IMPACT OF LAW AND ORDER ON PAKISTANS ECONOMY AT OPERATIONAL LEVEL

LAW AND ORDER The law and order situation arises when there is insecurity, threat of violence or violence arising due to a host of factors disturbing the ordinary conduct of life and businesses in a society. it may be a product of one or more of the following: y y y y y y factors/components: External aggression Internal upheavals Religious/sectarian extremism Labor unions strikes, boycotts, lock outs, and similar activities Ethnic/racial/linguistic cleavages

ECONOMIC GROWTH selective macroeconomic indicators to determine the state and growth of economy like GDP growth rate, poverty incidence, and per capita income growth rate over a specific period of time, and level and nature of investment. LAW AND ORDER SITUATION IN PAKISTAN Organized crime and terrorism are usually viewed as two different forms of crime, increase of which directly deteriorates law and order. Organized crime is generally held to focus mainly on economic profit (but not always limited to it), while terrorism is said to be motivated chiefly by ideological aims and by a desire for political change. Causes of Crimes Side by side the economic and poverty factors, crimes may be caused by social environment motivating or encouraging crime and the dysfunctional family conditions like parental inadequacy, parental conflict, parental criminality, lack of communication (both in quality and quantity), lack of respect and responsibility, abuse and neglect of children, and family violence. Our review, however, has a limitation of considering primarily the economic and poverty causes and precedence of crimes with a law and order perspective. Nature of Terrorism Tribal belt especially the North and South Waziristan Agencies have traditionally been a fertile land for militant activities. The area was used for recruitment, training and as a launching pad for operations against Russian forces during Soviet Union occupation of Afghanistan in 1980s. After Taliban defeat in 2001, the militants shifted to this area and started their activities against US / NATO forces. Since 2004, Taliban terrorist attacks and LEAs counter attacks have become a routine affair in Pakistan.

Analysis The worst victims of law and order as well as poor economy are always the poor. Their vulnerability to shocks is more than others. Therefore, it is imperative that any analysis of the impact of law and order on economic situation must start with the most vulnerable in the society. In other words, no study of economic situation is complete without taking account of at least three interrelated economic indicators of poverty, unemployment, inflation, particularly food inflation. Our study has seen positive correlations between crime and major economic variables: when there are negative trends in the economy (increase in inflation, poverty, unemployment, and decline in investment) there are negative trends in law and order (increase in crime rate). The results show that the decrease in number of all categories of crimes during the years 1999-2001 (Annex-I) have also witnessed decrease in inflation, poverty, and unemployment. The subsequent years have witnessed positive growth in these sets of variable testifying our hypothesis that law and order and economy have positive correlations: betterment in the conditions of the former coincide with an improvement in settings of the latter However, not all economic indicators have similar direct correlations with the crimes. Law and order and economy being complex and multidimensional may interplay with each other through their externalities depicted in our theoretical framework (Figure-1). These results may have some implications for the policy makers as well as practitioners engaged in law and order and economic management. It has been estimated by the Economic Survey that two thirds of the countrys population lives on less than $2 a day, with at least one third living below poverty line. During the last eight years or so the poverty in Pakistan has increased from 30 per cent in 1998-99 to almost one third in 2008-09, adding another 16 Million people to the absolute poor. While incidence of poverty decreased between 2000-01 and 2005-06, the last few years witnessed an increase. Another contributory factor to poverty is the inflation in the country. The Economic Survey of Pakistan (2009) puts the inflationary rate at 22.3 percent; the food inflation in the country has risen from a low of 6.9 percent in 2006-07 to 17.6 in 2008-09, touching a record high of 34.1 per cent in August, 2008. As poorest spend more than 70 per cent of their income on food, large sectors of population have been pushed deeper into poverty. The Human Development Index (HDI) that includes a broader definition of well being ranks the country 136th out of 177 countries showing that Pakistan is well below compared with other countries. The Global Hunger Index Pakistan ranks the country 61 out of 88 countries.[1] In short all estimates and survey point towards rising levels of poverty in the country, an outcome of slowing economy and worsening law and order situation. Another contributory factor to poverty as well as to crime and law and order situation is the rising levels of unemployment in the country. The successive governments over period have initiated a number of policies and programs for eradication of poverty in the country but still the poverty is on the increase. It is argued that these programs and policies did have some beneficial impact but the population growth rates as well as rural-urban disparities plus the weak implementation of policies neutralized the impact. The initiatives designed to improve rural infrastructure, cash transfers, zakat, Bait-ul-mal,

employment creation through small and medium enterprises, micro-finance programs, Khushal Pakistan Program, Rural Support Program, Social Action Program, and Poverty Reduction Strategy of Pakistan (PRSP). A recent initiative to this end has been Benazir Income Support Program (BISP). It is agreed at different levels that any single policy is not going to work to eradicate poverty. Its a complex issue and requires multidirectional approach with a mix of policies ranging from cash payments to human resource development. It should aim at greater growth that ensures an adequate flow of benefits to the poor and vulnerable. Special social safety nets play an important role to meet the current needs of the poor while micro-finance helps them Stand on their own feet and investments in human development and infrastructure helps enhance their productivity in terms of both quality as well as quantity. Another important initiative required is to provide employment by initiating labor intensive industry and programs. One important factor for increasing rate of poverty in the country has been slow down of the small and medium industries that are mostly labor intensive and rural. IDPS One of the prime examples of impact of law and order on the economic situation of the country on the life of common man is first displacement, and then relocation and repatriation of over 2.5 million people of Swat. It is perhaps the worst impact that the terrorism may have on the people and economy. While the cost of loss of business, government infrastructure and private property of the people is yet to be assessed. While the cost of loss of business, government infrastructure and private property of the people is yet to be assessed. It would be an understatement to say that the whole economy of NWFP in particular and of Pakistan in general has suffered. The cost of ongoing military operation rebuilding of the infrastructure, resettlement of the people and their businesses is estimated to be stupendous, while the cost in terms of human lives and sufferings is at best untold. It also offers the reverse linkages where poverty and poor economy provides ready recruits for crime and terrorism. Recommendations Our study of law and order has revealed that the policies often fail to achieve the stated objectives and targets for lapses at operational level. At this level either there is no identification with the policy aims and objectives or lack of understanding that often leads to poor strategizing with poor results. Even normal functions of governance receive little attention at times. Intra-provincial and inter-provincial policy distortions like varying compensation rates and allowances admissible in public sector etc. may be corrected The disparities between rural and urban areas create very strong urban bias in the provision of services need to removed Gender imbalances in essential services in education and health need to be corrected

