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Pak hurt most by attack on Afghanistan

Pak hurt most by attack on Afghanistan

Publication: The Times of India
Date: December 1, 2001

The Pakistani economy, already in crisis since 1998, has been hit particularly hard by the U.S.-led military offensive launched in Afghanistan. With investors more leery, tourism oft manufacturing orders down and production costs on the rise, Pakistan has suffered more than its share of economic grief from Washington's Afghan venture.

"The whole Asian region has been affected by an economic slowdown brought about by the war in Afghanistan, but Pakistan is in the front line," said Yoshihiro Iwasaki, regional director for the Asian Development Bank (ADB). The Institute of Policy Studies (IPS) here sounded the same theme in its latest newsletter in which it said, "The negative financial fallout of the U.S. military action in Afghanistan will be substantial for Pakistan."

Pakistani officials estimate that the country has racked up some $2.5 billion in economic losses since the September 11 terror attacks that prompted the U.S. military action. If President Pervez Musharraf s gamble to support the American action paid off quickly in a lifting of sanctions, in pledges of economic aid and debt relief, some analysts wonder if it will be worth it in the long term. "The key challenge before the government today is to ensure that the positive benefits from the removal of sanctions exceed the negative consequence of the crisis, So far, this is not happening," the IPS study said.

Since U.S. warplanes started pounding Afghanistan, Pakistan has come to be seen as more risky by investors. Manufacturing orders have been cancelled or cut back in all sectors and production costs are up because of soaring insurance rates, making exports less competitive. Tourists and businessmen have been steering clear of Pakistan, thousands of people here are losing their jobs. "Nobody at present considers investing in Pakistan, whether we are supported by the U.S. or not," said economist Faisal Bari from the University of Lahore.

Employment is Mr Bari's main concern. According to some estimates, the unemployment rate here has climbed to 20 per cent and does not look like coming down soon with the economic growth projections cut back to 2.5 per cent for 2001-2. But Pakistanis do not need figures to tell them times are hard. Handyman Khairulla Iqbal walks each morning about 20 km from Rawalpindi to Islamabad looking for work in the capital. But since September, he has made the trek in vain. "The American war has deprived us of our jobs," he lament&

While Pakistan has been unable to escape the consequences of the war, Islamabad has had no more success in achieving the main objective of its alliance with Washington: cancellation of its $38 billion debt. The debt amounts to a staggering 64 per cent of the gross domestic product. But up to now, Pakistan has won little more than some rescheduling pledges for its war effort, despite a parade of world leaders here in recent months.

Some Pakistani companies are seeking compensation in the U.S. for problems created by the war. Civil aviation officials have urged their government to seek damages from the Americans for what they say is a million dollars a week in losses since October.

According to a civil aviation official, the number of international flights landing in Pakistan has plunged by 70 per cent since October 7. Pakistan is now looking at the reconstruction of post-Taliban Afghanistan to reignite its economy. The long border between the two countries makes Pakistan a natural partner for the Afghans and international organisations. (AFP)

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