Abstract
The Govt. policies in Soviet-Afghan war led to influx of militant groups (Mujahidin) in our country and our status as frontline ally of US in war against terrorism triggered these militant groups (Mujahidin) to inflame militancy and violence in our country. As a developing nation terrorism is affecting adversely the social and economic structure of our country due to civilian and security force causalities and increased Government expenditure on security measures and military operations. The study is conducted for risk assessment of socio-economic structure of Pakistan due to terrorism as it has become indispensable to avoid or ignore and to develop a strategy or way forward to nip the terrorism in the bud for social and economic development. The data of social and economic parameters is interpreted in order to assess our socio-economic development over the years since the start of this phenomenon. Relevant data has been collected from various sources. The data has been analyzed by descriptive methodology by comparison of figures of different years in terms of GDP growth rate, inflation, Foreign Direct Investment, Tourists Arrival & Foreign Exchange, casualties, literacy rate, , number of internally displaced people, estimated losses due to terrorist activities and US military and economic aid to Pakistan. It is quite evident from the data that terrorism has drastically effected the social and economic structure of Pakistan. GDP growth rate was high during the time of economic aid from the US and decline was observed when economic aid was reduced. The estimated losses due to terrorism reaches up to 107 billion US $ while, the capital influx in terms of military and economic aid from US is about 18 billion US $ only. Civilian and Armed Personal casualties is another issue with serious social implications. The study reflects that the effects of terrorism are very deep on social and economic structure of our country in terms of losses and way forward is indispensable from social as well as economic perspective of Pakistan.
1. Introduction
During the 1960’s and 1970’s when most terrorism was vaguely left wing in inspiration arguments were made that terrorism was a response to injustice. Hence, if there were more political, social and economic justice, terrorism would more or less automatically vanish. But, in the 1980’s and 90’s when most terrorism in Europe and America came from the extreme right and the victims were foreigners , national minorities or arbitrarily chosen, those who had previously shown understanding or even approval of terrorism no longer used these arguments. They could no longer possibly explain or justify murder with reference to political, Social or economic injustice (Laqueur, 2001).
1.1 Soviet-Afghan War Era
Terrorism implanted its roots in Pakistan during the Soviet-Afghan war which started in 1979. During 1980’s there was heavy influx of Afghan refugees across the Durand Line border fleeing from Soviet Occupation to Pakistan including large number of Mujahidin groups who crossed back and forth. Pakistan served as major training ground for 250,000 foreign Mujahidin fighters who started crossing border on daily bases to wage war against the Soviet forces. The Mujahidin included locals, Arabs and others from over 40 different Islamic countries. These Mujahidin married local women and stayed in Pakistan among them were radical Muslims such as members of Saudi nationals led AL-Qaeda and Egyptian Muslims as well as prisoners from Arab Countries (The Jamestown Foundation, 2006). It was General Zia-ul-Haq regime and in foreign policy his support for the Mujahidin resistance led to the proliferation of millions of refugees, with heroin and weaponry into Pakistan’s frontier Province.
1.2 War on Terrorism
The war on terrorism since 2001 had a great impact on our country. In fact, it is shattering the foundations of our country as our country was already suffering from sectarian violence. In order to understand the phenomenon of terrorism we have to go back to its background. This tyrant of instability and chaos started after the terrorist attacks on US on 9/11/2001 by Islamic group Al-Qaeda. Pakistan had to fight Al-Qaeda and Taliban who fled from Afghanistan as US launched attack on Afghanistan for to depose Taliban Who had harbored Al-Qaeda. Pakistan Government of President Pervaiz Musharaf decided to act as the ally of US in war against terror in Afghanistan and Pakistan had given Logistic support to US earlier.
Shamsi Airfield was also provided later as base for CIA and surveillance of US Air force to launch drone attacks in Afghanistan as it was Sub leased by UAE on 20-10-2001 with approval of Pakistani Government of President Pervaiz Musharaf (Air Marshal Retd. Khan, 2007).
