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Henry Sokolski 

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December 2009 

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Foreword v 

Introduction: Pakistan's Nuclear Plans: 

What's Worrisome, What's Avertable? 1 

Henry Sokolski 

1. The Indo-Pakistani Nuclear Confrontation: 
Lessons from the Past, Contingencies 

for the Future 19 

Neil Joeck 

2. Reducing the Risk of Nuclear War 

in South Asia 63 

Feroz Hassan Khan 

3. Is Nuclear Power Pakistan's Best 
Energy Investment? Assessing Pakistan's 
Electricity Situation 103 

John Stephenson and Peter Tynan 

4. Pakistan's Economy: Its Performance, Present 
Situation, and Prospects 131 

Shahid Javed Burki 

5. Surviving Economic Meltdown and Promoting 
Sustainable Economic Development 

in Pakistan 187 

S. Akbar Zaidi 

6. Pakistan 2020: The Policy Imperatives 

of Pakistani Demographics 205 

Craig Cohen 


7. Imagining Alternative Ethnic Futures 

for Pakistan 243 

Maya Chadda 

About the Contributors 283 



The following volume consists of research that the 
Nonproliferation Policy Education Center (NPEC) 
commissioned and vetted in 2008 and 2009. It is part of 
a larger project that was published as Pakistan's Nuclear 
Future: Worries Beyond War. 

Pakistan's Nuclear Future: Reining In the Risk is the 
12th collaboration with the Strategic Studies Institute 
(SSI). Special thanks are due to Tamara Mitchell 
and Dan Arnaudo for assisting with the editing of 
the original manuscript. To the book's authors, the 
SSI editorial staff, and all those who made this book 
possible, NPEC is indebted. 

Executive Director 
The Nonproliferation Policy 
Education Center 



Henry Sokolski 

With any attempt to assess security threats, there is 
a natural tendency to focus first on the worst. Consider 
the most recent appraisals of Pakistan's nuclear 
program. Normally, the risk of war between Pakistan 
and India and possible nuclear escalation would be 
bad enough. Now, however, most American security 
experts are riveted on the frightening possibility of 
Pakistani nuclear weapons capabilities falling into 
the hands of terrorists intent on attacking the United 
States. 1 

Presented with the horrific implications of such an 
attack, the American public and media increasingly 
have come to view nearly all Pakistani security issues 
through this lens. Public airing of these fears, in turn, 
appear now to be influencing terrorist operations in 
Pakistan. 2 

Unfortunately, a nuclear terrorist act is only one — 
and hardly the most probable — of several frightening 
security threats Pakistan now faces or poses. We know 
that traditional acts of terrorism and conventional 
military crises in South West Asia have nearly escalated 
into wars and, more recently, even threatened Indian 
and Pakistani nuclear use. 

Certainly, the war jitters that attended the recent 
terrorist attacks against Mumbai highlighted the nexus 
between conventional terrorism and war. For several 
weeks, the key worry in Washington was that India 
and Pakistan might not be able to avoid war. 3 Similar 

concerns were raised during the Kargil crisis in 1999 
and the Indo-Pakistani conventional military tensions 
that arose in 2001 and 2002 — crises that most analysts 
(including those who contributed to this volume) 
believe could have escalated into nuclear conflicts. 

This book is meant to take as long a look at these 
threats as possible. Its companion volume, Worries 
Beyond War, published last year, focused on the 
challenges of Pakistani nuclear terrorism. 4 These 
analyses offer a window into what is possible and why 
Pakistani nuclear terrorism is best seen as a lesser- 
included threat to war, and terrorism more generally. 

Could the United States do more with Pakistan to 
secure Pakistan's nuclear weapons holdings against 
possible seizure? It is unclear. News reports indicate 
that the United States has already spent $100 million 
toward this end. What this money has bought, 
however, has only been intimated. We know that 
permissive action link (PAL) technology that could 
severely complicate unauthorized use of existing 
Pakistani weapons (and would require Pakistan to 
reveal critical weapons design specifics to the United 
States that might conceivably allow the United States 
to remotely "kill" Pakistani weapons) was not shared. 
Security surveillance cameras and related training, on 
the other hand, probably were. 5 

Meanwhile, the Pakistani military — anxious to 
ward off possible preemptive attacks against its 
nuclear weapons assets — remains deeply suspicious of 
the United States or any other foreign power trying to 
learn more about the number, location, and physical 
security of Pakistan's nuclear weapons holdings. 6 
Conducting secret, bilateral workshops to discuss 
nuclear force vulnerabilities and how best to manage 
different terrorist and insider threat scenarios has 

been proposed. It seems unlikely, however, that the 
Pakistanis would be willing to share much. 7 Destroying 
or retrieving Pakistani nuclear assets is another option 
that might prevent terrorists seizing them in a crisis. 
But the United States would have extreme difficulty 
succeeding at either mission even assuming the 
Pakistani government invited U.S. troops into their 
territory. 8 

What else might help? If policymakers view the 
lack of specific intelligence on Pakistani nuclear 
terrorist plots against the United States as cold comfort 
and believe that such strikes are imminent — then, the 
answer is not much. 9 If, on the other hand, they believe 
conventional acts of terrorism and war are far more 
likely than acts of nuclear terrorism, then there is almost 
too much to do. In the later case, nuclear terrorism 
would not be a primary, stand alone peril, but, a lesser- 
included threat— i.e., a danger that the Pakistani state 
could be expected to avert assuming it could mitigate 
the more probable threats of conventional terrorism 
and war. 

What sort of Pakistan would that be? A country 
that was significantly more prosperous, educated, and 
far more secure against internal political strife and 
from external security threats than it currently is. How 
might one bring about such a state? The short answer 
is by doing more to prevent the worst. Nuclear use 
may not be the likeliest bad thing that might occur in 
Pakistan, but it is by far the nastiest. Certainly in the 
near- to mid-term, it is at least as likely as any act of 
nuclear terrorism. More important, it is more amenable 
to remediation. 

This last point is the focus of this volume's first 
two chapters. Neil Joeck, now the U.S. National 
Intelligence Officer for South West Asia, and Feroz 

Hassan Khan, Pakistan's former director of Arms 
Control and Disarmament Affairs, examine just how 
easily conventional wars between India and Pakistan 
might be ignited and go nuclear. 

The first observation both analysts make is that 
keeping the peace between India and Pakistan is now 
a serious issue for U.S. security officials. With 55,000 
American troops in Afghanistan, Washington can ill 
afford increased military tensions and nuclear rivalries 
between Islamabad and New Delhi that deflect or 
reduce Pakistan's own anti-terror operations along 
Afghanistan's southern border. 

More worrisome is their second shared assessment: 
India and Pakistan have developed military doctrines 
that increase the prospects of nuclear use. Although 
India has pledged not to use nuclear weapons first, 
it has increased its readiness to launch shallow 
"Cold Start" conventional military strikes against 
Pakistan calibrated to deter Pakistani military or 
terrorist incursions. Meanwhile, Pakistani military 
planners insist that Pakistan will use nuclear weapons 
immediately if India attacks Pakistan's nuclear forces, 
conventional forces, and territory, or if it strangles 
Pakistan's economy. 

Unfortunately, each of these countries' plans to 
deter war are too prone to fail. Precisely how does India 
intend to attack Pakistani territory either in a shallow or 
temporary fashion without tripping Pakistan's nuclear 
trip wires? U.S. interventions, following terrorist 
acts that the Indian public has accused Pakistan's 
intelligence service of having backed, kept India from 
attacking Pakistan, but will such U.S. interventions 
work in the future? Indian military planners claim 
that they want to be able to punish Pakistan for any 
future perceived provocations well before any U.S. 
intervention has a chance to succeed. 

Given India's interest in escalating its schedule of 
conventional military retribution, will Pakistan decide 
to intensify its own nuclear deployment efforts to 
persuade New Delhi that it is serious about its nuclear 
first use doctrine? How can Islamabad adjust its 
forward deployed nuclear forces to be credibly on the 
ready without also increasing the odds of unauthorized 
use or military miscalculation? 

Then, there is the larger problem of nuclear rivalry. 
India claims the size and quality of its nuclear forces 
are driven by what China has; Pakistan, in turn, claims 
that the size and quality of its nuclear forces are driven 
by what India has. As one enlarges its forces, so must 
the other. 

In an attempt to disrupt an action-reaction nuclear 
arms race while still ambling ahead, New Delhi recent- 
ly persuaded the United States and other leading nuc- 
lear supplier states to allow India to expand its civilian 
nuclear and space launch sectors with imported foreign 
technologies and nuclear fuel. India's hope here is not 
to ramp up its domestic rocket and reactor production 
directly so much as to upgrade these programs and 
free up and supplement its own domestic missile 
technology and nuclear fuel production efforts with 
peaceful foreign assistance. 10 

Although subtle, this approach has failed to calm 
tensions with Pakistan. Instead, Islamabad has used 
U.S. and foreign nuclear and space cooperation with 
India as an argument for enlarging its own nuclear 
arsenal. Thus, in 2007, Pakistan's National Command 
Authority warned that if the U.S.-India nuclear deal 
altered the nuclear balance, the command would have 
to reevaluate Pakistan's commitment to minimum 
deterrence and review its nuclear force requirements. 
Reports then leaked out that Islamabad had begun 
construction of a new plutonium production reactor 

and a new reprocessing plant. Shortly thereafter, 
Pakistan announced plans to expand its own civilian 
nuclear power sector roughly 20-fold by the year 2030 
to 8.8 gigawatts generating capacity. The idea here is 
to expand Pakistan's ability to make nuclear electricity 
that would also afford it a larger nuclear weapons- 
making mobilization base it could use if India ramps 
up its own nuclear weapons-making efforts. 11 

This brings us to this volume's third chapter by 
Peter Tynan and John Stephenson of Dalberg Global 
Development Advisors. Just how economically 
sensible is expanding Pakistan's civilian nuclear sector 
over the next 2 decades? The short answer is not very. 
As Tynan and Stephenson explain in their analysis, 
"Even under Pakistan's most ambitious growth plans, 
nuclear energy will continue to contribute a marginal 
amount [3 to 6 percent] of electricity to meet the 
country's economic goals." 12 More important, building 
the number of large reactors that this level of expansion 
would require would be extremely difficult to achieve. 
Expansion of alternative energy sources, decentralized 
micro hydro, increased energy efficiency, coal, and 
natural gas, they conclude, would be far less risky. 

In fact, they conclude that Pakistan could save 
considerable money over the next 2 decades and 
achieve its energy goals sooner by not building more 
nuclear power plants. The political salience of this 
point is magnified when paired with earlier analyses 
that Tynan and Stephenson did of India's planned 
nuclear power expansion. In India's case, Dalberg's 
conclusions were much the same: India could not meet 
its energy goals even under its most ambitious nuclear 
expansion plans, and there were a number of cheaper, 
quicker alternatives that make near- and mid-term 
investment in nuclear expansion a bad buy. 13 Bottom 
line: In both the Pakistani and Indian cases, expanding 

nuclear power only makes sense if one is willing to 
lose money or is eager to make many more bombs. 

Judging from the state of its current finances, 
Pakistan can ill afford to do either. This much is clear 
from the economic analyses of Shavid Javed Burki 
and S. Akbar Zaidi presented in Chapters Four and 
Five. Pakistan, Burki writes, faces a "grim economic 
situation": "There is likely to be a sharp reduction 
in the rate of economic growth, an unprecedented 
increase in rate of inflation, a significant increase in the 
incidence of poverty, a widening in the already large 
regional income gap, and increases to unsustainable 
levels of the fiscal and balance of payments gaps." 14 

Moving the nation away from foreign charity 
funding toward an economic growth agenda will not 
be easy. Certainly, all unnecessary public spending, 
excessive military support, and consumer subsidies 
(e.g., for energy) must be cut. Pakistan, moreover, 
must assume a significant portion of the backend 
financing of its own planned growth. Investments in 
education and the agricultural sector must be increased 
substantially. Taxes will have to be increased without 
increasing the poverty rate or the already significant 
economic disparities between Pakistan's key regions. 

None of this can come without political pains. To 
be specific, they will require political reforms that 
cannot simply be made top down from Islamabad, 
but will require a decentralization of powers to the 
localities. The good news is that some of this change 
may be pushed by modernizing trends, which both 
Burki and Zaidi note, are already under way. These 
include the urbanization of Pakistan, the dramatic 
growth in electronic communications (e.g., cell phone 
use has increased 10-fold to roughly 50 percent of the 
population in the last 5 years, the number of private TV 

stations from one to more than 30), and the emerging 
domination of higher education by women (perhaps 
by a factor now as high as four-to-one) and their entry 
into Pakistan's work force. 

In addition to these generally positive trends, there 
is increased investment in Pakistan and remittances 
from the oil-rich Persian Gulf, increasing trade with 
India (now Pakistan's seventh largest source of 
imports), and the prospect of a demographic dividend, 
which Craig Cohen details in Chapter Six. This 
demographic dividend, which will afford Pakistan a 
large labor supply relative to its young and old, Craig 
predicts, will continue to grow through the year 2050. 
This, he argues, has the potential to power significant 
economic growth "because the dependency burden is 
low," increasing savings and "allowing development 
of human capital." 15 

All of this should help stabilize Pakistan's economy 
and society. None of these trends, however, can possibly 
help if the government cannot reduce inflation (pegged 
at 28 percent in the first quarter of 2009), educate and 
feed its population, power its businesses and homes, 
and attend to its growing (and potentially violent) 
adolescent population. Achieving these objectives, in 
turn, requires political stability, domestic security, and 
increased domestic and foreign trade and investment. 

It is unclear if this requisite stability will finally be 
achieved. What is clear, though, is that any successful 
attempt will only be possible if Pakistan and its 
friends focus less in the near term on direct forms of 
democratization and more on ethnic reconciliation and 
regional accommodation. Maya Chadda details how 
one might go about this in Chapter Seven. She makes 
a key recommendation that those assisting Pakistan — 
principally the United States — distinguish between 

violence that is driven by ethnic differences and that 
which is driven by Islamist terrorist organizations. 

Professor Chada argues that the United States 
should do more to help Pakistan integrate its ethnic 
groups while letting Pakistan and its military take the 
lead in fighting Islamic fundamentalism. What this 
requires, in turn, is an understanding of the key ethnic 
groups — the Punjabis, Sindhis, Pashtuns, Balochis, 
and others — and establishing metrics for safeguarding 
these groups' rights. Reforming Pakistan's federal 
model toward this end will not entail the promotion 
of direct, liberal democracy, but it will create the key 
building blocks necessary to create such a system. More 
important, it will give the key religious and ethnic 
groups the power and the interest needed to shape 
Pakistan's economic and social order and to keep them 
vested in Pakistan's future. 

What, then, should the United States do? With 
regard to Pakistan reformulating its federal model, 
the United States might help to focus and condition 
economic assistance and freer access to U.S. markets and 
encourage Islamabad to foster greater equality among 
Pakistan's key regions and ethnic and religious groups. 
One suggestion that this book's authors discussed was 
giving each of Pakistan's provinces greater power to 
promote trade directly with India and focusing foreign 
investment to expand such commerce. The aim here 
is to moderate Indian-Pakistani relations by bolstering 
Pakistan's growing middle class. Pakistan, however, 
must take the first steps: If Islamabad does not want 
to reformulate its federal model to accommodate 
its various regions and ethnic and religious groups, 
Washington is in no position to help. 

As for U.S. assistance to the Pakistani military, the 
key here is to do no harm. It is now fashionable in 

Washington to argue that U.S. policies toward India 
and Pakistan should be de-hyphenated. Yet, one sure 
fire way to increase Pakistani distrust of the United 
States and to increase its anxieties regarding India's 
military ambitions is for the United States to favor 
India's military modernization. If the United States 
wants to reduce the number of wars that could escalate 
into nuclear conflicts, it must make sure U.S. military 
aid to India and Pakistan does not prompt destabilizing 
military competitions. Accomplishing this, in turn, will 
require that the United States and other arms exporters 
provide these states with something other than mere 
quantitative equal treatment. 

Consider missile defenses. Because Pakistan has 
not yet fully renounced first use of nuclear weapons 
and India will always have conventional superiority 
over Islamabad, Pakistan would have cause to feel 
more insecure than it already does even if the United 
States or others gave equal levels of missile defense 
capabilities to both sides. In this case, India could 
diminish Pakistani nuclear missile threats and feel 
more confident about launching massive conventional 
military operations against Pakistan. Similarly, 
Pakistan would have far more to fear than to gain 
if the United States offers India and Pakistan equal 
amounts of advanced conventional capabilities since 
these might conceivably enable New Delhi to execute 
a humiliating "Cold Start" conventional strike against 
Pakistan's much smaller military or conceivably 
knock out Islamabad's limited nuclear forces without 
using Indian nuclear weapons. How the United States 
and others go about enhancing each of these states' 
offensive and defensive military capabilities, in short, 
matters at least as much as the actual quantity of goods 
transferred. 16 


While the United States should do all it can to 
discourage India from putting its conventional forces 
on alert against Pakistan, it also makes sense for 
Washington to make sure Pakistan's military and 
intelligence services stay focused against Islamist 
terrorist organizations operating in Pakistan. Here, 
it would be helpful to get India to reassure Pakistan 
that New Delhi is not supporting unrest in Balochistan 
and other areas in or bordering Pakistan. Yet another 
confidence-building measure that India should be 
encouraged to embrace is to invite the Pakistani 
military to all major Indian military exercises and to get 
Islamabad to reciprocate as part of a mutual military 
exchange. Finally, India and Pakistan should begin 
negotiations that would pull back forces identified 
to be offensive or threatening to agreed lines. No, 
low, medium, and high-force zones could then be 
discussed. Here, North Atlantic Treaty Organization 
(NATO) conventional force reduction treaty expertise 
(including from Turkey) might be usefully tapped. 

Making progress on any of these non-nuclear 
recommendations will help foster progress on the 
nuclear front. Here, the United States has a role to play 
in the implementation of the U.S.-India civilian nuclear 
cooperation agreement finalized in 2006. India may 
not be bound by the Nonproliferation Treaty (NPT), 
but the United States, Russia, China, and France — all 
NPT nuclear weapons states — are. Under Article I of 
the NPT, weapons state members cannot help any state 
acquire nuclear weapons directly or indirectly that did 
not already have them in 1967. 

India no longer has any stockpiled uranium reserves . 
Shortly before the nuclear cooperative agreement was 
finalized with the United States, India was running its 
power reactors at a fraction of their capacity. That is 


one of the key reasons why India was so eager to get 
the United States to allow foreign uranium exports to 
India under the nuclear cooperative agreement. If India 
now imports a significant amount of nuclear fuel for its 
civilian power reactors, makes more nuclear weapons 
than it did before the deal, and does not increase its 
domestic production of uranium, it would necessarily 
be using the civilian imports of nuclear fuel to increase 
the amount of domestic uranium it could use to make 
bombs. This would implicate nuclear weapons states 
that might supply such fuel to India — e.g., Russia, 
France, China, and the United States — in violating 
Article I of the NPT. Under U.S. law, the Henry J. Hyde 
United States-India Peace Atomic Energy Cooperation 
Act of 2006 requires the U.S. executive to report 
annually on India's uranium consumption and supply 
to make sure that the United States is not implicated 
in any such a violation. The idea behind the reporting 
requirement was to implement the U.S.-Indian deal in 
a manner that would threaten continued U.S. nuclear 
assistance to India's civilian program should India use 
U.S. nuclear fuel imports to help it make more nuclear 
weapons per year than it was making prior to the deal. 
Promoting this approach with China, Russia, and 
France would clearly be useful: It could help restrain 
India's nuclear weapons materials production efforts 
and help the United States and the other NPT nuclear 
weapons states persuade Pakistan to do the same. 

Ultimately, however, nuclear restraint by India and 
Pakistan is unsustainable without China doing more 
to restrain its nuclear weapons programs and exports. 
President Barack Obama obliquely referred to this 
in his April 5, 2009, arms control address in Prague. 
After the United States and Russia agree to significant 
cuts in their nuclear weapons arsenals, he noted, "we 


will seek to include all nuclear weapons states in this 
endeavor." 17 For Pakistan's sake and that of South West 
Asia and the rest of the world, this endeavor should 
start as soon as possible. 

One way to begin might be to encourage China to 
announce publicly what it claims privately to have 
already done — cease making additional fissionable 
materials for nuclear weapons. The United Kingdom 
(UK), France, Russia, and the United States already 
have made public statements to this effect and have 
made it clear that they have ceased this production as 
a matter of policy. If China were to follow, additional 
pressure might be placed on both India and Pakistan 
to do likewise. Certainly, it would be far preferable 
to attempt to balance the nuclear weapons efforts of 
Pakistan and India this way than by relying solely 
on the calibration of supplies to Pakistan and India 
of peaceful nuclear reactors, nuclear fuels, missile 
technology, and conventional military goods. 

