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Security fears over Pakistan's bankruptcy threat
Already nearly broke when the global financial crisis took hold, Pakistan now faces further woes that could take the nuclear-armed nation's security situation closer to the edge, experts said. The country, a frontline ally in the US-led campaign against Al-Qaeda and Taliban militants, has been forced to seek 10 billion dollars from western backers to stave of the threat of going bankrupt as early as February 2009.The situation is perhaps the biggest challenge yet for Pakistan's new government as it tries to replace former president Pervez Musharraf's outdated economic and security policies.
Pakistan saw years of rapid growth after Musharraf seized power in a coup in 1999, with former Citibank executive-turned-premier Shaukat Aziz overseeing an apparent turnaround in the country's finances. But after Musharraf's allies were defeated in elections in February, the new civilian government quickly found itself facing gaping holes in the economy and public anger over rising prices. The largely impoverished population of 168 million is suffering from inflation that hit a 30-year-high in June, the last available figure, of 25.33 percent, making staple foods and fuel unaffordable. Meanwhile the Pakistani rupee has plummeted 23 percent against the US dollar since the start of the year. At one point last week it hit a record low of 80.5 rupees to the dollar. The biggest impact of Pakistan's economic problems could be on its battle against extremism near the Afghan border. The country is still reeling from the bombing last month of the Islamabad Marriott Hotel, one of the few remaining symbols of foreign investment. "Economic hardship and the militancy are directly linked," Talat Masood, a retired Pakistan army general and now a leading security analyst, told AFP. "People become more vulnerable to exploitation by militant forces, who always take advantage of public deprivation. Also, for Pakistan's huge army, economic problems make it impossible to sustain and upgrade the necessary equipment to wage counter-insurgency and counter-terrorism operations," Masood said. Posted by: Pappy 2008-11-10 |
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