There is an urgent need for augmenting the security apparatus in NWFP and Tribal areas that includes deployment of armed forces in support of police, and para-military forces of to

prevent deterioration of law and order in the most vulnerable areas The already established community police force in the tribal areas needs to be brought into the mainstream of local administration of law and order and other areas may also be considered for having such force Modern training may be imparted to police force to combat terrorism Recommendations The government needs to reduce its dependence on the use of military force to address internal security issues, and should enhance the capacity of paramilitary forces i.e. Rangers, the Frontier Corps and other law enforcement agencies. That has emerged as a crucial issue in view of the high number of casualties caused during operational attacks in the NWFP and FATA Capacity building of intelligence agencies to be enhanced. A better coordination among various agencies and law enforcement departments is also recommended The government and media need to create more space for cultural and social activities, provide healthy activities for the youth and ensure proper utilization of funds allocated for youth and cultural development Recommendations The already started reconciliation and confidence building process in Balochistan should immediately be concluded and action plans to remove the grievances be prepared in consultation of the important stakeholders The new NFC may immediately announcement by considering the proposals of Balochistan on resource distribution and Gas Development More development funds, especially for better health and education, must be allocated as a priority Temporary rehabilitation facilities for the resettled IDPs in their areas be provided and the process of developing permanent facilities be accelerated Special counter-insurgency contingents of paramilitary be raised Physical infrastructure including road, and bridges in inaccessible affected areas be constructed Procedures and systems for regular audit of Madrassahs and NGOs be devised and implemented Economy Recommendations To control rise of inflation, the administration should take initiatives for enabling consumers to form their effective consumer associations supplementing already in place monitoring mechanisms Despite very high inflation, the possibility of reducing the discount rate by further 1-2 percentage point may be explored at operational so that the costs of borrowing from the banks are reduced During the period of economic problems, the government should take the lead and start

more public investments to provide a jump start to the economic activities. Economic Recommendations Primarily, it is the domestic investors who have to be encouraged and motivated to take the lead for the investment. The administration of governmental incentives to them should be more business-friendly. Once, domestic investors start flourishing, it will encourage foreigners to invest in Pakistan as well There is a need to improve business environment in the country, including the availability of educated and skilled manpower, ancillary industries and utility services. Continuous rise in the prices of petroleum products, electricity, gas and other utilities are also adversely affecting the business environment. We need to improve our infrastructure facilitations to make the Business environment more conducive to foreign and local investments. Power shortage has already resulted in closure of many units which is deplorable and needs to be rectified at the earliest. The main stake of our economy is agriculture and facilitation and incentives to develop the cottage industry need special attention. In order to boost up investment particularly in livestock, poultry, fisheries, and associated value added production facilities like financing, development of services infrastructure, and manpower development should be part of government plans and programs So far, most of FDI has been in the services sectors which are non-tradable and adversely affects the balance of payment. Taking into account the unfavourable balance of payments problems of the country, we need to prefer further FDI in the foreign-exchange-earning sectors in future. Pakistan has a record of economic growth in sixties as well as in the recent past. However, the adhocism, and poor implementation of policies have been distorting the system. In order to stimulate investment and revitalize our economy, we have to ensure continuity of economic policies coupled with political stability. In order to boost up further investment in the home grown manufacturing like textile industry the system of one-door operation need to be activated and extended INVESTMENTS Factors instrumental to private and foreign investors: Risks of doing business and ; Expected returns of the investment. Four major challenges to Pakistans socio-economic growth including: regaining macroeconomic stability; poverty reduction; fiscal retrenchment and; Weaknesses in the external account.

Decay of Pakistans image The soft image Indeed is a pre-requisite for attracting high ratios of foreign direct investments; Brightens the possibilities of joint ventures; Encourages FTAs and regional economic integration. Manufacturing Second largest sector of economy GDP contribution 18.4 % Negative growth of 3.3 % against target of 6.1 % and last years 4.8 % because of acute energy outrages, security environment and political disruption in March 2009.

Service Sector The services sector grew by 3.6 percent as against the target of 6.1 percent and last years growth of 6.6 percent. Value added in the wholesale and retail trade sector grew at 3.1 percent as to 5.3 percent in last year and target for the year of 5.4 percent. Finance and insurance sector slowed down to 12.9 percent in 2007-08 but registered negative growth of

