Impact of war on terrorism on Pakistan economy
Tuesday, 23 March 2010
Mohammad Idris Khan
Pakistan seeks cooperative relations with all countries to ensure peace, security and economic progress in the country and the region. In post 9/11 scenario, the region has been turned into a theatre of war. Pakistan, a nuclear power, has a war in Afghanistan on its western border, strained relations with India on the eastern border and grave insurgency at home by militants. The destiny has driven Pakistan to assume the role of a frontline state in war against terror which has had a crippling effect on its economy, law and order and the social fabric.
Terrorism and extremism have posed Pakistan with a complex problem. These have on the one hand seriously impacted on socio-economic fabric of Pakistan and on the other nurtured and sustained militancy. There are nearly 300,000 tribal people currently uprooted from their homes due to fighting and seasonal winter migration. As a sequel to war on terror, more than 740 persons have been killed in about 80 US drone attacks in Pakistan since August 2008. Around 12072 innocent people have lost their lives in terrorism-related incidents across the country and 3000 soldiers have laid down their lives in the fight against terror. The militants have blown up government schools, basic health units and other government buildings. Fruit orchards and agricultural lands have been ruined depriving the affected people of their livelihood. The war against terror has had negative fallout on domestic and foreign investment resulting in slowing of economic growth and increase in unemployment.
More than 150,000 troops are busy in counter-militancy operation in several areas of the North-West Frontier Province including the Federally Administered Tribal Areas (FATA), and they cannot be withdrawn till complete normalcy returns. Even Swat, Buner, Lower Dir and other districts in Malakand division where the military action was most effective require the presence of security forces at least until 2011 or even beyond before these areas are fully secure.
The government was able to send back 2.5 million internally displaced persons from Malakand and Swat within a short period of three months, which is being termed as a success story in the world. The government had earmarked Rs. 50 billion for the reconstruction in Swat and Malakand while another Rs. 25 billion would be provided in two years for capacity building of the law enforcement agencies. Pakistan's three-year plan for reconstruction and rehabilitation in Swat, Malakand and other areas affected by violence would cost 300 million dollars, while the country's five year development plan for the these areas carry a 1.2 billion dollar price-tag.
The government feels that pursuit of military dimension is not the only option to eliminate extremism and terrorism. The power of persuasion must find primacy than the dictates of coercion, to be supplemented by dialogue and reconciliation. Success can only be possible through political initiatives, economic development and respect for local customs, traditions, values and religious beliefs.
More than three million Afghan refugees who are still in Pakistan add to the economic burden and pose an additional security risk often providing nurseries and sanctuaries to the militants.
The economic cost of the war against terror amounting to $40 billion for the last eight years has severely impacted on Pakistan's economy. The losses inflicted on the national economy in the fight against terrorism are more than that incurred during wars with India.
The inflow of much promised assistance from foreign donors including US and Friends of Democratic Pakistan is very slow. Even timely US assistance is of not much soothing effect as major chunk of US aid on the development projects in the range of 50 to 60 % out of the $1.5 billion (per annum) goes back to Washington in the name of consultancy and intermediary costs.
Despite the continuing negative fallout of war on terror, the national economy is steadily showing signs of recovery. During the current year, economy is expected to grow around 3.5%. Exports are projected at $17.2 billion and import at $33.9 billion.Current account deficit is expected to be lower than the previous year. Large scale manufacturing is reversing its negative growth trends while agriculture sector has also shown improvement. Foreign Exchange reserves are presently touching US $15 billion mark. State Bank of Pakistan (SBP) expects more than $8 billion in remittances from overseas Pakistanis this year.
The President of Pakistan Mr. Asif Ali Zardari has pronounced time and again that Pakistan has suffered greatly in the fight against militancy and called upon the international community to give Pakistani people the peace dividend by way of massive economic assistance and energy development. The president believes that a Marshal Plan is needed to overcome economic problems and called for the Friends of Democratic Pakistan to translate into practice the pledges of economic and financial support to Pakistan. He has also been calling for allowing greater market access to Pakistani goods in the US and European markets to effectively boost and sustain the economy.
