0.109 billion.

Tax Collection

Pakistan even faced great difficulties in collection of revenues in the wake of developing

law and order situation in the backdrop of WAT. The revenue loss in F/Y 2001-02 was

around $ 0.247 billion.


31

Table: 3

DAMAGES

Pakistan’s Economy faced a colossal loss of over $ 8.0 billion only in the fiscal year 2008-

09 as the whole infrastructure in war hit areas was destroyed.

Physical Infrastructure

Physical infrastructure like bridges, roads, girls’ schools and official buildings has been

destroyed, resulting in increased cost of maintenance or reconstruction. At present there

exist only 3,530 kilometer roads throughout FATA which provides interconnectivity to its

38% area only. Even this existing road structure is not in good condtion and needs to be

reconstructed or repaired for smooth transportation of men and material in order to develop

resource basis at various locations in the region. The civic facilities like water supply were

also destroyed during the attacks inflicting huge loss of already insufficient infrastructure.

Industrial development and communication network shattered blocking all opportunities for

outside business, trade and development in FATA. According to an official estimate a loss

of Rs.2672 million had occurred in FATA by October 2008 due to the military operation

Cost of War Estimated in 2001-02

0

0.5

1

1.5

1

Affected Sectors

$ b

illi

on

s Exports

FDI

Privatization

Industrial Output

Tax Collection

Expenditure Overruns


32

against the militants in the region. A study of the detail break up of this cost hints that the

volume of the damages occurred in Swat has been more in proportion with other areas of

NWFP.

S.No Name of the District Estimate Loss in Rs. million

1 Swat 2542.26

2 Malakand 9.00

3 Dir Upper 14.50

4 Buner 3.814

5 Dir Lower 20.03

6 Shangla 81.98

Total 2671.58

Agriculture

Agriculture has been the life line of small landholders whose subsistence depends on the

cultivation of wheat, oil seeds, vegetables, pulses, cereals and fruits. The agricultural

productivity in this midland irrigated system has always been low but it was seriously

affected in the WAT when the inhabitants had to leave the territories. There are 199,530

Hectare Acres of cultivated area that constitutes the 7% of the agricultural land in FATA.

These areas produced 96,872 tonnes of wheat, 17,027 tonnes of rice, 68,494 tonnes of

maize and 4,691,680 tonnes of sugarcane in 2003. Agriculture growth volume in FATA

has drastically reduced by 26% and this loss in production and trade of commodities,

vegetable and fruits is estimated to be around Rs.15.00 per annum. The loss occurred to the

poor farmers who supplemented their household income by growing apple, apricot, peach

and walnut is beyond calculation.


33

Agriculture Water Tax

In NWFP low recovery of “Abiana” was witnessed during the troubled times. A loss of

Rs.193.7 million was registered in this regard and law and order situation was the main

reason for the reduction in recovery of agriculture tax by 24%. Total loss faced by the

agriculture sector in NWFP is calculated as Rs.5.0 billion in the F/Y 2007-08.

Forests

Forests play a significant role in the livelihoods of the rural population who depend on

them for their fuel and fodder. In FATA the forests were source of job creation as hundreds

of people were employed in felling, transportation, sawmills, and sale depots of timber

wood. After situation worsened in WOT approximately 500,000 people were directly

affected who lost their jobs instantly because of halt of economic activity. Moreover it has

also been noted that forests in FATA are declining rapidly as a result of timber extraction.

The gap between production and use of wood has widened in WAT as authorities no more

exercise check over the felling of timbre.

Per Capita Cost of War

The Economists have calculated that with $ 450 billion spent so far as cost of war, the cost

per person in the United States is around $ 150010. The poor men and women who have lost

their lives, homes and livelihoods in Pakistan in WOT would ask as to why their loss is not

computed when each and every person in the country’s boundries has psychologically,

socially and financially suffered. Why there has been no cost for their loss? Those citizens

who faced the strains of recession during war times should also be remembered as they

have also contributed their share in building up this massive loss. It has been established by

the economists that in NWFP the per capita income of the people have reduced

dramatically in the past five year. According to sources it has dropped from $ 746 to $ 250

in the recent times. So the loss has occurred. Let’s assume that every Pakistani citizen has

faced a minimum loss of $ 10 as a result of the country’s nine years involvement in WOT. 10 Richard Sammon (July 2007). "Iraq War: The Cost in Dollars


34

This assumption is definitely conservative but the tabulation may help us to quantify the

unregistered losses that ordinary people have suffered during these troubled times. This

simple arithmetic indicates that country suffered the loss of 1.7 billion that has not been

documented yet.