As a reaction Pakistani Interior Minister Moinuddin Haider’s elder brother Ihteshamuddin Haider was shot dead near soldier bazar in Karachi (The times of India, 22 Dec. 2001). An American journalist Daniel pearl was also kidnapped and killed in Karachi on 22-02-2002 (CNN, 15 March 2007). President Pervaiz Musharaf himself survived on an assassination attempt when a powerful bomb exploded minutes after his convoy crossed the bridge of Rawalpindi on 14-12-2003 (BBC News, 14-12-2003).
Afterwards many incidents of attacks on Pakistan Armed Forces and Civilians are being witnessed till now in 2015. In between these periods of terror and instability incident of besiege of LAL MASJID complex by Pakistan Army from 03-07-2007 to 11-07-2007 occurred. As Negotiations failed and complex was captured by Pakistan Army’s Special Service Group resulting in 154 deaths which also activated the Pro-Taliban rebels near the Afghan border to cancel 10 month old peace agreement with Pakistan Government (BBC News, 19-07-2007). This incident augmented another serge in militancy and violence in Pakistan resulting in more than 3000 causalities (M&C News. 04-05-2008).
Statement of the Problem
The Govt. policies in Soviet-Afghan war led to influx of militant groups (Mujahidin) in our country and our status as frontline ally of US in war against terrorism triggered these militant groups (Mujahidin) to inflame militancy and violence in our country. The developed countries have the ability to counter the terrorism due to strong economic structure and better security system. As a developing nation terrorism is affecting adversely the social and economic structure of our country due to civilian and security force causalities and increased Government expenditure on security measures and military operations (Rah-e-Nijat, Rah-e-Rast & Zarb-e-Azab) against these militant groups, causing shift of spending of capital money from developmental activities to less productive security activities . Way forward is desired to deal with this menace of our society to bring peace and harmony in our country for socio-economic development.
Significance and Scope of Study
1. Risk assessment of socio-economic structure of Pakistan due to terrorism as it has become indispensable to avoid or ignore.
2. Need to develop a strategy or way forward to nip the terrorism in the bud for social and economic development.
The study is also important for future policies of our country.
Literature Review
Small developing countries are apt to show detrimental economic effects from terrorism (Enders & Sandler, 2012; Gaibulloev & Sandler, 2011). This is likely true of failed states that host terrorist groups, because such groups will scare away foreign direct investment (FDI), which is an important source of savings and, hence, growth. If, however, a developing country has only a modest amount of terrorism, then the country should weather these attacks with little economic stress. Fourth, most cross-sectional and panel studies of regional aggregates found that terrorism caused a small, but significant, negative impact on per capita GDP growth (Enders & Sandler, 2012).
Economic consequences of terrorism can be at the macroeconomic level in terms of reduced GDP or lost GDP growth. Macroeconomic aggregates – consumption, investment, and government expenditures – may also be affected by terrorist attacks. A country that experiences a significant terrorist campaign may lose investment owing to a higher perceived risk on the part of the investors (Blomberg et al., 2004).
Moreover, such investors may be expected to transfer their funds to other countries with similar rates of returns but lower risks of terrorism. The need for more government-supported counterterrorism measures may crowd out public and private investments owing to higher taxes. There may also be microeconomic level impacts from terrorism as some sectors or locations are at greater peril from terrorist attacks. A time-series analysis, showed that terrorist attacks directed at the Greek tourist industry cost Greece 23.4% of its annual tourism revenue for 1988 (Enders et al., 1992). Another wave of terrorist attacks in Austria during 1985–87 cost Austria 40.7% of its annual tourist revenues for 1988 (Drakos & Kutan, 2003).
A panel of the National Research Council observes that regions most likely to generate terrorist threats have a history of colonialist exploitation by Western interests, and of postcolonial economic and cultural penetration. Particularly in nondemocratic societies, conflicts generally reflect class, ethnic, racial, or religious divisions (Smelser and Mitchell, 2002).
