Pakistan

By Eurasia Group analyst Maria Kuusisto

Pakistan is experiencing multiple crises. First, the political system remains unstable. The civilian government is fragile, and facing a range of internal and external pressures that are undermining its effectiveness. Second, the security situation is deteriorating. The Taliban is expanding its influence in the northwestern tribal belt and carrying out frequent terrorist attacks in the large cities, causing fear among the population. Third, the economic outlook is not showing any signs of improvement. While Pakistan's foreign exchange situation has improved, its GDP growth has declined to 2 percent and the key manufacturing and textile sectors are in recession, leading to increased unemployment and poverty. To make things worse, the country is facing a power supply and demand gap of some 4,000 megawatts, hindering economic activity and spurring popular discontent.

After the 2007 political crisis, a civilian government returned to Pakistan. The country's politics have long been dominated by two main parties: the left-leaning Pakistan People's Party (PPP) led by President Asif Ali Zardari and the conservative Pakistan Muslim League-Nawaz (PML-N) led by former prime minister Nawaz Sharif. These parties have a history of intense, highly personalized political rivalry that dates back to the 1990s. The PPP won a landslide victory in the February 2008 elections, largely because of popular sympathy for the party after popular PPP leader Benazir Bhutto was assassinated in December 2007. This election result paved the way for a PPP-led coalition government, including the PML-N. After a few months of cooperation, however, the PML-N resigned due to differences over democratic reforms.

Since then, the PML-N has become an increasingly powerful opposition force. While the PPP is widely perceived as having failed to address the multiple crises facing the country, the PML-N is seen as being more in touch with people's problems, increasing its popularity. A major turning point was the March pro-democracy campaign sponsored by Sharif, which led to the reinstatement of Chief Justice Iftikhar Muhammad Chaudhry. The PML-N is hoping to carefully manage a transition in civilian politics -- while preventing the military from intervening -- and prepare for early elections. It is taking up highly populist issues, forming alliances, and delivering relatively effective governance in Punjab, where it has a provincial government. Early elections are likely to lead to a PML-N-led coalition government.

Meanwhile, the US is trying to broker a power-sharing deal between the PPP and PML-N. The Obama administration has formed a good working relationship with Zardari and the PPP-led government. It is concerned about the prospect of early elections and related political instability, which risk undermining Pakistan's fight against al Qaeda and the Taliban. Moreover, it is concerned about PML-N's political agenda, which is highly populist, less accommodating toward Washington, and more sympathetic to conservative religious forces. The Obama administration hopes that a power-sharing deal would lead to a national government, including the PML-N, and prolong the life expectancy of the current political set-up.

The United States is unlikely to succeed in its brokering efforts. In 2007, Washington tried, albeit unsuccessfully, to broker a similar power-sharing deal between Bhutto and former president General Pervez Musharraf. In this case, the PML-N has little interest in a power-sharing deal, particularly if Zardari remains the most powerful person in the political arrangement. Such a deal would undermine PML-N's popularity and long-term political prospects. Many Pakistanis would view such a deal as a sell-out for short-term political gain. They would also make PML-N liable for the perceived failing policies of the government. For its part, the PML-N has little trust in PPP's willingness or ability to meet its end of the bargain. That said, the PML-N is likely to continue talks about a potential deal because it needs to accommodate the United States and because it needs more time to prepare the ground for early elections. The likely collapse of talks also will eventually provide the PML-N with a convenient excuse to mobilize opposition against the PPP.

The continuing political tension in Pakistan undermines the government's ability to tackle the country's multiple crises. On the political front, the government needs to implement constitutional reforms to strengthen democracy and civilian institutions. On the security front, it needs to shift from carrying out counterterrorism military operations to delivering better governance (eg, integrating the tribal belt into the political and institutional mainstream). On the economic front, the government needs to improve domestic revenue collection -- instead of relying on international assistance -- and stimulate the economy through well-channeled incentives to key sectors and social protection schemes. If the government fails to tackle these crises, it risks social unrest and the increased influence of conservative political and social forces.

AFP/GETTY IMAGES

By Eurasia Group analysts Seema Desai and Maria Kuusisto

While no one’s launching a full revival of the India-Pakistan peace process yet, conversations are beginning to take place in the wings. On June 15, Indian Prime Minister Manmohan Singh and Pakistani President Asif Ali Zardari met for the first time since the November 2008 Mumbai terrorist attacks. Largely because of U.S. diplomatic pressure, they agreed to this brief discussion and public appearance on the sidelines of a Shanghai Cooperation Organization (SCO) summit in Russia.

Although the meeting demonstrates that Delhi and Islamabad may be willing to resume some sort of dialogue, both Singh and Zardari remain constrained by the hard-line sentiments of their domestic constituencies. India wants clear signs that Pakistan is cracking down on extremist elements within its borders. Meanwhile, the Pakistani government is under pressure from the military, which remains suspicious of India. And Pakistan's recent release of a prominent militant from house arrest has undermined prospects of cooperation.