Pakistan seeks cooperative relations with all countries to ensure peace, security and economic progress in the country and the region. In post 9/11 scenario, the region has been turned into a theatre of war. Pakistan, a nuclear power, has a war in Afghanistan on its western border, strained relations with India on the eastern border and grave insurgency at home by militants. The destiny has driven Pakistan to assume the role of a frontline state in war against terror which has had a crippling effect on its economy, law and order and the social fabric.
Terrorism and extremism have posed Pakistan with a complex problem. These have on the one hand seriously impacted on socio-economic fabric of Pakistan and on the other nurtured and sustained militancy. There are nearly 300,000 tribal people currently uprooted from their homes due to fighting and seasonal winter migration. As a sequel to war on terror, more than 740 persons have been killed in about 80 US drone attacks in Pakistan since August 2008. Around 12072 innocent people have lost their lives in terrorism-related incidents across the country and 3000 soldiers have laid down their lives in the fight against terror. The militants have blown up government schools, basic health units and other government buildings. Fruit orchards and agricultural lands have been ruined depriving the affected people of their livelihood. The war against terror has had negative fallout on domestic and foreign investment resulting in slowing of economic growth and increase in unemployment.
More than 150,000 troops are busy in counter-militancy operation in several areas of the North-West Frontier Province including the Federally Administered Tribal Areas (FATA), and they cannot be withdrawn till complete normalcy returns. Even Swat, Buner, Lower Dir and other districts in Malakand division where the military action was most effective require the presence of security forces at least until 2011 or even beyond before these areas are fully secure.
The government was able to send back 2.5 million internally displaced persons from Malakand and Swat within a short period of three months, which is being termed as a success story in the world. The government had earmarked Rs. 50 billion for the reconstruction in Swat and Malakand while another Rs. 25 billion would be provided in two years for capacity building of the law enforcement agencies. Pakistan's three-year plan for reconstruction and rehabilitation in Swat, Malakand and other areas affected by violence would cost 300 million dollars, while the country's five year development plan for the these areas carry a 1.2 billion dollar price-tag.
The government feels that pursuit of military dimension is not the only option to eliminate extremism and terrorism. The power of persuasion must find primacy than the dictates of coercion, to be supplemented by dialogue and reconciliation. Success can only be possible through political initiatives, economic development and respect for local customs, traditions, values and religious beliefs.
More than three million Afghan refugees who are still in Pakistan add to the economic burden and pose an additional security risk often providing nurseries and sanctuaries to the militants.
The economic cost of the war against terror amounting to $40 billion for the last eight years has severely impacted on Pakistan's economy. The losses inflicted on the national economy in the fight against terrorism are more than that incurred during wars with India.
The inflow of much promised assistance from foreign donors including US and Friends of Democratic Pakistan is very slow. Even timely US assistance is of not much soothing effect as major chunk of US aid on the development projects in the range of 50 to 60 % out of the $1.5 billion (per annum) goes back to Washington in the name of consultancy and intermediary costs.
Despite the continuing negative fallout of war on terror, the national economy is steadily showing signs of recovery. During the current year, economy is expected to grow around 3.5%. Exports are projected at $17.2 billion and import at $33.9 billion.Current account deficit is expected to be lower than the previous year. Large scale manufacturing is reversing its negative growth trends while agriculture sector has also shown improvement. Foreign Exchange reserves are presently touching US $15 billion mark. State Bank of Pakistan (SBP) expects more than $8 billion in remittances from overseas Pakistanis this year.
The President of Pakistan Mr. Asif Ali Zardari has pronounced time and again that Pakistan has suffered greatly in the fight against militancy and called upon the international community to give Pakistani people the peace dividend by way of massive economic assistance and energy development. The president believes that a Marshal Plan is needed to overcome economic problems and called for the Friends of Democratic Pakistan to translate into practice the pledges of economic and financial support to Pakistan. He has also been calling for allowing greater market access to Pakistani goods in the US and European markets to effectively boost and sustain the economy.