Perilous journey

S P E C I A L R E P O R T

PA K I S TA NFebruary 11th 2012

Pakistan.indd 1 31/01/2012 11:38

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EARLY LAST YEAR the Pakistan Business Council, a lobby group of localconglomerates and multinationals, drew up a �national economic agen-da�, setting out some desperately needed reforms. It took out newspaperadvertisements to press its case and made presentations to the four big-gest parties in parliament. Rather to everyone’s surprise it achieved aconsensus, which was to be announced on a television chat show onMay 2nd. But that morning it was revealed that American commandoshad killed Osama bin Laden in a town not far from Pakistan’s capital, Is-lamabad. Television had other priorities, and the moment passed.

For many in Pakistan, thisanecdote is typical of the waygeopolitics gets in the way of sen-sible policymaking. Their coun-try, they say, has so much goingfor it, yet all the foreign presswrites about is the dark side: war-fare, terrorism, corruption andnatural disasters. Asad Umar, thePakistan Business Council’schairman, compares his coun-try’s condition to that of the pas-sengers in a cable car over a �re.They can see the lush greenery oftheir destination, but it is gettinghot, and they cannot be sure thatthe cables will hold.

This report on Pakistan will,like so much foreign reporting onthe country, be looking at the�ames. Pakistan is at risk of utterdisaster, though probably not im-mediately. But, preoccupied withdousing �res, its leaders are ne-glecting Pakistan’s longer-term

needs, or, as optimists would have it, failing to exploit the country’s tre-mendous potential. Before looking at Pakistan’s manifold problems, it isworth putting these optimists’ case. They normally cite �ve reasons forhope: demography, geography, geology, culture and democracy.

The bright side

Pakistan has a very young and rapidly urbanising population. Itsworkforce is growing by about 3% a year and its share of the total popula-tion, currently about 60%, is rising steadily, thanks to a falling birth rate.Similar demographic bulges have been accompanied by prolongedbooms in East Asia and elsewhere.

Moreover, Pakistan borders the world’s two fastest-growing bigeconomies, China and India. Its new port at Gwadar on the Arabian Seao�ers another route into China. It is also the nearest seaport for much ofCentral Asia. The hydrocarbon riches of Turkmenistan could �owthrough a pipeline across Pakistan to India. And Pakistan itself is blessedwith natural resources, including gas, coal and copper. It is already a cot-ton producer and a big exporter of textiles. Its farmers have proved re-markably resilient to successive natural disasters, but they have the po-tential for big increases in productivity.

Perilous journey

Pakistan has a lot going for it, but optimism about its future is

nevertheless hard to sustain, says Simon Long

CONTENT S

A list of sources is at

Economist.com/specialreports

An audio interview with

the author is at

Economist.com/audiovideo/

specialreports

3 Afghanistan

Too close for comfort

5 Foreign policy

State of vulnerability

6 Politics

Captain’s innings

8 Religion

In the shadow of the mosque

9 The economy

Lights o�

11 Education

A taste of Hunny

12 Poverty

Always with us

12 Violence

Dripping with blood

13 Water

Going with the �ow

SPECIAL REPORT

PAKIS TAN

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2 The Economist February 11th 2012

P A K I S T A N

I N D I A

I R A N

A F G H A N I S T A N

TAJIKISTAN

Islamabad

ISLAMABAD(1.7)

Kabul

Delhi

KarachiGwadar

A r a b i a n S e a

Sir Creek

Indu

s

K A S H M I R(administeredby Pakistan)KHYBER

PAKHTUNKHWA(21.8)

JAMMU & KASHMIR(administered by India)

B A L O C H I S T A N(8.8)

S I N D H (44.2)

P U N J A B(100.6)

X I N G J I A N G

G U J A R A T

FEDERALLYADMINISTERED

TRIBAL AREAS(4.4)

C H I N A

Lahore

DiamerBhasha

Kalabagh

Quetta

Abbottabad

Rawalpindi

Area ceded by Pakistan toChina, claimed by India

Area held by China,claimedby India

D u r a n d L i n e

Mohmand SiachenGlacier

Swat

NorthWaziristan

Line of control

INDIA

C H I N A

AFGHANISTAN

BANGLA-DESH

PAKISTAN

TURKMEN-ISTAN

Population, byprovince, 2009, m

Sources: IMF; Pakistan Bureauof Statistics; US Census Bureau

Interactive: Our online map demonstrates howthe territorial claims of India, Pakistan andChina would change the shape of South AsiaEconomist.com/asianborders

National totals:Population, 2009 = 181.5mGDP, 2011 = $204bn

(0.0)

Proposed dams

250 km

2 Pakistanis justly point to their traditions of toleranceand hospitality. An extremist Islamist fringe should notcolour views of the vast moderate majority. Nor isthere any shortage of highly intelligent, articulate,cosmopolitan and enlightened leaders in busi-ness, government and the army. Ties of kin-ship�of loyalty to a large extended family�give Pakistani society a solidity that makesforecasts of its imminent collapse seemfanciful. As Anatol Lieven concludes inhis splendid recent book, �A HardCountry�, Pakistan, �though a deeplytroubled state, is also a tough one�.

Its elected civilian govern-ment, now in o�ce for four years,might yet become the �rst inPakistan’s history to serve a full�ve-year term. And it has somenotable achievements to itscredit: the 18th amendment tothe constitution restored a ci-vilian structure and intro-duced a welcome devolutionof power from central govern-ment. The most recent�award�, in 2010, by the Nation-al Finance Commission, whichallots Pakistan’s resources to its in-dividual provinces, managed thepolitically di�cult feat of giving Pun-jab, the biggest and richest, a smaller sharethan its proportion of the population. Pakistan’sarmy, meanwhile, has driven an insurgency out of part of oneprovince, Khyber Pakhtunkhwa, and is containing it in most ofthe often lawless Federally Administered Tribal Areas (FATA).

The downside

But even Pakistan’s biggest boosters �nd it hard not to bedistracted by the �res. The growing population is mostly poorand badly educated. Pakistan borders not only China, India andIran but also Afghanistan, and is infused by the venom of thewar being fought there. Much of the mineral wealth is in areaswhere Pakistan itself su�ers from poor security, and the plannedpipeline from Turkmenistan would actually cross Afghanistan.Traditional tolerance is fraying and violence spreading.

The president, Asif Ali Zardari, and his civilian governmentare far from certain to see out their terms. They have lasted thislong only by backing away from every confrontation with thebody that sees itself as the true representative of Pakistan’ssovereignty and, in many ways, the country’s rightful ruler: thearmy. Fiercely protective of their budget and big business inter-ests, and with a veto over foreign and security policy, the gener-als make Pakistani �democracy� seem a stunted, sickly infant.

Even one of this democracy’s most impressive trappings, afree and vibrant press, has limits. Elements of the armed forcesare believed to be behind death threats to senior journalists,which, to put it mildly, act as a dampener on the freedom of ex-pression. Indeed, so successfully has the army merged its imagewith that of the nation that many commentators trumpet itsviews without coercion. A BBC television documentary madelate last year, accusing the army of links with terrorist groups athome and in Afghanistan, led the cable companies themselvesto block the BBC World television channel.

But those accusations will not go away. They have played abig part in bringing relations with America, Pakistan’s traditional

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ally, to a new low. And they raise serious questions about thearmy’s in�uence in domestic politics, too. It is not, as it portraysitself, the neutral arbiter of the national interest, keeping venal ci-vilian politicians in check; rather, it pursues what it perceives asits own institutional interest.

This report will begin by considering Pakistan’s policy inAfghanistan. That will be a burning international concern asAmerica and its NATO allies prepare to withdraw most of their130,000 combat troops by the end of 2014 or, as American o�-cials are now suggesting, even 18 months earlier. But it also high-lights the way in which a misguided military strategy trumpspolicymaking, at times seeming to threaten Pakistan’s future.

Leaders of the American-dominated International SecurityAssistance Force (ISAF) in Afghanistan no longer dream of a de-�nitive defeat of the Taliban insurgency by 2015. Nor does thereseem much prospect as yet of an overarching peace settlement.The �victory� now hoped for is to leave behind an Afghan gov-ernment that has security forces equipped to carry on the �ght,and the legitimacy to get them to do so. Compared with thehopes held for Afghanistan’s future after the swift toppling of theTaliban regime in November 2001, this looks like failure. And forthat, ISAF’s commanders and their political masters have beenever more vocally blaming the malign role played by Pakistan.