The reason why United States is reluctant to withdraw the forces from international war

zones is quite interesting. U.S.A is worried that If the war were to wind up costing 1.9

trillion dollars, the cost would be over 4.2 times higher ($6,300 per United States citizen.)

This would put the expense at $25,000 for an average family of four, or $32,000 per family

if Afghanistan is included. But the point for Pakistan is that if the WAT continues, the cost

would be ten times higher ($ 100 per Pakistani Citizen) by the year 2011. Can somebody

calculate the value of loss of national pride and enthusiasm in this WAT?

INDIRECT COST

a) Strikes in the markets and closure of business due to apprehensions of protests have

also affected the economy.

b) The clearing of cheques by banks, processing of shipping bills for export, and port

operations remain disturbed.

c) Financial, corporate and educational institutions are all in a state of uncertainty.

d) Roadblocks erected all over the city to divert traffic away from US and other

diplomatic buildings are causing traffic problems and frustration.

e) Retail and wholesale markets remain closed on days when strikes have been called,

for fear of shops being stoned, looted or burned down.

f) Transporters of goods also refrain from operating on such days, causing a shortage

of supplies in the city.

g) In the northern region of Pakistan there are reports of hospitals closing for an

indefinite period "due to the uncertainty in the area".

h) Multinational companies in the energy sector have informed the Government of

their decision to evacuate expatriate employees. Some foreign companies are

closing down, others are curtailing their operations.


35

i) NWFP’s per capita income was calculated as Rs.746.00 in the year 2000. There has

been a clear negative trend in the per capita income of the province since then.

According to an estimate it has been relegated to even less than 500.00. There might

be other causes of decline in per capita as well but there has been no doubt that law

and order situation has been the major cause of the decline in this very important

indicator that only signifies the gravity of economic situation in this part of the

country. This loss of Rs.246.00 per person in the population of 50 million over the

period of nine years only explains the fall in the quality of life of people. It is not

difficult to make an estimate of accumulated loss due to decline in per capita

income in NWFP. The World Bank indicators seem to tell that of incidence of

poverty fell from 40.8% in 2001 to 38.1% in 2007 but we know that these indicators

do not represent the real economy and of reflective of the allocations made in the

social sector.

Social Implications

Political unrest in the backdrop of WOT

The incident of Lal Masjid also coincided with these developments in Islamabad in 2007

and USA categorically expressed their reservations on the Chief Justice of Pakistan who

ordered the mosque to be reopened after the tragic killing of the besieged hardliners. The

CIA mistakenly felt that provision of relief to those affected in Lal Masjid incident from

the Chief Justice would strengthen the terrorists in the region. The Chief Justice’s order to

probe the case of missing persons who had been picked up by the intelligence agencies in

connection with WOT was also viewed as interference in maintaining law and order

situation. The chief justice was hence removed from his post forcibly. Even when the Chief

Justice was restored on 23rd March, 2009, United States sent the head of the CIA to

Islamabad on that very day to discuss the situation establishing the links of judicial crisis

with WOT. ‘The point is that the judicial crisis that inflicted huge loss to the country’s

economy in 2008-09 has its roots in the womb of WOT’ . The normality in economic

indicators never returned since then.


36

After the new democratic set up in February 2008 was put in the saddle they were given the

task of improving the economy that was fictitious and the most threatened one in the world

in the wake of WOT. Main root cause of macro-economic instability after the new

government was sworn turned out to be policy inaction and delay in taking key decisions.

WOT and the judicial crisis dragged the graph of GDP Growth down to only 1.2 percent in

the year 2008-09. Pakistan faced all these major challenges including fiscal current account

deficits; rising inflation; growth deterioration; depleting foreign exchange reserves while

being on the side of the United States of America as a front line state in WOT. It is strange

that the world leaders had a narrow definition of WAT and wanted a hungry man to fight

with a dragon. Is there a nexus?

Pakistan’s association in WOT has overstrained the country’s budget allocations and has

put a dent to the development process that essentially has a huge socio-economic cost.

Since the start of anti-terrorism campaign the country has faced a continuous capital flight

and a slowed down economic activity. While all this is happening on the economic front,

Pakistan is excluded from the deliberations of the Group 20 that has been tasked to

restructure the global economic financial system. ‘It is complicated to understand as to how

with no voice in the international economic system Pakistan is expected to help the world

to fight against terrorism.’