Of course, none of these steps will be easy. Each will 
take considerable time and effort. On the other hand, 
the reform agenda laid out here is far more tractable 
and concrete than anything flowing from concerns 
that Pakistani nuclear assets might fall into the wrong 
hands. Here, the specific options analysts propose are 
so extreme, they crowd out what's practicable. Rather 
than distract our policy leaders from taking the steps 
needed to reduce the threats of nuclear war, we would 
do well to view our worst terrorist nightmares for what 
they are: Subordinate threats that will be limited best 
if the risks of nuclear war are themselves reduced and 



1. See, e.g., Bruce Riedel, "Armageddon in Islamabad," 
National Interest, June/July, available from www.nationalinterest. 
org/Article.aspx?id=21644; David Sanger, "Obama's Worst 
Pakistan Nightmare," The New York Times, January 8, 2009, 
available from 
html; Evelyn N. Farkas, "Pakistan and Nuclear Proliferation," The 
Boston Globe, March 5, 2009; Paul McGeough, "West Warned on 
Nuclear Terrorist Threat from Pakistan," The Age, April 12, 2009, 
available from 
terrorist-threat-from-pakistan-20090412-a40m.html; The Editors, 
"Pakistan Nuclear Scenarios: U.S. Nuclear Solutions," May 5, 2009, 
The New York Times, available from roomf or debate hlogs.ny times. 
com/2009/05/05/pakistan-scenarios-us-solutions/; Paul K. Kerr and 
Mary Beth Niktin, "Pakistan's Nuclear Weapons: Proliferation 
and Security Issues," Congressional Research Service Report for 
Congress, RL.34248, May 15, 2009, available from 
crs/nuke/RL34248.pdf; and John R. Schmidt, "Will Pakistan Come 
Undone?" Survival, June-July 2009, p. 51. 

2. See, e.g., Salman Masood, "Attack in Pakistani Garrison 
City Raises Anxiety About Safety of Nuclear Labs and Staff," 
The New York Times, July 4, 2009, available from www.nytimes. 
com/2009/07/05/world/asia/05pstan.html?rej=world. For a more 
detailed analysis of the connection between media emphasis on 
certain terrorist threats and terrorist operations, see Brian Jenkins, 
Will Terrorists Go Nuclear? New York: Prometheus, 2008. There 
also have been additional reports of other Taliban raids against 
Pakistani nuclear weapons-related sites whose veracity the 
Pakistani government has officially denied. See Reuters "Article 
Points to Risk of Seizure of Pakistani Nuclear Materials," August 
12, 2009, available from 
asia/12nuke.html; and Global Security News Wire, "Pakistan Rejects 
Report of Attacks on Nuclear Sites," August 12, 2009, available 

3. See, e.g., Helene Cooper, "South Asia's Deadly Dominos," 
The New York Times, December 6, 2008, available from www. 


4. See Abdul Mannan, "Preventing Nuclear Terrorism 
in Pakistan: Sabotage of a Spent Fuel Cask or a Commercial 
Irradiation Source in Transport"; Chaim Braun, "Security Issues 
Related to Pakistan's Future Nuclear Power Program," and 
Thomas Donnelly, "Bad Options: Or How I Stopped Worrying 
and Learned to Live with Loose Nukes," all in Henry Sokolski, 
ed., Pakistan's Nuclear Future: Worries Beyond War, Carlisle, PA: 
U.S. Army War College Strategic Studies Institute, January 2008, 
pp. 221-368. 

5. See Mark Thompson, "Does Pakistan's Taliban Surge Raise 
a Nuclear Threat?" TIME, April 24, 2009, available from www. time. 
com/time/world/article/0, 8599, 1893685, 00, html; and David E. Sanger, 
"Strife in Pakistan Raises U.S. Doubts Over Nuclear Arms," 
The New York Times, May 4, 2009, available from www.nytimes. 
com/2009/05/04/world/asia/04nuke.html? _r=l&pagewanted=print . 

6. See David E. Sanger and William J. Broad, "U.S. Secretly 
Aids Pakistan in Guarding Nuclear Arms," The New York Times, 
November 18, 2007, available from 

7. See, e.g., Rolf Mowatt-Larssen, "Nuclear Security in 
Pakistan: Reducing the Risks of Nuclear Terrorism," Arms Control 
Today, June/July 2009, available from 
act/2009 _07-08/Mowatt-harssen. 

8. Although the United States has contingency plans to dispatch 
American troops to protect or remove any weapons at imminent 
risk of being seized by terrorists, the practicality of such a mission 
is extremely low. See R. Jeffery Smith and Joby Warrick, "Nuclear 
Aims by Pakistan, India Prompt U.S. Concern," The Washington 
Post, May 20, 2009, available from 
wp-dyn/content/article/2009/05/27/AR2009052703706_2.html; and 
Thomas A. Donnelly, "Bad Options" in Pakistan's Nuclear Future, 
pp. 347-68, available from 

9. See, e.g., James Jay Carafano, "Worst-Case Scenario: 
Dealing with WMD Must Be Part of Providing for Common 


Defense" Heritage Foundation Special Report, #60, Washington, DC: 
Heritage Foundation, June 29, 2009, available from www. heritage. 

10. See Zia Mian, A. H. Nayyar, R. Rajaraman, and M. V. 
Ramana, "Fissile Materials in South Asia and the Implications of 
the U.S.-India Nuclear Deal," in Sokolski, ed., Pakistan's Nuclear 
Future, pp. 167-218, available from 
20080116-PakistanNuclearFuture.pdf and Richard Speier/'U.S. Sat- 
ellite Space Launch Cooperation and India's Intercontinental 
Ballistic Missile Program," in Henry D. Sokolski, ed., Gauging U.S.- 
Indian Strategic Cooperation, Carlisle, PA: U.S. Army War College 
Strategic Studies Institute, 2007, pp. 187-214, available from www. 

11. Private interviews with senior Pakistani national security 

12. Peter Tynan and John Stephenson, "Is Nuclear Power 
Pakistan's Best Energy Investment? Assessing Pakistan's Elec- 
tricity Situation," Henry Sokolski, ed., Pakistan's Nuclear Future: 
Reining in the Risk, Carlisle, PA: Strategic Studies institute, U.S. 
Army War College, Chap 3, December 2009, p. 99. 

13. Peter Tynan and John Stephenson, "Will the U.S.-India 
Civil Nuclear Cooperation Initiative Light India?" in Gauging 
U.S .-Indian Strategic Cooperation, pp. 51-70, available from www. 

14. Shavid Javed Burki, "Pakistan's Economy: Its Performance, 
Present Situation, and Prospects," Henry Sokolski, ed., Pakistan's 
Nuclear Future: Reining in the Risk, Carlisle, PA: Strategic Studies 
institute, U.S. Army War College, Chap 4, December 2009, p. 129. 

15. Craig Cohen, "Pakistan 2020: The Policy Imperatives of 
Pakistani Demographics," Henry Sokolski, ed., Pakistan's Nuclear 
Future: Reining in the Risk, Carlisle, PA: Strategic Studies institute, 
U.S. Army War College, Chap 6, December 2009, p. 204, see fn 13. 

16. On these points, see Peter Lavoy, "Islamabad's Nuclear 
Posture: Its Premises and Implementation," in Pakistan's Nuclear 
Future, pp. 129-66. 


17. President Barack Obama, Arms Control Address, Prague, 
Czech Republic, April 5, 2009. 







Neil Joeck* 


In 1998, India and Pakistan conducted a series 
of nuclear tests, making evident to the world and 
each other that they had a robust nuclear weapons 
capability. Despite the tests, the two countries fought 
a short war in 1999 and came close to fighting a 
second war in 2002. In both confrontations, the United 
States played an important role in helping to prevent 
escalation. The confrontations were followed by an 
extended diplomatic process called the Composite 
Dialogue that began in 2004 and served as a kind of 
umbrella for discussing the disagreements between 
the two sides. Given this history, it is likely that diplo- 
matic dialogue and military confrontation will both 
play a role in resolving Indo-Pak conflict over the next 
several years. U.S. policies may also play a positive role 
in preventing crises from occurring and in mediating 
them when they do. This chapter reviews what hap- 
pened in the two military confrontations and what 
lessons the two sides may have learned from them. 
It then assesses the implications of these conflicts for 

*The views expressed in this chapter are those of the author and 
do not represent the Lawrence Livermore National Security LLC 
or the U.S. Government. 


future crises, what scenarios may be envisioned for 
future conflict, and what steps the U.S. might take to 
reduce the prospects for nuclear use. 

In the end, India and Pakistan control their own 
future, but the United States can no longer afford 
to be a bystander in South Asia. Positive diplomatic 
developments over the past decade have resulted in 
the United States being engaged in South Asia on a 
permanent basis. It is unlikely — and probably not 
desirable for either India or Pakistan— that the United 
States would return to its historic pattern of paying 
attention to South Asia only in times of crisis. The effects 
of nuclear proliferation and international terrorism 
give Indo-Pakistani relations global consequence. 


What happened? 

In 1999, India and Pakistan fought a short war over 
disputed territory along the Line of Control (LOC) 
that separates their forces in Kashmir. It began in 
May when shepherds on the Indian side of the LOC 
encountered Pakistani infiltrators occupying land that 
had been vacated by Indian soldiers early in the winter. 
The commander of the army, V. P. Malik, was briefed 
on the incursion, but it initially appeared to be little 
more than normal artillery firing that characterizes 
the military confrontation along the LOC. Further 
reconnaissance, however, revealed a more widespread 
Pakistani occupation of key points around the town 
of Kargil. Although Islamabad claimed that the forces 
occupying the disputed ground were local freedom 
fighters, in fact Pakistan had deployed elements of 
the Northern Light Infantry into positions vacated 
by Indian troops, seizing a 200-kilometer stretch of 


territory. Once it was fully assessed, India saw that 
Pakistan's action significantly challenged India's 
control of the main highway through Kashmir and 
threatened to cut off resupply to India's forces based 
on the disputed Siachen Glacier. India escalated at the 
point of Pakistan's attack but, finding itself fighting 
up almost vertical heights, was unable to dislodge 
the invaders. When he was apprised by the Director 
General of Military Operations (DGMO) of events 
on the ground on May 15, General Malik advised 
that helicopters be brought into the battle, additional 
troops requested, and the Chiefs of Staff Committee 
(COSC) informed of the developments. 1 The Indian 
government then moved into crisis mode, established 
an ad hoc crisis committee, and escalated forcefully 
against Pakistan's positions. 2 

The ad hoc crisis team soon decided to take a 
step that upped the ante. India deployed air assets 
against Pakistan's entrenched positions, which India 
recognized could have "far reaching consequences" for 
Pakistan. 3 J. N. Dixit, a key member of the committee, 
saw the potential for serious military escalation: ". . 
. the use of the air force would change the nature of 
the military conflict ... if India decided to deploy the 
air force in Kargil, India should be well prepared to 
anticipate the expansion of war beyond Jammu and 
Kashmir, and respond to expanded Pakistani offenses 
in other parts of India." 4 The implications of the 
decision were not lost on India. The use of air assets 
was an escalatory step, and Pakistan might, in turn, 
escalate still further. The war could expand beyond 
Jammu and Kashmir, which by definition would mean 
fighting across the international border. 

Pakistan had started the war and showed no signs 
of giving up the fight on the battlefield; India was also 


prepared to escalate rather than back down. Were they 
prepared to do the same with their nuclear assets? The 
record is less open on this issue, but Malik notes that 
India had "one or two intelligence reports indicating 
that Pakistani Army personnel were noticed cleaning 
up artillery deployment areas and missile launch sites 
at the Tilla Ranges." Even though India had no specific 
information that Pakistan "was readying its nuclear 
arsenal . . . we considered it prudent to take some 
protective measures [and] some of our missile assets 
were dispersed and relocated." 5 On the other side of 
the conflict, Pakistan's Foreign Secretary, Shamshad 
Ahmed, stated on May 31 that Pakistan would not 
"hesitate to use any weapon in our arsenal to defend 
our territorial integrity." 6 Years after the war was over, 
an American official, Bruce Reidel, reported that on July 
3, "more information developed about the escalating 
military situation in the area — disturbing evidence that 
the Pakistanis were preparing their nuclear arsenal 
for possible deployment." 7 The escalation to nuclear 
readiness appears to have been all too real. 

As the war progressed, Pakistan's Prime Minister 
Nawaz Sharif grew increasingly nervous. He consulted 
with the United States and was told in no uncertain 
terms that his country had started the war, and it 
was his responsibility to end it. Strobe Talbott, then- 
U.S. Deputy Secretary of State, later wrote that the 
United States "put the blame squarely on Pakistan for 
instigating the crisis, while urging India not to broaden 
the conflict." 8 After a hasty flight to Washington, DC, 
to consult directly with U.S. President Bill Clinton on 
July 4, Sharif returned to Islamabad and ordered the 
troops off the Kargil heights and back to their barracks. 
In his version of the war, Pervez Musharraf claimed 
that there had been no need for Sharif to recall the 


troops, that in fact they were holding up well and were 
prepared to continue fighting. 9 

Lessons and Consequences. 

Coming only a year after the reciprocal nuclear 
tests of May 1998, the Kargil War makes it clear that the 
acquisition of nuclear weapons did not prevent India 
and Pakistan from engaging in war. Indeed, nuclear 
weapons appeared to have little effect on Pakistan's 
planning. Only a small number of military leaders 
hatched the plan to seize the Kargil heights, and none 
of them apparently considered what role nuclear 
weapons would play. In a forthcoming volume on the 
Kargil conflict, the key planners appear not to have 
been dissuaded from their plan by the fact that India 
had demonstrated a fairly robust nuclear capability. 10 

In retrospect, the Kargil war appears to have 
contained a certain degree of mirror imaging, even 
though circumstances had changed dramatically 
with the acquisition of nuclear weapons. Pakistan's 
own response to India's similar seizure of contested 
territory along the Siachen Glacier in 1984 seems 
to have unduly influenced Pakistan's calculations. 
Pakistan had attempted to dislodge Indian troops 
from Siachen for several years, but finally decided 
that evicting the Indian troops would require a major 
offensive. Pakistan's military planners therefore 
assumed that India would draw the same conclusion 
regarding Kargil. Thus, Pakistan was surprised when 
India mounted a vigorous attack against Pakistan's 
positions and even escalated to the use of aircraft. This 
possible outcome was evidently never considered — 
nor was the corollary that escalation could continue to 
the nuclear level. 


The role nuclear weapons may play, whether 
deployed or not, in deterring action or in sending a 
threat may not have been fully appreciated. President 
Musharraf argued that since "our nuclear capability 
was not yet operational . . . talk of preparing for 
nuclear strikes is preposterous." 11 This contradicts the 
threats implied by Shamshad Ahmed's comment noted 
above, but in any case seems to suggest that Musharraf 
believed that nuclear weapons only play a role when 
they are operationally deployed, without defining 
what deployment would entail. How were India's 
leaders supposed to know that Pakistan's weapons 
were not operationally deployed, and why would that 
knowledge lead them to conclude that their actions 
would not provoke a nuclear response? Are nuclear 
weapons only useful for intrawar deterrence? What 
lessons Pakistan drew remains to be fully explored. 

On India's side, it is also not clear what role 
nuclear weapons played. India was not deterred from 
escalating at the point of attack and chose to mount a 
major offensive to regain the lost ground. Yet India's 
troops were under strict orders not to cross the Line 
of Control. That said, John Gill notes the "military and 
political leadership was careful to keep the option of 
cross-LOC operations open and used public statements 
by senior officials to highlight the latent threat of 
escalation." 12 Was the limit on crossing the LOC due 
to Pakistan's nuclear weapons? If so, why did the 
restraint not also apply to the use of aircraft? It is clear 
from Dixit' s comment above that India knew that step 
could result in the possible expansion of the war. Yet 
they authorized the escalation. 

On balance, it is difficult to reach firm conclusions 
about what lessons were learned about how deterrence 
worked at Kargil. Despite this, there is by now an 


assumption in Pakistan that Pakistan's nuclear capa- 
bility forced India to fight a limited war, even though 
India was not deterred from escalating with respect to 
resources and was ready to fight across the international 
border if necessary. In addition, it is unclear how and 
whether limited war— typically defined in terms of 
limits on space, resources, time, and objectives — can 
remain limited in a nuclear environment. India's Chief 
of Army Staff (CO AS) Malik points to the decision not 
to cross the LOC as a good example of how political 
control will ensure that wars in the nuclear age will not 
escalate. The decision to limit the war geographically 
but not in terms of resources, however, contradicts this 
optimistic assertion. Furthermore, India was prepared 
for escalation beyond the limits it initially intended to 

Finally, the duration of the war was determined by 
the Pakistani Prime Minister bending to U.S. pressure. 
From the perspective of the Pakistan military, however, 
the war could — and should — have continued. As 
President Musharraf writes, when asked by Prime 
Minister Sharif on July 3 as he was boarding his plane to 
Washington whether it would be necessary to accept a 
cease-fire and withdrawal, "My answer was the same: 
the military situation is favorable; the political decision 
has to be his own. ... It remains a mystery to me why 
he was in such a hurry." 13 Thus Kargil provides at best 
a mixed lesson in how war may stay limited under the 
nuclear cloud. 

There was a lack of consensus among Indian and 
Pakistani observers about the outcome of the war as 
well as the influence of nuclear weapons. Pakistan 
felt that the military was acquitting itself well on 
the battlefield and had been sold out by politicians. 
Furthermore, Pakistan felt that its central objective 


had been achieved — Kashmir had been brought 
back to international attention. In contrast, India was 
convinced that Kargil was a victory for its own forces. 
India's troops had prevailed on the battlefield, India's 
political leaders had not been intimidated by Pakistan's 
nuclear weapons, and Pakistan had been portrayed to 
the international community as the aggressor. 

A somewhat further worrisome outcome of the 
war is that Pakistan convinced itself that India was 
deterred from escalating because of Pakistan's nuclear 
weapons. In short, nuclear deterrence allowed Pakistan 
a certain freedom of action while it constrained India's 
response. This is a troubling conclusion if it inspires 
reckless actions in the future. It is doubly troubling 
in that the danger of nuclear escalation apparently 
did not affect the planners. If this betrays a belief 
that nuclear deterrence has an automatic character, 
it suggests that future conflicts may also be planned 
without due consideration of how the other side may 
utilize its nuclear and conventional capabilities. 

A lesson that both sides seem to have drawn from 
Kargil is that although nuclear weapons do not prevent 
war, they do keep it controlled. Reason and hope 
suggest that this will always be the case, and the logic 
of nuclear deterrence supports such a conclusion. But 
people often act unreasonably and illogically, while 
wars have a way of turning out quite differently than 
initially planned. Therefore one cannot confidently 
cite the Kargil war as an example of how wars will be 
fought and whether nuclear weapons will remain in 
the background. 

A final outcome of the 1999 war was the adoption 
by India of a nuclear doctrine that was introduced in 
draft form on August 17, 1999, and presumably was 
intended to inform Pakistan about how far it could and 


could not go in a conflict before it would face nuclear 
consequences. 14 It specified that India would develop 
a triad of delivery platforms. It stated that "credible, 
minimum nuclear deterrence" is a "dynamic concept 
related to the strategic environment, technological 
imperatives, and the needs of national security." 15 
Thus it would have to change according to these 
factors, which would dictate the size, components, 
deployment, and employment of India's nuclear 
stockpile. The document specified command and 
control arrangements, research and development 
plans, and other elements of the overall decision 
structure. The key message it contained was that, 

. . .any threat of use of nuclear weapons against India 
shall invoke measures to counter the threat and any 
nuclear attack on India and its forces shall result in 
punitive retaliation with nuclear weapons to inflict 
damage unacceptable to the aggressor. 16 

The message seemed to be that if Pakistan again 
threatened to use any weapon in its arsenal as it 
had during Kargil, India would respond likewise by 
readying its own weapons. If Pakistan used nuclear 
weapons, India appeared to be threatening the 
rough equivalent of the 1950s U.S. threat of massive 

Pakistan responded to India's nuclear doctrine with 
a challenge of its own. Three former senior foreign 
policy officials wrote a broad response to the new 
doctrine. Agha Shahi, Abdul Sattar, and Zulfiqar Ali 
Khan argued that India's new doctrine would threaten 
Pakistan's ability to respond. 17 In their view, India's 
declaration of a no first-use posture, if also adopted by 
Pakistan, would allow India to conduct a conventional 
first strike. Pakistan would therefore adopt a posture 


of flexible response and would use nuclear weapons 
first if necessary. The three authors specifically 
cited any attempt by India to occupy large parts of 
Pakistan's territory or to seize its communications 
junctions as causes for Pakistan to use nuclear 
weapons. In an interesting assertion, they claimed that 
nuclear deterrence had already worked. Once, in the 
mid-1980s when India decided against preventively 
striking Pakistan's nuclear installations: again in 1987 
when an Indian military exercise threatened to boil 
over into cross-border war: and finally, in 1990 when 
Kashmir erupted in demonstrations following the 
kidnapping of the Kashmir Home Minister's daughter. 
This came as news to India and many analysts who 
did not see nuclear deterrence at work in any of 
these confrontations. The fact, though, that Pakistan 
considered nuclear deterrence to have prevented 
military action in those three instances underscored 
the lack of common understanding between the two 
sides about the role nuclear weapons played. It also 
begged the question why the planners of Kargil had 
paid so little heed to the role of nuclear weapons in 
their deliberations, while at the same time suggesting 
that Pakistan might take a number of provocative 
actions in the belief that nuclear deterrence prevented 
large-scale war. 