1.2 percent in 2008-09 because of financial crisis plaguing international in financial markets. Investment total investment has declined from 22.5 percent of GDP in 2006-07 to 19.7 percent of GDP in 2008-09. Fixed investment has decreased to 18.1percent of GDP from 20.4 percent last year INFLATION The inflation rate as measured by the changes in Consumer Price Index (CPI) showed an easing trend beginning in November 2008, touching 17.2 percent in April 2009 after reaching a record level of 25.5 percent in August 2008 as the food group was the major source of inflation in Pakistan during the first ten months of 2008-09, the nonfood component of the CPI has also been persistently high, resulting in overall stubbornness of the inflation. External Sector The exports (-) 6.7 % $19.1 billion to $17.8 billion in 2008-09 compared last year; Exports were targeted at $ 19.1 billion or 6.7 percent lower than last year. The exports were $ 17.8 billion in 2008-09. Imports (-) 12.9 % $40.4 billion to $34.9 billion in 2008-09 Trade Balance The merchandise trade deficit improved by 12.3 percent and declined from $10.7 billion in July-April 2008-09 to $ 12.3 billion in July-April 2008-09. The substantial decrease of 9.8 percent in imports outstripped otherwise significant decrease of 3.0 percent in export growth, which caused the trade deficit to improve by 12.3 percent. Conclusion An overview of Pakistans economy 2008-09 by Ministry of Finance has reported that the macroeconomic environment of the country is affected by intensification of war on terror and deepening of the global financial crisis which penetrated into domestic economy through the route of substantial decline in Pakistans exports and a visible slowdown in foreign direct inflows. Pakistans participation in the international campaign has led to an excessive increase in the countrys credit risk. Due to which recently, the World Bank has lowered our credit rating further. Pakistans economy continues to remain exposed to the vagaries of international developments as well as internal security environment. Pakistan not only lost precious lives and infrastructure but a very conservative estimate has placed economic cost of this war for Pakistan at around US$ 35 billion since 2001-02. Rehabilitation of IDPs and their livelihood will require more than $ 5 billion in Malakand and FATA alone. All this expenditure is not going favourably for Pakistan as they are the unsustainable burden on the meagre resources of Pakistan. Terrorism is a great hurdle in our socio-economic prosperity, political stability, geo-strategic sustainability and energy security. Development activities are halt in these areas. Conclusion The rule of ignorance, stagnation, fanaticism, and destruction is spreading like a wild fire especially in NWFP and FATA. The government should initiate three-pronged policy i.e. dialogue, development and deterrence. Let us hope that our soil will be freed from the terrorism and there will be no more bloodshed in the days to come.

PLAN B Why Plan B? Complexity Volatility Uncertainties Multi dimensional FUTURE POSSIBLE SCENARIOS Domestic Resurgence of ethnic conflict in Karachi? Regional Attack like Mumbai takes place? International US Iran conflict escalates? DOMESTIC Ethnic conflict in Karachi erupts. Business loss Flight of capital Exports / imports suffer Ripple effect on economy Law and order deterioration REGIONAL Another Mumbai takes place. Nuclear conflict India opts Surgical strikes Pakistan goes into further Isolation Economic meltdown INTERNATIONAL US attacks Iran. Surge in oil prices Use of proxies by Iran Attack on US interests Disruption in NATO supplies Minorities at risk IMPLICATIONS Public Protests Oil prices affect economy Law & order aggravates

Damage to the infrastructure Sectarian, ethnic clashes Economic melt down __________________

Law and Order Situation in Pakistan

Law & Order Various untoward incidents of bomb explosions at the public places, perpetration of suicide bombings by extremist elements bathed in religion and dogmatism and firing of bullets on the innocent civilians by the miscreants bear out that volatile law and order situation is gravely affecting social, political, economic and religious fabric of Pakistan. This unwanted state of affairs has given birth to uncertainty and frustration which are acting as blight in our society. No public place is secure, no religious institution is sacrosanct and no spiritual or political congregation is safe.Talented people are leaving the Land of the Pure for good because their fate is in the doldrums due to uncertainty of jobs and insecurity to their life and property. Thus menace of Brain Drain is continuously depriving the country of the intellectuals that are the true assets of the country to resolve its intricate problems. Our tourism industry is in the doldrums due to security concerns. Despite scenic beauty of hilly areas, glistening peaks, towering mountains, gushing rivers, archeological sites, and historical monuments ,the PTDC and the Tourism Ministry have badly failed to catch the attention of the

foreign tourists because no one will take risk to visit a country where indigenous population is not secure and its rulers address public gatherings behind bullet proof screens. Pakistan has a lot of investment potential which could not be fully tapped because of violent incidents. Therefore, the economy of Pakistan is in the shambles. The investors fear of sinking their investment due to unending terrorist incidents. The worst victims of law and order as well as poor economy are always the poor. Their vulnerability to shocks is more than others. Therefore, it is imperative that any analysis of the impact of law and order on economic situation must start with the most vulnerable in the society. In other words, no study of economic situation is complete without taking account of at least three interrelated economic indicators of poverty, unemployment, inflation, particularly food inflation. Our study has seen positive correlations between crime and major economic variables: when there are negative trends in the economy (increase in inflation, poverty, unemployment, and decline in investment) there are negative trends in law and order (increase in crime rate). The role of police force is vital for maintaining law and order situation in the country. Since 9/11 and the consequent US/NATO military action in Afghanistan, Pakistans troubled northwestern frontier has come under increasing pressure from militant and terrorist organizations operating in the area. Pakistans deficient and flawed law enforcement capacity in the Federally Administered Tribal Areas (FATA) and the adjacent North West Frontier Province (NWFP) have helped Pakistani Taliban and other terrorist groups expand their influence and strongly challenge the states writ. Outgunned and outfinanced, on average 400 police officers have been killed every year in terrorist attacks since 2005. Controversial and haphazard Pakistani military action in the area has led to more instability, and limited resistance in FATA has now become a growing ethnic insurgency. As is clear from the turmoil in the NWFPs Swat district, any army action can provide no more than a breathing space to the state; only police and law enforcement actions can help the state reestablish its writ and stabilize the area. A timely police action can be more effective in quelling emergent insurgencies. My research into the 2007 Lal Masjid (Red Mosque) crisis in Islamabad, where a strong military operation led to hundreds of deaths and dozens of retaliatory suicide attacks, also indicates that: (a) an effective police action in time (200405) could have avoided the later bloody clash and (b) the police lacked authority and the permission of the state and its important institutions to legally pursue the rebel clerics in the mosque (during the 200407 timeframe). The police infrastructure is one of Pakistans most poorly managed organizations. It is aptly described as ill-equipped, poorly trained, deeply politicized, and chronically corrupt. It has performed well in certain operations; overall, however, that is a rare phenomenon. Arguably, the primary reason for this state of affairs is the governments persistent failure to invest in law enforcement reform and modernization. It is ironic that despite frequent internal crises since its inception in 1947, ranging from ethnic confrontations and sectarian battles to a sharp rise in criminal activity and growing insurgencies, both political and military policymakers have never given this sector top priority. Hence, poor police performance in counterterrorism and counterinsurgency is not surprising. The fact that the police successfully challenged some

militant religious groups in Punjab and tackled an insurgency-like situation in Karachi in the late 1990s shows that they do have the potential to deliver the desired results when political support is present and resources are provided.