The European Union refused to sign a free trade agreement (FTA) with Pakistan in March

2007 arguing that the size of Pakistan’s economy did not warrant such a trade deal. Europe

is Pakistan’s single largest trading partner accounting for 26 percent of its total exports but

no voice represented Pakistan at that critical juncture. No international forum including the

United Nations argued that size of the economy in Pakistan needs to be improved to deliver

the services on military front as a front line state in WOT. When Pakistan was asked in

2001 to extend its support against terrorism, it could have said that the size of its economy

did not warrant such a disastrous deal but it never said no.


37

Peace and Development

Focus on FATA

Spread over 27,220 square kilometers of mountainous terrain, FATA has been home of

approximately 3.7 Pushtoons. Impact of WAT on development activities in FATA is the

most alarming factor. The ongoing development concerns are worth millions of dollars that

face a halt in the wake of war happening in the territories. The anticipated development

initiatives that have been worked out to improve the livelihood of the local people after

years of homework also seem to be in the doldrums. According to the estimates the

development concerns in FATA are huge and they need to be studied closely.

Impact on Development Activities

The analysts are of the view that aid and assistance granted in the backdrop of WOT has

been rendered ineffective. It has also made it impossible to reach the targets committed by

Pakistan under Millennium Development Goals. Furthermore it has also been noticed that

international interference in Pakistan increased whereas a sharp decline was seen in the

ratio of assistance provided from friendly countries such as China and the Gulf. Every

opportunity lost by Pakistan because of its involvement in WOT has a cost and it needs to

be calculated.

Ongoing Development Concerns

Total volume of on-going development sector projects in NWFP is around $1.4 billion.

There has been an obvious halt to the activities in various projects because of the law and

order situation in the province and FATA. Fata Development Authority (FDA) alone is

handling total number of 12 Projects of varied nature but none of them have kicked off

solely because of the law and order situation in the territory. It is apprehended that donors

will withdraw the amount committed for the development sector in this province inflicting

more injuries to already fractured social sector. What happened to $ 540.00 million

development budget of NWFP for the fiscal year 2008-09 is another dismal story. Several


38

development Projects that were planned for FATA are still in the incubation stage and

suffer from start-up delays because of uncertain security situation. This will certainly result

in cost over runs and the loss is estimated to be in millions.

However it has been pointed out by authorities that there is no authentic system to gauge

the volume of loss happening in the development sector. The reason is that allocation for

the development sector in FATA has dramatically increased. Only USAID has committed

$750 million to be spent in FATA over the period of five years. The disbursements cannot

be a parameter to calculate the progress or inactivity in development sector projects as no

less than 2000 big and small projects are going on at different places and the ratio of

utilization always seems to be on the higher side. Local residents are of the view that Law

and Order situation in FATA has turned out to be an opportunity for progress and

development as the attention of the donors and the government has now shifted towards

them. Another interesting fact was unearthed during the interviews conducted by this

researcher regarding the impact of bad security situation on development activities. One

contractor told that development work in most of the areas of FATA continues unhindered

and without any visible threat. The reason is that most of the contracts for implementation

of development work has been outsourced to the locals and it is in their interests to continue

the development activities. Some officers of the local administration also seconded this

point of view and stated that direct implementation of development work by the foreign

agencies will never work in FATA as it is considered interference in their closed culture.

They have suggested training the local people in project activities and then allowing them

to implement the schemes that would complete with guaranteed security and confidence.

The federal government itself is under immense pressure in respect of financing the

development projects. Around 40% of the budget is reserved for debt servicing and 20%

directly goes to the Defense Sector. The pays and pensions of the ex-military officials also

run in millions and they are charged from the civilian account. In the backdrop of WOT,

this ratio has been continuously increasing and government has no option but to shelve the


39

development initiatives that were otherwise quite necessary for the people of Pakistan who

lack basic amenities such as clean drinking water.

Psychological perils

Unemployment

The stock market crisis has made possible loss of employment of about 20 to 25 thousand

people and thousands were laid off by the banks, and other organizations and private

companies, which in turn could help create alertness about the seriousness of the

employment implications of the war on terror and current recession.

The capital of ordinary labor class poor people is their health, physical strength and their

skills. The WAT has resulted in displacement of millions who lost their work and business

in their territories. It has also affected the health and earning capacity of the common

laborers who have shifted to other areas for security reasons. Their average has dropped by

50 to 60 percent making it difficult to make the ends meet. The places outside FATA also

reflect the same temperament as security situation has imprinted clear impressions on their

life style. Unemployment ratio in NWFP in the fiscal year 2008-09 has rising at an

alarming ratio and is destined to raise the crime level in the province.