Connected with India's nuclear doctrine was 
the recognition that India was not well-positioned 
conventionally to respond to the kind of war they had 
faced at Kargil. At an annual conference in New Delhi 
in January 2000 hosted by the prestigious Institute 
for Defence Studies and Analysis, General Malik 
presented the case. 18 He argued that India needed to 
find space between tolerating low intensity war of the 
kind Pakistan had fomented at Kargil and escalating 
to nuclear use. Defense Minister George Fernandes 


seconded this view, but no changes were made in force 
disposition or conventional planning. It would take 
another round of confrontation for India to address 
this challenge to its security. 


What happened? 

In a certain sense, the 2001-02 confrontation 
between India and Pakistan dates to September 11, 
2001 (9/11) when al Qaeda attacked the United States, 
and Washington responded by sending troops into 
Afghanistan. For the first time since World War II, U.S. 
troops were on the ground fighting a war in South 
Asia. The cause of U.S. engagement was a global war 
on terror that Pakistan— after momentary reflection— 
had joined. Thus engaged, it would prove impossible 
for the United States to avoid getting caught in the 
middle of the Indo-Pakistani confrontation. 

The actual Indo-Pakistani crisis began on December 
13, 2001, when terrorists attacked India's parliament 
building, killing a number of guards but failing in their 
larger ambition of capturing and assassinating senior 
members of the Indian government. After examining 
the gunmen's dead bodies, India determined that the 
terrorists had been supported and probably directed 
in their actions from Pakistan. India responded by 
deploying upwards of half a million men along the 
LOC and the international border that divides the 
two nations. Almost immediately, however, India 
encountered enormous pressure from U.S. President 
George W. Bush and UK Prime Minister Tony Blair not 
to carry out its threat to retaliate for the attack on its 


Needing Pakistan's support for its operations 
inside Afghanistan, the United States was anxious to 
avoid a war in South Asia that would draw Pakistan's 
troops away from the Western border. 19 Washington 
placed numerous calls to New Delhi, urging Prime 
Minister Vajpayee to refrain from an attack. The 
United States argued that Pakistan would respond to 
U.S. pressure to stop infiltration across the LOC, so 
New Delhi should be patient. After a forceful personal 
intervention by Tony Blair and others, on January 12, 
2002, Pakistan's President Pervez Musharraf went on 
nationwide television to denounce terrorism and call 
for a jihad against social ills. 20 

The speech closed a window of opportunity for 
India's decisionmakers. If they had a quick strike 
capability, it might have been used to counter Pakistan's 
apparent support for the terrorist attack against the 
Lok Sabha. 21 Instead, India was left to apply pressure 
as best it could under the strictures of its operating 
doctrine at the time. Called the Sundarji Doctrine 
for its author, General K. S. Sundarji, it deployed 
defensive, or holding, divisions near the border, with 
heavy strike corps kept in reserve for attack across the 
international border and deep into Pakistan. Getting 
this large force into position was a lumbering and time- 
consuming process, ill suited for a rapid response to a 
terrorist provocation. India was thus constrained from 
launching an attack against Pakistan in response to the 
attack on the Lok Sabha not only diplomatically and 
politically, but by the unwieldy nature of the build-up 
as well. 

Despite India's conventional build-up, it appeared 
to Pakistan's leaders that nothing would happen 
because India was primarily focused on influencing 
the United States and the UK. In their view, the 


movement of forces was a substitute rather than a 
preparation for action. Even when terrorists attacked 
the Indian military camp at Kaluchak in May 2002 and 
ruthlessly murdered family members of the soldiers 
deployed along the LOC, India still held back. India's 
main demand throughout the confrontation was that 
cross-LOC infiltration must stop, which prompted a 
steady flow of diplomatic visits by high-level officials 
to Islamabad and New Delhi. This culminated in June, 
when U.S. Deputy Secretary of State Richard Armitage 
visited South Asia, stopping first in Islamabad and then 
in New Delhi. When he arrived in India, he declared 
that Pakistani President Musharraf had agreed to 
end such infiltration permanently. By summer's end, 
India declared that its objectives had been met, and 
the troops were returned to their barracks. The crisis 
had passed without any shots fired, but again with 
conflicting interpretations of the result. 

Nuclear weapons were never at the forefront of 
the confrontation but were visible in the background. 
In January 2002, just as the two sides were close to 
completing their deployments, Khalid Kidwai, the 
head of Pakistan's Strategic Plans Division, which 
was in charge of Pakistan's nuclear weapons, granted 
an interview to two visiting Italian scholars. In his 
interview with Paulo Cotta-Ramusino and Maurizio 
Martellini, he sketched out four red lines that could 
prompt Pakistan to use nuclear weapons. They 
broadly repeated the two red lines Shahi, Sattar, and 
Khan had identified but added two more. Kidwai said 
that in addition to the territorial and communications 
(economic strangling) red lines, if India were to destroy 
a large part of Pakistan's land or air forces or destabilize 
Pakistan politically, Pakistan would be prepared to use 
its nuclear weapons. 22 


Then, following the Kaluchak incident, the nuclear 
threat became more palpable. On May 30, 2002, U.S. 
Ambassador Robert Blackwill ordered nonessential 
embassy staff and all dependents to leave the country. 
This was followed by an official State Department 
travel warning, implying that the possibility of war 
and of Pakistani use of a nuclear weapon against New 
Delhi was high enough that the United States could not 
justify endangering the lives of the embassy workers. 23 
The UK issued a similar warning to its nationals in the 
area, and other Western governments duplicated the 
State Department announcement. India was outraged 
and privately accused the United States of capitulating 
to terrorism. 

Despite its annoyance, the nuclear alarm may have 
had an impact. Although New Delhi had issued its draft 
doctrine following the Kargil conflict, a possible gap 
was made evident by the Twin Peaks confrontation. If 
India had invaded, as it was threatening to do, Indian 
troops might have found themselves inside Pakistan 
or Pakistan-controlled Kashmir. It was not clear from 
the doctrine, however, how India would respond 
to Pakistani nuclear use under those circumstances. 
This omission was addressed in January 2003 when 
the Prime Minister's Office issued a press release 
specifying that nuclear weapons would be used "in 
retaliation against a nuclear attack on Indian territory 
or on Indian forces anywhere" and in response to a 
biological or chemical attack on Indian forces. 24 

Lessons and Outcomes. 

From Pakistan' s perspective, India had been bluffing 
through the whole process. Musharraf rejected India's 
assertions that Pakistan was connected to the terrorist 


attacks, and saw India's efforts as a failed attempt to 
drive a wedge between Pakistan and the United States. 
Pakistan had called India's bluff and demonstrated 
that any talk about fighting a limited war was hollow. 
In fact, as Islamabad saw things, war in 2002 did not 
need to be deterred because India never intended to 
fight a war. In the end, Pakistan stood firm, and India 
backed down. 

From India's perspective, the U.S. "discovery" of 
the terrorist threat on 9/11 made Washington a Johnny- 
come-lately to the issue. Washington compounded the 
problem for India by aligning itself in the new global 
war on terror with Pakistan, who, in India's view, 
was the chief sponsor of terrorism. This misalliance 
handcuffed India after the Lok Sabha attack. India, the 
aggrieved party on December 13, 2001, and a victim 
of Pakistan's use of low-intensity conflict in Kashmir 
for a decade, was pressured by the United States to do 
nothing. The window of opportunity after December 
13 closed on January 12, and Musharraf's speech was 
then used as a club to beat India. Because the United 
States wanted to fight its own war against terrorism in 
Afghanistan and needed Pakistan's help to do it, India 
was pressured to hold back. This may have made a 
virtue of necessity, since India at the time was saddled 
with the Sundarji Doctrine, but it was nonetheless 
galling to have to forgo a military response. Indeed, 
practicing restraint after the Kaluchak incident was 
very damaging to Indian civil-military relations, as the 
army was anxious to respond but was prevented from 
doing so for political reasons. 

It was then even more disturbing to India to find 
the United States apparently knuckling under to veiled 
Pakistani nuclear threats. The decision to withdraw 
civilians from New Delhi demonstrated a craven lack 


of resolve that rewarded the perpetrator of terrorism 
while punishing its victim. Nuclear weapons seemed 
to have had a greater effect on the United States than on 
India itself. In sum, however, the 2002 confrontation, 
coupled with the problems identified in the Kargil 
conflict, revealed strategic weaknesses in India's 
defense policy and constraints on India's freedom of 
action that called for change and new thinking. 

Just as 1999 caused new thinking in India about a 
nuclear doctrine, the 2002 confrontation made India take 
a new approach to conventional war. India had kept its 
response at Kargil limited geographically, but at great 
expense in terms of manpower. Its inability to mount 
a quick response to the terrorist attack in 2001 resulted 
in a costly and extensive build-up of conventional 
forces and also became a national embarrassment for 
the Indian army. Not only had what India declared 
to be Pakistani-supported terrorists attacked the 
symbol of India's democracy, they had murdered the 
dependents of soldiers preparing for a war that was 
never fought. Army post-mortems on the 2001-02 
confrontation reached a number of conclusions. The 
Sundarji doctrine may have been appropriate in an 
earlier time for different needs, but it resulted in a slow 
motion and lumbering deployment of forces. It would 
have to change. In addition, Army analysts realized 
that even if the Sundarji doctrine were successfully 
implemented, it could very well cross key Pakistani red 
lines for the use of nuclear weapons. A new doctrine 
would have to account for Pakistani insecurities and 
avoid destabilizing intrawar deterrence. Finally, 
the new doctrine would also have to account for the 
intervention of third parties. A window for retaliation 
had been open from December 13, 2001, to January 12, 
2002. The United States and the UK exploited this time 


to prevail on India's politicians and allow President 
Musharraf to evade the consequences of the terrorist 
actions. A new doctrine would have to enable India to 
strike on a very short time scale. 25 

The new doctrine was dubbed Cold Start and 
unveiled in April 2004. The idea was to restructure 
the Indian army so that it could address the defects 
made evident in 2002. With Cold Start, the ponderous 
holding divisions would be divided into eight or ten 
smaller integrated battle groups, each of which would 
be able to conduct shallow-penetration attacks across 
the border with Pakistan with relatively little lead- 
time required. This new doctrine would position the 
Indian army to conduct limited war against Pakistan, 
thus allowing New Delhi to retaliate against Pakistan 
swiftly before Islamabad could prepare militarily and 
before outsiders could intervene diplomatically, while 
also reducing the risk of escalation once the armies 
were engaged. 

The contours of the Cold Start doctrine beg a 
number of questions regarding India and Pakistan's 
approach to limiting war. One of the more extreme 
interpretations of the objectives of the Cold Start 
doctrine would be the destruction of the Pakistan 
army. 26 This maximal position is almost certainly not 
endorsed by India's civilian leadership, nor by its 
entire military. Once introduced as a possible objective, 
however, Pakistan must treat it as at least a possible 
contingency that could become reality during conflict. 
Even if India explicitly rejected this objective, it brings 
up the problem of finding limits that both sides can 
accept and communicate. Suba Chandran makes the 
point that it is "essential to communicate to the other 
side the extent to which one would go in a limited war 
situation." 27 


In addition to communicating that the political 
objectives are limited, geographical limits will have 
to be identified. Borrowing from Thomas Schelling's 
discussion of tacit bargaining in a nuclear environment, 
India needs to ask whether new conspicuous stopping 
places can be mutually agreed once the LOC and 
international border are breached. 28 This may be 
difficult, as V. R. Raghavan argues "... there is no 
mutually agreed set of limitations between India 
and Pakistan on a future war— as there were none in 
past wars — neither side has control over the other's 
saliencies." 29 Pakistan has said that it would respond 
to a conventional Indian attack by escalating at the 
point of attack and expanding the war elsewhere 
at a point of its own choosing. 30 How will India and 
Pakistan agree on a new geographical limit once Cold 
Start has been implemented and either the LOC or the 
international border — obvious current limits, whose 
symbolism was reinforced in Kargil — have been 
breached? As noted earlier, one of Pakistan's red lines 
for nuclear use is territorial. If India attacks Pakistan 
and conquers a large part of its territory, Pakistan may 
respond with nuclear weapons. Implementing Cold 
Start without breaching this space threshold may be 
complicated once the bullets start flying. In addition to 
reaching tacit understandings about new geographical 
limits, they must also identify new limits on means 
during the induction of Cold Start. India breached 
the "no aircraft" understanding during Kargil. Com- 
municating new limits while Cold Start is being 
implemented and Pakistan is escalating in response 
will be extremely difficult. 

One of the obvious dangers as India plans how to 
conduct limited war is the prospect that Pakistan will 
be pushed to escalate. One of the goals of Cold Start is 


to avoid such an outcome, but it is difficult to predict 
outcomes once troops are engaged on the battlefield 
and new opportunities arise. The Shahi, Sattar, and 
Khan response to India's nuclear doctrine said that 
Pakistan would not use nuclear weapons tactically, and 
Pakistan has since indicated that it would use nuclear 
weapons in a relatively widespread attack. Given 
that any such use would compel India to respond in 
kind, leaving both countries devastated and rendering 
governance in Pakistan problematic at best, it is possible 
that Pakistan would reconsider how best to exploit its 
nuclear weapons during a war. Though highly fraught, 
the limited use of nuclear weapons might appear to be 
a better option for Pakistan if the alternative to nonuse 
was conventional defeat and the likely destruction 
of the state. The possible consequences of this new 
thinking and how conflict may again erupt in South 
Asia is discussed in the next section. 


Status of the Composite Dialogue. 

Following the 2001-02 confrontation, Pakistan and 
India reopened their political dialogue. At the annual 
meeting of the South Asian Association for Regional 
Cooperation (SAARC) in January 2004, Indian Prime 
Minister Vajpayee and Pakistani President Musharraf 
announced that they had agreed to resume the peace 
process that had been sidelined for several years. On 
February 18, 2004, they made the formal announcement 
that a bilateral "composite dialogue" would begin in 
the May-June 2004 time frame. 31 It is certainly too early 
to conclude that diplomacy has replaced conflict— 
the dialogue was suspended for several months in 


July 2006 after terrorists detonated as many as seven 
bombs on Mumbai trains— but diplomatic channels 
remain open, with the dialogue separated into eight 
different baskets. The baskets include Kashmir, 
peace and security, Siachen, Sir Creek, the Wullur 
Barrage, terrorism and drug trafficking, trade, and the 
promotion of friendly relations. These ministerial-level 
discussions have so far achieved varying degrees of 

On Kashmir, a number of confidence building 
measures (CBMs) have been achieved and discussed, 
including the Srinagar-Muzaffarabad and Punch bus 
lines, crossing points on the LOC, and intra-Kashmir 
trade and truck services. The peace and security 
dialogue, held at the Foreign Secretary level (as are 
the Kashmir meetings), produced agreements on 
the prenotification of missile flight tests and nuclear 
accidents, a foreign secretary hotline and upgraded 
DGMO hotline, and reaffirmation of the ceasefire. 
It has not, however, been able to broach the issue of 
strategic restraint, leaving both sides unfettered as they 
increase their nuclear weapons stockpiles and expand 
strategic capabilities. The Siachen glacier dispute and 
Wullur Barrage remain contentious, but a joint survey 
of Sir Creek was agreed upon and may form the basis 
of a final settlement. Though no tangible results can 
be cited on drugs and terrorist issues, the two sides 
remain engaged and appear not merely to be casting 
aspersions on the other. Whether that spirit survives 
the deadly bombing of the Indian Embassy in Kabul 
on July 7, 2008, remains to be seen. Finally, the trade 
and friendly relations baskets remain subject to the 
political atmosphere and perhaps are notable for still 
proceeding as much as anything else. Pakistan remains 
concerned that India's tariff structure, especially 
regarding textiles, is too restrictive. 


Though India and Pakistan are engaged in this 
structured dialogue, it is fragile and unlikely to weather 
any strong jolts. The Mumbai train bombings derailed 
it for a short period of time, but India came back to 
the table. Repeated attacks, however, could well force 
India's hand. The July 2008 terrorist attack on the 
Indian Embassy in Kabul, now determined by India 
to have been supported by Pakistan's Inter-Services 
Intelligence Division (ISID), is yet another example of 
the stress that is continually placed on the relationship 
and the efforts at diplomacy. So far, the desultory 
progress on the diplomatic front provides relatively 
little material gain to offset any sense on India's part of 
being played for a patsy. Conflict therefore cannot be 
ruled out, and a number of possible scenarios can be 

Conflict Scenarios: Triggering Events. 

A number of possible triggers for conflict are 
evident. The first and most obvious is another 
terrorist attack on an important economic or political 
symbol. The attack on India's embassy in Kabul was 
not sufficiently damaging to cause a crisis much less 
conflict. This can be a tricky issue for India. New 
Delhi wants to avoid intemperate and inaccurate 
remarks that would inflame relations with Pakistan at 
a time when India would like to see Pakistan achieve 
political stability. It is not in India's interest to get in 
the way of Pakistan reaching a political accord that 
would stabilize its current government in Islamabad. 
At the same time, the experiences in 1999 and 2001- 
02, as detailed above, make India want to avoid again 
appearing to be a passive and ineffectual victim of 
terror. Another attack on an important symbol or with 


significant loss of life may force New Delhi to act. It 
does not appear to be in Pakistan's interest to support 
any terrorist activity, but with Pakistan's military no 
longer running the country, there could be an increase 
in unauthorized activity by the army or the ISID. This 
might be justified internally as a means to assert the 
military's independence, to galvanize opposition to 
India's involvement in Afghanistan, or to force India's 
attention back to Kashmir. Furthermore, the terrorist 
organizations within Pakistan may well draw their own 
conclusions about what needs to be done regarding 
India. A violent action even two steps removed from 
ISID may be enough to compel India to go after the 
source rather than the immediate perpetrator of a 
terror attack. 

A second possible triggering event would be the 
assassination of a key political leader. Political violence 
is regrettably common in South Asia, Benazir Bhutto's 
death only being the latest in a string that includes Rajiv 
Gandhi, Zia ul-Haq, Indira Gandhi, Liaquat Ali Khan, 
and Mohandas Gandhi. As with the Kabul bombing, 
there would have to be quite reliable evidence that 
Pakistan was somehow behind the killing for it to 
prompt an Indian response. Even in the absence of 
solid evidence, however, suspicions could lead to 
escalating tension, which itself could be a sufficient 
trigger. Another aspect of this factor would be the 
assassination of a lesser political leader such as one 
of the Kashmir politicians working with New Delhi, 
notably Omar Abdullah or Mehbooba Mufti. The likely 
resulting demonstrations and violence within Kashmir 
would inevitably increase tensions between India and 

War could be instigated either in connection with 
or separate from an assassination of a prominent 


Kashmiri leader. Should militancy return to Kashmir, 
fanned by Pakistan or a spontaneous response to some 
real or imagined affront, it could take a more venomous 
form than previously seen. The demonstrations that 
followed the August 2008 decision by India to cede 
ground in Kashmir to Hindu penitents visiting the 
Amarnath shrine did not foment a new round of Indo- 
Pakistani conflict, but did make evident how tenuous 
relations are over this region. If Taliban or al Qaeda 
elements turned their energies to supporting Muslims 
in Kashmir, the outcome could be savage. Suicide 
bombing is now part of Pakistan's landscape — a few 
well-planned suicide bombings in Kashmir could 
easily trigger a dramatic Indian response across the 

Another possible trigger for war may be India' s Cold 
Start doctrine, whether it has been fully implemented 
or not. Pakistan is not inclined under current conditions 
to preempt as it has done in the past. In December 1971, 
when war was effectively already underway in East 
Pakistan in the form of Indian support for the Mukti 
Bahini guerrilla forces, Pakistan conducted preemptive 
air attacks against India's Western positions in the hope 
that India would engage in the West, where Pakistan 
held slightly better positions, and defer attacking in 
the East, where Pakistani forces were isolated and 
vulnerable. Pakistan did not preempt in 1987, however, 
even though India's Brass Tacks exercise began to look 
like preparation for an Indian attack against Pakistan. 
Pakistan still sees itself as potentially vulnerable to 
an Indian armored attack, however, and although the 
Cold Start doctrine is intended to allay Pakistani fears 
that any of its red lines would be crossed in a conflict, 
it could well have the opposite effect. If Pakistan fears 
that it cannot rebuff Indian forces at all the points of 


attack envisioned in Cold Start, it may decide to take 
the initiative in a future crisis and launch an attack at 
a point of its own choosing rather than allow India to 
dictate the terms of a conflict. 

War could also result indirectly from a coup by 
radical elements within Pakistan's army against the 
current moderate leadership. Again, this is an unlikely 
eventuality, but a new civilian government may well 
target the army and wish to punish it for the 9 years 
of army rule from 1999 to 2008. Former Prime Minister 
Nawaz Sharif has rhetorically asked why only civilians 
should be hanged, a clear reference to the military 
decision in 1979 to hang Zulfiqar Ali Bhutto and at the 
same time a threat to Pervez Musharraf for his role in 
the October 1999 coup and subsequent leadership of 
Pakistan. As Prime Minister from 1996 to 1999, Nawaz 
sought to neuter the various opposing centers of power 
in Pakistan— opposition parties, the Supreme Court, 
the National Assembly, the media, the Army— and, 
if reelected, may try to do so again. If Chief of Army 
Staff Kayani were to accept civilian intervention as 
former CO AS Jehangir Karamet did in Sharif's earlier 
term, more radical elements could attempt a putsch. 
The consequence would be enormous turbulence 
within Pakistan, possibly including the imposition of 
martial law, a step Musharraf was loath to take. Such 
a sequence of events could set the stage for rising 
tensions and accusations hurled at India, potentially 
setting the stage for a new round of conflict. 