Not only has it provided sanctuary from which terroristshave mounted attacks in Afghanistan. Not only is the Taliban’smost senior leadership�the Quetta shura�believed to be basedin Pakistan. Worse, elements of the Pakistani state are accused ofcomplicity in all this. And worse still, partly because of that com-plicity, Pakistan itself is prey to a �erce xenophobic Islamist in-surgency. Rather than being able to declare victory in Afghani-stan, a wild country of some 30m people, the West fears anightmare: defeat in Pakistan, a country of nearly 200m that wasonce seen as a �rm ally and a bastion of moderation. 7

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PAKIS TAN

PAKISTAN REACTS WITH understandable resentment tocriticism of its role in Afghanistan. During the long war

there it has provided sanctuary to millions of refugees. It has lostfar more troops �ghting terrorists than has ISAF. After September11th 2001 it swiftly repudiated the Taliban and threw in its lotwith America and its �war on terror�. In 2004 it was named a�major non-NATO ally� by America. Its territory has providedISAF with vital supply routes and bases for attacks on suspectedterrorists by unmanned drone aircraft. Many of its civilians havealso died in those and other attacks. It has provided intelligencethat has led to the capture of a succession of al-Qaeda leaders.And the �American� war in Afghanistan has fuelled the rise ofviolent Islamist extremists in Pakistan itself, the �Pakistani Tali-ban�, bent on overthrowing the government.

Now, too, there is a reciprocal grudge against Afghanistan.Armed �ghters from the Pakistani Taliban, defeated in the Swatregion of Pakistan in 2009, have set up camp in eastern Afghani-stan and continue to launch attacks on Pakistan. All of this helpsfuel popular anti-Americanism, which is steadily worsening.The war is a political liability for the government.

Yet American politicians seethe at Pakistan’s refusal�de-spite large amounts of American aid lavished on the army�tostart operations in the tribal area of North Waziristan against theHaqqani network, a group that Mike Mullen, then chairman ofAmerica’s Joint Chiefs of Sta�, last year called a �veritable arm�of the Inter-Services Intelligence agency (ISI), Pakistan’s mainspy service. This year a NATO report leaked into the public do-

main alleged that �Pakistan’s manipulation of the Taliban seniorleadership continues unabated.�

Yet even American diplomats believe that some of thesecharges are overstated. Having helped form, train and arm theTaliban in the 1980s (with American backing) to �ght the Sovietoccupation of Afghanistan, and having in the 1990s used otherterrorist out�ts against India in Kashmir, the ISI has deep linkswith the extremists. But that does not make them all passivetools of the Pakistani state.

Publicly, the ISI plays down its links with such groups,mocking the tendency to see its shadowy hand everywhere.�We are a very responsible organisation,� says an ISI spokes-man. �People think we are responsible for absolutely every-thing.� Yet at the same time the ISI somehow manages to give theimpression that it has more control over the extremists than itprobably does.

The army’s explanation for its restraint in North Waziristanis capacity. Roughly 150,000 soldiers are already deployed in thetribal areas; 10,000 are on UN peacekeeping missions; and60,000-70,000 were diverted to providing �ood relief in 2010and 2011. Add in troops kept in reserve, and that leaves onlyaround 200,000 to keep an eye on 2,900km (1,800 miles) of Paki-stan’s eastern border with the traditional enemy: India.

Annus horribilis

In fact by late 2011there were plenty of other reasons too forrestraint in North Waziristan, argues Rifaat Hussain of theQuaid-i-Azam University in Islamabad. A severe humanitariancrisis in which one-third of the population of the Federally Ad-ministered Tribal Areas had already been displaced would havebeen made even worse by intervention. Divided tribal loyaltiesin the region might have coalesced in a united anti-army front. Arelative lull in the second half of 2011 in suicide-attacks else-where in Pakistan might have been broken. And the army mightnot have won but instead got bogged down, as has happened toso many foreign armies in similar rugged terrain, across the bor-der in Afghanistan.

The need for caution on the Indian border helps explain

Afghanistan

Too close for comfort

In the war in Afghanistan it is not always obvious

which side Pakistan is on

It was an accident, said ISAF

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why Pakistan’s strategic objectives in Afghanistan seem at oddswith ISAF’s. Its main goal is to thwart the establishment of anygovernment that might align Afghanistan �rmly with India.Partly this re�ects its abiding fear of Indian invasion and theneed for �strategic depth� to withstand it. Also, Pakistan sees theadministration of President Hamid Karzai as dominated by for-mer members of the anti-Taliban Northern Alliance, which wasclose to India and Russia. O�cials in Islamabad claim India is al-ready using Afghan territory to foment unrest in Pakistan, espe-cially in the restive province of Balochistan.

Another reason why this does not seem Pakistan’s war isthat the Taliban are dominated by Afghanistan’s largest ethnicgroup, the Pushtuns, many of whom also live on the Pakistaniside of the frontier. And the Afghan government has never recog-nised the border with Pakistan dating from the British colonialera, the Durand Line. If a hostile Afghan government were to re-surrect the dispute, recollecting old calls for a separate �Pushtu-nistan� that incorporates not just the tribal areas but most ofKhyber Pakhtunkhwa and Balochistan,Pakistan would be destabilised further.

In 2011 the continuing tensions be-tween America’s and Pakistan’s objec-tives in Afghanistan became acute. Fromthe perspectives of the American and Af-ghan governments, the evidence of Paki-stani double-dealing became more �a-grant. When bin Laden was found to havebeen living in Abbottabad, a town not farfrom Islamabad that is known for its elitemilitary academy, it was hard to believethat no part of the Pakistani establishmentwas aware of his presence. After that, Ad-miral Mullen seemed to accuse the ISI ofcomplicity in bloody attacks on America’sforces in Afghanistan and on its embassy in Kabul, blamed onthe Haqqani network (though Hillary Clinton, the Secretary ofState, later said there was no evidence implicating the ISI). Af-ghan politicians, for their part, blamed Pakistan for the assassi-nation in September of Burhanuddin Rabbani, a former Afghanpresident involved in seeking a peace settlement.

With friends like these

From Pakistan’s perspective, however, 2011 was a year ofever more egregious American violation of its sovereignty. InJanuary an American CIA contractor, going about his murkybusiness, shot dead two robbers in Lahore. A third man waskilled by the car sent to rescue him. America claimed the CIA

contractor, Raymond Davis, had diplomatic immunity, andeventually had him set free. Pakistanis were appalled that an un-known number of trigger-happy Americans appeared to have alicence to kill on their streets.

The Navy SEAL raid in which bin Laden was killed was keptsecret from the Pakistani government and army, apparently be-cause they could not be trusted not to alert the target. Thatcaused far greater outrage in Pakistan than did the revelation ofthe al-Qaeda leader’s whereabouts. Indeed, some Pakistanis,typically for a country where any event spawns countless con-spiracy theories, believe the army’s commanders did know ofthe raid. In this theory, revealing for what it says about how thearmy is viewed, the generals thought it less damaging to their im-age at home�and, crucially, within their own lower ranks�to ap-pear inept, rather than complicit in the killing of an old jihadi ally.Most Pakistanis blame the al-Qaeda attacks of September 11th2001on America or Israel.

Hopes of repairing ties were dashed by what was, at best, a

terrible ISAF blunder. On November 26th 2011, 24 Pakistani sol-diers were killed by the air support called in by Afghan andAmerican troops on the border with the Pakistani tribal area ofMohmand. NATO called it an accident and said its troops hadacted in self-defence. Many Pakistanis believed it was a deliber-ate attack. Barack Obama o�ered condolences but no apology.

In protest, Pakistan withdrew from a big conference in Ger-many in December on Afghanistan’s future. It ordered Americato quit the base in the Pakistani province of Balochistan fromwhich it was believed to be mounting drone attacks. And it cur-tailed the intelligence co-operation which presumably helpedidentify targets for those attacks, as well as lead to terrorist sus-pects in their hideouts. It also closed the two border crossingsthrough which large quantities of ISAF supplies had been pass-ing. ISAF has three other land routes, through Russia, CentralAsia and the Caucasus, but they are more expensive and havepolitical complications of their own.

Pakistan, for all its denials, can also in�uence the outcome

in Afghanistan through the presence in its territory of the insur-gent groups. They will not be defeated unless they are beaten inPakistan, nor brought into a process of national reconciliationuntil Pakistan has helped nudge them to the table. ISAF com-manders in Kabul believe that some Afghan Taliban leaders arecha�ng at their dependence on Pakistan and the ISI and might bewilling to return home if it did not mean abandoning their fam-ilies in Pakistan. ISAF has tried to coax them back with o�ers ofsafe passage. Recent agreement for the Taliban to open an o�cefor negotiations in Qatar is another way of prising the groupaway from Pakistan and has brought a formal peace process a lit-tle closer. But it will still need Pakistani help.

