IMPACT OF THE EVENT 9/11 ON PAKISTAN’S DOMESTIC POLITICS AND PAKISTAN’S ECONOMY Dated:29-04-2010 Executive Summary After 9/11 the challenges and allegations of supporting the militants imposed great affects on the security of the Pakistan. From welfare state Pakistan transformed into a security concern state which caused our military to mobilize. Post US and foreign aid caused the Economy to survive temporarily but it was only for temporary and end day situation was worst then day one.

On political front the collaboration between Pakistan and NATO solidified internationally.Whereas on local side general public was against Pakistan involvement of Pakistan in this so called Americans war on terror. Musharraf departure was also due to this war. Table of Contents Introduction4 1.

Impact on Political Scenario5 1. 1 Pakistan as Front Line State in War on Terror5 1. 2 Joined War on Terror5 1.

3 Rise of Political-Religious Parties in Pakistan5 1. 4 Formation of MMA6 1. 5 Emergence of MMA as Main Party in October 2008 Elections6 1. 6 Reaction of Government Policies6 1. 7 Rise of political Islam and Terrorism (Domestic Impact)6 1. Rise of political Islam and Terrorism (International Impact)7 1. 9 Musharraf as Center7 1.

10 Status of Constitution and Parliament7 1. 11 Kashmir and Palestine Cause7 2. Financial Situation post 9/118 2. 1 The financially uncertainty8 2. 2 Foreign aid8 2. 3 Effect on KSE-100 Index8 2.

4 Final Impact9 3. References10 Introduction On September 11, 2001, with the collapse of the World Trade Center, U. S had started the war named as war against Terrorism. U.

S. President George Bush termed it as an act of terrorism and threatened strong action against the people who had carried out those attacks.It was the Al-Qaida and Osama bin Laden who were eventually held responsible for those attacks. Today it’s 2010 and an end to this war in near future is not in sight. Terrorism, extremism, violence and instability in Pakistan and Afghanistan have touched the record level. The US and its allies have miserably failed in Afghanistan and have suffered huge economic and military setbacks in this war. The US administration is losing this war because of their flawed policies. More than 2500 US soldiers have lost their lives in Afghanistan, and on the other hand the US has spent billions of dollars on the war against terrorism.

But still they are unable to achieve any considerable success in Afghanistan. Situation in most parts of Afghanistan is out of the US control. Taliban are gaining strength. Situation in tribal areas of Pakistan is also getting worst. Drone attacks by the US have resulted in strong backlash from local population. As a result of all these facts, suicide bombing in Pakistan has suffered huge civilian and military casualties.

1. Impact on Political Scenario 1. 1 Pakistan as Front Line State in War on Terror The events of September 9/11, 2001 changed the global political scenario radically.

The U. S. traced the terrorist outrages in New York and Washington to the Al-Qaeda and the Taliban regime in Afghanistan. As a result, the U. S. declared war against international terrorism, targeting Afghanistan, for which Pakistan‘s support was imperative. The U. S.

political and military campaign against global terrorism also reshaped an alliance system in South Asia, where Pakistan once again emerged as a frontline state in a war in Afghanistan. In this situation, Pakistan had only two options: either to support the U. S. in its war on terror to go with the Taliban.Taking high risks at domestic and regional fonts, Pakistan opted for the first option, and extended its support to the U.

S. The cooperation with the U. S. also required withdrawing support to the Taliban and start crackdown on the militant Jihadi. 1. 2 Joined War on Terror President Pervaiz Musharraf accommodated U. S. requests for backing after 9/11, especially in the search for al Qaeda and Osama bin Laden.

Pakistan joined the U. S. war on terror and broke relations with Afghanistan’s Taliban government, to the embarrassment of many Pakistanis.

Pakistan has also deployed 25,000 troops to the Tribal Areas to track Qaeda. Pakistan sided with the United States in the war on terror and, as a result, regained the strategic importance it had during the 1980s, when it was a base for U. S. aid to Islamic militias fighting the Soviet occupation of Afghanistan. On June 24, 2003, President Bush hosted Musharraf at Camp David and announced a $3 billion aid package for Pakistan, as well as $1 billion in loan forgiveness, in recognition of its assistance to the United States in fighting al-Qaeda. 1. Rise of Political-Religious Parties in Pakistan Demonstrating their anger, the religious-political parties in Pakistan launched countrywide anti-US protests, criticizing the government of withdrawing its support to the Taliban regime in Afghanistan and becoming the part of US-led coalition against terrorism. They were of the opinion that government should support Afghans instead of supporting US.