An unpredictable but possible trigger for conflict 
could be a nuclear accident. This would likely occur 
in connection with one or more other factors that had 
escalated tension, but if a nuclear accident occurred 
even during a minor confrontation, both sides 
might suddenly face the reciprocal fear of surprise 


attack. Even if it were during routine activities — an 
electrical fire at a nuclear weapon manufacturing site 
or a nuclear release at a reprocessing plant— the side 
responsible for the accident might try to cover it up. 
If that were successful, there might be no problem, 
but the probability of success would be low. Then the 
discovery of the cover-up would inject fear into the 
other side — if it was only an accident, why not admit 
it? If, instead of trying to cover up the accident, full 
disclosure was made, the other side might ask for more 
information to ensure that no harm was intended. It 
would be natural in such circumstances, however, to 
resist offering too much information, yet failure to be 
completely forthcoming would only exacerbate the 
situation, creating further tension. 

If the accident occurred during the transfer of 
a weapon or a nuclear component to a safer storage 
area or to a site for mating with other components, 
tensions would escalate dramatically. Why was the 
transfer being made? How many other weapons 
were being transferred? How many were already 
transferred and ready for launch? Had intelligence 
that was previously considered solid now proven to 
be erroneous? Even if the exaggerated fears captured 
by such questions were not running through the minds 
of the decisionmakers in the opposite capital, it might 
well be assumed by the state that was moving the 
weapons that such thoughts were influencing the other 
side. And if they were, would it not make sense for 
the other side to ready its own weapons with as much 
haste as possible? How and whether such a cycle could 
be broken would depend on a host of psychological 
and political factors, all of which could be highly 
stressed by the unraveling events. India and Pakistan 
have addressed this issue by reaching an agreement 


regarding nuclear accidents (discussed subsequently 
in the CBM section). Full disclosure that an accident 
occurred does not necessarily solve the fears raised 
here, however, leaving this issue a potential source of 
tension and misunderstanding. 

A last illustrative example of a possible trigger for 
war between India and Pakistan would be a substantial 
ethnic uprising in Pakistan. Pakistanis believe that 
India has in the past aided and abetted Balochi national 
aspirations. It is possible that a more coordinated 
uprising could take place in Balochistan, perhaps with 
support from India, anti-Punjabi Taliban elements, or 
al Qaeda terrorists. This would be unlikely without 
other contributing factors being present, such as an 
aggressive Islamabad government intervention in the 
Federally Administered Tribal Area (FATA). Support 
for a Balochi uprising might be used as a distraction 
to take forces away from the FATA or elsewhere. 
Pakistan might respond against India by another 
Kargil-like incursion or open support for terrorists in 
Kashmir. This congruence of events could force India's 
hand and provoke cross-LOC or international borders 
maneuvers to confront Pakistan. 

Conflict Scenarios: What Would War Look Like? 

War in the future might look much like war in the 
past. Pakistani support for proxy forces, primarily 
irregular militants operating outside government 
control, would most likely originate from Kashmir but 
conceivably could have a base in Bangladesh or Nepal. 
Pakistan's goal in supporting proxy forces would 
be to tie up the Indian Army as much as possible, 
bleeding and hectoring its forces to convince India 
that a diplomatic resolution to Kashmir on Pakistan's 


terms must be found. A parallel to this kind of conflict 
would be Indian support for the same kind of activity 
in Balochistan without the same longer-term objective 
of resolving Kashmir, but rather to make clear that two 
can play the same game with damaging consequences 
for Pakistan. India's goal would be to force Pakistan to 
deploy its forces away from other fronts, thus reducing 
Pakistan's ability to respond elsewhere on the IB or 

These proxy efforts have been conducted in the 
past but without either side taking the war to the 
source of support across the border. Although Cold 
Start was developed in part to provide India with an 
ability to intervene in response to terrorist activities 
inside India, there are options short of Cold Start that 
could produce a different kind of war. Rather than 
invoking Cold Start as presently conceived, India 
could respond to Pakistani support of proxy war 
inside Kashmir by conducting a "punish and leave" 
strategy. 32 This might be an incursion by Indian special 
forces for no more than a 3-4 day period to allow the 
destruction of key training camps and supply routes. 
An alternative might be a "punish and stay" operation, 
more like the Chinese invasion of Vietnam in 1979 or 
the U.S. invasion of Cambodia in 1971. In both cases, 
the invasion force would be sent in for a fixed but 
significantly longer period of time, with the intent of 
disrupting the enemy's ability to continue resupply or 
staging. Both run the risk that Pakistan would expand 
the war elsewhere along the contested boundary. That, 
however, would force India to fight entirely defensively 
at points of Pakistan-initiated conflict, which could 
consequently reduce the dangers associated with Cold 


Conflict would look quite different if India invoked 
its Cold Start doctrine in response to a Pakistani 
provocation. Here there could be at least three broad 
variants: success on all the seven or eight fronts that 
Cold Start envisions; success on a few fronts and failure 
on the others; or failure on all the fronts. The latter 
outcome would create fewest problems from the point 
of view of escalation and nuclear use, but is also the 
least likely given India's superiority in conventional 
terms. 33 The second possibility might be a more likely 
outcome. Pakistan might choose to concentrate its 
forces at key defensive points to overcome India's 
thinned out forces that are called for by the Cold Start 
doctrine. Confronting Indian forces at a few critical 
choke points or in defense of vulnerable cities would 
be more important than stopping every one of the 
seven or eight points of attack. The result might be 
more like a stalemate, assuming that the successful 
Indian offensives stopped after achieving the planned 
shallow penetration. Battlefield initiative might carry 
some commanders away, however, especially if they 
encountered light and only harassing resistance. 
Whether Pakistan would interpret a deeper penetration 
by a lighter force as crossing the territorial red line 
would depend on the dynamic circumstances at play 
elsewhere along the border. The most dangerous 
scenario would probably be the first, where Indian 
forces succeeded in surprising Pakistan and were able 
to penetrate along seven or eight fronts and then dig in 
and hold their positions. Seeing itself defeated along 
a broad swathe of territory would force Pakistan into 
making critical decisions about nuclear escalation. 

Such a decision would also be forced on Pakistan's 
leaders in the event of an outright cross-border war 
such as India threatened in 2002. Whether the new 


Cold Start doctrine will be flexible enough to allow a 
massed invasion consistent with the earlier Sundarji 
Doctrine is not clear. But a powerful deep thrust into 
Pakistani territory at one or more points would likely 
overwhelm Pakistan and force it to counterattack 
elsewhere in a flanking maneuver. The dynamics of 
that kind of conflict would again be difficult to predict, 
but it is more likely that India would be able to prevail 
on the ground than Pakistan. In such a case, Pakistan 
would have to decide whether escalation to nuclear 
weapons would make any sense. How those weapons 
may be employed will be discussed in the next section. 

Limited Nuclear Use Options. 

As noted earlier, India has declared that it will not 
use nuclear weapons first but reserves the right to 
retaliate against nuclear, chemical, or biological use 
against Indian forces anywhere. In the hypothesized 
scenarios depicted above, Pakistan is in most cases the 
state on the losing end of the conventional war and in 
contrast espouses a first use doctrine. It is therefore 
more likely that Pakistan would need to consider more 
carefully than India what nuclear steps it might have to 
take in certain dire circumstances. What might limited 
nuclear use look like? 

Decisions would be made under duress, with 
troops backpedaling on the battlefield, and the 
international community using a combination of 
threats and rewards to induce Pakistan to show 
restraint. Under such circumstances, Pakistan almost 
certainly would first issue a threat to resort to nuclear 
weapons. It is popularly believed that Pakistan used 
public comments by Dr. A. Q. Khan in 1984 and 1987 
to threaten India with nuclear weapons. His February 


1984 interview with Nawa-i-waqt came when India 
appeared to be considering a preventive strike against 
the Kahuta uranium enrichment facility, and his 
January 30, 1987, interview with the Indian journalist, 
Kuldip Nayar, occurred just at the close of the tense 
Brass Tacks face off. 34 These incidents may have been 
what Shahi, Sattar, and Khan were thinking of in saying 
that nuclear deterrence had worked in those years. The 
comments by Shamshad Ahmed during Kargil may 
have been intended to convey a similar warning, but 
all the pronouncements were somewhat veiled. 

Under the conditions posited here, any threat from 
Islamabad would need to be far more official for it 
to have immediate effect. It would certainly have to 
be time-bound and specific— we will do X in place 
Y if Indian troops have not silenced their guns by 
time Z. To reinforce its seriousness, Pakistan would 
need to proceed with visible readiness steps, for 
example, moving truck convoys (both dummy and 
real) to potential assembly points, broadcasting the 
deployment of missiles armed with conventional and 
nuclear weapons at undisclosed launch pads (possibly 
communicating to third parties the coordinates of some 
of them to reinforce the point), and so on. Pakistan 
might also want to leave itself options to demonstrate 
resolve without starting a nuclear escalation. 

A third step therefore might be to test a weapon to 
quicken the decisionmaking pace for India. That would 
require already having a weapon in place, which is 
highly unlikely, but could perhaps be done with a 
week's notice. Moving a weapon into position for such 
an eventuality would require substantial foresight by 
Pakistan, but is in the realm of the possible. 

A fourth escalatory step — or third if a weapon 
had not been prepositioned in a test tunnel— would 


be to conduct a test in the atmosphere, perhaps on a 
missile fired toward the Arabian sea. Each of these 
steps would require a time lapse to allow India to see 
reason and stop its offensive - but at the same time, 
it may be difficult to stop the action on the battlefield 
in a timely manner. There could be a real problem of 
actions and threats overtaking the decision process in 
New Delhi. In any case, Pakistan would be forced to 
make a fateful decision whether to use one or more 
weapons against Indian targets. With the armies likely 
enmeshed and intermixed on the battlefield, dropping 
a weapon would require care to avoid also killing 
Pakistani soldiers. This could argue for using a weapon 
well behind Indian lines, but that could produce only 
marginal effect on the actual fighting. Pakistan might 
instead target a military base close to the front. 

The next escalatory step would be a fairly large- 
scale attack. It is possible to imagine steps short of 
such an attack as described above, but at some point 
Pakistan would likely see no reason not to attack with 
large numbers of weapons on a range of military and 
industrial — and potentially civilian — targets. There 
might be an effort made to avoid Muslims, but at such 
a dreadful point it would be quite difficult to practice 
much target discrimination. Any attack would be both 
destructive and suicidal since it would shatter any 
lingering caution on India's side, and a similar attack 
would almost certainly follow in response. Both sides 
would be left with unimaginable damage and a long 
and painful recovery. Depending on the extent of the 
damage, there could also be widespread but likely 
temporary (1 to 2 years) global consequences for food 
production, health, and the environment. 35 



Current Confidence Building Measures. 

Over the years, India and Pakistan have agreed to 
a number of confidence building measures (CBMs) 
whose record of success is, to quote the Stimson Center, 
a prominent proponent and supporter of CBMs in South 
Asia, "spotty at best." 36 As noted earlier, they have also 
made some progress in the Composite Dialogue on 
additional CBMs. One of the longer lasting and more 
touted nuclear-related CBMs is the agreement reached 
between Prime Ministers Benazir Bhutto and Rajiv 
Gandhi not to attack one another's nuclear facilities. 
This arose out of the concern in the 1980s that India 
was planning to conduct an attack against Kahuta. To 
assuage Pakistani concerns, India proposed that the 
two sides exchange lists of their nuclear facilities and 
agree never to attack the listed sites. This CBM has 
held steady for almost 2 decades. 

Another CBM that emerged from a crisis was the 
April 1991 Agreement on the Advance Notification of 
Military Exercises, Maneuvers, and Troop Movements. 
Communication channels were available in January 
1987 when the Indian Exercise Brass Tacks threatened 
to explode into war. Reciprocal misinterpretations 
of the other sides' movements— by Pakistan of the 
orientation of India's exercise, by India of Pakistan's 
responsive military positioning — created heightened 
tension that was resolved by diplomatic discussions. 37 
To avoid a repeat of that crisis, the two sides agreed 
on prenotification mechanisms, which have also so far 
been useful in maintaining military communications 
and reducing apprehensions. 


As technical capabilities expanded, so too did 
CBMs. For example, in 1999 the two sides reached an 
agreement to prenotify each other of flight-testing of 
ballistic missiles. With the two sides having developed 
a fairly large suite of missiles, they have by now 
conducted an equally large number of tests. Given the 
close proximity of the countries and short flight times 
of missiles, this agreement has special value and has 
been used quite frequently. The existence of a CBM, 
however, does not guarantee that stability will follow. 
In April 1998, after Pakistan duly notified India and 
then conducted a test of its new Ghauri missile, India 
was sufficiently irritated that it went ahead with the 
decision to test nuclear weapons. 38 

Other CBMs are on the books but are not fully 
implemented. For example, one CBM created a hotline 
between the Directors General of Military Operations 
(DGMOs), but off-the-record reports indicate that the 
respective DGMOs can be reluctant to pick up the 
phone lest that act be interpreted as a sign of weakness 
in a time of tension— precisely when the hotline is 
supposed to come into play. There is a scheduled once- 
a-week call, but when the need is greatest, this CBM has 
been underutilized. There has been a hotline between 
the Prime Ministers as well, going back to 1999. But 
just as technology creates needs, it can eliminate needs, 
and we may see the day when the two Prime Ministers 
simply include one another in their "favorite five" on 
their cell phones. 

Another prominent attempt at a CBM was the 
Lahore Declaration that highlighted Indian Prime 
Minister Vajpayee's historic bus trip to Pakistan 
in February 1999. This declaration sketched out a 
number of positive cooperative steps regarding 
nuclear stability, but as India's Foreign Minister 


later commented, the bus to Lahore got hijacked to 
Kargil. 39 The Kargil war broke out only a few months 
later, and it was soon evident that Pakistan's military 
leaders had been planning the intervention even as the 
political leaders were breaking bread — or naan as the 
case may be — together. That said, one of the elements 
of the Lahore memorandum was implemented 8 
years later in February 2007 when the Agreement on 
Reducing the Risk of Accidents Relating to Nuclear 
Weapons was signed. This CBM specifically addressed 
the contingency hypothesized earlier where the other 
side might misinterpret a nuclear accident and trigger 
counter moves. A swift and complete explanation of 
any nuclear accident would certainly serve to dampen 
fears, but its implementation, if such an accident 
occurs, will require great transparency. Both sides will 
need to overcome their fears during a crisis, which 
may prove to be a test not just of this agreement, but of 
their political systems and national will. 

A number of links between the two countries 
are regularly severed during crises, which creates 
opportunities for the two sides to show that they are 
improving relations when the severed links are finally 
reestablished. Such measures as foreign secretary 
meetings, air links, flag meetings between military 
commands, sports exchanges (especially of cricket 
teams), opening consulates, and ministerial-level talks 
are sometimes hailed as signs of improved relations 
and the restoration of confidence. That kind of progress 
may do little more, however, than set the stage for a 
new round of cuts to demonstrate anger when a new 
crisis begins to boil. In an odd way, such links may 
allow each side to blow off steam and send a message 
well short of conflict, thereby increasing crisis stability. 
To count them as CBMs, though, might cheapen the 


Once reestablished, however, the content of the 
senior level meetings can produce new opportunities, 
if not formal CBMs. The Foreign Secretaries met in June 
2004 to discuss the sensitive issue of peace and security 
in Kashmir, and in September 2005 they discussed 
the overall peace process; the respective Commerce 
secretaries met in August 2004 to discuss difficult trade 
issues; the Foreign Ministers and Prime Ministers meet 
regularly at SAARC, the United Nations (UN), and 
elsewhere for discussions. This may seem like cold 
comfort given the severity of their dispute, but some 
venue for discussion, if not resolution, is seen by both 
sides as positive, necessary, and for now, good enough. 

Options for U.S. Support. 

Concerns about the safety and security of Pakistan's 
nuclear arsenal became particularly pronounced 
following the 9/11 al Qaeda attacks. Although the al 
Qaeda bases were across the border from Pakistan in 
Afghanistan, there was still a certain amount of concern 
about whether Pakistan's nuclear weapons were 
adequately guarded and contained safety mechanisms. 
President Musharraf wrote that after 9/11, "Every 
American official from the president on down who 
spoke to me or visited Pakistan raised the issue of 
the safety of our nuclear arsenal." 40 Pakistan had only 
established a robust command and control structure in 
January 2000, and at first it did not include a separate 
division for safety and security of the arsenal. 41 It 
did assign responsibility for the management and 
operation of its nuclear program to the Strategic 
Plans Division, which served as the pivotal secretariat 
between the Strategic Forces Command in the field and 
the National Command Authority as the apex decision 


body. Pakistan and the United States were willing to 
consider areas for improvement and cooperation in 
this management structure. 42 This is a sensitive area 
that potentially impinges on the most secret aspect of 
Pakistan's defense structure, so any expansion of the 
reported cooperation will be limited and dictated by 
Pakistan as a sovereign nation. 

The same sensitivities apply to India, but that nation 
has not faced the same scrutiny as Pakistan since it has 
not had the same relationship to the Taliban, al Qaeda's 
ally and erstwhile host. When the issue of safety and 
security was broached in passing with a senior science 
and technology advisor to the Prime Minister, the topic 
was dismissed quickly with the comment that India 
has adequately taken care of that problem. 43 This is 
suggestive of the difficulty the United States may face 
in engaging India, but if old narratives can be avoided 
and a common approach considered, there is as much 
room for U.S.-India cooperation on security, if not yet 
safety, as there is with Pakistan. 

Beyond the narrow management of the nuclear 
arsenal, the United States has vast experience, from 
mostly successful management of nuclear assets 
but some from grossly unsuccessful management 
practice. 44 It is therefore in a position to discuss best 
practices with Pakistan and India. Best practices can be 
interpreted in different ways, of course, but the strategic 
dialogues between Pakistan and the United States and 
India and the United States could include discussions 
of transportation safety, emergency search operations, 
personnel reliability standards, and alternatives for 
perimeter security. Although tricky from a protocol 
and NPT perspective, bringing the heads of India and 
Pakistan's nuclear management directorates to Omaha 
for meetings and discussions at the U.S. Strategic 


Command could be extremely instructive. Educational 
exchanges can also help, whether it is placing Pakistani 
and Indian officers in U.S. academic institutions or 
supporting American instructors in the staff colleges 
to teach a specific course or serve as a resource person 
for a specified duration. On the U.S. side, bringing 
Indian and Pakistani military instructors for a fixed 
term assignment with the National Defense University 
could be extremely interesting and create bonds that 
could serve U.S., Indian, and Pakistani foreign policy 

India and Pakistan are not ready for any 
comprehensive cooperative threat reduction efforts. 
Indeed their view of what "cooperative," "threat," 
and "reduction" mean and imply may be at odds 
with views held in Washington. However, that need 
not prevent sharing experiences and approaches to 
improve understanding of the nuclear management 
challenges and perhaps improvement of the operations 
in the field. A variety of cooperative efforts are 
underway regarding technology transfer, including 
the megaports and container security initiatives, but 
they fall outside the compass of nuclear management. 
Weapon and materials accounting and control must be 
done by Pakistan and India on their own so long as 
they see their nuclear stockpiles as part of their defense 
programs. Fissile material stockpile and production 
remain contentious topics at the Conference on 
Disarmament but remain high on the agenda for 
bilateral U.S. dialogues. 

Some issues can productively be addressed in Track 
II fora, and, although there have been many over the 
years with mixed results, the effort is worth making. 
U.S. Government officials are willing to admit that 
certain issues (e.g., counterterror cooperation, nuclear 


stability, and regional conflict) can be difficult to discuss 
in official dialogues. A somewhat routine exchange 
of interagency-cleared talking points is necessary 
but can be productively supplemented with informal 
discussions among policy cognoscenti who are then 
able to identify problem areas and opportunities for 
policy development that might otherwise be missed. 

Pakistan's greatest need at present in the area 
of conventional military hardware has to do with 
counterterrorism equipment and training. Some of 
the same equipment might usefully be transferred 
to India. A more interesting area has to do with U.S. 
considerations of transferring ballistic missile defense 
technology to India. Given that Pakistan is worse off 
in a defense-dominant world, it is unlikely that the 
transfer of defensive technology equally to both sides 
would solve Pakistan's concerns, even if the technology 
were being discussed. It cannot be overemphasized 
that defense does not serve Pakistan's interest, since, 
as the weaker power, Pakistan's threat to use nuclear 
weapons serves a legitimate security interest. In 
a defense-dominant world, Pakistan would again 
become vulnerable to Indian conventional superiority. 
As the stronger power, India continues to be interested 
in ballistic missile defense, and so far the United 
States has been open to the idea. India has already 
acquired some relevant technology from Israel and 
is considering Russian technology as well. Pakistan 
appears already to be responding to the possibility 
that India will acquire some kind of defensive system 
and can be expected to expand its offensive capability 
accordingly. In a sense therefore, providing defensive 
technology to India fuels the arms race, but the United 
States is not alone in that market. 