Consequently, terrorist activities lead to destruction of schools, colleges, hospitals, banks NGO’s working in the area and created harassment among the government employees to continue their duties. In addition these insurgents have made their social networks to achieve their own specific goals based on the agenda of so called jihad and Islamization (Rashid, 2002).
Pakistan is also one of those countries whose economic development, the social system and the political structure is being eroded as the consequence of the terrorism. These are open challenges to the law and order situation of Pakistan, are violating the human rights of the civilians and also causing severe damage to the infrastructure and reduce the economic opportunities. Destruction of the property, damage of infrastructure, loss of human lives and reduction in the short term economic activity are the immediate outcomes of the terrorism. It also increases the perceived risk and uncertainty which finally give rise to the low investment and reduced economic growth (Maryam et al, 2014).
2. Data & Methodology
The data of social and economic parameters is interpreted in order to assess our socio-economic development over the years since the start of this phenomenon. Relevant data has been collected from various sources, International Monitory Fund, Pakistan Bureau of Statistics, Pakistan Board of Investment, Tourism Division, News Reports, CIA World Fact Book, PRP, MoF, M/o Interior, M/o Foreign Affairs Joint Ministerial Group and Wikipedia. The data has been analyzed by descriptive methodology by comparison of figures of different years in terms of GDP growth rate, inflation, Foreign Direct Investment, Tourists Arrival & Foreign Exchange, casualties, literacy rate, , number of internally displaced people, estimated losses due to terrorist activities and US military and economic aid to Pakistan. The data collected is arranged in the form of tables. A strategy or way forward is devised to root it out from our society.
Table-2.1: GDP Growth Rate of Pakistan from 1980 to 2014
Year Gross Domestic Product, Constant Rate Year Gross Domestic Product, Constant Rate
1980 8.526 1998 3.494
1981 6.831 1999 4.184
1982 6.537 2000 3.906
1983 6.778 2001 1.967
1984 5.065 2002 3.112
1985 7.592 2003 4.726
1986 5.502 2004 7.483
1987 6.452 2005 8.958
1988 7.625 2006 5.818
1989 4.96 2007 5.537
1990 4.459 2008 4.988
1991 5.417 2009 0.361
1992 7.57 2010 2.581
1993 2.097 2011 3.624
1994 4.369 2012 3.837
1995 5.062 2013 3.696
1996 6.599 2014 4.139
1997 1.703
Source: International Monetary Fund, World Economic Outlook Database, April 2015
GDP Growth Rate is shown year wise in table-2.1 to estimate the impact of terrorism from 1980 to 2014. The interpretation in descriptive form is done in discussion section
Table-2.2: Causalities from 2003 to 2015
Year Civilians Security Force Personnel Terrorists/Insurgents Total
2003 140 24 25 189
2004 435 184 244 863
2005 430 81 137 648
2006 608 325 538 1471
2007 1522 597 1479 3598
2008 2155 654 3906 6715
2009 2324 991 8389 11704
2010 1796 469 5170 7435
2011 2738 765 2800 6303
2012 3007 732 2472 6211
2013 3001 676 1702 5379
2014 1781 533 3182 5496
2015 702 243 1950 2895
Total* 20639 6274 31994 58907
*Data till September 6, 2015
Source: http://www.satp.org
The casualties’ figures shown in table-2.2 are compiled from news reports and are provisional and interpreted in discussion section to assess the impact of terrorism in terms of casualties.
Table-2.3: (Estimated Losses 2001-2015)
Years $ Billion Rs. Billion % Change
2001-02 2.67 163.90 –
2002-03 2.75 160.80 3.0
2003-04 2.93 168.80 6.7
2004-05 3.41 202.40 16.3
2005-06 3.99 238.60 16.9
2006-07 4.67 283.20 17.2
2007-08 6.94 434.10 48.6
2008-09 9.18 720.60 32.3
2009-10 13.56 1136.40 47.7
2010-11 23.77 2037.33 75.3
2011-12 11.98 1052.77 -49.6
2012-13 9.97 964.24 -16.8
2013-14 6.63 681.68 -33.5
2014-15* 4.53 457.93 -31.7
Total 106.98 8702.75
*Estimated on the basis of 09 month actual data
Source: MoF, M/o Interior, M/o Foreign Affairs Joint Ministerial Group
The estimated losses are shown in table-2.3 from 2001-02 to 2014-15 for interpretation of these losses since the start of War on Terrorism.