The Balance of Justice The Sialkot incident was yet another example of a society calling its protectors for help in the face of a sorry state of human rights and rule of law. This episode of barbaric killings was not the first of its kind. There have been quite a few attempts of similar nature in the past 12 months, especially in Karachi where the people had literally assumed the role of law enforcers as well as the judiciary. There was a need for serious action back then which, unfortunately, was never taken and which ultimately culminated in the demise of two brothers in Sialkot. However, what was most depressing at Sialkot was the silent presence of law enforcers alongside a violent crowd. It depicts not only the weakness of the Police Department, but also their indifferent attitude towards the law. In fact, their silent presence encouraged the crowd to commit the barbaric act of public killing and hanging. The police simply did not try to enforce the law and for that they ought to be punished. The Police Order 2002 which governs their duties highlights penalties that can be imposed for gross negligence that cost the lives of two young men. According to Police Order 2002, it is the duty of the police to provide protection and maintain public peace. Section 3(d) of the said order, in this respect is attention-grabbing. It enjoins upon the police to aid individuals who are in danger of physical harm. With such clearly laid down rules, it was nothing but wilful defiance on the part of the police which caused the deaths. Also, their silence in the midst of criminal activity implicates them in the crime. Section 107 of Pakistan Penal Code is directly applicable in this regard on a person who intentionally aids, by any act or illegal omission, the doing of that thing. Both the laws taken together clearly signify

breach of law by the police officers. According to Section 80 of the Police Order, function of the Provincial Public Safety and the Police Complaints Commission is to take action against the omissions committed. It is under a statutory duty to do so, on its own accord, if the case is of severe nature, and order a competent authority to probe the matter. But to the dismay of fair-minded people of the country, no action was taken, and the Chief Justice of the Supreme Court had to take up the matter. A still gloomier picture appears when the incident is seen in the light of the punishment that has been prescribed for the police neglect. According to Section 155 of Police Order, if an officer is found to have breached his duty, he can be, at maximum, imprisoned with fine for no more than three years. Considering the gravity of the criminal acts, this punishment would hardly fulfil the demands of justice and in no way constitutes deterrence. More importantly, investigation is the main course to decide the fate of the guilty officer. But the slow pace of investigation, inability and ill will of the investigating officer or the team usually overshadows the proceedings that could provide an easy escape to the culprit. While the judicial inquiry into the Sialkot murders has been completed, the Police Department does not appear to show any seriousness in conducting its own inquiry. This incident highlights a signal failure of our police not only in the light of local law, but also the international code to which Pakistan subscribes. The United Nations has provided a Code of Conduct for Law Enforcement Officials (adopted by General Assembly resolution 34/169 of December 17, 1979) which sets out the basic standards for policing agencies across the world and relates to all law enforcement officers who exercise powers of arrest and detention. It requires them to recognise the rights set out in the UN Universal Declaration of Human Rights (UDHR) and other international conventions. Under its Article 5, a law enforcer is restrained from tolerating any act of torture, while discharging his duties. This grave violation brings out the need for reform in the system and revitalisation of the existing bodies established to check the police conduct such as Provincial Public Safety and Police Complaints Commission. It is necessary to establish a system which is easily accessible and neutral. In the UK, the Police Reform Act established the Independent Police Complaints Commission (IPCC) which investigates the most serious complaints and allegations of misconduct against the police in England and Wales, as well as handles appeals from people who are not satisfied with the way the police have dealt with their complaint. More importantly, IPCC is self-governing, making its decisions entirely independently of the police, government and complainants. These measures provide for a powerful legal regulatory framework making the police accountable for their actions. There is a stark need to introduce some changes on the same lines in Pakistan. Hence, the need of the hour is to introduce and implement a more coherent code for police accountability to eliminate the recurrence of such despicable acts in the future. The Sialkot act requires serious attention of the authorities and a strong reprimand of the officials whose criminal omission allowed the people to take law into their own hands. Indeed, now is the time to set an example and take appropriate steps to put an end to such wrongdoings!

Volatile Law and Order Situation in Pakistan Various untoward incidents of bomb explosions at the public places, perpetration of suicide bombings by extremist elements bathed in religion and dogmatism and firing of bullets on the innocent civilians by the miscreants bear out that volatile law and order situation is gravely affecting social, political, economic and religious fabric of Pakistan. This unwanted state of affairs has given birth to uncertainty and frustration which are acting as blight in our society. No public place is secure, no religious institution is sacrosanct and no spiritual or political congregation is safe.Talented people are leaving the Land of the Pure for good because their fate is in the doldrums due to uncertainty of jobs and insecurity to their life and property. Thus menace of Brain Drain is continuously depriving the country of the intellectuals that are the true assets of the country to resolve its intricate problems. Our tourism industry is in the doldrums due to security concerns. Despite scenic beauty of hilly areas, glistening peaks, towering mountains, gushing rivers, archeological sites, and historical monuments ,the PTDC and the Tourism Ministry have badly failed to catch the attention of the foreign tourists because no one will take risk to visit a country where indigenous population is not secure and its rulers address public gatherings behind bullet proof screens. Pakistan has a lot of investment potential which could not be fully tapped because of violent incidents. Therefore, the economy of Pakistan is in the shambles. The

investors fear of sinking their investment due to unending terrorist incidents. Following remedial measures are called for to check this peril of mayhem. It is bitter open secret that in recruitment of the police (especially in the lower ranks), there are several incidents of using under the table means for getting a contractual job. Institutions which are erected by bricks of corruption and insecurity of job cannot provide any guarantee to dispense justice and security to life and property to the citizens. Therefore, meritocracy and job security is essential. Most of the policemen carry obsolete guns and only five bullets per person while robbers and terrorists carry latest weapons and surplus ammunition. Therefore, the police avoid chasing such dangerous criminals by risking their own life. Thus miscreants can easily take to their heels. Therefore, police should be equipped with latest weapons and scores of bullets. There must be coordination and sharing of information among intelligence agencies, LEAs and the Interior Ministry.
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Pakistan is harboring Afghan refugees and other foreigners on the basis of religious fraternity. But, no country can afford to provide sanctuary to foreign elements which are known to involve in illegal and mutineer activities and poisoning the country with heroin culture. The government should take bold steps to send these refugees to their native countries. It should provide nationality to peace loving people according to the law of the land. The police with the help of media should launch a Herculean campaign for deweaponization of illegal armaments indiscriminately. There is crying need of reformation of social, political and religious institutions for proper socialization of the nation with the help of media by indoctrinating altruism, fraternity, humanity, religious tolerance and patriotism. Massive poverty stricken and illiterate population deprived of basic amenities of life are frustrated due to rampant corruption, social injustice, economic disparity, and political exploitation that force them to snatch their food which create law and order situation. Without resolving these knotty problems the establishment of peace and harmony will remain distant dreams. Dr Tanvir Hussain Bhatti

