Terrorism is now viewed as a critical variable influencing economic development and its course in various parts of the world in general and in Pakistan in particular.
In Pakistan, it is now widely believed to be a significant variable influencing the investment and thereby the GDP growth and economic development.
This is notwithstanding the decent rates of the GDP growth that Pakistan's economy might be able to attain, inter alia, due to better weather conditions and improved input management influencing the agricultural component of the GDP, better credit facilities influencing the manufacturing growth rate of consumer durables/construction/engineering goods, and growth in the textiles' sector resulting from a higher export demand. All of this would have a tractive effort on related industries pulling up their growth rates.
However, this increased activity still does not translate into a vibrant investment mood which remains downcast primarily due to weak consumer demand emanating from economic deprivation and now also due to the overshadowing threat of terrorism that continues to loom large. The variables of poverty and terrorism may also interact to produce either more of poverty or more of terrorism or more of both.
Terrorism, therefore, becomes an important variable to be explored and studied further so as to minimize, if not eliminate, its debilitating economic effect. If economists studied politics to yield public choice theory and institutions to come up with institutional economics, now is the time for them to also study terrorism.
So, if economic decisions and outcomes are influenced by the non-economic factors in general and political factors in particular, then it is important to disaggregate the variable of terrorism with a view to favourably influencing economic results. The terrorism that we see in Pakistan appears in various forms and manifestations.
Currently, it derives from an external international demand for the same in the heart of the Middle East and fuels a supply within that manifests itself either in the form of outright terrorist attacks on perceived foreign enemies and/or blatant sectarianism. In both its manifestations, it betrays lack of tolerance for those aligned with perceived foreign interests and/or those having a diverse religious view.
This strain of intolerance in Pakistan goes back to the end of the Cold War when none other than the flag bearer of the free world fomented this extreme sentiment to launch a final assault on the then Soviets. Having won the Cold War, the extreme sentiment could not be effectively disengaged nor was it alternatively engaged in economic development in their respective territories.
Consequently, they found alternative gainful engagement in the world's upcoming hotspots that provided a market for their expertise and skills. A spot could be found in the Palestinian region due to continued Israeli aggression and terror experienced by the people there.
Some others as in Kashmir came up due to the unfinished agenda of the 1940s as the freed up human resources could be "innovatively" deployed there. In parallel and driven by their internal compulsions to respond to a terrorist king, came up a religious revolution in a country that enjoyed certain homogeneity of thought which, additionally, induced an intensive promotion of a diverse religious thought. This direction might intensify now in the wake of the developments in Iraq which aspect should also be looked at in our context.
As the markets grew for trained informal fighters, so did the supply for a number of interacting reasons above. A concomitant variable was economic deprivation experienced in these regions that fuelled the supply of informal fighters.
Even though the conventional economic view of "supply creating its own demand" could not be borne out after the Great Depression of the 1930s in either the product or the factor markets in the economic realm; the supply of informal fighters has been creating its own demand in the case of this particular labour market of informal armies.
The reason is that the more the supply, the more the incidents of terror, the greater are the sentiments fuelled, the greater the consequent terror, and the greater the demand for informal fighters. The mutually reinforcing spiral of terror feeds into itself thus creating a greater demand for such fighters which is easy to cater to given the level of economic deprivation.
So, the economic deprivation in Pakistan provides a fertile ground to home-grow and supply informal fighters - actual or potential. As said a number of times before, economic growth by itself would not ameliorate the lot unless a frontal attack is made on poverty to which we are nowhere near except for in the imagination of some key policy elite.
Poverty is not an issue that can be wished away in thought and in speech. It requires transformational action on the ground with visible favourable changes in the lives of the people. With country's priorities thus far dictated more by territorial than economic interests, the problem of poverty has compounded.
It now stands further compounded as the above priorities have led us into an extremist web from which it is difficult to disentangle unless the entire gamut of informal struggles is surveyed.
The idea is to determine our own place in it so as to ascertain the areas from which we can possibly extricate ourselves to at least begin to realign our economic priorities.
Therefore, continuing with the survey, we will find economic deprivation as a strong reason behind the continued addition to the ranks of swelling informal armies elsewhere too as is also the case in Iraq as well as in Gaza Strip. Iraq could generate a demand as well as provide a supply of such informal fighters.
The religio-political parties in these regions attract huge funds due to their religious standing. Since certain contributions are mandatory and have to be made by the members of a sect, people have no choice but to contribute to the only parties or groups that are available.
Since people in the community are kept deprived in many ways due to the softness of state apparatus, such religio-political parties/groups set up charity schools, hospitals, and welfare centres for the benefit of the community. In the process, they win the community over.
The community would then provide informal fighters as well to protect the interests of the leadership with which they have struck congruence due to their long association in which they have taken and must return in the form of physical security through some of their male members of the family. This is the situation in the Sadr city of Baghdad where an uprising can be led if the leader so demands.
On the contrary, the Badr brigade in Basra is providing administrative services to the people and, together with other militias, has been able to restore administrative order to a large extent. Badr and other brigades are playing ball so long as they hope the coalition to deliver on their promises of giving the country back to Iraqis in the not-too-distant future failing which an infrastructure is already available to go violent at a moment's notice should their leaders decide to give a call for the same as happened in Sadr city recently.
If deftly dealt with policy-wise and administratively, need for violence could be de-marketed in Iraq. Iraq should, therefore, not be engaging others in the region in an out-of-control spiral of violence and vice versa. If this happens, there will be one less hotspot in the world fuelling demand for and supply of informal fighters whose impact spills over into other territories as we know already.
While there might be one less hotspot as optimistically viewed above for Iraq; in either case, Pakistan will need to shield itself from the sectarian ripples that might grow out of the developments in Iraq.
Moderation and tolerance would need to be encouraged at all levels in our country more than ever before. Otherwise, stirring this sentiment any more than it has remained stirred in the last over five decades would have grave consequences for the society in general and the economy in particular due to our peculiar vulnerability to sectarianism that has been more particular to us than to others yet.
The other interacting facet of terrorism emanates from our position in Kashmir and the position in Palestine of the world in general and that of the Palestinians in particular. While the Palestinians certainly require consensus amongst themselves about the possible solution, the terrorism-affected countries of the world especially those allying with the US do need to communicate with candour about the importance of an even-handed American approach to terror.
Dealing with terror selectively dilutes the legitimacy of the efforts against terror at a broader level of analysis, however repugnant specific acts of terror may be and however urgent it may be to deal with them specifically.
As the USA goes about engineering political systems in the Middle East, it is Israel's system too that perhaps requires some adjustments so as to ensure that ultra-hardline conservatives are not thrown up to derail whatever headway is ever made towards peace and development.
The Israeli acts of terror require censure by those who have taken it upon themselves to fight terror otherwise it will be difficult to break the vicious circle of terror begetting terror.
There is a moral level at which terror needs to be fought against by Pakistan as above with courage and conviction. And, there is a practical domestic effort that needs to be made in parallel to insulate from and eliminate sources of terror at home that liaise either with international networks or with domestic hardline groups for terror activity here or abroad or for an enmasse conversion of people to a single radical thought.
The order of priorities should be clearly delineated at both the public and private levels. That is, Pakistanis need to decide whether they have to be continuously engaged in informal battles on various fronts in the region or whether they should be waging a war for the socio-economic development of the country or for both and if so, how? Unless answers are found soon enough, we will have transformed into a self-reinforcing so-called "jihadi" entity even before we will know it.
The issues of economic development will have been displaced with religion-political issues, we are ill-equipped to confront at our current level of socio-economic development.