Impacts on Social Sector

According to an estimate shared by the government of NWFP the province has suffered the

loss of Rs.260 billion in the ongoing conflict. The losses suffered by the informal economy

have not been included in this estimate. Impact of WOT on health services and education

was noticed by the world with great concern. The military achievements in the region were

appreciated by the democratic regimes worldwide while schools, markets and hospitals

were attacked and closed down. The economists have not yet decided to calculate the

effects of these social crises on natural surrounding and resources in numerical terms.

According to recent studies, of the $10.0 billion of US reimbursement made, less than 10%

was given for human development including education; majority was spent in military


40

support. The question remains to be answered by the analysts as to where the rest of the

90% of the reimbursed money was spent. If it was reinvested in military for gaining more

strength in WOT, then essentially the people of Pakistan have lost those hard earned $9.0

billion.

Health

FATA is an area where there is one hospital bed for every 2,179 people and one doctor for

7,670 people. Situation in health sector worsened in war times as even hospitals were

bombed and destroyed by the terrorists. Government also could not provide sufficient funds

and arrangements for the health care of the displaced people who were exposed to bad

weather conditions and viral diseases.The local people are skeptical about immunization

programs launched by the International NGOs and even the government. One reason

government and NGOs have lost confidence and access among the people regarding health

sector in rural NWFP is War against Terror. The war stricken people are forced to believe

that health programs are international conspiracies to weaken them. Up till now 75 health

projects worth Rs.558.00 million such as Advanced Immunization Program and Lady

Health Visitors Program have been affected because of the access and acceptability related

issues.

Education

In the year 2004-05 GOP allocated 2.15% of GDP to Education sector but as soon as the

tension of the frontiers rose, the government priorities clearly seemed to change. In the next

financial year i.e F.Y 2005-06 the percentage dropped to only 1.95 of the GDP. In NWFP

the female enrolment rate was 32.9% in 2002 and that declined to 28.1% in 2004 and is

continuously on the low . Why particularly this are faced the fall in the enrolment rate of

female students. It was definitely an after-effect of the war in FATA. Until 2005 there were

5,344 educational institutions in tribal areas with an intake of 605,437 students (75% male

and 25% female) having 22,079 teachers in these schools. During this war the most horrible

terrorist activity was undertaken by the terrorists when they bombed and burnt the schools


41

from 2006 to 2009. Presently all the girls’ schools have been closed down owing to

worsening law and order situation. Gross enrolment rate at primary level in NWFP sharply

fell from 94% in FY-2004/05 to 61% in FY-2008-09. The gross enrolment at primary level

in other provinces of Pakistan rose significantly. In Punjab this ratio rose from 76% in

2001-02 to 95% in 2008-09. Similarly Sind and Baluchistan also recorded improvement of

gross enrolment rate at primary level from 63% to 79% and 62% to 82% respectively in

these nine years. It is therefore not difficult to attach the reasons of low gross enrolment at

primary level in NWFP. Big reasons that can be attributed to this downfall are the policy of

the militants to discourage female education in FATA, destruction of school buildings and

occupation of school buildings for military purposes by different fighting groups.

The higher level education was equally damaged as the gross enrolment rate at secondary

level for girls in rural areas of NWFP fell from 27% in FY-2002-03 to 21% in FY-2007-08.

In FATA we heard young girls appearing on TV screens pleading the government to ensure

continuity of their education. A strong response from the girls came when militants stopped

them to go for medical education in the medical college. The economists in this third world

country don’t have a mechanism to calculate the magnitude of loss occurred to the future

generations of this area where statistics of immense importance occur and disappear

without being registered. One way of calculating the economic damage done in this sector

is to present the budgetary provisions for education sector as an overall loss since no

objectives set against the budget allocations could be achieved. In FY/2007-08 an amount

of Rs.23,012 million was allocated for education sector in NWFP and an equal amount was

projected for the FY/2008-09. According to the sources of the department of education in

NWFP the volume of loss in respect of non-continuation of regular school work and

education projects and discontinuation of enrolment in schools is five times more than the

budgetary provisions made every year for the sector. If this opinion is taken as correct then

education sector in NWFP has suffered an approximate loss of $1.9 million in non-

infrastructure sectors. Similarly around 210 schools have been destroyed so far in NWFP

accruing the loss of $ 1.0 billion to the government exchequer. The total estimate of loss in

education sector alone in NWFP amounts to $2.9 billion.


42

Sports

Pakistan cricket has also paid the price for 'war on terror'. The attack on Sri-Lankan team in

Lahore brought a bad name and huge financial loss to Pakistan Cricket Board. The situation

has long lasting implications as general people have been barred from participating in

healthy activities in life.

