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Books on Pakistan
REPUBLICAN REFERENCE
Area (sq.km)
803,940
Population
162,419,946
Capital
Islamabad
Currency
Pakistani rupee
President
Pervez Musharraf
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Update No: 007 - (25/08/06)
Truces and US cash
During August Pakistan continued to send signals that it has finally
resolved to act against Afghan Taleban activities on its territory. After
arresting a number of them in July, more were arrested in August. Although no
known leader or prominent figure is among them, this is seen as at least a move
in the right direction by NATO and US authorities. Sceptical observers, however,
see these measures as an attempt to buy time while hoping that increased Taleban
activities in Afghanistan will soon yield some results. On the other hand,
Musharraf is also busy with a total overhaul of his domestic Taleban policies.
The US-sponsored confrontation has brought the North-West Frontier Province to
the brink of collapse, heightening tensions within Pakistan security services
and costing the Pakistani army as many as 800 killed. Musharraf is said to have
been inclined to withdraw the army back to India's border, but US pressure
prevented him from doing so. Under a new compromise, the army will stay in the
north-west but will not leave its barracks except in emergencies. At the same
time, truces are being negotiated with the Pakistani Taleban. The plan is to
strengthen the Pakistani paramilitary forces in the region and offer (US-funded)
financial incentives to the tribal leaders to break their alliances with the
extremists.
Icebergs right and left
Musharraf's difficult navigation between uneasy friends and increasingly
angry enemies is also exemplified by the recent proposal to repel the Hudood
laws, which were introduced under military dictator Zia-ul Haq in order to
"islamicize" the treatment of women. Musharraf is personally
sponsoring the move and even chaired the parliamentary committee meetings. He,
however, faced opposition from both liberals, who think he is not doing enough,
and conservatives, who think that he going too far - in normal terms that might
appear that he has got it about right, in the sense of what the nation, at this
stage will accept. In order to appease the conservatives, who included some of
his own ministers, the new law will continue to attribute to a woman witness a
fourth of the value of a man. The main changes from the previous version of the
law are that women will no longer be whipped as a punishment, that their
offences will be bailable and that it will be less difficult for victims to
prove crimes such as adultery and rape. Musharraf is clearly trying to recover
political ground after the old political parties regained credibility following
an end to their petty disputes and after corruption scandals have compromised
the credibility of some of his allies, such as the Prime Minister Aziz himself.
Until recently, the reputation for corruption of the country's two main parties,
People's Party and Muslim League, had been a major asset for Musharraf. Some
sectors of the army are beginning to show unease, as evidenced by a letter
signed by a group of retired generals and circulated in July, asking him to give
up his position of chief of the armed forces, which incidentally is also one of
the American demands.
Optimism supports the Rupee
At present, the strongest interest in investing in Pakistan comes from
investors based in Saudi Arabia and Dubai, who see opportunities in industries
such as building, electricity, infrastructure and motor vehicles. Optimistic
Pakistan observers estimate that as much as US$4 to 5 billion might come yearly
from these sources, out of a potential total of as much as US$6 to 7 billion. If
this potential was to be fulfilled, that would mean nearly doubling foreign
direct investment in the country, up from US$3.5 billion in 2005-06. Indeed,
this seems the only way through which Pakistan might be able to cope with its
fast rising current accounts deficit. The optimism of these observers is for the
moment being shared by the markets, as showed by the stability of the Pakistani
Rupee, which in July was trading at around 60 to a dollar, just 1.5% lower than
a year earlier. Pakistan's central bank is hostile to the idea of devaluing the
Rupee in order to address the trade imbalance, preferring to rely on a tight
monetary policy. Could Pakistan be due for some good luck?
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