Technology transfer in the area of nuclear 
management and operations is problematic. The 
United States so far has interpreted Article I of the 
Nuclear Nonproliferation Treaty in restrictive terms. 
The entire U.S.-India civil nuclear deal also brings up 
complicated issues of what is allowable, who are the 
legitimate end-users of the material, what restrictions 
must be enforced on internal transfer, etc. 


The 1999 and 2001-02 confrontations could have 
been worse without U.S. intervention. That said, 
neither India nor Pakistan sees the U.S. involvement as 
an unadulterated good. Many in the Pakistani Army 
feel politicians, who were too quick to succumb to U.S. 
pressure, stabbed them in the back. Meanwhile, many 
in India feel that the U.S. fear of Pakistan's nuclear 
weapons and compulsion about al Qaeda blinded it 
to the perfidious Pakistan regime, and therefore the 
United States unduly pressured India not to act in its 
own best interest. Thus another round of crisis or war 
between India and Pakistan will confront some of this 
lingering resentment. On balance however, the United 
States will be engaged and has constructed relations 
with both countries that at least until recently were as 
positive with both countries at the same time as anyone 
can recall. With a new civilian regime in power in 
Islamabad, though, U.S. influence cannot be assumed. 
The United States may be hard pressed to sustain 
the positive diplomatic atmospherics of the past 8 
years, but must bend every effort to do so in order to 
preserve some ability to offer its own good offices in 
a future confrontation. This chapter has sketched out 
some dire scenarios for conflict in the future. Resolving 


the dispute will fall to India and Pakistan themselves, 
but they may see value in turning to the United States. 
Sound diplomacy and technical engagement can help 
make it politically tolerable within these two countries 
for the United States to play that role, if and when the 
time comes. 


1. General V. P. Malik, Kargil: From Surprise to Victory, New 
Delhi, India: HarperCollins Publishers, 2006, p. 107; Pervez 
Musharraf, In the Line of Fire: A Memoir, New York: Free Press, 
2006, pp. 87-98. 

2. S. Paul Kapur, "Nuclear Proliferation, the Kargil Conflict, 
and South Asian Security," Security Studies, Vol. 13, No. 1, 
Autumn 2003, pp. 79-105; and S. Paul Kapur, Dangerous Deterrent: 
Nuclear Weapons Proliferation and Conflict in South Asia, Stanford, 
CA: Stanford University Press, 2007, esp. Chap. 6. 

3. From Surprise to Reckoning: The Kargil Review Committee 
Report, New Delhi, India: Sage Publications, December 15,1999, p. 

4. J. N. Dixit, India — Pakistan in War and Peace, London, UK: 
Routledge, 2002, pp. 55-56. 

5. Malik, pp. 259-260. 

6. "Pakistan May Use Any Weapon," The News, Islamabad, 
May 31, 1999. 

7. Bruce Reidel, "American Diplomacy and the 1999 Kargil 
Summit at Blair House," Center for the Advanced Study of India, 
Policy Paper Series, Philadelphia: University of Pennsylvania, 
2002, p. 3. 

8. Strobe Talbott, Engaging India: Diplomacy, Democracy, and 
the Bomb, Washington, DC: Brookings Institution, 2004, p. 158. 


9. Musharraf, p. 96. 

10. Peter R. Lavoy, ed., Asymmetric Warfare in South Asia: The 
Causes and Consequences of the Kargil Conflict, forthcoming, 2009 

11. Musharraf, p. 98. 

12. John Gill, "Military Operations in the Kargil Conflict," in 
Peter R. Lavoy, ed., Asymmetric Warfare in South Asia. 

13. Musharraf, p. 97. 

14. "Draft Report of National Security Advisory Board on 
Indian Nuclear Doctrine," Section 2.3, a, August 17, 1999, available 
from and 

15. Ibid. 

16. Ibid. 

17. Agha Shahi, Abdul Sattar, and Zulfiqar Ali Khan, 
"Securing Nuclear Peace," The News, Islamabad, October 5, 1999. 

18. Malik, pp. 365-366. 

19. Polly Nayak and Michael Krepon, U.S. Crisis Management 
in South Asia's Twin Peaks Crisis, Washington, DC: The Henry L. 
Stimson Center, 2006; and Alex Stolar, To the Brink: Indian Decision- 
making and the 2001-2002 Standoff Washington, DC: The Henry L. 
Stimson Center, 2008. 

20. The text of President Musharraf's speech is available from 

21. The Lok Sabha, "House of the People," is the directly 
elected lower house of India's parliament. 

22. Paulo Cotta-Ramusino and Maurizio Martellini, "Nuclear 
Safety, Nuclear Stability and Nuclear Strategy in Pakistan: A 
Concise Report of a Visit by Landau Network - Centro Volta," 


Pugwash Online, January 14, 2002, available from www.pugwash. 

23. See Krepon and Nayak, pp. 34-35. 

24. Press release from the Prime Minister's Office, available 

25. Walter C. Ladwig III, "A Cold Start for Hot Wars? The 
Indian Army's New Limited War Doctrine," International Security, 
Vol. 32, No. 3, Winter 2007-08, pp. 158-190. 

26. See Subhash Kapila, "India's New 'Cold Start' War 
Doctrine Strategically Reviewed," South Asia Analysis Group 
Paper No. 991, New Delhi, India, May 4, 2004. 

27. Suba Chandran, "Limited War with Pakistan: Will it Secure 
India's Interest?" ACDIS Occasional Paper, Urbana-Champaign: 
University of Illinois, August 2004, available from www.acdis.uiuc. 

28. Thomas C. Schelling, The Strategy of Conflict, New York: 
Oxford University Press, 1960, pp. 67-74. 

29. V. R. Raghavan, "Limited War and Nuclear Escalation in 
South Asia," The Nonproliferation Review, Fall/Winter 2001, p. 15. 

30. Personal interviews with Pakistan Army officials in 
Islamabad, June 2003. 

31. "'Historic' Kashmir talks Agreed," BBC Online, January 6, 
2004, available from 

32. The term is from Michael Krepon. 

33. The Military Balance 2008, London, UK: International 
Institute for Strategic Studies, 2008, pp. 341-345, 349-351. 

34. Interview with Dr. A. Q. Kahn, Nawa-i-waqt, Pakistan, 
February 10, 1984; Kanti Bajpai, P. R. Chari, Pervaiz Iqbal 
Cheema, Stephen Cohen, and Sumit Ganguly, Brasstacks and 
Beyond: Perception and Management of Crisis in South Asia, New 
Delhi, India: Manohar, 1997, pp. 39-40, 106-107. 


35. See Owen Toon et ah, "Consequences of Regional-scale 
Nuclear Conflicts," Science, Vol. 315, March 2, 2007, pp. 1224-1225. 

36. The Stimson Center site provides a review of the concept 
of confidence building measures as well as a chronology previous 
Indo-Pakistani efforts; available from 

37. See Bajpai et ah, chaps. 2 and 3. 

38. Private conversation with former Indian NSA Brajesh 
Mishra, April 2008. 

39. Jaswant Singh, A Call to Honour: In Service of Emergent 
India, New Delhi, India: Rupa and Co., 2006, pp. 200-229. 

40. Musharraf, p. 291. 

41 . Private conversation in Islamabad, Pakistan, January 2000. 

42. David Sanger and William Broad, "U.S. Secretly Aids 
Pakistan in Guarding Nuclear Arms," The New York Times, 
November 18, 2007, p. 1. 

43. Private conversation in New Delhi, India, March 2008. 

44. The transfer of live nuclear warheads on aircraft across the 
continental United States without the knowledge of anyone in the 
chain of command being only one egregious example. 




Feroz Hassan Khan* 


The new international environment has altered the 
concept of national security. Threats to international 
peace and security now emanate not from strategic 
confrontation between the major powers, but from 
regional conflicts and tensions and the spread of 
violent extremism by nonstate actors, threatening 
nation-states from within and transcending state 
boundaries and international security. In recent 
years, the levels of security enjoyed by various states 
have become increasingly asymmetric — some enjoy 
absolute security, others none at all. This environment 
of security imbalance has forced weaker states to 
adopt a repertoire of strategies for survival and 
national security that includes alliances and strategic 
partnerships, supporting low-intensity conflicts, and 
engaging in limited wars and nuclear deterrence. 

*Views expressed herein are solely the author's personal views 
and do not represent either the Pakistan government or the U.S. 
Department of Defense. The author is grateful to Lieutenant 
Commander Kelly Federal, U.S. Navy, MA National Security 
Affairs, from the Naval Postgraduate School, for contributing in 
substance, editing, and assisting with this chapter. The author also 
thanks Naeem Salik, former Director of SPD and visiting Scholar 
at SAIS, Johns Hopkins University, Washington, DC, for inputs 
and comments; and Ms. Rabia Akhtar, Ph.D. candidate at Quaid-e 
Azam University, Islamabad, Pakistan, for sending published 
research material from Islamabad. 


South Asia has witnessed increased regional 
tensions, a rise in religious extremism, a growing arms 
race, crisis stand-offs, and even armed conflict in recent 
years. Nuclear tests did not bring an era of genuine 
stability between India and Pakistan, though military 
crises in the region did not escalate into full-fledged 
wars, underscoring the need for greater imagination to 
rein in the risks due to the fragility of relations between 
two nuclear neighbors in an increasingly complex set 
of circumstances. 

Pakistan's primary and immediate threat now 
is from within. Its western borderlands are rapidly 
converting into a battleground where ungoverned 
tribal space in proximity to the porous and disputed 
border is degenerating into insurgency both to its east 
into Pakistan as well as to its west into Afghanistan. 
The al Qaeda threat has now metastasized into a 
spreading insurgency in the tribal borderlands, which 
is taking a heavy toll on both Pakistan and Western 
forces in Afghanistan. The newly elected government 
in Pakistan has hit the ground running; but still mired 
in domestic politics, it has been unable to focus on the 
al Qaeda and Taliban threat that is rapidly expanding 
its influence and targeting strategy. The most tragic 
aspect of this conundrum is the success of al Qaeda in 
creating cracks of misunderstanding between Pakistan 
and the Western allies, while exacerbating tensions and 
mistrust between Pakistan's traditional adversaries, 
India and Afghanistan. 1 For example, Pakistan's 
security nightmare which perceives India- Afghanistan 
collusion in squeezing Pakistan is exacerbated, while 
the Indian and Afghan security establishments perceive 
Pakistani Intelligence malfeasance as perpetuating 
the Afghan imbroglio. Worse, the outcome of this 
confusion and blame generates real advantage for 


al Qaeda and the Taliban. Any terrorist act that pits 
Kabul, New Delhi, and Islamabad against each other 
and intensifies existing tensions and crises also throws 
Washington off balance, allowing al Qaeda and its 
sympathizers the time and space to recoup, reorganize, 
and reequip, and continue to survive. 

The only silver lining in this unhealthy regional 
security picture is the slowly improving relationship 
between India and Pakistan, which has developed 
over the past 4 years. Though relations are tense and 
still fragile, there is a glimmer of hope in this overall 
crisis-ridden region. The dialogue process between 
India and Pakistan has been somewhat resilient in the 
face of significant setbacks and changing domestic, 
political, and international landscapes within each. 

It is very improbable that a nuclear war between 
Pakistan and India would spontaneously occur. The 
history of the region and strategic nuclear weapons 
theories suggest that a nuclear exchange between 
India and Pakistan would result from an uninhibited 
escalation of a conventional war vice a spontaneous 
unleashing of nuclear arsenals. However, this region 
seems to be the one place in the world most likely to 
suffer nuclear warfare due to the seemingly undim- 
inished national, religious, and ethnic animosities be- 
tween these two countries. Furthermore, lack of trans- 
parency in nuclear programs leaves room to doubt the 
security surrounding each country's nuclear arsenal 
and the safeguards preventing accidental launches. 
Therefore, discussions aimed at mitigating a catas- 
trophic nuclear war in South Asia should focus mostly 
on the unilateral and bilateral anti-escalation measures 
Pakistan and India can take regarding existing 
issues. Additionally, each country's perception of its 
security is interwoven with the political, diplomatic, 


and strategic movements of the external powers that 
wield significant influence in the region. Coherent and 
consistent behavior that discourages conventional and 
nuclear escalation, although sometimes imperceptibly, 
is needed from the United States, China, and Russia. 
Without this, both Pakistan and India are unlikely 
to feel confident enough to reduce the aggressive 
posturing of their conventional forces over existing 
cross-border issues, leaving the escalation from 
conventional warfare to nuclear warfare a very real 

This chapter focuses on the India-Pakistan nuclear 
rivalry, leaving Afghanistan-Pakistan issues and 
Pakistan internal threat dimensions for later discussion. 
It argues from the basic premise that nuclear war 
between India and Pakistan will most likely result 
from an escalating conventional war that must be 
prevented at all costs. Though the likelihood is remote, 
a nuclear exchange from an accident or an inadvertent 
release cannot be ruled out in a crisis. The stakes for a 
structured peace and security that reduce the risk of 
war that could turn nuclear are extremely high and 
linked to international security. 

The chapter is organized into five sections. The first 
section gives a brief overview of crises and nuclear 
management in South Asia. The second section analyzes 
the likely causes of a nuclear exchange and possible 
scenarios. The third section evaluates the unilateral and 
bilateral steps that Pakistan and India can take with or 
without reciprocity. The fourth section examines the 
roles and influences of external powers in reducing 
risk and encouraging a peace and security structure 
in the region. Finally, the fifth section summarizes the 
key arguments and recommendations. 




During the Cold War, two sets of questions about 
security in the nuclear age were raised by some serious 
studies pertaining to the management of nuclear 
capabilities. The first set pertained to the performance 
of the command system in peace and war, and the 
second analyzed the dangers of inadvertence during 
a conventional war breaking out in Europe. 2 Since 
the end of the Cold War and the recession of strategic 
threats, the relevance of these dangers seems no longer 
important at the global level. Concerns about stability 
are now more applicable to individual regions where 
nuclear capability has emerged, especially in South 
Asia where a bipolar regional rivalry has changed the 
security dynamics, and violent nonstate actors have 
created the potential for triggering a war between 
two distrusting nuclear neighbors. It is essential to 
understand the differences between the Cold War 
era U.S.-Soviet nuclear tensions and the nuclear race 
underway in South Asia, as the latter is fraught with 
a long history of unsettled disputes, intense cognitive 
biases, and proximity. 

During the gestation period of covert development 
of their nuclear weapons, India and Pakistan 
underwent a series of military crises. The occupation 
of Siachin Glacier (1984) and the Brass Tacks Exercise 
(1986-87) broke the uneasy spell of peace and 
tranquility that existed between the two neighbors 
since the Simla peace accord in 1972. During this 
period, both countries faced domestic political and 
separatist challenges, with each side accusing the 
other of abetting insurgencies. 3 By 1989-90, the third 
military crisis began with the Kashmir uprising and 


prompted U.S. presidential intervention for the first 
time. The 1990 crisis was the first of its kind where the 
nuclear factor played a role. Controversy still exists 
with conflicting claims of whether Pakistan conveyed 
veiled threats and engaged in nuclear signaling during 
the crisis. 4 These crises of the 1980s have since shaped 
the regional security dynamics, which were directly 
influenced by three intertwined dimensions. The 
first dimension was the end of the Cold War, which 
lowered the strategic significance of South Asia, 
thereby allowing the superpowers to disengage from 
the region. Second, the war in Afghanistan mutated 
into intraregional civil war after the Soviet departure. 
Third, the uprising in Kashmir evolved into a full- 
fledged insurgency in Indian-administered Kashmir. 
In the center of all these dimensions was Pakistan. It 
was first to face the blowback of the Afghan war due 
to its decade-long involvement in Afghanistan and its 
vital security interests in both Kabul and Kashmir. In 
the changed geopolitical environment, Pakistan came 
under nuclear sanction (the Pressler Amendment) by 
the United States, which did not stop Pakistan's desire 
to match India's nuclear and missile developments. 
Nuclear sanctions, in particular, accelerated the 
ballistic missile race. As India flight-tested missiles, 
Pakistan, in a desperate search of suppliers to match 
India, sought a substitute for the F-16 aircraft, the 
delivery of which was stalled due to the nuclear 
sanctions. Pakistan looked east for its missile program 
and eventually received both liquid and solid fuel 
technology transfers to enable a strong base to proceed 
independently. By the end of the century, India and 
Pakistan would possess a nuclear capacity sufficient to 
destroy the subcontinent. 

In May and June 1999, Pakistan and India were 
engaged in a high intensity crisis at Kargil that was 


unprecedented in terms of its timing, nature, and 
intensity. The Pakistani opportunistic land occupation 
purportedly to improve its defenses was no longer 
considered business as usual along the Line of Control 
(LOC). In the summer of 1984, India occupied the 
Siachin Glacier, left undemarcated in 1971, which 
triggered a series of crises along the relatively quiet 
northern part of the LOC. 5 The act triggered instability 
between nuclear-armed neighbors, unacceptable to 
a world that was now deeply concerned about the 
nuclear dimension. The crisis deepened as India 
vertically escalated the conflict using airpower and 
threatened horizontal escalation. Its diplomatic and 
information campaign succeeded both internationally 
and domestically in rallying support behind India. 
The opposite happened in Pakistan. The victory of 
having done something after the ignominy of the 
loss of Siachin and other posts was short lived. The 
Pakistani narrative and justification fell on deaf ears 
both domestically and abroad. Isolated and under 
severe sanctions, Pakistan's internal mechanisms 
collapsed into confusion and its army was forced to 
withdraw after the Pakistani Prime Minister dashed to 
Washington for help. The breakdown of civil-military 
relations and its consequences continue to affect 
Pakistan nearly a decade later. 

The Kargil crisis of 1999 remains a highly 
controversial one for a number of reasons. One aspect 
was the nuclear dimension of the crisies. The U.S. 
intelligence community and policymakers believe that 
the Pakistani military made imminent preparations 
for possibly mating nuclear warheads with ballistic 
missiles. The Pakistani officials involved with such 
preparations deny any such actions or event. 6 Kargil is 
celebrated as a diplomatic success for the United States 


in crisis deescalation; however, this was a shocking 
blow to Pakistan and a clear manifestation of a U.S. tilt 
in India's favor, decidedly against Pakistan. With overt 
nuclear weapons capabilities, the paradigm of stability 
shifted. But new powers do not learn the shift instantly. 
Like the old, new nuclear powers take time to move up 
the learning curve. As Robert Jervis has argued in his 
work, nuclear revolution is a slow process. 7 

Although the crisis threatened prospects of peace 
and security, the foundations and potential for a 
structured peace were laid earlier in 1998-99. Under 
severe international sanctions, India and Pakistan 
were pushed into bilateral negotiations culminating in 
a summit from which the famous Lahore Declaration 
that encompassed the Lahore Memorandum of 
Understanding (MOU) was drawn in February 1999. 
The Lahore MOU recognized the nature of the changed 
strategic environment and laid down the basis of the 
potential peace, security, and confidence-building 

The run up to the Lahore Declaration, however, 
was not without highly intensive U.S. engagements 
with both India and Pakistan. The team, led by 
Strobe Talbott, was composed of high-level teams 
of nonproliferation and arms control experts with 
extensive experience of Cold War negotiations. The 
U.S. experts, however, were unaware of the nuances 
of regional security compulsions, while the South 
Asian security managers and the civil and military 
bureaucracy were equally inexperienced in the logic, 
lingo, and implications of classic arms control that had 
evolved during the Cold War nuclear rivalry. 

The Pakistani interaction with the United States 
(and dialogue with India) indicated a fast learning 
experience. 8 Substantive exchange of nonpapers 


with the U.S. teams led both sides to understand the 
obstacles and prospects of a minimum deterrence 
posture. Pakistan proposed the adoption of a Strategic 
Restraint Regime (SRR) for South Asia. The SRR was to 
consist of three interlocking elements: agreed reciprocal 
measures for nuclear and missile restraints to prevent 
deliberate or accidental use of nuclear weapons; 
establishment of a conventional arms balance as a 
confidence-building measure; and establishment of 
political mechanisms for resolving bilateral conflicts, 
especially the core disputes over Jammu and Kashmir. 9 

Of these three components, the two military 
elements were symbiotic and fundamental to 
Pakistan's security perspective and deterrent posture. 
The fundamental principle was a nexus between 
nuclear restraint and conventional force restraint. 
India dismissed the notion of conventional force 
restraints with Pakistan outright, indicating it would 
only discuss nuclear and missile restraint and doctrinal 
aspects. The U.S. experts were equally unenthusiastic. 
One interpretation was that linking conventional force 
restraints with nuclear restraints contained an implicit 
legitimization of upping the nuclear ante in the face of 
conventional threat. To the Pakistanis, tying down the 
nuclear hand while freeing up the conventional hand 
was tantamount to legitimizing use of conventional 
force by India, and delegitimizing the use of nuclear 
weapons by Pakistan. What, then, was the logic of 
Pakistani nuclear deterrence that was achieved after 3 
decades of opprobrium, sanctions, and military defeat 
in 1971 — the original raison d'etre for going nuclear? 