Effect on Tourism

The official said Pakistan’s tourism destinations like Swat, Gilgit and Naran were no longer

attractive for local or foreign tourists. The decline in tourism has resulted in loss of revenue

as well as employment.

Rule of Law

More than 800 Maliks and tribal elders were killed during this war shattering the hopes of

thousands who looked towards them as their benefactors. The vacuum created by their exit

could not be replaced as no alternative plan was ever worked out as a part of the war

strategy. The result was more war and more chaos that enabled the militants like Fazlullah

to strengthen their strongholds in the occupied tribal areas. It was in this backdrop that

people raised the voice to enforce Sharia Regulations in the troubled areas hoping to win

peace and rule of law in their areas. If the country’s own courts and law enforcement

agencies had delivered, they would have never thought of taking refuge behind the slogans

of Taliban.

Environment

It is very difficult to make an estimate of damages that has occurred to the bio-diversity and

natural beauty of the war torn areas. The WAT has affected the natural regenerative

capacity of the forests and environmental service provided by the natural eco-systems have

diminished. Rapidly reducing forests have led the land erosion to spread at vast scale.


43

Massive displacement

Average persons per household in FATA are 9.3 and according to the estimates around

100,000 families have been displaced during this WAT. Only in Bajaur 25,000 families

migrated from areas where security operations were being conducted. The burden of cost

has once again been shifted on the shoulders of the government as a compulsion.

When military intervened and entered the tribal areas of Pakistan to chase the foreign

elements hiding there, the tribes of FATA received them by sprinkling flower petals on

them. They had thought that army was coming there to protect their boundaries but army

had other plans. But the army contrary to their expectations started holding jirgas

themselves in the tribal areas. This was the responsibility of Maliks and Political Agents

and they had been well trained and equipped for that kind of work. This policy eventually

resulted in a civil war and millions of people had to leave their homes and take refuge in the

relief camps. The human misery intensified when government and peace keepers failed to

make satisfactory arrangements for the displaced people. It appeared as if army had shifted

the people to relief camps but in fact had no concrete plan to cater for their problems.

According to an estimate around 500,000 people were displaced from their homes only to

live as immigrants in their own country. The registration of the displaced people was

carried out by the Social Welfare Department of North West Frontier Province (NWFP)

with the assistance of UNHCR. According to their estimates around 22,000 families out of

the 85,000 registered in the eleven districts only belonged to Swat. If there are seven

members in a family, the total number of displaced people in this crisis is no less than

585,000 individuals. The number can be higher as the population growth rate in this part of

the country is the highest in the country. Around 78,060 persons took refuge in designated

camps in Dir Lower Disrtict, Peshawar, Charsada, Noshehra and Malakand Agency. The

camps that once housed the Afghan refugees in Pakistan are the new homes for citizens of

their own country.

As registration of displaced people was not carried out when they fled from areas such as

South Waziristan, North Waziristan, Kurram Agency in the wake of military operation, it is


44

difficult to determine their exact number. However keeping in view the population growth

and intensity in the areas, it can be safely said that no less than 300,000 have left their

homes due to uncertain situation.

Another group of displaced people is who have neither reported to relief camps nor have

returned to their homes. They have settled in other adjoining cities or have gone to friends

and relatives. Their number has been estimated around 95,000. If calculated, the total

number of displaced persons in NWFP as a result of military operation and militant’s

attacks would be around one million.

The displacement of people at a large scale without any alternate plan has resulted into a

huge and unprecedented collateral damage. While common people have been forced to

leave their homeland, the militants are also being chased from one agency to another.

Impact of additional forces USA is considering to send in Afghanistan would be more

troublesome as it will increase the number of displaced families at an alarming rate.

Non Effectiveness of Aid

Aid has been micro-managing Pakistan’s economy but this aid mechanism as applied in

war torn areas in fact brought the social indicators at the lowest ebb. The economists all

along this process relied on the trickle down effect that was not only a lengthy process but

also unrealistic to cater for 24% poverty growth in FATA in the wake of WOT.

Millennium Development Goals

According to a theory literacy rate is directly proportional to the economic growth of a

people and a territory. FATA has a population of 2.3 million and its per capita income is

estimated as $250. If the people of FATA had not been caught up in this geo-strategic

situation , the literacy rate of the area would have been 68% by FY-2008-09. It would have

created at least a growth of 9% in the local economy and it could have been no less than 3.0

billion a year. Can this amount in terms of lost opportunity be included in the list of losses?


45

This is definitely an indirect cost and there is no reason as to why should we not calculate

the loss occurred to the people in view of uncertain law and order situation in the territory.