In recent times Pakistan has often looked more like Ameri-ca’s enemy than its ally. An article published in November andDecember 2011 in the National Journal and the Atlantic, twoAmerican magazines, called it �The Ally from Hell�. It was deep-ly resented in Pakistan. In fact, the country’s ultimate objectivesin Afghanistan are not that di�erent from the West’s. It does nothave an interest in perpetuating a war in which, as it points out,Pakistani soldiers and civilians are victims. Only a small minor-ity in Pakistan hankers after a Taliban restoration in Kabul, whichwould encourage the Pakistani Taliban. In any event, such a res-toration is highly unlikely, since any government ISAF leaves be-hind will probably be able to hold the big northern cities.

So Pakistan’s Afghan policy at times appears to be self-de-feating. Partly this is a consequence of the ISI’s links with mili-tant groups, both domestic and Afghan, which have createdbonds of loyalty and patronage that are hard to untangle. But it isalso a consequence of Pakistan’s abiding fears of the two coun-tries best placed to help it, if only mutual trust could replace in-stinctive suspicion: America and India. 7

Pakistan’sstrategicobjectivesinAfghanistanseem atodds withISAF’s

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stanis, and it is hard to believe there was no o�cial connivance.The aim would have been to heighten tension with India, justi-fying the army’s concentration of its resources on the easternfrontier. Since both India and Pakistan are nuclear powers, thatwould make it a breathtakingly risky tactic. Yet Pakistan’s nuc-lear deterrent might have emboldened the alleged plotters. In-deed, Pakistan, watching India’s economy and defence budgetgrow, is believed to be expanding its nuclear arsenal as fast as itcan. Unlike India, it has never promised to use its nuclear weap-ons only in retaliation. Many Pakistani strategists argue that thesubcontinent is more stable with nuclear weapons than with-out, since they helped restrain India after an attack on its parlia-ment in 2001, as well as after the Mumbai and other atrocities.

This remains a terrifying state of a�airs, even if relations be-tween Pakistan and India are recovering from the post-Mumbaislump. A �composite dialogue� between the two countries hasresumed and limps on. And in November 2011 Pakistan at lastagreed to reciprocate India’s decision in 1996 to grant its neigh-bour’s exports most-favoured-nation status. But none of thecountries’ di�erences has been settled�even where, as with thearmed stand-o� over the Siachen glacier in the Himalayas, or thedisagreement over the maritime boundary in the Sir Creek be-tween Sindh and the Indian state of Gujarat, a solution seems

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SPECIAL REPORT

PAKIS TAN

VIEWED FROM ISLAMABAD, the history of relations be-tween America and Pakistan has been a saga of serial

American betrayals. In the 1950s the two countries were closefriends. Yet when Pakistan went to war with India in 1965, Ameri-ca stayed neutral. Nor was Richard Nixon much help when EastPakistan seceded to become Bangladesh in 1971, despite Paki-stan’s role in facilitating his opening to China. After the collapseof the Soviet Union, close co-operation in the 1980s over armingand training the mujahideen �ghting the Soviet occupation ofAfghanistan soon turned into sanctions against Pakistan’s nuc-lear programme.

In his memoirs, Pervez Musharraf, Pakistan’s then dictator,describes how he had to think long and hard in September 2001before o�ering his country’s logistical support to America in thelooming war in Afghanistan. From the outset Pakistan has feltunder-rewarded. The settlement reached in Bonn in December2001 that charted a course for Afghanistan’s political develop-ment already seemed to disregard Pakistan’s interests. The cen-tralised state set up by Afghanistan’s new constitution was seenas marginalising the Pushtuns and hence both unworkable andinimical to Pakistan’s interests. President Karzai is a Pushtun, buthis government is seen as dominated by Tajiks and Uzbeks.

Just as unsettling, the administration of George Bush madea concerted e�ort to improve relations with India. This culminat-ed in a deal giving India de facto legitimacy as a nuclear power, aposition that Pakistan, with its appalling record on proliferation,can never aspire to. Under Mr Obama America tried to put rela-tions with Pakistan on a �rmer footing with the appointment ofa senior diplomat, Richard Holbrooke, as a special envoy to Af-ghanistan and Pakistan. The initiative, however, was doomed al-most from the outset. The original idea was to give Holbrooke abrief also to mediate between India and Pakistan over Kashmir.However, India�ever adamant that outsiders keep out of theKashmir dispute�successfully lobbied to curtail Holbrooke’sportfolio, which after his death in December 2010 was taken overby Marc Grossman.

Too many strings

Even the o�er of lavish American aid was somewhat coun-terproductive. The Kerry-Lugar-Berman bill signed by the presi-dent in October 2009 promised $7.5 billion in non-military aidover �ve years. But it requires the secretary of state to certify thatPakistan is co-operating in thwarting nuclear proliferation andterrorist attacks in Afghanistan and elsewhere (eg, India). Thearmy fumed at the perceived incursion on Pakistan’s sovereign-ty. After the raid that killed bin Laden, Pakistan expelled someAmerican military trainers, and $800m in military aid was sus-pended. A further $700m was withheld in December, linked to ademand that Pakistan do more to stem the in�ow of improvised-bomb ingredients to Afghanistan.

The rest of the world fumes at the perceived complicity ofparts of the Pakistani state in terrorist attacks, most dramaticallythe one in Mumbai in November 2008 that killed more than 170people. That was planned in Pakistan and carried out by Paki-

Foreign policy

State of vulnerability

Threatened by India, betrayed by America, Pakistan

casts a lovelorn eye at China

To Mumbai, with hate

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SPECIAL REPORT

within reach and is in both sides’ obvious interests.Even on the biggest dispute, Kashmir, that has twice

brought the two countries to full-scale war, a solution of sortsseems tantalisingly close. Before the Mumbai attacks, talks be-tween Mr Musharraf and Manmohan Singh, India’s prime min-ister, along with back-room negotiations, had reached the out-lines of a settlement: one that looks very like the status quo,which is almost the only conceivable outcome. India would re-tain control of the Kashmir Valley, and the less populated but big-ger parts of Kashmir in Pakistan would remain with that country.But the borders would be softened, with travel and trade madeeasier, and some cross-border institutions would be set up.

There would be huge obstacles to this, notably trying topersuade Pakistanis and Kashmiris that this would not be a hu-miliating defeat. But at least in Pakistan the issue has droppeddown the agenda. As fewer young Pakistanis train as �ghters andsneak across the �line of control� to join the jihad in Kashmir, andas television propaganda about alleged Indian atrocities be-comes rarer, the con�ict there seems less immediate. In Pakistaniconversations listing India’s crimes, it features mainly as the lo-cation of dams denying Pakistani farmers water.

So now might not be a bad time to make another push for aKashmir settlement. But Pakistan’s government is too preoccu-pied with its internal troubles to try, even if the army, with itsneed for an �India threat� to justify its size and its budget, were toallow it to, or, just as unlikely, were India ready to o�er some face-saving concessions.

River deep and mountain high

So for the foreseeable future Pakistan’s relations with bothIndia and America will be stormy. There is, however, one all-weather friend: China. When the two countries’ leaders talk ofthis relationship, they sound more like lovestruck adolescentsthan statesmen. �Higher than mountains, deeper than oceans,stronger than steel and sweeter than honey,� was how Pakistan’sprime minister, Yousaf Raza Gilani, described their ties last year.

Zhou Rong, correspondent in Islamabad for Guangming, aChinese daily, says the bilateral relationship, uniquely, refutesPalmerston’s adage about nations having no permanent friends,only permanent interests. China has dealt uncomplaininglywith whatever ghastly regimes Pakistan’s elections and coupshave thrown up. And it was grateful for Pakistan’s swift rea�r-mation of friendship after the Beijing massacre in 1989.

All the same, it is a relationship based on mutual interests.Pakistan likes to feel it is not entirely beholden to America, andChina’s backing of Pakistan is a way of hedging against the riseof India as a regional power. There is an economic interest too.China helped build the port at Gwadar and has been improvingthe roads on the border with its western region of Xinjiang. It iseyeing the mineral wealth in Pakistan itself, and a new route forenergy and other imports. But it has little to show for all this.

In apparent reprisal for America’s nuclear assistance to In-dia, China is to sell Pakistan two nuclear power plants, despite itscustomer’s failure to join the international non-proliferation re-gime. But the friendship has its limits. China’s main concern inPakistan now probably mirrors America’s�the export of Islam-ist-inspired violence, in China’s case to its own restive Muslimsin Xinjiang.