Freelance International Columnist, Poet and Author of the Books What Plagues Pakistan ? and Live Balls of Fire
Published: August 15, 2008

Source: http://www.shvoong.com/society-and-news/news-items/1833296-volatile-law-order-situationpakistan/#ixzz1iZMRQv5T

Terrorism, Economy Dual Threats for Pakistanis

Majority believes government s terrorism efforts are lacking
by Rajesh Srinivasan and Julie Ray

WASHINGTON, D.C. -- After a nearly nine-year absence, civilian rule returned in Pakistan Tuesday, when widower of slain Pakistani leader Benazir Bhutto, Asif Ali Zardari, was sworn in as president. Gallup Polls in Pakistan reveal increasing frustration with efforts to fight terrorism - one of two major challenges for the new leader -- with a majority of Pakistanis (54%) in June 2008 saying the government is not doing enough, up from 45% in 2007.

Zardari, who views the threat of global terrorism as one of the chief challenges facing Pakistanis, vowed Tuesday that his country will "stand together" with Afghanistan in the war against terrorism. The president's promise, if kept, may help reassure Pakistanis whom Gallup Polls

show were growing increasingly skeptical of the previous government's efforts to combat a rising militant insurgency. Between June 2007 and June 2008, when President Pervez Musharraf was still in power, the percentage of Pakistanis who said their government was doing enough to fight terrorism deteriorated from 33% to 25%. Pakistanis living in provinces along the Afghanistan-Pakistan border, which some consider a haven for the Taliban and al-Qaeda, are by far the most dubious of their government's efforts to fight terrorism. In North West Frontier province and in Baluchistan, Gallup observed drastic drops from 2007 to 2008 in residents' perceptions that the government was doing enough to fight terrorism. In Punjab and Sindh, provinces far removed from borderlands, evaluations of the government's efforts stayed the same or improved somewhat.

Rising violence and the government's perceived ineffectiveness to quell it may have contributed to the erosion in Pakistanis' general feelings of personal security. According to the latest Gallup Poll, fewer Pakistanis than ever say they feel safe walking alone at night in the areas where they live.

The Economy In addition to dealing with the country's worsening security problems, Pakistan's new president also will be contending with rapidly deteriorating economic conditions. After several good years of economic expansion, Pakistan's economy is slowing, severely hampered by soaring consumer price and food price inflation, an extremely weak currency, and risky national debt. Only three years ago, a slim majority of Pakistanis (51%) gave positive assessments of the country's economy, but their most recent opinions reflect the worsening situation. A record-low 13% of Pakistanis surveyed in June, when consumer price inflation hit a 30-year high and food price inflation soared to 32%, said economic conditions in the country are good.

Looking ahead, few Pakistanis are optimistic that the country's economic situation will improve. Only 10% of citizens surveyed in June said they think the country's economy is getting better, which represents a huge drop from the 45% who said this in 2005 and the 26% who said this last year. Commensurate with their lack of confidence in the country's economy, only 27% of respondents surveyed in June said their standard of living was getting better, compared with 53% who said so in 2005 and 48% who said so in 2007. Pakistan's Future Many Pakistanis' hopes are pinned on Zardari's ability to bring political and economic stability to the nation and make the country's return to democracy successful. On the other hand, there will be mounting pressure from the United States to see significant efforts in fighting terrorism with a considerable financial stake attached to it. The coming months will see a serious test of Zardari's ability to walk the political tightrope and address the twin dragons of terrorism and the economy -- at the same time. Survey Methods Results are based on telephone and face-to-face interviews with approximately 1,000-1,500 adults, aged 15 and older, conducted in 2005, 2007, and 2008, in Pakistan. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is 3 to 5 percentage points. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
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(Reuters) - A halt of U.S. aid reimbursement into Pakistan's treasury is unlikely to immediately affect the economy but could have a longer-term negative impact, analysts said on Tuesday.
The U.S. has confirmed it is holding off nearly one-third in security aid to show displeasure over Pakistan's cutback of American military trainers and other irritants such as limits on visas for U.S. personnel. The announcement put in question $300 million in what's called Coalition Support Funds (CSF), which are paid into the general treasury and are considered Pakistan budget revenue. In addition, a separate $500 million in U.S. military aid is in question. "$300 million is not a big amount so it's something that can be easily made up," said Sakib Sherani, former economic advisor of the finance ministry. "It's the signal which potentially could have some negative bearings." The $300 million in CSF funds is equivalent to about 25 billion rupees, or less than one percent of the total budget of 2.76 trillion rupees that Pakistan has set for the fiscal year that began July 1. "The decision to delay $300 million in CSF will not have any direct impact, but it signals further straining of relations between the U.S. and Pakistan and that could risk spreading into something broader, for instance the IMF negotiations," said Asif Qureshi, director at Invisor Securities Ltd. U.S. support was pivotal to securing an agreement in November 2008 for the International Monetary Fund to loan financially-strapped Pakistan $11 billion and stave off a balance-ofpayments crisis. Its economy has since been propped up in part by this loan. In August 2010, the IMF stopped releasing funds because of Pakistan's patchy implementation of fiscal reforms the government promised to carry out. IMF and Pakistani officials are due to meet this month to discuss the possible release of the sixth tranche, though no official date has been decided. LONG-TERM ECONOMIC IMPACT Holding back CSF payments will not directly hurt the military, but could strain the country's finances further and widen the fiscal deficit. The CSF money that's been suspended was expected by June 30, and its delay bumped Pakistan's fiscal deficit to 5.3 percent of gross domestic product for fiscal year 2010/11 (JulyJune), a finance minister official said. With the CSF money, the deficit was anticipated to be 5.1 percent. But since it is just the start of fiscal year 2011/12, Pakistan has time to make up this amount. It aims to contain the fiscal deficit at 4 percent of GDP for the year ending June 30, 2012. Analysts said Pakistan can cut other expenditure or try to mobilise more revenue or could borrow domestically to make up for the $300 million. CSF money also supports Pakistan's current account. Though the July 2010-May 2011 current account had a surplus of $205 million, this might be not sustainable because of high international oil prices and lower cotton prices.