According to the Fiscal Responsibility Debt Limitation Act (FRDLA), 2005; social and

poverty expenditures are not to be reduced below 4.5% of GDP in any given year.11 But

this did not happen when allocations for health and education sectors in the war torn areas

of NWFP reduced considerably over the years. Federal Bureau of Statistics (FBS) launched

the new Pakistan Social and Living Standard Measurement (CPSLM) survey and its results

clearly indicate the decline in quality of life of the people in NWFP. According to the

findings the households’ perception about their economic situation is continuously under

pressure since 2003. Around 76% of the people covered in the survey representing whole of

the country stated that their economic condition has worsened over the years. In NWFP this

percentage rose to 87% revealing the sentiment of the public about their dismal economic

situation and challenges.12

Afghan Turmoil

Pakistan economy suffered unprecedented loss directly and indirectly because of turmoil in

the neighboring country of Afghanistan. More than three million Afghan refugees who

have not yet gone back to their country due to WOT continue to put an extra burden on the

government’s exchequer. They are also a severe threat to security as they have linkages

with Taliban across the border and their movement and profile is not documented.

According to a survey conducted by the Pak-US Business Council the country has been

facing a net loss of $7 billion as a fallout of the Afghan proximity and linkages in the WOT.

The total volume of loss in this connection has been estimated as $68 billion by the

business community.13

11 Poverty Reduction Strategy Papers-II/2009 12 This percentage reflects analysis of data/feedback under three categories; much worse, worse and same. 13Iftikhar Ali Malik, The Role of Economy Towards Survival of the Country, (The News : 24.3.2009)


46

Iran Pakistan India Gas Pipeline

Only because of the absence of peace and stability in the region $ 7.4 billion IPI Gas

pipeline project is rapidly turning the commitment into a major loss for Pakistan. This

pipeline may also link Gawador port with China’s remote western regions but America’s

strategic advance in Afghanistan and Baluchistan on the plea of fighting terrorism means to

contain this important development.14

Decline in Ratio of Assistance from Friendly Countries

Some very close countries in the Middle East and the South East started wavering to extend

aid and assistance in the wake of troubles at the war front. The war in fact created

confusions among the neighboring friends and isolated Pakistan to some extent.

14 CIA Report….


47

Conclusion

Beneficiaries of Terrorism?

Although it is very difficult to maintain as to who are the main beneficiaries of WOT but it

is not impossible to guess. Only simple questions with an inquisitive mind can lead us to

legatees of terrorism. The cost of WOT is now reported to reach the figure of $3.0 billion.

Has U.S.A spent all their tax payers’ money only to capture OBD? If yes, then should we

consider failure to capture him as the failure of U.S.A? Are the religious networks

expanding their influence and resources in the passion to spread Islam? Has flow of funds

to these religious networks something to do with the designs of the New Great Game?

Have the people of Pakistan benefited from this global WOT in any way? Do they really

need ideals and theories that are being injected by the world in the socio-political economy

of the country. What do they need exactly? Religious fanaticism, International

Confrontation or Peace and Development? A country with 180 million population needs to

be taken seriously by the geo-strategic planners. Where will they all go if civil war in

FATA expands to all corners of the country? A hundred million young boys and girls

prepare themselves for their future. What future international community has prepared for

them? According to an estimate if there is a conflict in a developing country for continuous

seven years, an average of $64.0 billion loss occurs to the society. In this case the war has

been going on since ten years. Is this what People of Pakistan has as their share in WOT?

Are they still beneficiaries?

Is Government of Pakistan or the Country is the beneficiary in this mysterious alliance

against terrorism? What exactly has it received in terms of dollars at the cost of destroying

social fabric of the country? Is there anything else that the country has been given other

than $14.0 billion in lieu of services that has deprived the people from basic amenities such

as electricity, environment and even food? Don’t they deserve any transfer of technology,

some insight to promote education or any mechanism to enhance skill development and

employability of the enormous population? Do they deserve only promises? Don’t they


48

deserve at least peace so that they can once again start building the pillars of their nation?

Will not the world get more dangerous if there is no peace in the region?

Three Assumptions

The questions raised above can help to form opinion about the possibilities that can shape

in future. Since war is uncertain, anything can happen in the region. Given the facts and

facets of war, three approaches can be made in order to get an idea of what lies ahead. The

insight may help international strategists, policy makers and general people to frame

opinions and trigger a debate on issues pertaining to peacekeeping in Pakistan.

Optimistic Approach

First scenario is that everything goes well as planned by the international key players

involved in global war against terrorism. United States starts withdrawal of their troops

from Afghanistan and Germany fulfills the responsibility of training of Police therein.