Like America, too, it would be most afraid of a Pakistan runby a hardline Islamist regime. Of all the assertions in the Atlan-tic’s �Ally from Hell� article, the one that probably upset Paki-stan’s soldiers the most was the suggestion that, following secrettalks, China and America had reached an understanding that�should America decide to send forces into Pakistan to secure itsnuclear weapons, China would raise no objections.� 7

�HE’S THE MAN!� purrs the cosmopolitan young media-studies graduate at Punjab University in Lahore. A group of

a dozen or so contemporaries broadly shares her enthusiasm forImran Khan, the rising star of Pakistani politics. Even an angrysceptic, who sees him as �the new blue-eyed boy of the estab-lishment�, admits that he would vote for him.

Politically, Mr Khan has been on a slow-burning fuse thatdid not go o� until 15 years after he formed his party, PakistanTehreek-e-Insaf (PTI), and nearly 20 after he captained his coun-try to its only victory ever in the cricket world cup. After the PTI

boycotted the most recent general election, in 2008, his politicalcareer seemed destined to �zzle out. But a huge rally in Lahore inOctober 2011showed that he would be an important �gure in thegeneral election to be held by early 2013. The Lahore rally was fol-lowed by several others, including a massive gathering in Kara-chi on Christmas Day, the birthday of Pakistan’s founder, Mu-hammad Ali Jinnah. Mr Khan likes to talk of the �tsunami� hehas created.

Many observers assume that Mr Khan’s emergence hasbeen assisted by �the establishment�, a common euphemism forthe army. It is true that the army has a history of trying to bolster�third forces� in Pakistani politics, to weaken the two big civilian

Politics

Captain’s innings

The emergence of Imran Khan re�ects

disillusionment with both politicians and generals

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PAKIS TAN

parties that it has in the past turfed out in coups�the PakistanMuslim League (Nawaz), or PML(N), and the Pakistan PeoplesParty (PPP), which heads the present ruling coalition.

Yet, whatever behind-the-scenes help or encouragementMr Khan is receiving, there is no doubting his popularity amongthe young urban middle classes (�the pious but unbearded�, asone academic puts it). Ijaz Gilani, of Gallup Pakistan, a pollster,attributes his success to even-greater-than-usual disillusionmentwith the two big parties, and the emergence over the past decadeof a new class of educated professionals. Mr Khan’s appealstems from the attractive simplicity of his message: end corrup-tion and stop �ghting the �American war�. He has managed topresent himself as an �anti-politician�, di�erent from the rest ofthe breed, which is widely seen as universally corrupt.

Stumping chance

This makes for rousing rallies, but not necessarily electoralsuccess. Pakistan has a �rst-past-the-post system which, as else-where, tends to favour two-party politics. And the PPP and PML

(N) have deep roots. Both are family �efs.The PPP is the party of the Bhuttos, fromSindh province; the �N� in PML(N) is forNawaz Sharif, a former prime minister,who, with his brother Shahbaz, the chiefminister of Punjab province, lords it overthe party. Their organisations and patron-age networks provide strong defences against upstart parties andstack parliament with rich landowners who can deliver thevotes of their clans and dependants.

Elections are never free of all fraud, but nor, these days, arethey susceptible to massive rigging in favour of the �establish-ment� candidate. So most analysts think the PTI’s best hope inthe election is to emerge as the third party and the power-brokerin a coalition. Even to achieve that, however, it needs to attractdefectors from other parties with their own local power bases.Two notable recruits are Shah Mehmood Qureshi, a former PPP

foreign minister, and Makhdoom Javed Hashmi, a PML(N) veter-an. Mr Khan also enjoys some help from Jamaat-e-Islami, thebiggest Islamist party, which, like the PTI, boycotted the 2008election. And he has attracted some members of the PML(Q), the�king’s party� cobbled together in the early 2000s to give a civil-ian underpinning to the rule of Pervez Musharraf when he wasstill army chief.

This is problematic for Mr Khan. Mr Qureshi and MrHashmi have unusually clean reputations, but the same cannotbe said of many established politicians. Enlisting the candidateswho can win electoral seats risks tarnishing Mr Khan’s brandamong his idealistic young core of supporters. It also provokessome resentment among longer-serving PTI stalwarts who stuckwith Mr Khan when times were tough.

For now, however, he is pro�ting from the exceptionallytoxic political atmosphere. The administration of Mr Zardari iswidely viewed as hopelessly inept and irredeemably corrupt.And, predictably in a country that has seen three coups in its 64-year life, there are always rumours that its days are numbered.

The immediate deadline is March, when 50 of the 100 seatsin the upper house of parliament, the Senate, are up for indirectelection by the four provincial assemblies. The 2008 nationaland provincial elections were held not long after the assassina-tion of the PPP’s leader, Benazir Bhutto, a former prime ministerand daughter of the party’s founder, Zul�kar Ali Bhutto. Her wid-ower, Mr Zardari, is holding the party in trust for their young son,Bilawal. He became president after the PPP emerged from thegeneral election as the largest party in parliament.

The PPP also made a good showing in the provincial assem-

blies, so it is poised to win control of the Senate in March (with itsallies’ help). This matters not just for passing legislation, but alsobecause the Senate, together with the elected lower house andfour provincial assemblies, will form the electoral college fornext year’s presidential election. Also, were the president to beincapacitated, the Senate’s chairman would take over until anew president is elected.

So the PPP’s opponents were keen to see its government fallbefore March. It has been under threat from three sides. The leastsigni�cant of these was the political one. The PML(N), led by MrSharif, sought to take advantage of the government’s �ounder-ing. He would prefer elections before the PTI bandwagon gathersfurther momentum (the �pious unbearded� are also an impor-tant PML(N) constituency). But Mr Sharif, once seen as a creatureof the army, has become an outspoken critic of its political ambi-tions, so he cannot expect its support for an early bid for power;and his ambitions depend on civilian government enduring.

The other potential sources of trouble for the governmentwere more dangerous: the judiciary and the army. A lawyers’

movement was instrumental in bringing down Mr Musharraf,and the reinstated chief justice, Iftikhar Chaudhry, seems to seethe courts not so much as independent of the government as su-perior to it. The Supreme Court has been pursuing corruption al-legations against Mr Zardari, having declared illegal an amnestygranted under Mr Musharraf.

It has also been investigating a scandal known as �Memo-gate�. This involves a document delivered by an American busi-nessman of Pakistani origin, Mansoor Ijaz, to America’s formernational security adviser to pass to the chairman of the jointchiefs of sta� in May, just after the raid that killed bin Laden. Itsought America’s help in reining in the army, humiliated by thebin Laden episode. Pakistan’s ambassador to America, HusainHaqqani, was alleged to have prompted and approved thememo and was forced to resign. The implication was that Mr Zar-dari himself had initiated the approach.

The government asked the court to drop the �non-issue�,but the army chief, General Ashfaq Kayani, and the head of theISI, General Ahmed Shuja Pasha, insisted there was a case to an-swer, despite the oddity of accusing a head of state of treasonagainst armed forces of which he is the titular commander. Theimpression was of a judiciary and army joining forces to topplethe government, which certainly appeared to wobble.

Mr Zardari has never shaken o� the allegations of corrup-

1Families and friends

Source: National Assembly of Pakistan

Number of seats in national assembly, latest

Opposition:

PPP125

ANP12

PML(Q)54

MQM25

Others29

Coalition government:

PML(N)90

Total seats:335

The Economist February 11th 2012 7

The administration of Mr Zardari is widely viewed ashopelessly inept and irredeemably corrupt, and thereare always rumours that its days are numbered

2

1

8 The Economist February 11th 2012

PAKIS TAN

SPECIAL REPORT

tion that in the past put him in jail twice for a total of 11years. Hisgovernment’s �ailing response to catastrophic �ooding in 2010,and his own decision to drop by his chateau in France at theheight of the �oods, further damaged his reputation. In Decem-ber his response to criticism was not to defend his government’srecord but to point to his dynastic lineage. Referring to himself asZul�kar Ali Bhutto’s �spiritual son�, he asked the nation �to havefaith in the trust reposed by Benazir Bhutto in him�. Around thattime a friend of his gave a dark warning that �the distance be-tween Islamabad and Rawalpindi [the adjacent city housing thearmy’s headquarters] is growing.� The president and his primeminister hinted at conspiracies against democracy.

This year both legal threats have intensi�ed. Of the two,Memogate seems likely to fade as a threat to the government.However, contempt of court proceedings have been initiatedagainst Mr Gilani, because of the government’s failure to act onthe Supreme Court’s instruction in 2009 to write to the Swiss au-thorities to seek the reopening of a money-laundering caseagainst Mr Zardari. His government argues that the president en-joys constitutional immunity.

The confrontation ensures that the rest of its term will behaunted by constitutional and legal wrangling. But Mr Gilani hasvarious avenues of appeal that can drag out the legal process.Meanwhile all parties seem close to a tacit understanding thatthere will be no coup. Speaking at the World Economic Forum inDavos in late January, Mr Gilani denied both that he was on badterms with his generals and that democracy was under threat.But it seemed likely that the election would be called early, in Oc-tober or November of this year. The probable outcome would beanother fractured coalition.