3. Discussion
3.1 Impact on GDP growth rate
It is evident from the chart (Table-2.1) that GDP growth rate was very high in 1980 when Soviet-Afghan war started then there was decline trend till the year 2001 when the war or terrorism started and afterwards, there was rise in GDP growth rate till 2005 may be due to economic aid received from the US. There was decline again from 2006 as economic aid was considerably reduced during the year 2005 by US and GDP was at lowest level during the year 2009 (Table-2.9). It may also due to increased terrorist activities as causalities are more afterwards 2005 till 2009. It is on the rise again from the year 2010 to 2014. According to Blomberg et al. the consequences of terrorism could be reduced or lost GDP growth rate.
3.2 Impact in terms of casualties
This chart (Table-2.5) shows the casualties of civilians, armed personal and terrorists from 2003 to 2015 and there is considerable increase in human loss from 2007 to 2013. Pakistan suffered from 20639 civilian and 6274 Armed Personal casualties from 2003 to 2015. This leads to harassment among the society and fear to go to their work places. Media journalists have also suffered from these terrorist activities. These are open challenges to the law and order situation of Pakistan, are violating the human rights of the civilians and also causing severe damage to the infrastructure according to Maryam et al.
3.3 Impact in terms of estimated losses
The chart (Table-2.8) shows increase in estimated losses from 2001-02 to 2010-11 and there is decline in estimated losses afterwards. However Pakistan suffered from 106.98 $ Billion total estimated losses due to terrorism since 2001. Bloomberg et al. pointed that Govt. expenditures may also be affected due to terrorist attacks.
3.4 Impact on inflation
The inflation chart (Table-2.2) determines that inflation was on the decline till 2003-04 and was very high during the years 2007-08, 2008-09 and 2010-11 (12, 17&13.66) respectively as per consumer price index. It reflects that when there was less or no financial aid from the US the inflation rate also increased. Small developing countries are opt to show detrimental economic effects according to Enders & Sandler; Gaibulloev & Sandler.
3.5 Impact on Foreign Direct Investment
Foreign Direct Investment was very low during 2001-02 (Table-2.3) and it increased many folds till 2007-08 which means that security situation was under control during these years or militant groups were dormant during that period and there was heavy influx of investment during these years. Then investment decline was observed from 2008-09 to 2011-12. Terrorist incidents increased during these years as militant groups were activated again. Peaceful investor friendly environment is the basic requirement for economic growth. Local as well as direct foreign investment is required for development of all the sectors. It could be hardly possible in the atmosphere of high degree of uncertainty produced as a result of terrorism. Blomberg et al. &Maryam et al. pointed out that terrorist activities can be a cause of loss investment owing to higher perceived risk on part investors.
3.6 Impact on Tourism
The tourism department data (Table-2.4) shows increase in no of tourists and foreign exchange from the year 1996 to 2009 except the years 2001 and 2002 when US launched attack on Afghanistan and War on Terrorism started. The situation has worsened in terms of terrorist activities since 2008-09 affecting adversely the tourism industry of Pakistan by depriving us from the foreign exchange that we earn from this industry. It also has social implications that people do not like to come to our country as they do not feel safe here and we are suffering from global isolation also. Enders et al mentioned that Greek tourist industry suffered loss of 23.4% of total tourism revenue during 1988. Austria also suffered the loss of 40.7% of its total tourism revenue during the same year according to Drakos and kutan.
3.7 Impact on Literacy
It is evident from the literacy chart (Table-2.6) that there is considerable increase in the literacy rate from year 2003 to 2009 as US aid was also invested in the education sector, especially in the higher education. Instead, between 2007 and 2011 Taliban destroyed more than 400 schools in swat (Al-Jazeera, 15 Oct 2012). These terrorist activities also created educational disparity in KPK province as girls were forced to not go to school. Consequently, terrorist activities lead to destruction of schools, colleges according to Rashid et al. and future of our children is at stake in these areas.