The process of separated triangular strategic 
dialogue between each of the three — Pakistan, the 
United States, and India — created suspicions as each 
side was blind to the discussions of the other two. In 


Pakistan, suspicion especially grew for two reasons. 
First, after 50 years of an alliance relationship with the 
United States, Pakistan was less inhibited in candor 
and trust. For India, this was probably new. However, 
U.S. sympathy and the public cozying up of Strobe 
Talbot and Jaswant Singh lent credence to onlookers 
that the United States was not interested in an 
equitable treatment of mutual restraint and potentially 
had a different agenda with India than with Pakistan. 
Second, the notion of dehyphenation was evident as 
the United States began to dismiss Pakistani security 
concerns; and, increasingly, U.S. negotiators began to 
mirror the perceptions and positions of their Indian 
counterparts. 10 

The strategic dialogue lost its seriousness, and 
soon it became a U.S.-India partnership dialogue 
rather than a U.S.-brokered chance of establishing 
a structure for regional stability. India was loath to 
accept any regional-based proposals as these would 
reduce India's status and elevate that of Pakistan. 11 
Nevertheless, Pakistan took away many learning 
experiences. The dialogue process enabled Pakistan to 
set its priorities and align the key thinking on issues 
of doctrine, command and control, arms control, and 
nonproliferation concerns. In particular, the activities 
of A. Q. Khan crystallized the need for responsible 
oversight and restraint. There was a hiatus in the 
dialogue with the military government between 1999 
and 2001. President Clinton's reluctant visit in March 
2000 with the baggage of Kargil as the backdrop and a 
failed Agra Summit proved counterproductive in the 

Encouraged by the success in Kargil and the U.S. 
response during negotiations, India announced its 
draft nuclear doctrine in August 1999, later made 


official in 2003. The draft nuclear doctrine, which 
announced the no-first-use policy, espoused a massive 
retaliation doctrine to include the use of nuclear 
weapons in the event of a major attack against India 
or Indian forces anywhere. If attacked with biological 
or chemical weapons, India would retaliate with 
nuclear weapons; and India supported this policy 
with the development of a triad of land, sea, and 
air nuclear weapons platforms. This was further 
enhanced by formal deployment of the Prithvi missile 
and subsequent development and deployment of the 
Agni series and other cruise missiles (Brahamos). On 
January 25, 2000, on the eve of India's constitutional 
birthday, Indian Defense Minister George Fernandos 
announced a doctrine of limited war under a nuclear 
umbrella. From a Pakistani perspective, every Indian 
pronouncement, India's doctrinal thinking, and its 
force goals and postures were directed at Pakistan- 
specific interests and only indirectly referred to other 
unspecified threats (China). 

In December 2001, just when U.S. forces were 
pounding at the Tora Bora hills to destroy the remnants 
of the Taliban and al Qaeda, Pakistani armed forces 
were moving into the Federally Administered Tribal 
had passed through a critical phase with Pakistan 
providing major logistics, intelligence, and operational 
space. Pakistani forces were required to be the anvil 
as U.S. forces were conducting operations across the 
region. This was the most crucial phase of the war 
against al Qaeda for which the United States required 
major Pakistani military force deployment to block 
the porous border as best as they could. As military 
operations proceeded along the Afghanistan-Pakistan 
border, five alleged terrorists attacked the Indian 


parliament in New Delhi on December 13, 2001. This 
attack was the second of its kind within 2 months. The 
first attacks were on the State Parliament in Srinagar, 
Kashmir, on October 1, 2001. Enraged, India ordered 
complete mobilization of the Indian armed forces, 
and the Indian Prime Minister called for a decisive 
war against Pakistan. Since 1984, this was the fifth 
crisis and the largest and, at 10 months, the longest 
military standoff between the two rivals. This was 
also the first time that Pakistani armed forces were 
physically confronted on two battlefronts, particularly 
in the Spring of 2002 when U.S. forces conducted 
another follow-up military operation (Operation 
ANACONDA). 12 As brinksmanship and force 
deployment deepened on both sides, another terrorist 
incident occurred in May 2002, and war between the 
two neighbors seemed imminent. The consequence 
of the military standoff between India and Pakistan 
provided an opportunity for remnants of the Taliban 
and al Qaeda to escape into the porous borderlands 
with greater ease than would have been possible had 
Pakistan focused on a single front. The prospects of 
Pakistani force effectiveness in the tribal borderlands 
would have been greater at that time because tribal 
areas had up until then given no resistance to Pakistani 
force movement, allowing peaceful penetration into 
tribal areas. During the compound crises in 2002, 
India and Pakistan respectively signaled strategic 
unease through missile testing at two peak moments 
of their military standoffs. India tested its Agni-1 in 
January 2002, and Pakistan flight-tested three ballistic 
missiles in May 2002, prompting U.S. intervention to 
diffuse the crisis. 13 Given the propensity of crises in 
the region for the past decades, and with no prospects 
of conflict ending, there is not enough confidence that 


a miscalculation can be prevented in the future. The 
region refuses to acknowledge that limited or low- 
level conflict carries a threat of nuclear escalation. 


The legacy of suspicion created by violent events 
at partition still exists among many of Pakistan's and 
India's ruling elites. 14 Consequently, India and Pakistan 
have focused on internal balancing (i.e., modernizing 
their armed forces and eventually going nuclear) and 
external balancing (i.e., forging alliances or treaties 
of friendship with great powers). 15 This in turn 
contributed to the hardening of their respective stances 
on conflict resolution and the increasing frequency 
of cross-border crises. The nuclear capabilities of 
each only exacerbate the tensions inherent between 
the two countries, pushing each toward unilateral 
internal security-building measures. The double 
effect of the nuclear capability is that on the one hand 
it has contained crises and prevented major wars 
(deterrence optimism), but on the other hand, failed 
to prevent a series of military crises and dangerous 
confrontations (proliferation pessimism). 16 The mix 
of violent extremism and terrorism in the milieu has 
made regional security issues no longer an exclusive 
domain of any one state in the region. 17 Today, terrorist 
acts are not only affecting societies within the South 
Asian nations, but its effects ripple through the region 
and the world. 

This section begins with the premise that surprise 
or unexpected nuclear exchange between the two 
countries is remote. This condition may change in 
the future for two reasons. One, change will happen 


if nuclear weapons are mated with delivery systems 
and deployed arsenals are routinely maintained, as 
was the case in Europe during the Cold War. Two, 
if strategic weapons asymmetry between India and 
Pakistan is broadened, it will increase India's first 
strike options in terms of capabilities, notwithstanding 
India's declared intentions of no first use in its official 
doctrine. This imbalance will occur in the future due 
to the introduction of destabilizing technologies and 
the freeing up of India's domestic fissile stock for 
military purposes, as and when the Hyde Act of 2007 
is implemented. 

Three major developments will erode the current 
balance in the future: Increasing capacities in advanced 
information, surveillance, and reconnaissance systems 
(Israeli-supplied Phalcon and Green Pine radars, 
for example); acquisitions of anti-ballistic missile 
(ABM) systems; and the steady militarization of outer 
space in which India has recently shown interest. 
Even if the possibility of a surprise strike against 
Pakistan may be remote and arguably meant for 
balance against China, these developments will force 
Pakistan into countervailing strategies. Pakistan's 
geophysical vulnerabilities to Indian aggression will 
increase, compared to China or any other country. 
This perceived invincibility against strategic arsenals 
would encourage India to wage limited wars with 
conventional forces. Since the 2002 military standoff 
and relative tranquility between India and Pakistan, 
the Indian military has experimented with new ideas of 
waging conventional war with Pakistan, as illustrated 
by the emerging military doctrine of Cold Start. 

India's Cold Start military doctrine envisages 
creating multiple integrated battle groups that are self 
sufficient in limited offensive capacities — maneuver 


and firepower— forward deployed to garrisons close to 
Pakistan. One study suggests that the doctrine requires 
reorganizing offensive power of the three Indian Army 
strike corps into eight integrated battle groups, each 
roughly the size of a composite division, comprised of 
infantry, armor, and supporting artillery and other fire 
power units. This force would resemble the erstwhile 
Soviet Union's offensive maneuver groups, capable 
of advancing into Pakistan on different axes with 
the support of the air force and naval aviation. 18 The 
fundamental purpose of such a doctrine is to redress 
India's time-consuming mobilization of offensive 
mechanized forces, which loses surprise and allows 
Pakistan time to outpace India due to the short distances 
required for deployment. This was demonstrated in 
the 2002 crisis, and the Indian military was somewhat 
frustrated because of heavy-handed political control, 
diplomatic intervention, and loss of military opportunity 
to wage a short and limited, but intense, punitive war. 
Cold Start reflects several assumptions on the part 
of India. It dismisses Pakistan's nuclear capability, 
assumes accurate calculations of red lines, assumes it 
can control the degree of escalation, underestimates 
Pakistan's reciprocal conventional preparations and 
the subsequent retaliatory damage, assumes Indian and 
Pakistani governments will accept a fate accompli, and 
believes the reaction of outside powers (read United 
States) would be manageable and would help keep 
the conflict purely conventional and limited. These are 
all sizeable and significant assumptions; the failure of 
any opens the door to uncontrollable escalation to the 
nuclear level. The possible long-range outcomes for 
maintaining such a doctrine include an increasingly 
fortified India-Pakistan border, continued tension and 
pressure to maintain strategic weapons deployment, 
and a regional arms race. All three outcomes hinder the 


development of each country, but would be especially 
debilitating for Pakistan as it struggles to maintain two 
borders and a multitude of domestic crises. 

Nuclear Force Deployment Scenarios. 

Should security dynamics unfold as described 
above, Pakistan will be forced to become a security 
state, far removed from the vision of a welfare state. 
In a heightened security environment with no peace 
prospects, there are four possible general scenarios in 
which Pakistan would be forced to consider deploying 
nuclear weapons, as outlined below: 

1. Hot pursuit. India conducts punitive raids across 
the LOC or the international border. Imminent tactical 
preparations in India will force Pakistani conventional 
force reserves to mobilize. 

2. Brass Tacks and composite crises 2002 revisited. 
Indian conventional force builds up for coercive 
deployment or decisive war (Brass Tacks or 2002 
deployment), and nuclear forces are alerted and 

3. East Pakistan revisited. India abets internal 
discords within Pakistan, inducing civil war, and seeks 
an opportunity to assail it as it did in 1971. Balochistan 
and parts of Sind and the North West Frontier 
Provinces, where domestic unrest and religious and 
tribal extremism are high, are good candidates for such 
a design. 

4. Peacetime deployment of strategic weapons. 
India opts for formal deployment of nuclear forces, 
citing China or another strategic threat, and Pakistan 
follows suit. 


The strategic picture profoundly changes should any 
conditions enumerated above manifest themselves. 
Lieutenant General Khalid Kidwai, in an interview 
with two Italian physicists, discussed hypothetical 
use scenarios and generally defines Pakistan's nuclear 
thresholds. Paolo Cotta-Ramusino and Maurizio 
Martellini quote Kidwai: 

Nuclear weapons are aimed solely at India. In case that 
deterrence fails, they will be used if: 

a. India attacks Pakistan and conquers a large part of 
its territory [space threshold], 

b. India destroys a large part either of its land or air 
forces [military threshold], 

c. India proceeds to the economic strangling of 
Pakistan [economic strangling], or 

d. India pushes Pakistan into political destabilization 
or creates a large scale internal subversion in Pakistan 
[domestic destabilization]. 19 

The four thresholds — geographic, military, 
economic, and domestic, as defined by Lieutenant 
General Khalid Kidwai — are factors that would 
determine the decision for deliberate use by a national 
command authority. These are not red lines, defined 
and understood by the adversary or other external 
parties. A clearly defined red line erodes nuclear 
deterrence and provides room for conventional force 
maneuver or destruction by firepower. The other 
possibility is inadvertent nuclear use. In this chapter, 
I use the Barry Posen model of inadvertent escalation 
and apply that model to the conditions applicable to 
South Asia. 20 


Nuclear Use Scenarios. 

In the absence of any structure of strategic restraint 
between nuclear-armed neighbors, the possibility of 
conventional wars breaking out is more likely. This 
then raises the question Barry Posen raised nearly 2 
decades ago: the probability of inadvertent use. I argue 
that once the conventional war breaks out, the fog of 
war sets in and two major factors can create conditions 
for inadvertent use. First, during a conventional 
war, deceptions, countercontrol targeting, and 
communication breakdowns are routine consequences 
of warfighting. These elements contribute to the fog of 
war, which is further thickened by other conditions, as 
elucidated by Carl von Clausewitz in On War. Second, 
during peacetime, nuclear weapons safety is more 
important than effectiveness, especially if chances of 
war are small. But in war, the safety coefficient is of lesser 
significance than battle effectiveness. Again, this factor 
is not simply common sense, but critically important 
for deterrence stability. An unmated safe weapon will 
likely failsafe but is more vulnerable to preventive 
strikes. National command authorities cannot afford 
this risk and therefore must not only make weapons 
invulnerable but also capable of effective retaliation. 
It is the combined effect of these two factors that form 
the danger of inadvertence in the fog of war. As Martin 
Schram put it, "Danger of inadvertence is not guided 
by human planning but human frailty." 21 Following 
are possible scenarios that can cause inadvertence in 
the fog of war: 22 

Fog of War Scenario One: When strategic arsenals are 
deployed for war, deployed delivery vehicles capable 
of carrying both conventional and/ or nuclear warheads 
are dispersed for protection and invulnerability. In 


addition, dummy warheads and real ones are mixed to 
deceive and keep the enemy guessing. The probability of 
misperceptions with the adversary increases, especially 
in South Asia. In the midst of war, any launch by such 
a strategic weapon (ballistic or cruise missile) will reach 
the target within 3 to 5 minutes. Depending on what 
warning and damage it does, any weapons fired from 
a strategic delivery vehicle will evoke unpredictable 
responses and the dimension of the battle will change. 23 

Fog of War Scenario Two: The second scenario could 
be derived from a communications break down in 
conjunction with a perceived rumor of decapitation 
or crippling of national leadership or the national 
command centers. Most modern wars commence with 
such a strike. Aircraft and ballistic or cruise missiles are 
ideal weapons to take out leadership in countercontrol 
strikes to decapitate nuclear forces, which are then 
either rendered incapacitated or incapable of effective 
retaliation. These forces, usually dispersed, camouflaged, 
and concealed, could then be neutralized by other means. 
In such an extreme case, for deployed nuclear forces to 
be effective, the "always" element of the command and 
control dilemma would become more expedient than 
the "never" element. 24 The last resort scenario would 
necessitate a "manual override" capability with nuclear 
weapon units. 25 This can only be undertaken in extremis, 
and it still does not necessarily imply that weapons units 
are independent or not under command or control of a 
formalized chain of command. 

Fog of War Scenario Three: A conventional attack by 
aircraft destroys a nuclear weapon convoy or a fixed 
site on the ground, resulting in an explosion featuring 
a radioactive plume. In this case, it is unclear whether a 
nuclear weapon was used or the nuclear asset was blown 
up on the ground. Imagine a hypothetical scenario in 
which a Pakistani air force plane or ballistic missile were 
to hit an Indian nuclear weapon site or ballistic missile 
convoy. Will India construe this to be a first nuclear 
strike by Pakistan? Will India retaliate as enunciated 
in its strategic doctrine, or will India deliberate and 
evaluate what had happened before responding? 


In all of the above scenarios, the best outcome would 
be that the respective national command authority 
does not jump the gun, assesses damage, and evaluates 
options. The worst case response, however, would be 
one made out of haste or impatience; war situations 
can cause irrational responses leading to an upward 
spiraling of panic within militaries and civil societies. 
The short flight times between countries suggest that 
this is a plausible scenario; therefore, the confusion and 
time-compressed reactions and responses in the heat 
of war should not be discounted. It is hard to predict 
the reaction and response of units in the field if some of 
their nuclear assets are destroyed or made ineffective 
by conventional attacks. In the ensuing chaos, would 
surviving units, if capable of operating manually, wait 
for authorization (enabling codes) and deliberation 
of the national command authority? Discipline, 
training, and Standing Operating Procedures (SOPs) 
would suggest they might; but as of yet, there is no 
precedent in history that sets a barometer to predict 
battlefield responses of militaries armed with both 
lethal conventional as well as nuclear weapons. 

Pakistan's National Command Authority retains 
assertive control during peace and war. In a state of 
war, nuclear weapons will be mated with delivery 
systems; permissive action links to enable weapons 
will be established with a two- to three-man rule; and 
clearly articulated instructions about the authorization 
will be clearly issued to all commands. 26 However, it 
is unclear how command and control will cope with 
electronic jamming or other information warfare 
techniques that may preclude enabling weapon 
systems. Alternative command and communication 
channels are therefore always planned. In Pakistan, 


command and communication systems are wargamed 
each year to test the efficacy of the system. Even if 
redundancies fail, methods of establishing contact 
will be made through any means of transportation, 
including helicopters or ground transportation. 
Absence of communications will force local leaders 
to make use-it-or-lose-it decisions in case of severe 
attacks. However, should all other means fail, the last 
resort would necessitate pre-delegation to next-in- 
command or alternative commands as redundancy to 
assure retaliation, further enhancing deterrence. 


Unlike Pakistan, India is in a different position 
when it comes to reducing military tension between 
itself and Pakistan specifically and in South Asia 
generally. Its geographical size, central location, and 
military strength give India a hegemonic influence that 
it uncomfortably and inconsistently wields. In South 
Asia's turbulent history, India passed through its 
most dangerous decades relatively better than others, 
its smaller neighbors lacking adequate structure and 
strength to stem crises and wars. Regional security 
issues compounded also due to India's steadfast 
reluctance to accommodate its neighbors and to focus 
on a grand strategy of regional hegemony. 27 

India is still searching for the right strategy to 
deal with its neighbors, arguably impeding its own 
rise. 28 Two opposing schools of thought have emerged 
in the past 2 decades. The first school was based on 
engagement with its smaller neighbors on the basis of 
nonreciprocity, also referred to as the Gujral Doctrine. 29 


The second school of thought seeks a dominant posture 
and assertive policy towards neighbors, as enunciated 
in the Gandhi Doctrine. 30 India followed both tracks 
at various times, eventually favoring the hegemonic 
model. Had India pursued a broad approach of 
accommodation with its neighbors, it would not 
only facilitate better regional integration, but the 
prospects of fostering sustained peace and conflict 
resolution would be greater as well. A self-confident 
neighborhood that has a stake in, rather than a fear 
of, India's rise is a harbinger for stronger structures of 

As identified above, India enjoys an edge in 
geophysical as well as qualitative and quantitative 
superiority over Pakistan. India can choose the time 
and place for an offensive, and it "is the conventional 
imbalance that could bring both sides to the nuclear 
brink." 31 Zawar Haider Abidi explains the Pakistani 
nuclear posture, which rejects the concept of no first use 
primarily due to its perceived vulnerability to Indian 
conventional advantage. 32 A RAND Corporation study 
endorses the unlikelihood of a change in Pakistan's 
nuclear posture "without shifts in the conventional 
balance of forces, requiring CBMs [confidence- 
building measures] to demonstrate non-hostile intent" 
(e.g., halting training along the LOC in Kashmir or 
the prenotification of major military exercises). 33 As 
argued elsewhere in this chapter, the best pathway to 
assured nonuse of nuclear weapons is to undertake 
conventional arms control measures. 

India and Pakistan go back a long way in negotiating 
treaties and elaborate CBMs. 34 Unfortunately, the 
record of implementation is rather unimpressive. 35 
CBMs are no panacea for peace and security, but they 
are a useful foundation for potential structural arms 


control agreements. The basic reasons for the failure of 
CBMs is continuing distrust, aggressive force postures, 
forward deployment of military units, and continuing 
violence in the region. As one Indian author says, 

India has significant and identical CBMs with both 
China (stronger) and Pakistan (weaker) neighbors, the 
implementation of Sino-India and Indo-Pakistani CBMs 
have been different. With China, India has had positive 
experiences, with forces pulled back and tensions eased. 
India believes this is so because there is greater political 
will and common desire to normalize relations in the 
case of China, but not so in the case with Pakistan. 36 

The reasons go beyond the political will: India's and 
China's force deployments against each other are 
neither threatening in real time nor accompanied by 
active violence. 

There is also a fundamental disagreement over 
the approach to peace and CBMs. India insists on 
transparency of doctrines as an important ingredient 
to tension reduction, particularly emphasizing a no 
first-use policy. Since Pakistan refuses to agree to such 
a step in the face of a superior conventional force, its 
diplomats concentrate on bilateral conventional and 
nuclear force reduction steps and India's offensive 
doctrines and force postures. 37 Subsequently, the 
process of agreement is extremely slow. Regardless, 
there are unilateral and bilateral measures the two 
countries can take to reign in the nuclear risks. 

Unilateral Anti-Escalation Measures. 

Even though bilateral measures have the greater 
potential to reduce the likelihood of conventional 
escalation, there are steps each country can take 


without reciprocity, which could also mitigate 
escalation. On Pakistan's side, they can go beyond their 
ill-defined deterrence doctrine by specifically defining 
(and announcing) specific policies on key issues with 
appropriate parliamentary backing. 