Fourth time lucky?

That would probably suit the army quite well. Mismanage-ment of the economy is hitting it hard and it might welcome a re-gime of competent technocrats, but there is no obvious way ofinstalling one. And indeed it is hard to see why the army wouldwant to take power now. In the past few years it has successfullybeaten o� whatever challenges the Zardari government hasthrown at it. In July 2008 the government announced that the ISI

would be brought under civilian control, through the interiorministry. It retracted the idea within hours.

Having ruled Pakistan for more than half its existence, thegenerals know that even broadly popular seizures of power,such as the one that ousted Mr Sharif and installed GeneralMusharraf in 1999, usually end with the army discredited. Hav-ing been far more e�ective than the civilian authorities in pro-viding �ood relief, the army, despite the humiliations of 2011, isnow less unpopular than it was. So a coup seems unlikely, unlessMr Zardari tries to sack or otherwise meddle with the top brass,or the army is instructed to take unpopular pro-American ac-tions, such as tolerating a big American operation against theHaqqani network. A complete rift with America would make thegenerals worry less about the international implications of un-constitutional action. They would be con�dent that China atleast would not condemn them publicly; but China probablycould not give them the money, technology and respectabilitythat America provides.

The reason that a coup is talked about so often is not justthat it has happened before. It is also that the army is still widelyseen as the country’s most e�ective and disciplined organisa-tion. Given its disastrous history, notably in the brutal war thatled to the secession of East Pakistan in 1971, and its poor record inrunning the country when it has tried, this seems curious. Sadly,however, it is probably true�though civilian rulers have neverreally been given the chance to do better. 7

THE CLEAN-SHAVEN, middle-aged academic in Lahore isunder �re from his wife and his bushy-bearded 20-year-old

son, a student. Last year he completed the haj, the pilgrimage toMecca that every Muslim is expected to make at least once. Now,after a lifetime of weekly attendance at the mosque, on Fridays,he is told by his family that he should make the half-hour tripthere to say his prayers �ve times a day. �Pakistan�, he says, �hasbecome very religious-minded and anti-West.�

Since 2001, these sentiments�piety and anti-Westernism�have become inseparably fused. Pakistan’s founder, Jinnah, stillrevered as the greatest of national heroes, created a homelandfor Muslims but was a Westernised intellectual, often photo-graphed in Savile Row suits, pu�ng on a cigarette. Now, though,many Pakistanis see the West as waging war with Islam. The out-ward forms of piety have become more visible everywhere. Farmore women now cover their heads.

Even before 2001, life in Pakistan was becoming Islamised.Zia ul Haq, the military dictator who ruled from 1977 to 1988, wasa religious fanatic. Under him the school curriculum became farmore rigidly Islamic. The failings of state education have meantthat more and more children attend religious schools, madras-sas, of which according to one recent study there are about20,000, with a student body of 2m-3m. The large numbers ofPakistani migrant workers in Saudi Arabia and elsewhere comehome inculcated with stricter forms of Islam than the tolerant,mystical saint-worship of Pakistan’s Su� tradition.

The spread of stricter forms of Islam has been disguised bythe electoral failure of avowedly Islamist parties. Even in thegeneral election in October 2002, when Jamaat and �ve otherscampaigned as a united alliance and enjoyed their best resultever, they won only 11% of the votes, despite some alleged helpfrom the ISI. But supporters of the mainstream parties are notvoting for secularism.

With the rise in religious observance society has become

Religion

In the shadow of themosque

Religion is becoming less tolerant, and more central

to Pakistan

Visibly more pious

2

1

The Economist February 11th 2012 9

SPECIAL REPORT

PAKIS TAN

less tolerant. In late 2011, as Pakistan was rocked by crisis after cri-sis, the press still agonised over the antics of Veena Malik, a Paki-stani actress who had posed on the cover of an Indian men’smagazine, apparently wearing nothing but a tattoo reading �ISI�(she claimed the photo had been doctored). It was hard to counthow many taboos Ms Malik had �outed, but the ones governingfemale modesty were among the most important.

In a studio stacked high with his artwork and antiquitiesrescued from Hindu temples, Iqbal Hussain, a well-knownpainter, shrugs o� the many threats he receives. His subjects arethe working women of his neighbourhood, the red-light districtof Lahore. His only customers seem to be foreigners. If intoler-ance stopped at public prudishness it would be less worrying,but all too often it is also a pretext for violence. Last year saw theassassination of two leading politicians for daring to call for re-form to Pakistan’s pernicious blasphemy law, which carries amandatory death sentence and is often abused to persecute al-leged blasphemers on the basis of hearsay evidence.

Murderers as heroes

One critic of the law, Salman Taseer, governor of Punjabprovince, was shot dead in the street in Islamabad in January2011 by his own bodyguard, Mumtaz Qadri. His murderer wasfeted as a hero. Not long after Taseer’s murder, Pervez Hoodbhoy,a physicist and leading advocate of liberal secular ideals, con-fronted two Islamic spokesmen in a television debate. The stu-dio audience of 100 or so students clapped when his interlocu-tors called for death for blasphemers. When Mr Hoodbhoyaccused one of them of having Taseer’s blood on his hands, theresponse was a plaintive �How I wish that I did!�

The Ahmadi minority, who consider themselves Muslimsbut are regarded by the law as in�dels, su�er particular persecu-tion. In May 2010 at least 93 were killed in bomb explosions attwo of their mosques in Lahore during Friday prayers. Chris-tians, too, complain of victimisation. The explosions in Lahorewere blamed on the Pakistani Taliban. But the tolerance andeven encouragement of violence by mainstream clerics mustsurely be one reason armed extremism �ourishes.

As noted, the state, too, has played a big part in that, encour-aging jihadis to �ght �rst in Afghanistan, then in Kashmir and, it iswidely believed, elsewhere in India too. Now it has itself be-come the target of jihad. Muhammad Amir Rana, of the PakistanInstitute for Peace Studies, an Islamabad think-tank, says thePakistani Taliban gain their political legitimacy from the war inAfghanistan, but their ideological legitimacy from radical Islamand the aim of establishing theocracy in Pakistan. A 2009 treatiseon Pakistan’s constitution by Ayman al-Zawahiri, at the time sec-ond to bin Laden in the al-Qaeda hierarchy, called for the de-struction of the Pakistani state.

Mr Zawahiri may still be hiding out in North Waziristan, inthe Federally Administered Tribal Areas (FATA) bordering Af-ghanistan. The Pushtun tribes there have provided fertile recruit-ing grounds for the groups that have coalesced into the PakistaniTaliban. As in Afghanistan, their appeal stems from their abilityto deliver swift justice and settlement of disputes. Mr Rana saysthe radical groups have no big support base. They have, how-ever, become a serious threat to the Pakistani state, not just in thetribal areas but in �settled� Pakistan as well.

No army wants to be at war with its own people, and thecampaign against the Pakistani Taliban is complicated by the po-litical legitimacy Mr Rana refers to. So from time to time peacetalks are held, which give the extremists a chance to regroup.Moreover, the army’s record in �ghting both in Swat and FATA

has been marked by allegations of brutality, torture and extra-ju-dicial killings. This has further boosted militant recruitment. 7

KAMRAN, A TAILOR in Rawalpindi, is enjoying a littleboom. He and his sta��two men perched on a platform

above the counter in his tiny shop�have increased production�vefold this year, to �ve or six suits a day. They charge 300 rupees(about $3.30) each, with the customers supplying the material.The secret of their success is simple. They have access to credit, inthe form of a 15,000-rupee loan from Tameer Bank, a microcreditlender, and, thanks to that, to a reliable supply of electricity. Theyhave invested the money in a battery that enables them to keepsewing through the power cuts that bedevil Rawalpindi, and in-deed most of Pakistan, for much of the day and night.

Multiply Kamran’s experience across the Pakistani econ-omy, and the common estimate that power cuts knock aboutthree percentage points o� the growth rate seems extremely con-servative. To make matters worse, natural gas, widely used forheating and cooking and to fuel buses and cars, has been in shortsupply. The shortages have become a serious deterrent to invest-

The economy

Lights o�

Shortages of electricity and credit are bad for growth

2

1

PAKIS TAN

SPECIAL REPORT

ment and a big cause of social unrest.At the other end of the economic scale from Kamran, Asad

Umar, who besides his role at the Pakistan Business Council isboss of Engro, a big Pakistani conglomerate, also has access tocredit. Even so, Engro’s ammonia-urea fertiliser plant in northernSindh�the biggest in the world and the largest private-invest-ment project in Pakistan�shut down only four days after it start-ed production in December 2010 and was closed for half of lastyear because its feedstock, natural gas, was unavailable. Yet En-gro’s fertiliser business is pro�table, so subsidised is the price itpays for the gas. Engro has promised to cut its fertiliser prices assoon as it has a reliable supply of gas.