Pakistan received $632 million in CSF funds in its 2010/11 fiscal year and a total of $8.8 billion since 2001. While the United States has decided to stall $300 million in CSF, it remains committed to civilian aid. It gave Pakistan $190 million for a post-flood programme in June. Pakistan's army chief in June called for billions of dollars in U.S. military aid to be diverted into helping the economy to improve the lives of ordinary people. (Editing by Chris Allbritton and Richard Borsuk) Electricity issue poses threat to countrys economy: Hafeez
Staff Report ISLAMABAD: Power sector could pose a threat to the country economy and result in fiscal imbalance, said Federal Minister for Finance and Revenues, Dr Hafeez Shaikh. Addressing the inaugural session of 27th conference organised by Pakistan Institute of Development Economics (PIDE) on Tuesday he said, Higher inflation is a challenge for the government but claimed it started witnessing declining trends in first few months of the current fiscal year. There is also challenge to contain fiscal deficit as it shot up to an average of over 6 percent in last four years. The increased share of provinces in the aftermath of NFC Award brought major changes in favour of federating units and resulted into providing additional Rs 800 billion to the provinces. The tax collection remained a historic failure and became another source of vulnerability. He said despite tough resistance of powerful lobbies of textile and agriculturists, the government abolished zero rating and withdrew tax exemptions on fertilizers, tractors and agri inputs. He conceded the integrated Value Added Tax (VAT) could not be imposed because numerical strength in the Parliament was not supportive of this initiative but added the government made tough political decisions by abolishing zero rating on five sector including textile and withdrew crucial GST exemptions. He said government identified 700,000 potential tax evaders out of which 200,000 notices were sent and 27,000 paid up taxes. This ongoing exercise of checking potential tax evaders of 700,000 will be accomplished in the current fiscal year, he added. He said the centralized refund system was put in place due to which over 54,000 cheques were issued in last fiscal compared to over 20 thousand a year earlier. If single penny of bribe was given for getting refunds, I will be responsible for that, he claimed. He said the oil prices shot up in international market that could cause pressure on budgetary forecast as the government prepared its budget estimates on the basis of $80 per barrel in international market while an average price was hovering around $110 per barrel. Controlling the fiscal deficit was the primary challenge for the government as it shot up to over 6 percent on average basis in last four year.

The losses of public sector enterprises (PSEs) made the task of achieving fiscal balance more difficult as power sector alone consumed Rs one trillion in shape of subsidy. Dr Rashid Amjad Ch, Vice Chancellor, Pakistan Institute of Development Economics and the president of Pakistan Society of Development Economists said despite many setbacks, Pakistans economy has shown great resilience. However, Pakistans economy needs new direction, which has been emphasised in the New Growth Framework, formulated by the Planning Commission of Pakistan, he added. Home | Business

Presentation Pakistan
Capital: Islamabad Local time: It is 01:18 PM in Islamabad Exchange rate on 04/01/2012: 1 PKR = 0.0110 USD, 1 USD = 90.9228 PKR 1 PKR = 0.0085 EUR, 1 EUR = 118.2406 PKR GDP growth rate: 4.5% in 2013 FDI stock: 21 494 million USD in 2010 Country risk: See

the country risk analysis from Pakistan provided by Ducroire.

Economic freedom: Score: 55.1/100 Position: Mostly unfree World Rank: 118/179 Regional Rank: 23/38

Distribution of Economic freedom in the world Source: 2011 Index of Economic freedom, Heritage Foundation Economic trends
The GDP's growth rate remained positive despite the international economic crisis, thanks to the positive results of the agricultural sector. In recent years, the government made significant macro-economic reforms, which include the privatization of statesubsidized services, the institution of an anti-money laundering law, an increase in the harshness of punishment against the piracy of intellectual property and quick settlements for the disputes between investors. In the context of the fight against terrorism, the country has received substantial financial aid from the United States, an important factor for growth and

economic stability. However, when this payments reached their end in October 2008, Pakistan asked aid from the IMF in November, and adopted a stabilization plan which has obtained limited results. Despite a slight improvement, the country remains confronted with several difficulties: economic slowdown, budgetary deficit and insufficient growth of tax receipts. Some of the major threats to Pakistan's economy are: international high prices in oil barrels, inflation, raw materials prices, a deficit on the balance of payments and political insecurity and uncertainty. The main indicators of the country are in the red. Approximately 30% of the population lives below the poverty line. The unemployment rate is estimated at around 7.5% and the level of under-employment is very high. Life expectancy is only 64 years and barely 55% of the population is literate. Extreme poverty and under-development are major problems in Pakistan, especially in rural areas. The perspectives of growth for 2011 are expected to be low due to the strong floods that devastated the country in 2010. Thousands of agricultural workers lost their jobs and the cost of reconstruction is estimated at USD 15 billion.

Main branches of industry

The agricultural sector is the main pillar of the Pakistani economy. It contributes around 22% to the GDP and employs approximately 42% of the active population. Wheat, rice, cotton, sugarcane, fruits, vegetables and tobacco are the chief crops. Cattle livestock farming is also very important. Pakistan is the 4th largest cotton producer in the world and has abundant natural resources, mainly copper, oil and gas. The industrial sector contributes around 25% to the GDP. The major industries are textile production (the largest source of foreign exchange revenue), oil refining, metal processing, and the production of cement and fertilizers. Maritime transport is also a significant activity. The tertiary sector contributes to around half of the GDP. Money transfers from Pakistanis working abroad create a considerable godsend financial income for the country.