Strategic Weapons (warheads and missiles). Pakistan 
could make an official strategic doctrine that 
encompasses its concerns, doctrinal approach, and 
security obligations. Four main ingredients around 
which its doctrinal pronouncements could revolve are: 

1. Minimum credible deterrence and eschewing of 
an arms race with India; 

2. No first use of force — conventional or nuclear; 

3. No transfer of nuclear technology to any state or 
nonstate entity or provision of extended deterrence to 
any other country; and, 

4. No use or threat of use of force against a non- 
nuclear state. 

Strategic force postures. Pakistan can formally 
announce that unless the security situation dramatically 
deteriorates, its nuclear weapons will remain 
dealerted, its missiles and nuclear warheads will 
not be kept mated with delivery vehicles (aircraft or 
missiles), strategic weapons will remain operationally 
nondeployed, and Pakistan will provide notification of 
all missile tests. Islamabad should consider broadening 
its notification policy by including all neighbors of its 
tests, particularly Iran, Afghanistan, and China. 

Conventional forces. Pakistan can formally announce 
it will not engage in a conventional arms race and 
will only maintain an acceptable ratio commensurate 
with its threats; and will not engage in dangerous 
hot pursuits, surgical strikes, or limited war with any 
neighbors across recognized borders or agreed lines of 
deployment (i.e., no more Kargils.) 


Low-intensity conflicts. Pakistan should explicitly 
renounce the asymmetric strategies of using 
noncombatants in any shape or form as part of its 
security policy. It should explicitly announce that it 
will not allow its state territory or territory under its 
control to be used for training, organizing, preparing, 
and executing any form of cross-border violence (i.e., no 
more Operation GIBRALTAR or other forward policy 
as an extension of strategic depth). Pakistan should 
offer a joint regional terrorism cooperative center and 
open it to all neighbors and likeminded countries. 

India, too, has some nonreciprocity steps it can take 
to mitigate conventional escalation. The South Asian 
hegemon can unilaterally announce that it will neither 
cross borders or the LOC (i.e., no more Siachins), 
mobilize mechanized forces (i.e., no more Exercise 
Brass Tacks), or undertake coercive operations (i.e., 
no more Operation PARAKARMs) against South 
Asian Association for Regional Cooperation (SAARC) 
members, and that it will only maintain defensive 
formations within its border areas. This would 
preclude Brass Tacks-like developments and allow its 
smaller neighbors, Pakistan in particular, to focus their 
domestic military operations on counterinsurgency 
efforts. Furthermore and most importantly, India does 
have room to renounce its offensive military doctrines 
such as Cold Start and unlink future doctrines from the 
concept of limited war under a nuclear umbrella. Also, 
India's offensive military exercises can be reshaped 
not to portray Pakistan obtusely as the sole opposition 
force. Brazen Chariots, an exercise conducted in April 
2008, is one such example that continues to harden 
Pakistan's belief that India's war preparations are 
Pakistan-specific. Lastly, India has the capacity to 
take the lead in coordinating joint military and naval 


exercises that support regional objectives, such as 
piracy reduction, expansion of search and rescue 
networks, and support of disaster relief contingencies. 
Such exercises not only expand the capabilities and skill 
sets of each country's militaries and actually improve 
the safety and security of the region, but they expand 
the breadth of relationships between rival countries, 
thereby lessening the chances of a conventional or 
escalating war. 

Bilateral or Reciprocal Anti-escalation Measures. 

On the heels of the unilateral measures described 
above, previously hard-to-attain bilateral agreements 
will not be so daunting. And as far as reducing the 
risk of nuclear war on the subcontinent, bilateral and 
reciprocal measures will have exponentially greater 
success, making them essential ingredients to long-term 
nuclear stability. Since nuclear war will most likely be 
a result of conventional escalation, preventing military 
crises is the optimum goal of bilateral agreements and 
can be achieved through systematic steps. 

First, India and Pakistan must agree to pull back 
forces that are identified as offensive and threatening to 
the other. This is not an untenable goal and, even if not 
entirely successful at first, can have a stabilizing effect. 
Merely getting together and pointing out what force 
postures are threatening will create an awareness of 
issues and attenuate the risk of inadvertently sending 
the wrong strategic message. After that could come the 
mutual creation of a "Low Force Zone" in which force 
deployments will be mutually negotiated and a "No 
Offensive Forces Zone" as appropriate. 

The next series of bilateral steps would focus on 
the nuclear weapons themselves. However, such 


achievements are unlikely without outside support 
for such moves, particularly from the United States 
and China, and will therefore be discussed in the next 


Unfortunately, the influences of the United 
States, China, and Russia have not historically been 
consistently beneficial to the stability of South Asia. 
The superpowers have notoriously applied military 
and diplomatic pressure upon Pakistan and India 
when and where it seemed to best oppose the converse 
efforts of the adversaries, regardless of the effects it 
had on the civilians and governments that bore the 
brunt. Aid and technology was granted and denied 
to South Asia based not on the long-term regional 
stability implications, but on the respective central 
government's perception of its own periphery threats 
and its ability to provide such support. As the tides 
of support ebbed and flowed, South Asian countries 
redirected their solicitation as needed. 

U.S. military and economic support was particularly 
critical to Pakistan's survival, but the United States 
lent support to India when it was in its own interest, as 
during the 1962 war with China. In addition, the United 
States has played a significant role in deescalating Indo- 
Pak crises a number of times. Invariably, the regional 
countries looked towards other partners, namely 
Russia and China, when the expected U.S. support did 
not measure up or materialize. 

The United States still exhibits the same pattern of 
behavior. In the decade following the end of Cold War, 
it abandoned Pakistan in favor of connecting with a 


rising India, only to return to Pakistan after September 
11, 2001 (9/ ll). 38 Seven years later, the United States 
is in an unprecedented position of influence in New 
Delhi, Kabul, and Islamabad, each an important 
partner in its own right and significance. However, 
the mutual suspicions in the ongoing regional rivalry 
compound regional and global security prospects and, 
worse, help enemies such as al Qaeda. 

A contention of this chapter is that the prevention 
of war between India and Pakistan is intrinsic to war 
against al Qaeda — a hostile Indo-Pak relationship, 
particularly if it escalates toward force mobilizations 
against each other, hampers the U.S.-led war on terror. 
The U.S. policy has been to prevent nuclear weapon 
acquisition by war-prone states, and, if that fails, to 
prevent wars between nuclear-armed states. However, 
the India-Pakistan rivalry has direct impact on the 
most crucial security issue in contemporary times 
and all efforts to prevent nuclearization have failed, 
mandating a change of tack for the states wielding 
influence in South Asia. The United States, China, 
and Russia should proactively engage in three areas: 
(1) conflict resolution among all states; (2) strategic 
weapon threat reduction between India and Pakistan; 
and (3) conventional arms control between India and 
Pakistan. 39 

Conflict Resolution. 

The United States will need to expend a huge 
amount of time, energy, and money to bring Pakistan, 
Afghanistan, and India into a mode of conflict 
resolution, which is hampered by anti-U.S. sentiment in 
all these countries. But it is time to override objections 
and find a way to convince India that concessions 


made in the name of conflict resolution neither 
reduce India's status nor undermine its ambitions. 
Chinese involvement can serve to assuage fears of U.S. 
imperialism or overreaching while also providing a 
hegemonic stability upon which secure regimes can be 
constructed. The new U.S. administration should soon 
consider a Madrid-like process for South Asia. 

Strategic Weapons Threat Reduction. 

It will likely be futile for the United States to work 
on lowering strategic force goals, as past experience 
has indicated resistance from both India and Pakistan. 
It would be more pragmatic to help India and Pakistan 
formalize nondeployment plans for their strategic 
weapons, dissuade the introduction of nuclear and 
non-nuclear destabilizing technologies, and assist in 
best practices for their nuclear regimes. Specifically, 
international actors should encourage Pakistan and 
India along the following four areas: 

1. Nuclear Risk Reduction Centers (NRRCs). The 
basic purpose of NRRCs in each capital will be to 
have a focal point to prevent an impending crisis from 
escalating. Outside countries can j oin in to help establish 
such centers. The United States can play a vital role in 
encouraging nuclear and political confidence building 

2. Personnel Reliability Program (PRP). Sharing 
experience on organization best practices such as PRPs 
and procedures to manage sensitive technologies 
will help respective national command authorities 
adopt most stringent practices of safety, security, 
and reliability. As mentioned, training and selection 
of personnel to withstand psychological pressures in 
the fog of war will be of the utmost importance in the 
crisis-prone region. 


3. Accident Avoidance. The United States, China, 
and Russia all have a role to play in the realm of 
accident avoidance since they provided much of 
the original technology in use in South Asia. They 
could also share and possibly train a core of people 
on accident avoidance techniques and reduction of 
technological errors, such as electromagnetic radiation 
and computer fallibility. 

4. Physical Protection Technology. The use of some 
generic physical protection and material accounting 
practices such as sophisticated vaults and access 
doors, portal command equipment should be mutually 
agreeable. 40 Again, there is sensitivity in both countries 
to such intrusion, so this cooperation must remain 
within the bounds of general training and allow 
countries to develop their own technology if desired. 

Conventional Force Restraints. 

There are three principal reasons for a U.S. role 
in conventional force restraints in South Asia. First, 
between 1999 and 2001 the United States was the main 
supplier of sophisticated technologies and state-of-the- 
art platforms to the region. It must understand how this 
affects regional strategic instability, and why the need 
for conventional agreement is necessary. Second, the 
U.S. prime concerns are on the Pakistan-Afghanistan 
border. The United States expects and desires Pakistan 
armed forces to focus their military power on this all- 
important front — an unlikely occurrence absent a force 
restraint agreement with India. Third, the United States 
needs to examine not just the physical postures and 
build up of conventional forces but emerging military 
doctrines (Cold Start and low intensity conflicts/proxy 
wars) under the nuclear umbrella. These strategies 
undermine U.S. objectives of war against al Qaeda. 


The United States should encourage the develop- 
ment of overarching principles of identification, mech- 
anism, and nonaggression agreements coupled with 
strategic weapon restraints. It would make sense to 
proceed gradually and simultaneously on parallel 
tracks towards conventional force restraint. Four stages 
of a conventional arms agreement can be brokered: 

1. Identify offensive and defensive forces and 
requirements for other security forces. 

2. Agree on designation of a determined "Low 
Force Zone." Any increase in strength equipment or 
structure is voluntarily made known to each other 
under a CBM. 

3. Engage in restructuring and relocation of 
offensive conventional forces so as to build confidence 
and trust as other peace objectives are achieved. 

4. India and Pakistan must engage in proportional 
force reduction efforts similar to the pattern of Mutually 
Balanced Force Reductions (MBFR). 

In addition to the objectives outlined above, Chinese 
actions carry some added weight. Whether or not 
China builds up its nuclear capability based on South 
Asian security concerns or outside influences, it upsets 
whatever balance India might feel it has regarding the 
Asian power. The U.S. reliable replaceable warhead 
(RRW) program exemplifies this. Although China may 
feel its 200 nuclear warheads is an adequate balance 
to the 10,000 U.S. warheads, the RRW threatens that 
balance and could cause escalatory ripples in South 
Asia via China. 41 Although Chinese-Indian interaction 
has become increasingly positive and more frequent 
as of late, China's internal force posturing, especially 
in the nuclear realm will invariably create waves in 
India and, in turn, Pakistan. Support for Pakistan has 


become less overt under the scrutiny of U.S. military 
involvement in the area, but China also needs to keep in 
mind the indirect effect China has on the subcontinent 
when it starts altering the status quo of its forces. 


A nuclear-armed subcontinent is a reality. The 
best way to achieve strategic stability in the region 
is by establishing a structural peace and security 
framework for conventional war avoidance and 
formalizing the nondeployed status of nuclear 
weapons. Recent history has shown that reliance on 
the nuclear umbrella sheltering South Asia seems to 
have provided militaries on both sides of the border 
more strategic room with respect to perpetuating 
low intensity warfare and escalating conventional 
warfighting doctrines. Additionally, this chapter 
has argued that the most probable cause of a nuclear 
exchange on the subcontinent will be a result of 
conventional war escalation— either through accident 
in the fog of war or due to established protocols — and 
less due to accidental launches. Preventing a nuclear 
exchange in South Asia is, therefore, less dependent on 
strategic weapons safeguards, although they remain 
a key to strategic stability, rather more dependent 
on the prevention of conventional war escalation. 
Conventional, and therefore nuclear, stability can start 
through unilateral steps taken by Pakistan as well as 
India. More importantly, India as the primary regional 
power has significant responsibilities in preventing 
nuclear war and initiating anti-escalation measures. 
Where real stability will be achieved, though, is through 
bilateral and multilateral strategic actions improving 
the safeguards and reducing the apparent threats to 


opponents, superimposed by coherent superpower 
policies and involvement. 

Because of India's primacy in South Asia, it must 
take the lead initiating stability-inducing policies 
and doctrines, particularly due to its relative military 
strength. Its behavior has not been consistent over 
time, vacillating between accommodating (Gujral 
doctrine) and confronting (Indira Gandhi doctrine) in 
its dealings with other South Asian neighbors. India 
has leaned towards the latter as new international 
trends like Asian power balance and globalization, for 
instance, favored India leaving little incentive for the 
former model. 42 Shifts in the international system — 
global terrorism, globalization, and informational and 
economic interdependence— will make traditional 
security issues less relevant. Regional security issues 
in South Asia are now qualitatively different and 
interrelated such as energy, water, food, poverty, 
terrorism, and rising religious extremism. India must 
take the lead. 

A structured peace and security regime between 
India and Pakistan is now a geo-political compulsion. 
A cooperative relationship between India and Pakistan 
is directly related to peace and stability in Afghanistan. 
Unless India and Pakistan stabilize their relationship 
and change the culture from confrontation and 
exploitation to cooperation and collective gain, success 
in the global war against al Qaeda will remain elusive. 

The United States, in concert with major powers, 
can turn this grim and seemingly intractable security 
situation into a unique opportunity of security 
paradigm change from suspicion and rivalry to one 
of conflict resolution and stability. The stakes of 
preventing war and crisis between India and Pakistan 
(and Pakistan and Afghanistan) is now an extremely 


important ingredient of the global war on terror and 
is not just simply a matter of moving toward a peace 
between two nuclear-armed countries. 

Nuclear neighbors with a long history of unsettled 
disputes, cognitive biases, crises, and wars require 
years of crisis-free confidence and trust building to 
mature into detente, aided by a supportive international 
community. Conditions for instabilities will continue 
so long as the dangerous trend of seeking space for low- 
level conflicts continues, and the feasibility to wage 
limited conventional war under the nuclear threshold 
is not taken off the table. Nevertheless, as has been 
shown in this chapter, there are unilateral and bilateral 
steps India and Pakistan can take to rein in the risk of 
nuclear war on the subcontinent. 


1. On July 7, 2008, a suicide car targeted the Indian embassy 
in Kabul, killing many including the Indian defense attache. This 
terrorist incident has triggered angry responses from people in 
New Delhi, India, and Kabul, Afghanistan, who, not surprisingly, 
are pointing fingers at the Pakistani Inter-Service Intelligence. 
Relations are tense within the region. (At the time of this writing, 
September 13, 2008, in yet another terrorist incident in New Delhi, 
India, five blasts killed over 20 and injured dozens.) 

2. See, for example, Ashton B. Carter, John D. Steinbruner, 
and Charles A. Zraket, eds., Managing Nuclear Operations, 
Washington, DC: Brookings Institution Press, 1987; Desmond 
Ball, "Can a Nuclear War Be Won?" Adelphi Papers 169, London, 
UK: The International Institute for Strategic Studies (IISS), 1981; 
and Barry R. Posen, Inadvertent Escalation: Conventional War and 
Nuclear Risks, Ithaca, NY: Cornell University Press, 1991. 

3. India was involved in Sikh, Tamil, and Naxalite insurgencies 
and also experienced emergency rule in the mid-1970s. Pakistan 
underwent political turmoil leading to martial law in 1977 and 
insurgencies in Balochistan and Sindh. 


4. The author's interviews with several Pakistani senior 
military and civil servants indicate conflicting claims and denials 
about Pakistan sending their Foreign Minister, Sahibzada Yaqub, 
to convey a subtle threat, which Yaqub-Khan denies having 
been either tasked or having conveyed. Reports of F-16s being 
prepared to signal deterrence also remain unverified whether it 
was a post-event rhetorical claim for domestic political purposes 
or otherwise. 

5. India felt justified in its land grab of Siachin as it was 
outside the demarcated LOC. The international community saw 
this crisis as another between India and Pakistan over Kashmir. It 
was before the start of the South Asian nuclear era., recognized as 
1998 and not 1974. 

6. The most oft-cited reference is from Bruce Reidal, who was 
the note taker during the Clinton-Sharif meeting on July 4, 1999. 
The categorical denial comes from Pervez Musharraf in In the 
Line of Fire, New York: Simon & Schuster, 2006. Also, Lieutenant 
General Khalid Kidwai, during a briefing tour in the United States 
in the fall of 2006, repeatedly denied any such preparations. Also 
see Feroz Hassan Khan's interview with Aziz Haniffa in "Pakistan 
Did Not Prepare Nuclear Weapons in Kargil Crisis," India Abroad 
Weekly Journal, April 2002. 

7. Robert Jervis, The Meaning of Nuclear Revolution: Statecraft 
and the Prospect of Armageddon, Ithaca, NY: Cornell University 
Press, 1989. 

8. Pakistan took the lead on issues of arms control and 
disarmament since it had set up a dedicated cell in Army 
Headquarters in 1994. The author was the first director of this 
organization, which was later merged with the Strategic Plans 
Division, Joint Service Headquarters in 1999. See Stephen P. 
Cohen, The Pakistan Army, New York: Oxford University Press, 

9. Statement by Ambassador Munir Akram, Permanent 
Representative of Pakistan to the United Nations, New York, in 
the General Debate of the First Committee of the 58th Session of 
the U.N. General Assembly, October 10, 2003. 


10. Strobe Talbott, Engaging India, Washington, DC: Brookings 
Institution Press, 2004. 

11. Zafar Iqbal Cheema, "Prospects of Strengthening the 
CBMs Regime in South Asia," in Pervaiz Iqbal Cheema and Imtiaz 
Bokhari, eds., Conflict Resolution and Regional Cooperation in South 
Asia, Islamabad, Pakistan: Islamabad Policy Research Institute, 
2004, p. 48. "Cheema Cites India Not in Favor of Disarmament," 
News India, November 14, 1987. 

12. Pakistan was also confronted on two fronts in the 1980s 
crises, but its armed forces were not physically involved. It was 
focused on proxy war against the then Soviet Union. 

13. Feroz Hassan Khan, "Nuclear Signaling, Missiles, and 
Escalation Control in South Asia," in Michael Krepon, Rodney 
Jones, and Ziad Haider, eds., Escalation Control and the Nucleus 
Option in South Asia, Washington, DC: Henry L. Stimson Center, 
2004, p. 88. 

14. Rifaat Hussain, "The India-Pakistan Peace Process," 
Defense & Security Analysis, Vol. 22, No. 4, 2006, p. 409. 

15. Stephen P. Cohen, India: Emerging Power, Washington, DC: 
Brookings Institution Press, 2001, pp. 204, 209- 211. 

16. Scott D. Sagan and Kenneth N. Waltz, The Spread of Nuclear 
Weapons: A Debate Renewed, New York: W. W. Norton & Company, 
Inc., 2003. 

17. Right wing politics in both India and Pakistan generate 
religious hatred and extremist ideological positions. A ritual 
cleaning act was performed by Jamait Islami and Shiv Sena 
respectively after PM Vajpaee's visit to the Pakistan Monument 
in 1999 and President Musharraf's visit to the Gandhi Memorial 
in 2001. See Rizwan Zeb and Suba Chandran, "Indo-Pak Conflicts 
Ripe to Resolve," RCSS Policy Studies, Vol. 34, Colombo, Sri Lanka: 
Regional Center for Strategic Studies, 2005, p. 23. 

18. Walter Ludwig III, "A Cold Start for Hot Wars? Indian 
Army's New Limited War Doctrine," International Security, Vol. 
32, No. 2, Winter 2007/08, pp. 158-190. 


19. "Nuclear Safety, Nuclear Stability and Nuclear Strategy in 
Pakistan," Como, Italy: Landau Network, Centro Volta, January 
2002, available from 

20. Barry R. Posen, Inadvertent Escalation: Conventional War and 
Nuclear Risks, Ithaca, NY: Cornell University Press, 1991. 

21. Martin Schram, Avoiding Armageddon: Our Future, Our 
Choice, New York: Basic Books, 2003, p. 53. 

22. Also author's interview with Martin Schram for PBS Ted 
Turner Documentaries, PBS series. This was complied in the book, 
Avoiding Armageddon, cited above, which gives identical scenarios 
extracted from the author's interview, pp. 53-57. 

23. India's Prithvi and Pakistan's Hatf series of ballistic 
missiles, if deployed, may have mixed warheads. Improved 
surveillance and intelligence capabilities in both countries will 
know both deployment sites and launch times; but neither side 
will ever be certain about the composition of incoming warheads. 
A launch-to-target time of only a few minutes will reveal the 
kind of warhead used once the first warhead explodes on target. 
However, strategic weapons fire exchanges from nuclear-capable 
delivery systems will inevitably follow, which will leave neither 
side assured of constant non-nuclear responses through the 
duration of war. If a conventionally armed warhead launched 
from a nuclear-capable delivery vehicle targets a nuclear weapon 
site of the adversary, it is reasonable to believe that a nuclear 
response would result. 