Neither gas nor generating capacityneed be in such acutely short supply. Thepower cuts are largely the result of badpolicy and mismanagement. What startedas a �nancial problem is now crippling thereal economy. The electricity industry isbeset by �circular� debts. Fuel suppliers are owed money by gen-erators who are owed money by distributors who cannot getconsumers to pay. At the end of November last year unpaid elec-tricity bills reached 326 billion rupees. Among the big defaulterswere the railways, the prime minister’s secretariat, the army andthe ISI.

A lot of the electricity used is never billed in the �rst place.Estimates of �transmission and distribution� losses�in largemeasure a euphemism for theft�vary from 11% to 37% of totalsupply, according to the central bank, the State Bank of Pakistan(SBP). About two-thirds of generation comes from ine�cient,high-cost oil-�red plants. Generating costs have doubled in thepast two years. In the long run much hope is invested in theplanned Diamer Bhasha dam and hydropower plant in thenorth of Pakistan-held Kashmir, backed by the Asian Develop-ment Bank (ADB). But it will be hugely expensive, at an estimat-ed $12 billion, and worries some observers because of the risk ofearthquakes. And it is opposed by India (because of where it is).

For Mr Umar, the solution to both the gas and electricity cri-ses are obvious: deregulate and �nish privatising the energymarket. He points out that there is never a shortage of phos-phate-based fertiliser because it is in the private sector, withprices set by the market. He also cites two examples of privatisa-tion working in Pakistan: telecommunications, where the cost ofa call from Karachi to Lahore is now 5% of what it used to be; andbanking, where some 85% of assets are now held in privatebanks, compared with only 10% in 1990.

It is true that the government’s performance in runningbusinesses is poor. Government-owned companies are piling up

losses of about 600 billion rupees a year. Besides the state-owned electricity distributors, the railways, the national airlineand a steel company are all bleeding cash. Most are seen as cor-rupt. The chief justice, Iftikhar Chaudhry, started an investiga-tion into the non-payment of salaries and pensions by PakistanRailways. He asked why it was so interested in buying new loco-motives, and why it had retired 104 out of the 204 it had acquiredsince 2008. The implication was that the purchase of new rollingstock brought lavish commissions.

Can lend, won’t lend

Not everyone agrees with Mr Umar that the privatisationof the banks has been a success. Most of the big ones are indeeddoing very well. But they are doing so by indulging in what Ra-kesh Mohan, a former deputy governor of India’s central bank,dubbed �lazy banking�: simply investing their deposits in gov-ernment bonds. Mian Mohammad Mansha, chairman of MCB, alarge and highly pro�table commercial bank, says it is lendingless than half its deposits. Most of its assets are in treasuries,which he understandably sees as a better investment than loansto state-owned companies. For small businesses�which means70% of Pakistan’s �rms�credit is hard to come by.

So Kamran the tailor is lucky to have made contact with Ta-meer, which is backed by Britain’s aid agency, DFID. With the for-mal banking sector doing well by lending to the government andbig companies, small business is neglected. The economy doesnot collapse, says Werner Liepach of the ADB, because so muchactivity is shifting into the informal sector. Moneylenders�usu-rers�are having a �eld day. According to Yaseen Anwar, the go-

vernor of the SBP, 56% of Pakistan’s adult population have no ac-cess at all to �nancial services, with a further 32% served onlyinformally�among the lowest levels of �nancial penetration inthe world.

There is a crying need for micro�nance, and not just for itstraditional purpose of providing seed money for the poor start-ing their �rst, tiny business but as working capital for small �rms.Just over the road from Kamran, Tahir Mahmud has borrowed30,000 rupees, like Kamran at an annual interest rate of 20%, toexpand his thriving business of designing and decorating custo-mised motorcycle petrol tanks. But so far the number of activemicro�nance borrowers stands at just 2m or so.

What enables banks to be lazy is the government’s appetitefor borrowing. Its de�cit in the �scal year that ended in June 2011was 6.6% of GDP, if electricity subsidies are included. The budgetfor the current �scal year sets a target of a de�cit of 4%, but that is

likely to be missed by a widemargin for the third year run-ning. The target had beenagreed with the IMF, which inNovember 2008 approved astandby arrangement of $11.3billion for Pakistan. The ar-rangement was put on hold inMay 2010, by when $7.6 billionhad been disbursed, and termi-nated in September 2011.

The IMF withdrew be-cause the government failed to

01 03 05 07 09

2How not to do itPakistan’s:

Sources: CEIC; State Bank of Pakistan *September

tax revenue and budget deficitAs % of GDP

credit by borrower, rupees bn

Years ending June 30th

0

2

4

6

8

10

2000 02 04 06 08 10 11

Tax revenue

Budget deficit

0

1

2

3

2006 07 08 09 10 11*

Government

Private sector

3Not emerging

Source: IMF

GDP per person, annual averagegrowth, 1990-2011, %

0 2 4 6 8 10

China

India

Indonesia

Pakistan

Neither gas nor generating capacity need be in suchacutely short supply. The power cuts are largely theresult of bad policy and mismanagement

2

1

10 The Economist February 11th 2012

The Economist February 11th 2012 11

SPECIAL REPORT

PAKIS TAN

meet its �scal targets. In particular, it needs to raise taxes. Govern-ment tax revenues as a proportion of GDP are about 10%, amongthe lowest in the world. In 2010 and 2011 �oods hindered e�ortsto raise more taxes, but the fundamental problem is political. Nodemocracy �nds it easy to raise taxes, and in Pakistan that di�-culty is compounded by the main parties’ perception of theirsupport bases. The PML(N) does not want to alienate business,which opposes indirect taxes, and the PPP rejects land or othertaxes that would hurt its landowner friends.

So the government does not have much to spend and, asthe SBP noted in its annual report, risks being caught in a debttrap because it is borrowing for recurrent as well as capitalspending. Spending on health, welfare and education is furtherconstrained by a big outlay on defence, which accounts for near-ly 20% of the 2011-12 budget expenditure, compared with lessthan 8% for education.

Some analysts worry that the �scal de�cit is about to take adire toll on Pakistan’s external accounts. This month the �rst re-

payment to the IMF, of $1.2 billion, fallsdue. Fears that this is going to precipitate acrisis seem overblown. But Pakistan’s cur-rent account�in a small surplus lastyear�is likely to tilt into de�cit. Thehealthy �ow of repatriated income fromoverseas workers may be reduced by thedeterioration in the world economy andby Saudi Arabia’s plan, if implemented, tocap remittances.

Exports did surprisingly well in2010, despite the �oods, thanks in largemeasure to a rise in the price of cotton.That trend has reversed, and with thepower shortages plaguing the textile in-dustry, and falling global demand, exportsare unlikely to maintain their growth. It ispossible that Pakistan, which has foreign-exchange reserves to cover four to �vemonths of imports, will run into balance-of-payment di�culties in the next coupleof years.

GDP growth may pick up slightlyfrom the 2.4% seen in 2010-11, but will re-main far below that achieved by Paki-stan’s neighbours, and well below the 7%per year that Pakistan’s Planning Com-mission says is necessary to absorb abulge in the working-age population. In1971, when East Pakistan seceded to formBangladesh, its population, of about 70m,was 9m-10m bigger than Pakistan’s. NowBangladesh has about 156m people andPakistan somewhere between 180m and200m. Its population is growing at nearly2% a year, and is expected to reach 350mby 2050. Family planning has never beena government priority. The number ofchildren per woman is falling, from 6.1 in1990 to 3.9 now, but is still the highest incontinental Asia outside Afghanistan.

In an enlightened �Framework forEconomic Growth�, published last year,the commission sought to pinpoint thereason for Pakistan’s persistent failure togrow fast. The problem, it concluded, wasnot the �hardware��Pakistan’s infrastruc-ture, though de�cient, was no worse thanIndia’s, for example�but the �software�.Markets were not well developed becauseof lack of competition, policy distortions,entry barriers and poor regulation. Ande�cient public-sector management waslacking, meaning that �security of life,property, transaction and contract� can-not be guaranteed. 7

THE HUNNY SCHOOL, a private institutionoccupying two cramped buildings in Rawal-pindi’s back streets, seems a happy place.The boys and girls packed into its littleclassrooms look pleased to be there. Somelook much older than their classmates. Theyhave a lot of catching up to do. Many werestreet children whose parents could nota�ord to send them to school. A future ofilliteracy and perhaps crime and drugsbeckoned.

