War Against Terrorism Its Economic Impact on Pakistan

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WAR on Terrorism: Impact on Pakistan’s Economy Rehana Saeed Hashmi * Abstract In analyzing the government of Pakistan’s policies towards USA in the war against terrorism, this article focuses on Pakistan US relationship and US assistance to Pakistan for economic development. The main concern is to understand the environment of mistrust between the two states and need to analyze that Pakistan’s economic development should be based on sound long term economic policies. In the region of South Asia, Pakistan has the most delicate strategic position. The event of Russian invasion in Afghanistan during cold war period and in the post cold war era, the other world shaking event, the terrorist attacks on World Trade Centre have witnessed that these developments profoundly affected Pakistan’s strategic position. The incident of 9/11 affected Pakistan’s defence and strategic concerns, its national cohesion, domestic stability and economic condition. In the wake of 9/11 incident, once again Pakistan gets the status of a front line state, because immediately after the attacks on WTC, the US government approached Pakistan and presented stark choices. It had to either make common cause with Washington in its war against terrorism suspected terrorist bin Laden and his Al-Qaeda network based in Afghanistan with the support of Taliban regime or the second option was to persist with its pro Taliban Afghan policy and live with international condemnation and isolation from rest of the world1. Washington gave Pakistan twenty four hours to decide, whether it would be on America’s side or not2 and according to a news report the next day on September 13, President General Pervaiz Musharraf gave green signal to the state department that Pakistan would extend its “unstinted cooperation” to the international coalition against terrorism3. After the higher official meeting President of Pakistan General Pervaiz Musharraf addressed the nation and presented his policies which were completely reversed direction. In his television address to the nation on September 19, 2001, he clarified, *

Author is Lecturer in the Department of Political Science, University of the Punjab, Lahore.

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“We in Pakistan are facing a very critical situation. Perhaps as critical as the events in 1971. If we make the wrong decisions our vital interests will be harmed, our critical concerns are our sovereignty, second our economy, third our strategic assets, (nuclear, missiles) and fourth our Kashmir cause. All four will be harmed. If we make these decisions they must be according to Islam. It is not the question of bravery or cowardice. But bravery without thinking is stupidity. We have to save our interests. Pakistan comes first everything else is secondary4. The policies presented in the president’s speech resulted in withdrawal of Pakistan’s support for the Taliban government in Afghanistan and extended cooperation towards USA. Through this speech, he also presented his new strategy to safeguard Pakistan’s national interests based on four key objectives. These were security, protection of Pakistani nuclear assets, settlement of the Kashmir dispute and long term economic development. Main focus of this paper is to analyze the ambition of this long term economic development with the help of following questions:1. 2. 3. To understand the ground realities in which Pakistan joined the US coalition. The situation of Pakistan’s economy when it joined the US led coalition against terrorism. Either the economic assistance given to Pakistan was conditional to the US support on war against terrorism or to improve the basic economic and social condition of Pakistan? What were the expectations of Pakistan and how it was treated by the US government? What should be the future strategy for the improvement of economy and to give the economic benefits to the masses?

4. 5.

Before discussing Pakistan’s macro economic condition when it became the ally of US led war against...
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