Economic Impact of Terrorism


The following article has been published in Daily Nation, dated 22nd December 2014

(E-Paper (Print Edition): http://nation.com.pk/E-Paper/lahore/2014-12-22/page-9)

(Online: http://nation.com.pk/business/22-Dec-2014/economic-impact-of-terrorism)

Economic Impact of Terrorism

Prof Dp

By: Omer Zaheer Meer

The menace of terrorism engulfing Pakistan culminated in the worst tragedy in recent history with the barbarian killing of children in the Army Public School Peshawar. While Pakistan was dragged in this quagmire by a dictator searching for the legitimacy of his rule, the complicated regional “grand game” has now reached the stage where the country is tearing itself from within, something the enemies always desired.

Leaving aside all other complicacies and debates, killing children can never be condoned no matter what the reason. Islam’s fundamental war principle baring one unique incident has been the strict instruction to not harm the children, women, elderly and even the non-combatant men of the non-believing enemy let alone the Muslims. The massacre in Peshawar was therefore anything but Islam. It was infact an effort to tarnish the image of Islam and a direct assault not just on Pakistan or Islam but entire humanity. Having said that, let’s focus on the lesser examined aspect of the terrorism faced by Pakistan, the economic impact.

The USA-started war on terror that General (R) Pervaiz Musharraf brought into Pakistan while claiming as his success, the meager assistance from USA had actually negatively hammered Pakistan’s economy to the tune of well over $ 103 Billion as per National Economic Survey and various other reputable studies. The loss in addition to the direct costs resulting from infrastructure damage and cross-border attacks involves loss of investor confidence, loss of productivity, wasted time, reduced exports due to increased security costs, business loss due to law and order situation, lack of developmental funding due to diversion to security-related expenses, e.t.c.

Although most of the above costs couldn’t be fully monetized and the biggest factor, the human cost has not been considered, still the conservative estimate of over $ 100 billion should be an eye-opener. To fully appreciate the significance of this, compare it to the total foreign debt of Pakistan currently standing at around $ 64 billion. This would mean an extra $ 39 billion to spend on development and betterment of the lives of the people of Pakistan even after paying off all the foreign borrowings to date. These borrowings as of now account for most of our national budget on account of debt servicing, even much higher than the total defense budget.

Meanwhile the total US aid to Pakistan during the above mentioned war has been under $ 20 billion. It touches the mark of $ 25.9 billion as per the most lavish US claims which still results in Pakistan ending up $ 77.1 billion in red. What’s ironic is that a lion’s share of this “aid” was actually the reimbursement of expenses directly incurred by Pakistan for the conduct of US-led coalition’s war operations. This means the actual truly no-strings attached aid was even less than $ 10 billion as per the most lenient studies, against a loss of over $ 100 billion. It is therefore no surprise that the US embassy in Pakistan vehemently opposed Pakistan’s decision to reveal the economic cost of terrorism in the economic survey of Pakistan released earlier this year, a fact revealed by reputable officials privy to the discussions.

However, with the Peshawar school massacre this American started war on terror has turned a new chapter. It is now closer to home and has turned into a war for the survival of Pakistan. It is an established fact that no country can thrive economically without peace. Therefore the deteriorating law and order situation in Pakistan has a huge economic cost and is burdening an already shaky economy guided by a policy based on failed measures from the past.

The fact of the matter is that there isn’t a sector left in Pakistan which has not been affected by terrorism, either directly or indirectly. Agriculture which is the backbone of the national economy has taken hits over the years with uncultivated lands captured by non-state actors besides law and order issues making people leave their lands for their lives. This is in addition to the water and energy crisis already pushing this sector to the brink. Manufacturing has also been crippled resulting in lower exports. No foreign business personnel are ready to visit Pakistan and such meetings now normally take place in UAE. But even worse than all this, culminating from the Peshawar school attack, is the wide-spread panic with resulting shockwaves across all segments of the society as well as the economy. If not checked the ramifications of this can be much more than what we’ve already faced.

While the economic impact briefly outlined above is important, the immeasurable cost of the lost lives and the related potential can never be monetized. Therefore, now that the American started war on terror has turned into the foreign-sponsored TTP menace engulfing Pakistan, we’re faced with a problem we’ve to resolve ourselves. The benefits of resolving this amicably will not just be economic but the social positives from such a strategy can be manifold. Though for such a drastic step to succeed we’d need to rid ourselves of the American interferences and subjugation too. It is high time that the overwhelming majority of Pakistanis take control of the national narrative to direct the course of action as the extremes of the society, both right and left, have harmed the country enough. The way of the Prophet PBUH followed by the majority of Pakistanis, one of maintaining balance and level-headedness, is the need of the hour.

The author is Director of the think-tank “Millat Thinkers’ Forum”. He is a leading economist, chartered financial analyst, qualified accountant and anti-money laundering expert with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk

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