Of the school’s 900 students, over 400are �nanced by the Punjab Education Foun-dation (PEF), a statutory body under theprovincial government which in turn re-ceives aid from donors such as Britain. Itprovides vouchers to pay the fees of ap-proved schools such as Hunny, which rangefrom 200 to 350 rupees a month.

It is an attempt to tackle one of Paki-stan’s worst problems: the huge number ofchildren who receive no education at all.One-tenth of the world’s primary-age

children who are not in school live in Paki-stan�7m of them, thanks to a net enrol-ment rate (after allowing for dropouts) ofjust 57%. According to UNICEF, the UnitedNations’ children’s agency, 30% of Paki-stanis have received less than two years’education. More than half of its women havenever attended school. Literacy rates arelow by any standards: 57% overall, and just33% among women in the countryside.

It has not been plain sailing forHunny. When it joined the PEF scheme twoyears ago it su�ered an exodus of fee-paying pupils whose parents worried abouttheir children mixing with the wrong sort,and about falling standards (justi�ably at�rst, test results showed). And though itseems a nice place, the headmaster con-cedes that every single one of his teacherswould leave if o�ered a job in a governmentschool. Pay is better there, and teachers donot always turn up.

Optimistic Pakistanis speak of theircountry’s �demographic dividend� of ayouthful population in which over two-thirds are under 30, nearly a third are under14 and 25m are of school age (6-16). But it isa dividend only if the economy providesopportunities for a workforce growing at 3%a year, and if children are educated enoughto take advantage of them.

A taste of Hunny

A small start on the big problem of illiteracy

29

66

Primary Secondary

Try harder

Source: World Bank

Pakistan’s net female school enrolment rate2010, %

4

010203040506070

2003 04 05 06 07 08 09 10

Primary Secondary

Striking it lucky

2

12 The Economist February 11th 2012

PAKIS TAN

SPECIAL REPORT

THREE TIMES IN recent years Pakistan has su�ered fromcataclysmic disasters. The earthquake that struck Kashmir

in October 2005 killed over 70,000 people and made 3m home-less. In 2010 the Indus river spilled over its banks, �ooding one-�fth of the country and a�ecting 20m people. More than 1,700people lost their lives. The following year unusually heavyrains�one monsoon’s-worth in a day�brought renewed �ood-ing in Sindh and Balochistan. Of the inundated area, 35% hadalso been �ooded the year before. Over 5m people were a�ected.

On each occasion appeals for emergency aid werelaunched, but by 2011 the response was tepid. That may havebeen because there were so many competing disasters else-where, or because the world was weary of Pakistan’s woes. But italso re�ected some donors’ exasperation with the government’shandling of the crisis.

The economic impact of these disasters was not as great asmight be expected. In 2005, the earthquake year, Pakistan’s GDP

grew by 7.7%, one of its best-ever performances. The �oods in2010 and 2011 had a big impact on people’s lives, but again didnot dent overall growth that much. In 2010, according to the StateBank, 6.6m workers were unemployed for two to three monthsand capital stock worth $2.6 billion, or 1.2% of GDP, was de-stroyed. But agriculture recovered remarkably quickly, with abumper winter-wheat crop; and, buoyed by the high cottonprice, so did textile exports, despite the waterlogging. The minis-try of �nance estimated that the huge but somewhat less cata-strophic �oods in 2011would shave just 0.5 percentage points o�growth for the �scal year ending in June 2012.

The relatively small macroeconomic impact of these disas-ters re�ects the extraordinary resilience of rural Pakistan. It isalso a tribute to the international aid e�ort and to the work of thearmy and Pakistani charities. One factor mitigating the govern-ment’s desperately low tax take is that Pakistan has one of thehighest rates of private charitable donations in the world�al-most 5% of GDP.

For all the criticism, the government has also brought insome admired relief measures, in particular its system for pro-viding direct cash payments to �ood-a�ected households (virtu-ally none of which has a bank account). Families are issued withsmart, machine-readable �Watan� cards issued by the big banksthat allow holders to collect cash from branches or local agents.Some 1.7m of these were issued after the 2010 �oods. Althoughimpressed with the scheme, one foreign aid professional never-theless describes it as �palliative care for a bad macro-economy�.

Indeed, the main reason that the disasters seem to havesuch a limited e�ect on growth is that the people they hit aremostly so poor that the loss of their production has no impact onGDP. Most are among the roughly two-thirds of the populationwho live in the countryside and depend on agriculture, whichcontributes about one-�fth of GDP. Besides the natural disastersthey have also had to cope with high in�ation: food prices roseby about 10% in the year to last November.

According to the Asian Development Bank, the proportionof Pakistan’s population living on less than $2 a day (adjusted for

purchasing power) has fallen from 83% in 1996 to about 60% now.But in 2007 the bank also found that Bangladesh and Pakistanwere the only countries in Asia where the poorest �fth of thepopulation were worse o� than they had been a decade earlier.

Foreign aid workers administering �ood relief have beenshocked by the high levels of malnutrition they found. One callsit �the other emergency�. According to �gures from UNICEF, 44%of Pakistani children are su�ering from chronic malnutrition, in-cluding 15% who are acutely malnourished.

This is partly to do with feeding practices. Only 37% of Paki-stani babies are exclusively breastfed. But a national survey alsofound that 58% of households were �food insecure� and 30%were su�ering moderate or severe hunger. In �ood-a�ected ar-eas the numbers were even worse, with 18% of children �acute-ly� malnourished and 7% su�ering �severe acute malnutrition�.

Given the e�ect of malnutrition on children’s develop-ment, it is perhaps not surprising that Pakistan is further downthe United Nations league table of human-development indica-tors (145th out of 187 countries) than that of GDP per head (138th).That, too, is an emergency of a sort. 7

Poverty

Always with us

Natural catastrophes have shown up the depth of

poverty in Pakistan

After the �ood

ON DECEMBER 29TH Syed Baqir Shah, a police surgeon,was gunned down in Quetta, the capital of the province of

Balochistan. A few days later the police said that some 50 sus-pects had been arrested but there had been no �major break-through�. Few were surprised. Among the prime suspects werethe police themselves and the Frontier Corps, a paramilitary out-�t that in theory reports to the provincial government but takesorders from the army.

Dr Shah was just one of more than 300 people in the prov-ince believed to have fallen victim to the security forces’ �kill anddump� policies last year. He had testi�ed to an inquiry lookinginto the death of �ve unarmed foreigners from Russia and Tajiki-stan earlier last year. Contradicting the o�cial account, he said

Violence

Dripping with blood

Too many disagreements in Pakistan are fatal

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The Economist February 11th 2012 13

SPECIAL REPORT

PAKIS TAN

they had been killed by the security forces. Shortly after that hewas beaten up, but did not change his professional opinion.

Of all the sordid little wars under way in Pakistan, the con-�icts in Balochistan, Pakistan’s biggest but sparsely populatedprovince, are among the dirtiest. A long-running secessionistcampaign intensi�ed after the killing of a Baloch nationalistleader, Nawab Akbar Bugti, in August 2006. As usual, Pakistan’sgovernment blames the troubles on India. Some Western intelli-gence sources believe it is meddling, but the prime cause of theunrest is Pakistan’s own handling of the province.

Nor is secessionism the only cause of violence. Last Octo-ber a bus outside Quetta was held up by gunmen on motorcyclesand 13 of the passengers shot dead. The previous month 26 peo-ple had been killed when travelling on a bus to Shia holy sites inIran. They were ethnic-Hazara Shias, of whom, according to Hu-man Rights Watch, a research and lobby group, over 300 havebeen killed by Sunni extremist groups since 2008.

Baloch-nationalist extremists have introduced a furtherpoison: a form of selective ethnic cleansing, killing migrantsfrom Punjab and Sindh. Schoolteachers have proved particular-ly vulnerable, leading to the closure for much of the year ofschools in parts of rural Balochistan. Fuelling the con�ict is Balo-chistan’s natural wealth�oil, gas and especially copper. Theprovince complains that the federal government does not give itenough money, though it now receives 9% of federal funds, withonly about 5% of the total population.

A nation at war with itself

Balochistan is an extreme example of a national phenome-non. Pakistan, a tolerant, hospitable and friendly country, has be-come a very violent place. Over 30,000 Pakistanis have lost theirlives in terrorist-related violence in the past four years. Even inthe comparative lull in suicide-bombings in late 2011, the news-papers carried a litany of horror stories: terrorist attacks; �hon-our killings�; ethnic violence in Karachi; assassinations. Not allthe carnage can be blamed on �the American war�. According tothe Human Rights Commission of Pakistan, at least 675 womenand girls were murdered in the �rst nine months of 2011, mostlyfor having �illicit relations�. Some were raped or gang-raped be-fore being killed. Of course this is illegal, but the state is too weakand too unwilling to enforce the law consistently. Very few of theculprits will be brought to justice.