3.8 Impact in terms of IDPs
The chart (Table-2.7) gives an idea of internally displaced persons in Pakistan due to terrorist activities. More than 1.2 Million IDP’s were recorded in Pakistan till 2014. The real number could be much higher than the figures provided. This influx of IDPs has created enormous pressure on Govt. and it has serious social implications as well for the IDPs.
4. Conclusion
It is quite evident from the data that terrorism has drastically effected the social and economic structure of Pakistan. GDP growth rate was high during the time of economic aid from the US and decline was observed when economic aid was reduced. The direct foreign investment also increased after becoming an ally to US on War on terror and was low when there was rise in casualties due to terrorist activities in Pakistan. Inflation rate was also on the rise during the period of reduction in economic aid and increased casualties. There was also considerable decline in tourist number in the country when war on terrorism started. Although there is considerable increase in literacy rate during the period of war on terrorism as US aid was invested in the education sector, however, there was destruction of schools in KPK Province of the country by the terrorists on the other side. In addition Pakistan has to face the challenge of internally displaced persons, putting pressure on the Govt. for their settlement and creating social implications. Greater part of budget is being spent on military operations against the terrorist. The estimated losses due to terrorism reaches up to 107 billion US $ while, the capital influx in terms of military and economic aid from US is about 18 billion US $ only. Civilian and Armed Personal casualties is another issue with serious social implications. The study reflects that the effects of terrorism are very deep on social and economic structure of our country in terms of losses and way forward is indispensable from social as well as economic perspective of Pakistan.
5. Recommendations or Way Forward
There is need to create social justice in our society as terrorism is a response to injustice. Social injustice creates desperation among the deprived segment of our society paving a way towards terrorism. If there will be more social and economic justice, recognition of fundamental rights of people and equal economic growth opportunities terrorism will more or less vanish.
Most of the people in our society lives below the poverty line, it can generate social crimes and lead towards terrorist activities at the end as these poor people can easily approached by terrorist groups. If Govt. spending will be more on basic human needs then the arms and military it will help in eliminating terrorism from its roots.
Religious extremism also prevails in our society. The students of the ‘Madrasas’ receive religious education only as there is no arrangement of modern skill based education to enable them to earn their livelihood, it is therefore they grow up with extreme religious ideas only and become in tolerant to other segment of the society by imposing their own extreme believes through violent actions and causing terrorism in the society. Current Govt. has the plan to provide O-Level education to the students of these Madrasas to bring them to the mainstream of our society which
is praise-worthy. Moreover, consultation or negotiation process needs to be channelized with religious leadership to take them in confidence for better solutions of this crisis.
Political instability and poor law and order situation and weak judicial system is also the one of the reason of terrorism in our country which needs to be cured. Each political party has its own agenda rather than one common national agenda. This political disharmony led to the creation of militant wings in the political parties, the implications of which are violence and terrorism in the society. Maturity of political Leadership to address the grievances of political parties and improvement in the law and order and judiciary can ease the situation.
Terrorism is an outcome of foreign policy during the Soviet-Afghan war and War on Terrorism. The number of terrorist activities has increased since the start of War on terrorism. According to Smelser and Mitchell a panel of the National Research Council, regions most likely to generate terrorist threats have a history of colonialist exploitation by Western interests, and of postcolonial economic and cultural penetration. We should watch our interests first rather than becoming a tool for the interests of other powers in the region.
Military operations are not the solution of terrorism. There is increase in number of terrorist attacks on civilians and armed personal since the start of the military operations. As terrorist activities are more pronounced in the Tribal Areas and KPK province of our country, development of these areas to create job opportunities and political dialogue in these regions can keep the people away from the arms.