From the U.S. perspective, the Obama administration sees easing India-Pakistan tension as an essential part of its regional stabilization strategy. It would enable the Pakistani military to focus on fighting the Taliban along the Afghan border and defuse covert and overt support for the Taliban and other extremists. In early June, the United States launched a diplomatic push, sending U.S. Special Representative Richard Holbrooke and Under-secretary of State William Burns to South Asia; Secretary of State Hilary Clinton will visit India and Pakistan in July.

India and Pakistan are sensitive to U.S. pressure: Islamabad needs U.S. financial assistance, and Delhi is keen to deepen the George W. Bush–era engagement. As a result, Delhi and Islamabad both made positive comments on the peace process around the Holbrooke-Burns visits, but they remain deeply sensitive to domestic forces, which will ultimately prevent deep engagement right now. And neither government wants to be seen as giving in to U.S. pressure, making a return to the results-oriented, pre-Mumbai composite dialogue highly unlikely.

Arif Ali/AFP/Getty Images

By Ian Bremmer

In the Pakistani city of Lahore on Tuesday, a dozen gunmen attacked a bus carrying members of Sri Lanka's cricket team, killing six policemen and a driver and injuring several of the athletes. Press accounts of the assault suggest a level of coordination similar to that used by the Pakistan-based militants who killed 173 people at several sites in Mumbai in September. Across Pakistan, suicide bombers killed two people in 2005, six in 2006, 56 in 2007, and 61 in 2008. Suicide attackers killed more people in Pakistan last year than in either Iraq or Afghanistan.

There are two important reasons why the threat of global terrorism is growing. The first is long-term and structural. The second is more directly tied to the global financial crisis. Both have everything to do with what's happening in Pakistan.

First, a report released in December from the U.S. Commission on the Prevention of Weapons of Mass Destruction, Proliferation, and Terrorism hints at both sets of problems. The report notes an increasing supply of nuclear technology and material around the world and warns that "without greater urgency and decisive action by the world community, it is more likely than not that a weapon of mass destruction will be used in a terrorist attack somewhere in the world by the end of 2013."

Destructive (and potentially destructive) technologies are now more accessible than at any time in history for small groups and even individuals. This will dramatically increase the baseline threat of disruptive violence from non-state actors over time. It's not just biological and nuclear material. GPS tracking devices help pirates operating off Somalia's coast venture further from shore and undertake increasingly ambitious attacks on private and commercial vessels.

Second, it's unlikely that we'll see the "greater urgency and decisive action by the world community" called for in the report. For the moment, political leaders around the world are too busy wrestling with the effects of the global financial crisis on their domestic economies (and their political standing) to coordinate action against such a diffuse threat.

But there's another reason why the financial crisis heightens the risk of global terrorism. Militants thrive in places where no one is fully in charge. The global recession threatens to create more such places.

No matter how cohesive and determined a terrorist organization, it needs a supportive environment in which to flourish. That means a location that provides a steady stream of funds and recruits and the support (or at least acceptance) of the local population. Much of the counter-terrorist success we've seen in Iraq's al Anbar province over the past two years is a direct result of an increased willingness of local Iraqis to help the Iraqi army and US troops oust the militants operating there. In part, that's because the area's tribal leaders have their own incentives (including payment in cash and weaponry) for cooperating with occupation forces. But it's also because foreign militants have alienated the locals.

The security deterioration of the past year in Pakistan and Afghanistan reflects exactly the opposite phenomenon. In the region along both sides of their shared border, local tribal leaders have yet to express much interest in helping Pakistani and NATO soldiers target local or foreign militants. For those with the power to either protect or betray the senior al-Qaeda leaders believed to be hiding in the region, NATO and Pakistani authorities have yet to find either sweet enough carrots or sharp enough sticks to shift allegiances.  

The slowdown threatens to slow the progress of a number of developing countries. Most states don't provide ground as fertile for militancy as places like Afghanistan, Somalia, and Yemen. But as more people lose their jobs, their homes, and opportunities for prosperity -- in emerging market countries or even within minority communities inside developed states -- it becomes easier for local militants to find volunteers. 

This is why the growing risk of attack from suicide bombers and well-trained gunmen in Pakistan creates risks that extend beyond South Asia. This is a country that is home to lawless regions where local and international militants thrive, nuclear weapons and material, a history of nuclear smuggling, a cash-starved government, and a deteriorating economy. Pakistan is far from the only country in which terrorism threatens to spill across borders. But there's a reason why the security threats flowing back and forth across the Afghan-Pakistani border rank so highly on Eurasia Group's list of top political risks for 2009 -- and why they remain near the top of the Obama administration's security agenda.

AAMIR QURESHI/GETTYIMAGES