Violence also permeates politics, from top to bottom. Oneformer president and prime minister, Zul�kar Ali Bhutto, washanged in 1979; a serving president, Muhammad Zia ul Haq, wasassassinated in an aeroplane explosion in 1988; Benazir Bhuttowas killed in a bomb attack in Rawalpindi in 2007. At the grass-roots, landowner-politicians rely on muscle-power as well as pa-tronage. In the cities, too, politicians have their guns and goonsas well as gold. Nowhere is this truer than in Karachi, a city of18m people, plastered everywhere with the �ags and posters ofpolitical parties and prey to appalling levels of violence. In thepast four years 7,000 people have been killed, including 1,891 lastyear. The prime minister has, again, hinted at the involvement of�foreign hands�. A more credible explanation is the fusion in Ka-rachi of gangland, political and ethnic battle lines. Since the late1980s the city’s administration has been dominated by a partynow called the Muttahida Qaumi Mahaz, or MQM. Its ethnicbase is among the mohajirs, the Urdu-speaking descendants ofimmigrants from India at the time of partition.

Its rivals are the PPP, whose base is among Sindhi-speakers(Karachi is in Sindh), and the Awami National Party, or ANP, withPushtun supporters. In recent years the ethnic and commercialbalance has shifted as large numbers of Pushtuns have moved toKarachi from the Afghan frontier, making it the largest Pushtun

city anywhere. The Pushtuns have gained clout thanks to theirdominance of the transport business: Karachi is the port wheresupplies for ISAF in Afghanistan arrive. The three parties andtheir gangster allies are engaged in a vicious turf war.

The endemic violence makes Pakistan the deadliest coun-try in the world for the press, according to the Committee to Pro-tect Journalists, an NGO. Eleven journalists died last year goingabout their jobs, of whom seven were murdered. In May lastyear the body of Saleem Shahzad was found, showing signs oftorture. He had been writing for Asia Times, an online newspa-per, about al-Qaeda’s alleged in�ltration of the Pakistani navy.This was the reason, he claimed, for a 17-hour siege of a navalbase in Karachi that month. Coming on the heels of the discov-ery of bin Laden, this was highly embarrassing to the army. MrShahzad had told colleagues that he had been receiving threatsfrom the ISI.

Others have received threats, too. In December two seniorjournalists, Hamid Mir and Najam Sethi, a longstanding contrib-utor to The Economist, made public that they had received deaththreats from extremist groups and �state actors�. They gambledthat publicity might a�ord them some protection�not least fromthe organs of the state whose job it is to provide security. 7

5Body count

Source: South Asia Terrorism Portal

Pakistan’s fatalities from terrorist violence, ’000

0

2

4

6

8

10

12

2003 04 05 06 07 08 09 10 11

CiviliansSecurity forcesTerrorists

FOR MILLIONS SUFFERING the misery of the past twoyears’ �oods it must seem the cruellest of jokes, but Paki-

stan is one of the world’s most arid countries. Average annualrainfall is less than 240mm, and the total availability of water perperson has fallen from about 5,000 cubic metres in the 1950s toabout 1,100 now, just above the 1,000 cubic-metre-per-head de�-nition of �water-scarce�. A shortage of water is a more seriousperil than any of the others mentioned in this report. Combinedwith continued fast growth in its population, it is the true exis-tential threat to Pakistan.

Pakistan is arranged along the Indus river basin and theworld’s largest contiguous irrigation system which it feeds. From

Water

Going with the �ow

To �x the country’s long-term problems, action needs

to start now

2

1

the air much of Pakistan looks brown, dusty and infertile. Onlyabout one-quarter of the land is cultivated. According to a 2009study by the Woodrow Wilson Centre in Washington, at least90% of Pakistan’s fresh water is used for irrigation and agricul-ture. But, it says, �intensive irrigation regimes and poor drainagepractices have caused waterlogging and soil salinity throughoutPakistan’s countryside. As a result, vast expanses of the nation’srich agricultural lands are too wet or salty to yield any meaning-ful harvests.�

The study forecasts that by 2025 Pakistan’s annual watersupply will fall short of demand by around 100 billion cubic me-tres, about half of the entire present �ow of the Indus. In parts ofthe country the shortage of water is already acute. Around Quet-ta in Balochistan, for example, the water table is now 330-400metres (1,000-1,200 feet) below the surface and estimated to befalling by 3.5 metres a year.Over 2,000 tube wells havedried up. Electricity subsidiesencourage expensive pumpingof scarce water.

John Briscoe, a water spe-cialist who used to work for theWorld Bank and is now en-gaged in a study for the Friendsof Democratic Pakistan, a do-nor group, says that in anyevent some 60% of water sup-plies around Quetta are unac-counted for�leaked or stolen.The only solution, he argues, isto stop pumping except for ur-ban use and put a price on it.Without some drastic action,Quetta, with more than 1m peo-ple, may have to close down.

Quetta’s thirst could be-come a national phenomenon.Already more than two-�fthsof Pakistan’s population lacksaccess to safe drinking water.The glaciers of the western Hi-malayas, whose snowmelt andrains provide the Indus with itswater, are dwindling as theworld warms up. In the shortterm this, and spectacular rainssuch as those seen in the pasttwo years, could lead to more�oods. In the longer run, river�ows could fall by what theWorld Bank calls a �terrifying�30-40%.

Much could be done toavert disaster: repairing andmodernising canal systems; de-veloping spate irrigationschemes that divert �ash �oodsto replenish aquifers; stoppingelectricity subsidies that en-courage water-intensive agri-culture; and building small andmedium-sized dams. But manyexperts believe that Pakistanalso needs some megadams,which are more controversial.

They point out that, whereasAmerica and Australia havedams that can hold 900 days-worth of river run-o�, Pakistancan barely store 30 days-worthin the Indus basin.

For Mr Briscoe, storagewould be the main bene�t of-fered by Diamer Bhasha, be-sides the much-needed electric-ity generation and �ood control.Another big dam, Kalabagh, un-der discussion for years, maynever be built, because it wouldbe in Punjab province andSindh has objected.

For some, despairing ofPakistan’s perpetually messypolitics, such disputes are rea-sons for suspending democracy.Only a strong government, theyargue, undistracted by the quo-tidian dealmaking and corrup-tion of parliamentary politics,can take the tough decisionsneeded: to combat Islamist ex-tremism, broaden the tax base,curb political violence andcounter the environmental anddemographic threats to Paki-stan’s future.

Such were the hopes fordecisive, impartial, �executive�government that accompaniedMr Musharraf when he tookover. And in Pakistan, it is still tothe army that people look forstrength. But military rule is notthe answer. After all, it has beentried for half of Pakistan’s exis-tence. What has not been triedis truly civilian rule backed by awholly supportive army.

It is too much to hope that the army will withdraw frompolitics altogether. But it is not too much to dream that an enlight-ened high command might try to put its house in order. It mightrealise that the �irtation with terrorist groups has become athreat to the nation’s future as well as to its own image; that a truepeace with India is in Pakistan’s interests; that politics would beless messy if the army meddled less; and even, at a mundane lev-el, as a member of parliament said of the ISI last November, that�when they can �nance political parties and interfere in demo-cratic a�airs, why can’t they pay electricity bills?�

Bananas are not the only fruit

The BBC documentary that prompted cable operators toblock the channel inde�nitely included an interview with Am-rullah Saleh, a former head of Afghanistan’s intelligence ser-vices. He describes a meeting in 2007 with Mr Musharraf, Paki-stan’s president at the time, at which he was told of Afghansuspicions that bin Laden was living in a settled area of Pakistan.Mr Musharraf lost his temper and shouted: �Am I the presidentof the Republic of Banana?� He need not have worried. The onlysense in which Pakistan is a banana republic is that parts of thearmy are out of civilian control, and unaccountable. 7

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6Burgeoning

Source: US Census Bureau

Pakistan’s population by sexand age group, 2011, m

12 8 4 0 4 8 1280+

60

40

20

0

Male Female

Arid debates

Financial innovation February 25th The nuclear world March 10th Cuba March 24thManufacturing April 21st

Missing map? Sadly, India censors maps thatshow the current effective border, insistinginstead that only its full territorial claims beshown. It is more intolerant on this issue thaneither China or Pakistan. Indian readers willtherefore probably be deprived of the map onthe second page of this special report. Unliketheir government, we think our Indian readerscan face political reality. Those who want to seean accurate depiction of the various territorialclaims can do so using our interactive map atEconomist.com/asianborders

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SPECIAL REPORT

14 The Economist February 11th 2012

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