Government of Pakistan consolidates its position in FATA, Khyber Pakhtunkhwa and

Baluchistan. The international intelligence sharing mechanism ultimately succeeds in

blocking flow of funds towards militants. Intelligence agencies break up with all the

religious militia groups and ultimately decide to save the social fabric of the country from

being distorted and destroyed. The immense social pressure from the public, forces the

religious militant groups to get defensive and ultimately to bury the hatchet. Madrasahs get

registered and their activities and accounts are audited and regulated on the pattern of Non-

Governmental Organizations in the country. The economy of the country gets better with

the help of foreign exchange earned in lieu of military services rendered by GOP. Focus on

promotion of agriculture, introduction of new Small and Medium Size Industries and

development of entrepreneurs gives the country new direction towards better socio-

economic conditions. And ultimately Pakistan and Afghanistan both are on the track of

peace and development to the utmost relief of the people in the respective countries and the

world community at large.


49

Pessimistic Approach

Second scenario is that tightening of noose makes the situation worse than ever. The

country enters a new phase of civil war with terrorists using respective religious and

linguistic platforms as the base of their operations. General public loses confidence in the

central government in Pakistan and starts looking up towards international means to secure

peace. Provincialism and sub-nationalism gains force in order to secure their territories and

cultures in the wake of uncertain political situation. Economic chaos of macroeconomic

situation in the country urges the well-off people to migrate from the country and millions

who cannot move anywhere sink into extreme poverty and sadness. The crime rate and law

and order situation worsens in the wake of weak economic condition of the general public.

The waves of religious extremism extend to other neighboring boundaries in order to get

social and financial support necessary for the survival of militant organizations. U.S.A

leaves Afghanistan under the immense pressure of its taxpayers unattended and warlords

once again take up arms to consolidate their positions. Country breaks up into further

different entities with Pukhtunkhwa and Baluchistan as separate countries. United States

moves rapidly to recognize the independent status of Pakhtunkhwa and Baluchistan. Rest of

the independent regions commence on a new era of wars over distribution of water

resources and ethnicities.

Pragmatic Approach

Those who tend to believe in the optimistic approach have certainly been playing on

the wrong footing. International powers in the WOT have their specific national interests

and they would least care about the fate of the common people being murdered and

slaughtered in Pakistan and Afghanistan. Similarly those who think that hell is going to

break loose on the people of respective countries in the form of civil war has been

misinterpreting the intentions behind WOT. The international powers certainly have a

responsibility on their shoulders (Record, 2003).They know that they have created a

Frankstein by declaring a war on terror in this region. They had not anticipated that their

bombardment on militant outfits and hideouts will aggravate the political condition. They


50

would definitely like establish peace in the region by propping up the economies and

withdraw. They would ensure peace as the first step towards prevailing of sanity once again.

In the light of human historical experiences, they would ensure that enough resources are

generated in the conflict ridden areas so that the focus of the people is on education and

economic empowerment. They would understand and acknowledge that raising standard of

living of the people is the only key to a successful peaceful process.

End Note

There were many ways to shelve these crises and to solve this problem of terrorism but the

policy of authoritarian rule had not allowed the sanity to prevail. Islamabad has seldom

tried to share power and wisdom with the people whose lives and fortunes are at stake in

these territories. They are in a better position to guide the government towards peace and

stability. No country in the world has bombed its own people in the manner we have been

doing it. Even India did not hurled missiles on Kashmiris in order to end the insurgency.

This is time for the civil government to rethink and re-plan the strategic needs and policies

for this country. “War is too serious a business to be left to generals”, once said Winston

Churchill and perhaps Pakistan still doesn’t believe in it.

Mukhtar Paras Shah

Appendix-I

Types Implications of War on Terror for Pakistan Human

7598 Civilian deaths ($500m) 9107 Civilians wounded ($200m) 14596 Insurgents killed 2876 Military deaths and injuries ($300m) Police and Para military killed 100 Journalist and religious leaders killed 748 Sectarian incidents

Security

250 suicide attacks (Rs. 4.0 b) Rise in militant recruitment Loss of government effective writ Arms/ drug smuggling Higher defense budgets Psychological impact – fear and insecurity in general public

Economic

Direct ($35 billion) GDP (100% loss) in ten years Rise in unemployment (20%) Loss of livelihoods ($119m) Lost exports (23%) Reviving the lost infrastructure cost Disruption in labor supply Economic burden of 5.0 million IDPs and Refugees ($572m) Decreased growth and revenue (13% annually) Outflow of capital ($432m) Cost of non-development in the conflict zone ($2146m) Lack of investment and capital flight from (2900 industrial units closed) $1000m conflict affected zone Lost opportunities cost ($2.0 billion)