They were also more concerned over the US influence in Pakistan, which compelled Islamabad to change its policies towards the Taliban. 1. 4 Formation of MMAThe post-9/11 policies of the government were considered a great betrayal on the part of the State. This also resulted in the gap in alliance between the State, dominated by the military, and the religious-political parties. This gap compelled the religious-political parties to get involved in mass politics, without the support of the State, by campaigning against the policies formulated by the government after the 9/11 incident. The situation also compelled the religious-political parties to politically unite together and confront the State policies from a united platform.For this, they formed Muttahida Majlis-e-Amal (MMA) in January 2002.

1. 5 Emergence of MMA as Main Party in October 2008 Elections The MMA emerged as significant political force at the national and provincial level after the October 2002 elections. It won 20 per cent of the total popular vote and 60 seats in the National Assembly, and formed its government in NWFP and coalition government in Baluchistan — two of the most sensitive provinces bordering Afghanistan. In the Senate, the MMA possesses 23 out of 100 seats. The MMA tried to Islamize the Pakistani Stale and Society.Although the religious-political parties had never polled more than 5 percent of votes, the rise of the political Islamists, represented by the MMA, was an alarming situation in Pakistan.

This was the main Opposition party in the National Assembly. It’s General Secretary, Maulana. Fazl-ur- Rehman, was the leader of the Opposition in the National Assembly and also a member of the National Security Council.

It also governed the North-West Frontier Province and shares power in Baluchistan province with King’s Party of Musharraf. 1. 6 Reaction of Government PoliciesThe political victory of the MMA also encouraged the militant Jihadi and sectarian groups, who in order to counter the government policies resorted to increasing violence and terrorism within and outside Pakistan.

The major component parties of the MMA, particularly the JUl-F, the JUI-S, the Jl and the Ahl-e-Hadith, then started using their militant Jihadi and sectarian groups for perpetrating terrorism within and outside Pakistan in order to pressurize the government to reverse the policies which it formulated after the 9/11 incident.As a result with MMA`s patronization of the militant Jihadi and sectarian outfits. The terrorist activities in Pakistan have risen.

It must be noted that despite government’s efforts to destroy the terrorists network, their strength and structure have so far structure intact. They have been able to gain political support of the MMA and to retain their links with the Al-Qaeda and the Islamist elements in the ISI. 1. 7 Rise of political Islam and Terrorism (Domestic Impact) The rise of political Islam and terrorism in Pakistan has domestic, regional and international implications.On the domestic front, the rise of political Islam and terrorism in Pakistan has severely impacted the structures of State and Society of Pakistan, the MMA’s political victory in 2002 elections and its growing influence in the Society have completely upset the domestic political scenario of Pakistan.

It has also been able to occupy the political space not only in the national politics but also in the provincial politics, particularly in NWFP and Balochistan provinces, by politically wiping out the more established secular parties there.It is the MMA which has been giving tough time to the liberal political agenda of the Musharraf regime on various domestic and foreign policy issues. 1.

8 Rise of political Islam and Terrorism (International Impact) Pakistan was seen as an alarming development by the United States, because the MMA was the main Opposition party in the National Assembly and having government in two strategically important provinces – NWFP and Baluchistan — where the U. S military operations against the Al-Qaeda and Taliban were going on. 1. 9 Musharraf as CenterIn war on terror, many analysts feel that US has no concern with Pakistan. For his stay in Afghanistan, he tries his best to extend Musharraf’s era. All policies of US in war on terror for Pakistan move around the Musharraf.

As a consequence, many Pakistani elites have observed that the institution that benefits most from the current engagement is the military—not Pakistan and its civil institutions. Through this a political space came in Pakistan political history. 1. 10 Status of Constitution and Parliament Before 2008 election, Musharraf wanted to become President again.Members of Parliament objected when Musharraf named himself president, because the Pakistan constitution forbids the head of the army from becoming president. Musharraf promptly sidelined them. 1.

11 Kashmir and Palestine Cause After collation partner in war on terror, Musharraf also take U-turn in Pakistan policy of Kashmir and Palestine. Through this fight for freedom become terrorism. Kashmir and Palestine leadership also move away from Pakistan.