War on terrorism cannot be won when war itself is a terrorism. Our religion Islam promotes peace and harmony and aggression is condemned in Holy Quran “And do not aggress; God dislikes the aggressors” (Surah Al Maida 5:87). Life of a person is of great value in our religion, what Holy Quran says about life: “You shall not kill any person, for God has made life sacred-except in the course of justice.” (Surah Al Israa 17:33).
Annexures
Annex-I: Historical Trend in Headline Inflation
Financial Year CPI Food Non-Food
1990-91 12.70 12.90 12.40
1991-92 10.58 10.64 10.52
1992-93 9.83 11.74 7.81
1993-94 11.27 11.34 11.22
1994-95 13.02 16.67 10.17
1995-96 10.79 10.13 11.34
1996-97 11.80 11.89 11.73
1997-98 7.81 7.65 7.94
1998-99 5.74 5.90 5.61
1999-00 3.58 2.23 4.69
2000-01 4.41 3.56 5.09
2001-02 3.54 2.44 4.28
2002-03 3.10 2.89 3.24
2003-04 4.57 6.01 3.62
2004-05 9.28 12.48 7.10
2005-06 7.92 6.92 8.63
2006-07 7.77 10.28 6.02
2007-08 12.00 17.65 7.90
2008-09 17.03 23.13 13.37
2009-10 10.10 12.93 8.26
2010-11 13.66 18.02 10.71
2011-12 11.01 11.03 11.00
2012-13 7.36 7.12 7.53
2013-14 8.62 9.00 8.35
2014-15 4.81 3.59 5.69
Source: Pakistan Bureau of Statistics (PBS)
Annex-II: Foreign Direct Investment in Pakistan 2001-02 to 2011-12 (in US$ million)
Year FDI (US$ Million)
2001-02 485
2004-05 1524
2006-07 5139.60
2007-08 5409.80
2008-09 3719.90
2009-10 2150.80
2010-11 1739.40
2011-12 595.1 (Up to April 2012)
Source: Board of Investment
Annex-III: Tourist Arrival by Mode of Transport
Arrival by Number
Year Air Sea Land Total
1995 327,776 322 50,267 378,365
1996 316,754 380 51,528 368,662
1997 312,736 135 61,924 374,795
1998 354,100 1,400 73,300 428,800
1999 353,600 1,800 76,800 432,200
2000 475,000 2,600 79,200 556,800
2001 406,800 – 92,900 499,700
2002 407,800 – 90,300 498,100
2003 385,300 – 115,600 500,900
2004 536,100 – 111,900 648,000
2005 681,760 – 116,500 798,260
2006 763,430 – 134,159 897,589
Source: Tourism Division
.
Annex-IV: Literacy Rate from 1995 to 2009
Country 1995 1998 2003 2004 2005 2009
Pakistan
37.8 42.7 45.7 48.7 49.9 54.9
Source: CIA World Fact Book
Annex-V: Figures of internally displaced persons in Pakistan
IDP Site
Total
Families Individuals
Jalozai (Nowshera) 4,685 23,317
Togh Sarai (Hangu) 1,154 6,173
New Durrani (Sadda) 700 4,166
Total In Camp Population 6,539 33,656
Total Off Camp Population 147,973 680,892
Total Number of IDPs (In and Off-Camp) 154,512 714,548
Total Number of IDPs of NWA* 83,000 500,000
Figures as at 08 July 2014
Source: * Planning figures utilized by the Humanitarian Country Team’s Preliminary Response Plan (PRP)
Annex-VI: Military and Economic Aid to Pakistan
Year Military (USD in billions)
Economic (USD in billions)
2002 1.36 1.233 for 2002 to 2004
2003 1.500 1.233 for 2002 to 2004
2004 1.200 1.233 for 2002 to 2004
2005 1.313 .338
2006 1.260 .539
2007 1.115 .567
2008 1.435 .507
2009 1.689 1.366
2010 1.232 1.409
2011 1.685 unknown
Total 11.740 billion[15]
6.08 billion[16]
Sources: http://belfercenter.ksg.harvard.edu/files/Final_DP_2009_06_08092009.pdf
“http://www.usinflationcalculator.com”.
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