International trade
Despite its economic and political difficulties, Pakistan has taken steps to liberalize its trade and investments in the context of commitments made with the WTO, IMF, and the World Bank. The share of foreign trade in the countrys GDP is around 35%. The drop in global demand has resulted in a high trade deficit.

In the 2008/09 fiscal year, the trade volume decreased by 9%. After having more than doubled between 2007 and 2008, Pakistani exports declined by 6% in 2008/09. Imports declined by 10.5% in 2008/09 compared to 2007/08. The fall in imports led to a reduction of 17% on the trade deficit in 2008/09, compared to 2007/08. During the fiscal year 2009/2010, exports reached the amount of USD 15.9 billion and its main trade partner was the United States. Pakistan's three main customers are the United States, the United Arab Emirates and Afghanistan. The main export commodities are cotton, textiles, clothing and cereals. Its three main import partners are Saudi Arabia, the United Arab Emirates and China. Pakistan mainly imports fuels, oil, vehicles, iron and steel.

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An Overview of Domestic Threats / Constraints to Pakistans

The nation state of Pakistan is going through convolutions of many constraints. For developing state like Pakistan however, the problem is from within, due to fragmentation along ethnic, religious and linguistic lines. The cohesiveness of these entities is crucial to nation building. An absence of this process on the contrary

could threaten the very existence of a state and so is the case with Pakistan. The end of the Second World War introduced strategic sophisticated and deadly weapons system and new aid, defense and security concepts. Security is increasingly being interpreted as security of people, not just territory, security of the individuals, not arms; security of all people every where, in their homes, on their jobs, in their streets, in their communities and in their environment Security issues are surrounded by the threat perceptions and different constraints. Over a half century has been passed since the birth of Pakistan,no development of democracy and institutions have been experienced. Since 1958, again and again military rule has deteriorated the system of this state. Army has penetrated into every system of Pakistan.Democracy did not get its roots and as a result the problems of ethnicity,sectarianism, integration, kalashnikolf and drugs,terrorism, suicide bombing, economic downfall,food shortage and power shortage, etc have been flourished with the passage of time. The threats confronted by the Pakistan democracy and security undoubtedly are interlinked and good governance is required to remove all the domestic constraints in the way to the security of Pakistan. Security perceptions of Pakistan are directly linked with the real and perceived threats confronting her from time to time.Threat is a geopolitical environment condition for which the price and penalty will have to be paid by the target state if it fails to build its own effective warding-of mechanism Major threats/constraints to Pakistanare national integration, national development and national security. These three are interrelated with each other. Internal threats to Pakistan come from several sources. Pakistan has to set its own housein order.National security and national integration areintimately interconnected and interdependent. Pakistan has been subverted from within. Pakistan is an Islamic ideological state and it should safeguard its ideology jealously, for it is the repository of its nationalism, national spirit,interest and powerAny programme for national integration would pre -suppose a graceful acceptance and realistic recognition of the fact that Pakistan is a multicultural/lingual and ethno-national nation-state and society. Pakistans ethnicity is a positive asset. Cultural co-existence is required for democratic system.Cultural co-existence resulting from cultural confluence and interaction is the answer for Pakistan.Pakistan has passing through the culture of political intolerance and by passing the true Islamic ideology and as a result, having no national integration in

the real sense. There are some more constraints which come out from the above mentioned constraints have been harassing Pakistan since its birth like Pakhtoonistan, Provincialism, Kashmir, Indo-Pak wars, parity, East Pakistan, Bangladesh, Four Nationalities, Secession, Parochialism, Aggression, Poverty, Terrorism, Talibanization of Society, suicide bombing, corruption etc. Pakistan is facing multi dimensional threats and problem is far more serious, for our very survival is at stake. Pakistan should plan their remedial measures and Pakistans national security can be ensured through national integration. True democracy is the binding force between national security and integration. The gap between the rulers and the ruled continue to be increased. M.P.Singh and Veena Kukreja in the book Pakistan Democracy, Development and Security Issues explain that Pakistan is a nation still in the making. It continues to be domestically unstable and politically weak. Pakistan is facing internal war like situation against the terrorists. Basically nations resort to war when diplomacy fails. A state which is truly democratic can face the challenge to its survival otherwise it will face stresses and strains of insecurity and in ability. Rule of law, fundamental rights, a free press and strong opposition is required for the security of Pakistan otherwise it will remain weak and vulnerable at the hands of all domestic problems and constraints. Pakistan has wanted its state moderate, free, open, peaceful, progressive, Islamic and democratic. Identity is one of the major constraints towards the security of Pakistan, even after the secession of East Pakistan in 1971 was severe, Ayub Khan and Yahya Khan faced the rebellious politics of Bengalis, Baloch nationalistic assertions in 1970s were seen and Bhutto used force in order to put down Baloch tribesman, Sindhi nationalism in the 1980s and Muhajir Qomi movements have been gathering strength since 1990s. Zia Ul-Haq sent the army to suppress rural Sindh and Musharaf used army against Balochies and tribal areas. The all have developed separatist tendencies. Todayswounded Pakistan is facing democratic turmoil; all the ethnic groups are feeling alienated by the Punjabi elite and Blouch, Pashtoon and Sindi nationalists are against the hegemonyofPunjab.Ethnic unrest is another kind, the domination of Punjabis in all aspects of life is resented by smaller ethnic groups .In early 1990s the civil unrest is seen in Sindh. Smaller provinces have been demanding provincial autonomy. Baloch nationalists groups have their grievances and this threat should