Social

Social cost of military battling the citizens ($1,109m) Religio-Ethnic radicalization Health infrastructure ($103m) Disruptions of living patterns Education (928 schools destroyed;15000 students affected) $250m Environment ($188m) Electricity and communication

Human rights

Missing persons Militant ‘martyrs’ and social unrest Impact on constitutional right to free speech and assembly Impacts on women General violation of human rights by militants & public in conflict zone

Sovereignty

Predator drone attacks inside Pakistani territory (76 drone attacks in 2009) Across the border movement of militants Civilian administration paralyzed

Mukhtar Paras Shah

Appendix-II


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Appendix-III


2

References

Burki.S.J (2009)Roots of terrorism; DAWN Publication, Karachi;Pakistan.

Lindberg.M (2010).Understanding Terrorism in the Twenty-First Century,Grupo de Estudios Estratégicos, GEESAnálisis No. 7561

Niazi.T (1969) China’s Naval Outpost on the Indian Ocean, Publication: China Brief Volume: 5 Issue, James Foundation, Washington.

Kamal.S(2009) Mainstreaming FATA. Survey Reoport,Shaheed Bhutto Foundation, Peshawar, Pakistan

Ross.M.H,(2009) Federally Administered Tribal Areas (FATA): A Modern – day Anachronism? Journal of Political Studies, Peshawar.

Conflict and Humanitarian Assistance Report (2010) Bureau for Democracy, Foreign Disaster Assistance, Pakistan.

Kolodziej.E.A(2007) From Palestine to Pakistan:Prospects of the Obama Strategyto Manage Disorder; Center for Global Studies University of Illinois, Urbana-Champaign Pakistan—Conflicted Ally,in the War on Terror ,

New America Foundation Report (2010) Terror Free Tomorrow; Public Opinion Survey in Pakistan.

Tellis.Ashley.J,(2008) Pakistan and War on Terror, Conflicted Goals Compormised performance, Carnegie Endowment, Brussels.

Record,J.(2003) Bounding the Global War on Terrorism. Strategic Studies Institute Journal, U.S. Army War College, 122 Forbes, Ave, Carlisle, PA 17013-5244.

Arshad,M(2007) Pakistan in theWar on Terrorism; A view point from Pakistan,

Lahore:Pakistan Publishers,Vol.1.

Farah,N(2009), Social Development in Pakistan; SDPC Journal, Nairang Publishers,

Karachi.

Poverty Reduction Strategy Papers (2009), Planning & Development Division,

Islamabad.Vol.II


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Richard,S.(2007), Iraq War; The Cost in Dollars, Gale Publishers, Washington.

Stlingts,J(2009), Pakistan-Afghanistan, GAO Journal; U.S.A.

FATA; SDP Report (2009) ;FATA Secretariat, Peshawar, 2009

Pakistan’s First Review; IMF(2009), Ministry of Finance, Islamabad.

Annual Report PIPS(2008), Islamabad, Pakistan.

Zaidi,M(2009) ‘Second Place for America in Pakistan’, DAWN Publishers, Karachi.

Buchanan.P. J. (2009) “Day of Reckoning”. New Delhi, India.

INTERVIEWS/LECTURES

1. Mr. KazuoTakahashi ; Visiting Professor GRIPS, Tokyo.

2. Tariq Fatmi; Ex Foreign Secretary of Pakistan.

3. Fahim Khattak; Secretary Finance; Govt.of NWFP

4. Syed Mazhar Ali Shah, Deputy Secretary, FATA Secretariat, Islamabad.

5. D.G.ISPR Briefing November, 2008

6. Capital Talk; Geo Investigative Report on Drone Attacks

7. Rustam Shah Mohamnd; Ex Ambassador of Pakistan to Kabut Peshawar

JOURNALS

1. Herald: Karachi: March,2009.

2. China Daily March 2003

3. CNN World Report March 2009

4. Herald Tribune/April 2008

WEBSITES

1. Ministry of Finance, Islamabad. www.finance.gov.pk

2. Government of NWFP. www.nwfp.gov.pk

3. Government of Punjab. www.punjab.gov.pk

4. Asian Development Bank. www.adb.org

6. Congressional Research Centre. www.crg.org

7. World Bank. www.worldbank.org

8. Washington Post. www.washingtonpost.com


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Mukhtar Paras Shah is a research scholar. This document was produced as part of a research study conducted at National Graduate Institute of Policy Studies, Tokyo. The writer can be reached at [email protected]

Documents

Pakistan' Socio-economic Loss in War on Terror