After this Jihad Council of Pakistan agreed to stop activities in Kashmir and focus their aim with political leadership. 2.Financial Situation post 9/11 2. 1 The financially uncertainty In 1999, Revenue generation of around Rs. 308 billion could not meet the growing expenditure requirements and more over there was no visible project to boast about. From this Rs.

308 billion around 65% was being utilized for debt servicing. In 1988 Pakistan’s foreign debt was $18 billion, but at the end of 1999 it had accumulated to become $38 billion. A 100% increased burden on the already crippled economy. Public and external debt exceeded 300% of Foreign exchange earnings. Pakistan had become a highly indebted poor country.Poverty levels also increased to become 35% according to economic survey.

This glooming situation can’t be ignored. While the world was progressing, Pakistan’s economy was motionless. Overall there was a feeling of despondency and uncertainty. It not only lowered the morals of the business community, but also affected adversely the Foreign Direct Investment. Making the overall situation worse. 2. 2 Foreign aid The U. S.

funneled nearly $5. 3 billion to Pakistan during the Soviet occupation of Afghanistan in the 1980s. After all, that money helped strike down a Cold War adversary.

But there were unintended consequences to namely, the Taliban. Since 9/11, the U. S. has turned on the spigot again, sending more than $15 billion in assistance to Pakistan. This is more then 3 times which was provided to Pakistan early it really allowed Pakistan to stabilize bit. The World Bank provided empirical evidence in which foreign aid to a country was linked to higher levels of investment, which in turn led to higher economic growth rates, in the presence of sound policy, over the last three decades (World Bank Statistics on Countries, Pakistan 2000-2002). .

3 Effect on KSE-100 Index Period of January 1, 1999 to September 10, 2001 corresponds to the formation of the SECP. The SECP, which became functional in January 1999, was authorized to oversee the efficient functioning of capital markets in Pakistan. Since its inception, the SECP introduced a number of reforms that improved transparency in the operations of the stock exchanges and the firms. Given figure shows the daily close price of KSE-100 Index for the period January 1, 1996 to May 24, 2007 2. 4 Final Impact 1. Affluent middle classThe huge interest of investors in this and other well-to-do areas is typical of the unprecedented surge in real estate businesses in big cities like Lahore and Karachi following the attack on the World Trade Centre. | 2.

Massive remittances Two months after 9/11, the forex reserves went up to $4bn as Pakistan joined the US coalition against the “war on terror”. The forex reserves then stand at more than $12bn. And there is little doubt that the catalyst for this growth had been the massive amount of remittances sent back by non-resident Pakistanis in the US and later from Europe.In 2001, the remittances totaled a little more than $1bn. But since 2002, Pakistan has received nearly $4bn in remittances every year. That means an additional inflow of $14-15bn has been returned to the country since the 2001 attacks.

3. Stability of rupee in foreign Declining rupee has been stable at around 60-61 to a dollar since then in international trade market. 4. All Plastic This all progress was temporary and it had was just on outside and all macro economics indicator level were contributing factor and micro economic factor were telling different story.After all outer plastic gone then Pakistan economic situation was worsen then day one.

3. References * PAKISTAN: U. S. -Pakistan Relations By Sharon Otterman http://www. cfr. org/publication/7818/pakistan. html * 9-11 Syndrome – Political Scenario in Pakistan and Indo-Pak War Euphoria By Zulfiqar Ali Janjua http://www.

mediamonitors. net/zulfiqaralijanjua1. html * US War on terror: Implications for Pakistan and Policy Options for Obama Administration By Masood Khan http://www. defence. pk/forums/strategic-geopolitical-issues/29108-us-war-terror-implications-pakistan-policy-options-obama-administrati. tml * September Eleven and Its Aftermath By Asad Zulfiqar http://www. storyofpakistan. com/articletext.

asp? artid=A145=1 * Pakistan’s post-9/11 economic boom http://news. bbc. co.

uk/2/hi/south_asia/5338402. stm * Pakistan’s Economic success: Mercy of 9/11 or Macro-Economic Policies? By Afreen Baig http://presidentmusharraf. wordpress. com/2008/06/17/pakistans-economic-success-mercy-of-911-or-macro-economic-policies * Image from http://thebsreport. files.

wordpress. com/2009/08/war-on-terror-poster. jpg