be treated as early as possible. Sectarian conflicts between Sunnis and Shias have been intensified the domestic constraints to the security of Pakistan. A path chartered by the military regime of Ayub Khan,Yahya Khan then of Zia- Ul Haq was altered by yet an other military regime that of Musharaf. All these military regimes produced political instability, poor governance, institutional paralysis, by passing the rule of law, socio-economic down fall and so on. No civil government has been able to establish and maintain its legitimacy for more than brief periods. Democracy was very weak and democratic institutions could not be strengthened by military rule. Military rule in Pakistan by paralyzing the democratic institutions is one kind of threat to Pakistan. Pakistan is passing through the `most difficult period of its existence and facing domestic threats and constraints to its security. Insecurity is increasing; people do not feel secure in the streets or in their homes. There is erosion in the legitimacy of the state when political institutions are unable to provide security to its citizens who may no longer perceive the central governments as the manager of conflicts. In such circumstances, groups perceiving deprivation tend to resort to violent solutions to their grievances.A diffusion of small arms and light weapons can promote the process of state breakdown due to violent internal strife. The Pakistani paradigm fits with this scenario. Economic instability is a fundamental variable of internal security threats to Pakistan. The absenceofgenuine socio-economic development hasprovided ethnosectarian elements and regional forces grounds to exploit and weaken Pakistan internally. Economic security we mean whether a country can pursue, without being threatened from the outside, independent economic and foreign policies or not. Per capita income and gross national product are required for security. Self sufficiency is also required. Pakistan being the developing state is clearly at a disadvantage and its security will be threatened. All Pakistani governments have failed to attain socio-economic equality.8 Low level of investment and social services are seen. Pakistan under heavy debt and rely on foreign aid for financing the investment. Security and peace are the two important prerequisites for the stability of economic and political systems of the state.Corruption and poor governance have had a threat to Pakistan. No proper economic planning except late 1950s and 1960s has been seen there and since 1990 it is facing the worst economic crises. The British Foreign Secretary David Miliband said that Pakistan faced more threats from internal terrorism, as it is facing various lingual, ethnic and sectarian problems. Suicide bombing is increasing

due to serious short comings in internal security measures and in law enforcement, failure to fully stop financing of terrorism , only banned selective terrorist organizations, half hearted efforts for education, anti American sentiments, militants suicidal attacks, economic weaknesses etc.War on Taliban and Al-Qaida created tussle within Pakistan and the religious fundamentalist groups have reacted in a hostile manner. Suicide bombers as resentment against government operations in lal masjid, wana, swat and waziristan has been increased. Most of the bombings in Pakistan have targeted security forces and civilians. At present any move to dismantle the terrorists is facing resistance. These are worst ever security threats for the citizens of Pakistan and these threats have heightened anxiety for the people of Pakistan day by day. These threats undermine the writ and credibility of the state as well as the security of lifeand property of the citizens. Pakistani educational institutions have been closed for some days because of fears about militant attacks after suicide bombing at the International Islamic University. Thereligious extremism and sectarian militancy got closely identified with proliferation of seminaries across Pakistan is noteworthy. The talibanization of Pakistani society has been an issue of concern in many quarters in the country. An increasing number of sectarian killings were a pointer to this phenomenon. Madrasas are not only responsible for breeding grounds of terrorism but other factors are also responsible. For Pakistans national security the 11 years of war in Afghanistan was the most dangerous time period. Pakistan supported the freedom struggle in Afghanistan which lead the kalashankof, smuggling, refugee problem and drug culture in Pakistan. According to UN data in Pakistan in 2009 there are about 2.5 million Afghans who are scattered around Pakistan .They are about 1.7 million registered Afghans with 45 percent residing in refugee villages and the rest scattered in whole of the Pakistan .When USSR moved out of Afghanistan,Pakistan was out of the nut cracker like situation ,America dumped Pakistan .Expanding terrorism and suicide attacks have raised concerns regarding the safety and security of nuclear arsenals. U.S media is writing stories about the threats to Pakistans nuclear weapons.

Pakistan was pushed into judicial crisis on March 9th 2007 by suspending Chief Justice of Supreme Court. It has been widely held as a dramatic move to constrain the judicial activism. Lawyers movement as well as the electronic media played a vital role for launching voices against the dismissal of chief justice of Supreme

Court. Threats and attacks against journalists were common and many journalists and lawyers were killed during this movement. Media remained under government pressure through laws and threats. Media houses were attacked, raided by police and security agencies and freedom of press came under attack as a result of two ordinances. Anti media laws and closure of channels were imposed.Civil society and politicians alsojoined hands with this movement and after the long march in 2009, the Chief Justice of Pakistan was restored on 16th march of this year and Pakistan came out from this constraint within a time span of two years. Another alarming threat is food security, due to lack of proper planning. It is the need of the time to take some bold steps to ensure food security. Firstly the wheat shortage and now sugar crises have traumatized the people. Election results of 18th February 2008 have rejected the status co. Last government failed to live up to the expectations of the people.A new government has come to power in March 2008. However, this government did not make any fundamental change of policy towards domestic issues which are threatening Pakistans security except the Swat operation and now in Waziristan military operation of army. No proper planning is seeing regarding the management of food and electricity shortage. Territory of Pakistan is home to a complex nexus of ethno-linguistic and religious groups. This range of actors combined with underdevelopment has created tensions in Pakistan that threaten to undermine the territorial unity of the country. Domestic stability involves a wide range of factors including human security, economics, politics, regional stability, environment, education, and religion. Interdependence of all these multifaceted threats and their over all impact on internal security should be removed. Pakistan needs development in political, social, and economic field.In political field the real constraint is the lack of political framework in which all the ethnic groups are ignored. The distribution of power must be equal for all the provinces and peoples participation is required in all issues and must be acknowledged by the government. In economic field Pakistan needs structural changes. Economic motivations are required. Among them social development by introducing fresh incentives for the improvement of the standard of people is also required on early basis. The role of military in politics must be eliminated. Ethno-Sectarian threats should be countered. Enforcement of rule of law should be there. Law enforcement agencies should be equipped with new technologies, techniques, training and equipments forstopping terrorist activities in

country.Pakistan should develop think tanks which will predict and stop the future threats to security. There isgoing to beno quick end to the domestic security threats/constraints faced by Pakistan. Long term policy is required.Pakistan needs a strong democratic government with a clear vision and clearly announced policies for the state.
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