24. The term "never-always" is borrowed from Peter Feaver. 
See Peter Douglas Feaver, Guarding the Guardians: Civilian Control 
of Nuclear Weapons in the United States, Ithaca, NY: Cornell 
University Press, 1992. 

25. The term "manual override" implies passing the electronic 
code manually to enable the launching of weapons. In Western 
jargon, the term "jury-rigged" is often used. 

26. Kidwai intervew with Maurizio and Paolo. 


27. Manjeet Singh Pardesi, "Deducing India's Grand 
Strategy of Regional Hegemony from Historical and Conceptual 
Perspectives," Draft Working Paper No 76, Singapore: Institute of 
Defense and Strategic Studies, April 2005, available from www. sg/rsis/publications/workingpapers. asp? selYear=2005 . 

28. C. Raja Mohan, Crossing the Rubicon: The Shaping of India's 
New Foreign Policy, New Delhi, India: Viking, 2004, p. 156. 

29. Peter J Katzenstein, A World of Regions: Asia and Europe in 
the American Imperium, Ithaca, NY: Cornell University Press, 2005, 
p. 236. 

30. The doctrine is named after Prime Minister Indira Gandhi 
and her son, Rajiv Gandhi, for their security approach in the 1970s 
and 1980s when India aggressively pursued a policy of assertion 
with all its neighbors from Sri Lanka to China. Major military and 
naval exercises were conducted along the Pakistani and Chinese 
borders, India flexed its muscles in Sri Lanka with the peace 
accord of 1987, and it intervened in the Maldives. 

31. Andrew Winner and Toshi Yoshihara, "India and 
Pakistan at the Edge," Survival, Vol. 44, No. 3, Autumn 2002. Also 
see Rodney Jones, Conventional Military Imbalance and Strategic 
Stability in South Asia, South Asian Strategic Stability Unit, Bradford, 
UK: University of Bradford, 2005. 

32. Zawar Haider Abidi, "Threat Reduction in South Asia," 
Occasional Paper 49, Washington, DC: Henry L. Stimson Center, 

33. Dalis Dassa Kaye, Talking to the Enemy: Track Two 
Diplomacy in the Middle East and South Asia, Santa Monica, CA: 
RAND Corporation Study, 2007. 

34. The Karachi Agreement of 1949, the Simla Accord of 1972, 
the Lahore Agreement of 1999, and the Islamabad Accord of 2004 
are some of the impressive bilateral accords. 

35. An acknowledgement to this effect has been in the Lahore 
MOU that seeks a mechanism for the implementation of existing 


36. Karan R. Sawny, "The Prospects for Building a Peace 
Process Between India and Pakistan," in Cheema and Bokhari, 

eds., Conflict Resolution and Regional Cooperation in South Asia, p. 

37. See, for example, the statement by Ambassador Munir 
Akram in the general debate of the first committee of the 58th 
session of the U.N. General Assembly, New York, October 10, 

38. At the time of this writing in September 2008, there is 
an unprecedented tension between United States and Pakistan. 
Pakistan has strongly protested U.S. Special Forces' cross-border 
incursions and open statements by U.S. policymakers to expand 
the war into Pakistani territory. 

39. India and Pakistan should engage in the three areas 
bilaterally. The initial U.S. role should be to act as a catalyst and 
honest broker between allies. 

40. David Albright, "Securing Pakistan's Nuclear Weapons 
Complex: Thought-Piece for the South Asia Working Group," 
paper presented at the Stanley Foundation conference on "US 
Strategies for Regional Security," Airlie Conference Center, 
Warrenton, VA, October 25-27, 2001. 

41. Dingli Shen, "Upsetting a Delicate Balance," Bulletin of the 
Atomic Scientists, Vol. 63, No. 4, July 1, 2007, p. 37. 

42. Mohan, pp. 155-156. 







John Stephenson 


Peter Tynan 


The drive for civil nuclear power has resurged 
around the globe, often under the banner of finding 
a clean energy alternative to meet growth objectives. 
Countries like India, Saudi Arabia, United Arab 
Emirates (UAE), Turkey, Egypt, and Jordan, among 
others, have all proclaimed a desire for nuclear power 
generation. Proponents argue that nuclear energy 
promotes economic development and reduces reliance 
on foreign sources of energy in a manner that is climate- 
change friendly due to the lack of carbon emissions. 

Similarly, Pakistan has pushed for nuclear power 
generation using many of the same arguments. 
Advocates for this initiative have underscored the 
recent congressional approval of the U.S.-India Civil 
Nuclear Cooperation agreement, which provides India 
with access to nuclear equipment and components 
from Western suppliers. As Pakistan's Prime Minister 
Yousaf Raza Gilani stated: "Now Pakistan also has 
the right to demand a civilian nuclear agreement 
with America. We want there to be no discrimination. 
Pakistan will also strive for a nuclear deal, and we think 
they will have to accommodate us." 1 A critical question, 


however, is whether nuclear power is necessary and 
vital to economic development in a climate-change 
friendly manner. 

This analysis looks at the economic and resource 
arguments for nuclear power through 2030 to evaluate 
whether nuclear power is necessary to meet Pakistan's 
energy expectations. First, the analysis evaluates the 
assertion that nuclear energy is vital to meet economic 
development goals. Second, this chapter analyzes the 
claim that global carbon emissions will be reduced 
by such an amount as to make salient the argument 
for increased Pakistani nuclear power generation 
capability. Finally, it evaluates whether development 
of nuclear energy would significantly reduce Pakistan's 
reliance on foreign energy sources. The framework 
used to evaluate resource options for electricity 
development (see Figure 1) includes looking at the 
total potential capacity, the likely pace of development 
of different technologies, the relative costs of those 
options, and the environmental issues and trade-offs 
inherent with each option. 

© Total potential 

• What capacity is needed 
to meet growth targets? 

'What resources are 

® pace of development 

• What is the likely pace 
of development of 

■ What constraints could 
slow development? 

® Relative costs 

'How do the options 
compare In terms of cost? 

■ In what ways do costs 


(4) Environmental issues 

• What environmental 
issues are associated 
with each option? 

Figure 1. Analytical Framework. 


This analysis concludes that nuclear power does 
not meet the expectations laid out by advocates for its 
development in Pakistan through 2030. Even under 
Pakistan's most ambitious growth plans, nuclear 
energy will continue to contribute a marginal amount 
of electricity to meet the country's economic goals. 
Furthermore, with Pakistan's considerable potential 
of untapped renewable resources, the country has 
numerous options other than nuclear to meet its 
development needs. In terms of reductions of carbon 
emissions, it should be noted that Pakistan currently 
represents only about 0.4 percent of global emissions. 
Certainly, while all emissions reductions are necessary, 
such reductions need to be pursued within the context 
of other risks, whether from deferred economic 
development or proliferation of sensitive technologies. 
Finally, given the sources of energy supplying Pakistan' s 
electricity generation, a significant proportion of 
which is based on natural gas, Pakistan could reduce 
its reliance on foreign sources of energy by developing 
nuclear. However, nuclear in the best case scenarios 
will provide a limited amount of electricity, and the 
predominant foreign sources of energy still emit 
carbon. As such, the route to developing Pakistan's 
considerable renewable resources can achieve the dual 
goals on carbon reduction and enhanced self-reliance. 

Background: Current and Future Needs. 

The primary sources of Pakistan's electricity are 
natural gas, hydro, and oil/diesel generation (see 
Figure 2). The total generation capacity of Pakistan 
in 2005 was 19.5 gigawatts (GW) and consisted of 
approximately 50 percent from natural gas, 30 percent 
from hydro power, and 16 percent from oil/diesel. 


Nuclear power's current contribution of electricity 
generation is 3 percent, while the contribution from 
coal is only 0.2 percent. Notably, renewable energy 
resources did not contribute to Pakistan's generation 
capacity in any meaningful way in 2005. 


Total = 
19.5 GW 




Oil/dies el 












Natural gas 






2 - 





Figure 2. Pakistan's Current Electricity Generation 
Capacity, 2005 (GW). 2 

Pakistan's current electricity generation capacity 
also does not meet the current demand, creating 
significant shortfalls. The country is presently 
experiencing supply deficits during peak demand 
periods and the variability of water supply contributes 
to deficits given the large reliance on hydropower. 3 
Nearly half of the population is also estimated to lack 
connection to the electricity grid, and load shedding has 
also become necessary in some areas. 4 Some estimates 
suggest that the grid system requires approximately 


two additional GW to cover peak demand with an 
adequate degree of reliability. 

Compounding the challenges for meeting current 
demand, Pakistan's generation capacity requirements 
are expected to increase significantly through 2030 
(see Figure 3). Forecasts for this growth rate vary and 
are generally tied to gross domestic product (GDP) 
expansion, which represents the energy intensity 
of economic growth. The Government of Pakistan 
estimates are based on an 8 percent GDP growth rate 
and a corresponding 9 percent generation capacity 
growth rate, thereby requiring 163 GW of generation 
capacity by 2030. However, the historical generation 
capacity growth rate from 1980-2005 was roughly 7.1 
percent, and, if this trend continues, the capacity by 
2030 would likely be 108 GSs. The actual generation 
capacity developed by 2030 will likely be somewhere 
in between these two ranges. However, even assuming 
a stronger GDP growth rate of 8.5 percent, thereby 
exceeding the Government of Pakistan projections, 
the need would be roughly 193 GSs. While the energy 
intensity varies and tends to decrease as an economy 
develops, the estimates of generation capacity present 
a conservative range against which to test the need for 
specific supply options. Considering the recent global 
financial and economic downturn, Pakistan's GDP 
growth rate could be significantly constrained, which 
could also create a concurrent reduction in the need for 
generation capacity. 

Total Potential Capacity. 

Despite the considerable power generation 
requirement needed by 2030, Pakistan has a wide 
breadth of potential sources to meet this future demand. 


In comparing the potential supply of resources with 
the generation capacity needed by 2030, this analysis 
uses both low- and high-end ranges based on various 
projections of GDP growth. As discussed above, the 
estimated generation capacity required by 2030 will be 
between 108 GWs and 193 GWs (shown in Figure 3). 
For each potential supply, the analysis also uses low 
and high estimates for the development through 2030. 

Capacity Capacity 

growth rate needed 
Government of 
(8% GDP growth) 90% 

1980-2000 8.3% 

7.5% GDP Growth 7.7% 

1980-2005 7,1% 

2005 2010 2015 2020 2025 2030 

Figure 3. Projections for Pakistan's Generation 
Capacity Requirements, 2006-2030. 5 

The key finding is that the potential supply of 
resources should be capable of meeting both low and 
high estimates for generation capacity needs, although 
requiring a portfolio approach. The available and likely 
resources consist of a broad range of supply options 
involving considerable development of the traditional 


supply sources of natural gas, hydro, and coal. While 
indigenous natural gas supplies are expected to 
dwindle, the Government of Pakistan has committed 
itself to investing in accessing external sources through 
pipelines. 6 In terms of coal, Pakistan has approximately 
185 billion tons of reserves, even with the anticipated 
increase of approximately 2.2 GW of coal-generated 
electricity by April 2009. Renewable energy resources 
offer significant potential even in the low and medium 
scenarios, which do not maximize the utilization of 
these resources, thereby leaving additional potential 
for well beyond 2030. Energy efficiency options are 
also likely to be a meaningful contributor to the variety 
of resources by 2030, offering more potential than that 
of nuclear power. 

Notably, even if the development of nuclear power 
meets high estimates, it is unlikely to constitute a 
significant contribution to the overall supply. Currently, 
Pakistan has two nuclear power plants (Chashma-1 
and Kanupp) which generate 300 megawatts (MW) 
and 125 MW, respectively. Pakistan's third nuclear 
power plant, Chashma-2, is expected to be completed 
by 2009 and will be capable of generating 325 MW. 
The Government of Pakistan estimates suggest a 13 
percent growth rate (see Figure 4) which would yield 
approximately 6-8 GW of nuclear power generation. 7 
This represents only about 3-6 percent of the electricity 
generated in 2030. If those high estimates are not 
met but instead nuclear power generation grows at 
a fast yet more reasonable pace of 8 percent, the total 
nuclear power generation would be roughly 2.8 GW. 
This would constitute only 1-3 percent of the total 
generation capacity by 2030. 


2005 to 2G3C 

: Potential sl 

pply options [GW) 

2030 need: 




la 122-291 GW ^^—"^ 

88-1 93 GW 




y^" Renew. 
^y Nuclear 

2 SO 







Coal °' esel 


^S ' 







Dcc-ofll 1 



High estimate for development 
Medium estimate for development 



50 - 



■ Low estimate for development 



2 Mt 



Cu*i H.'ihMnl R 


t EM-m Nutkn 

rMH T<*. 

Figure 4. Pakistan's Potential Supply Options for 
Electricity Generation, 2005-2030. 8 

Pakistan has considerable solar potential that rivals 
many other regions of the world (see Figure 5). The 
solarization of the country averages 5.2 kwh/m 2 and 
nearly half of the country shows economic viability 
for solar power generation. Few regions, aside from 
the Sahara, offer better solar potential in the world. 
Both solar photovoltaic and concentrated solar 
thermal technologies are becoming increasingly cost 
effective and commercialized, offering a considerable 
opportunity for this untapped resource in Pakistan. 
Although estimates for the total potential generation 
capacity from solar vary, a reasonable estimate is 70 
GW. 9 

The opportunity for wind power generation is also 
quite significant in Pakistan, at approximately 50 GW 
of potential generation capacity and a target of 9.7 GW 
by 2030. 


□ Z] 

!••!* U-U 

^•^ ^ 










Annual average mean daily 

Solar Radiation in Pakistan 




Figure 5. Global Solarization Rates 10 and 
Solarization across Pakistan. 11 

The AEDB is facilitating favorable rental terms for 
developers, and numerous letters of intent have been 


signed, with the target of generating 9.7 GW by 2030. u 
The National Transmission and Despatch Company 
(NTDC) is constructing new transmission lines to bring 
the power to markets, and at least two urban hubs, 
Karachi and Hyderabad, are nearby. 13 The potential of 
an estimated 50 GW of generation capacity suggests 
that ample wind capacity will still be available long 
after 2030. 

Figure 6. Location of Pakistan's Wind Corridor Near 
Gharo-Keti Bandar. 14 

In addition to solar and wind, other promising 
renewable energy sources exist for Pakistan to develop 
more fully. For instance, sugar mills in the country 
use bagasse for cogeneration purposes, and the 
Government of Pakistan has recently enabled them 
to sell surplus electricity back to the grid. Other such 


biomass, biogas, waste-to-electricity, and biofuels 
could also meaningfully contribute to the energy and 
electricity supply in Pakistan. The estimate for waste- 
to-electricity alone is approximately 500 MW per major 
city. 15 

Given the split between rural and urban 
populations, decentralized generation sources could 
also make considerable sense for development in 
Pakistan. By some estimates, roughly 70 percent of the 
population lives in rural villages, 16 with nearly half the 
population lacking a grid connection. With the costs of 
transmission and distribution, it is often uneconomical 
to connect these populations to the grid. As such, a 
centralized power generation source, like nuclear, 
may not serve to increase electrification rates across 
the country. Instead, decentralized wind and solar 
generation can often serve these populations better, and 
many small scale projects have already been developed 
throughout the country. The other concern is to have 
sufficient baseload generation, for which nuclear is 
normally used. While some renewable technologies 
raise concerns of intermittency, new technologies are 
being commercially developed to provide storage 
and enable use for baseload generation, especially as 
seen with concentrated solar thermal. And given the 
small share of nuclear power in the overall generation 
capacity mix by 2030, other options like hydro will 
provide significant baseload generation. 

Another critical opportunity for meeting Pakistan's 
electricity needs will be in energy efficiency, or 
negawatts, which even with conservative estimates 
will amount to more than nuclear power generation. 
Energy efficiency efforts can tackle a number of key 
areas in electricity production and consumption. 
They can include improving demand or efficiencies, 
such as switching to improved lights and energy 


efficiency appliances. Industrial production of goods 
can similarly be improved to generate considerable 
negawatts. Electricity generation itself can also be made 
more efficient, particularly with thermal generation, 
through equipment upgrades. Finally, transmission 
and distribution losses, traditionally quite high in 
developing countries due to technical losses and theft, 
can be improved for significant savings. Currently, 
Pakistan's transmission and distribution losses are 
estimated at approximately 26.5 to 30 percent. 17 The 
Government of Pakistan set the goal of reducing 
these by 5 percent by 2010, which could create 
approximately 8 GW of negawatts cumulatively by 
2030. 18 Committing to another 5 percent reduction in 
transmission losses would double this to roughly 16 
GW. In terms of estimating negawatts, this analysis 
remains quite conservative, having only reflected the 
potential savings from improving transmission and 
distribution losses. If demand efficiencies had been 
incorporated, these estimates could be considerably 
higher. Regardless, the potential improvements in 
transmission and distribution losses alone would 
outpace nuclear power generation by 1.5-3 times. 

Pace of Development. 

The likely pace of development of various supply 
options will be especially important for Pakistan and 
current projections significantly outpace historical 
development. Government projections often suggest 
that generation options will develop much more rapidly 
than historical progress suggests, and projections of 
nuclear development are no exception. In fact, the 
projections of nuclear development in Pakistan are 
predicated on attaining a development trajectory that 


very few countries in the world have been able to 

When projecting likely development of electricity 
generation sources, it is important to look first at the 
historical development of various options (see Figure 
7). In the case of Pakistan, the development of thermal 
and nonconventional energy sources (NCES) has risen 
the fastest over a 25-year period, at approximately an 
8 percent growth rate. However, recently (from 2000- 
05), installed plant capacity from these sources has 
stagnated at percent growth, while hydro power, 
at 6 percent, has maintained a consistent growth rate 
over the entire 25-year time period. Nuclear grew the 
slowest over this period, at 5 percent from 1980-2005. 
Recent high growth rates of 28 percent from 2000- 
05 reflect the small number of nuclear power plants 
overall. With two plants online and a third scheduled 
to go live in 2009, each additional plant represents a 
significant percentage of the total. Overall, generation 
capacity grew by 7 percent from 1980-2005 and by only 
2 percent from 2000-05. 19 

The projections for the various supply options 
are almost uniformly ambitious, but especially so for 
nuclear. From 2005 to 2030, it is expected that nuclear 
generation will increase at a growth rate of 13 percent. 
Other supply options have similarly high estimated 
growth rates, such as natural gas at 9 percent, hydro at 
10 percent, coal at 13 percent, and renewable energy at 
14 percent. 

Nearly all of these supply options will undoubtedly 
face challenges in attaining such growth targets, but 
fewer challenges are likely be met by those options 
that face lower barriers in the form of capital intensity, 
political will, and ready availability of supplies and 


GW Z0 

Growth Rales 

1980-05 2000-05 
Nuclear 5% 28% 

Hydro 6% 


Thermal 8% 



Figure 7. Historical Development of Electricity 
Generation, 1980-2005 (GW). 20 

Because nuclear faces immense challenges in terms 
of capital intensity and accessibility of supplies and 
technology, the growth rates implied for nuclear 
development suggest the attainment of targets that 
very few countries in the world have been able to 
achieve. However, as a nonsignatory to the Non- 
Proliferation Treaty, there are international embargoes 
on the transfer of such technology to Pakistan. China 
is currently the only supplier of nuclear power 
plants and components to Pakistan, but, to meet the 
projections, Pakistan would require access to advanced 
nuclear supplies and technologies from Western 
countries. 21 Such constraints raise particular questions 
around nuclear development, where governments are 
especially prone to overestimate their ability to develop 
such resources and install generating capacity. (See 
Figure 8.) 


Growth Rates 






Natural gas 




/ A 










Figure 8. Projected Development of Installed Plant 
Capacity, 2005-2030 (GW). 22 

Globally, the historical data of nuclear power 
development suggests that few countries have been 
able to achieve and maintain a consistently high 
growth rate for nuclear development as per Pakistan's 
estimates. South Korea comes the closest to reaching 
the trajectory and sustainability of nuclear power 
generation with a 14.3 percent compound annual 
growth rate (CAGR) over the 15 years from 1980 to 
2005. The United States and France both had much 
faster growth from 1980 until approximately the 
early 1990s (at 7 percent and 14 percent respectively), 
but their nuclear development programs have since 
leveled off. 23 By contrast, India has only attained a 4.9 
percent growth rate for its nuclear development. 24 For 
Pakistan to meet its own nuclear power development 
estimates over the next 30 years, it would have to 
emulate or surpass the efforts of countries like South 
Korea, France, or the United States. (See Figure 9.) 





osr ; 


5 5 


14 3% 

1965 1990 1995 2000 

Figure 9. Historical Development of Nuclear Power 

in the U.S., France, South Korea, and India, 

1980-2005 (GW). 25 

Nuclear development also requires considerable 
coordination between the private and public sectors, 
requiring rather strong government effectiveness, 
regulatory quality, and control of corruption since 
nuclear projects require large capital expenditures. 
Relative to countries such as the United States, France, 
and South Korea that have successfully developed 
nuclear power generation at impressive growth rates, 
Pakistan's measure on these governance indicators 
is significantly lower. (See Figure 10.) Although 
these metrics are general governance indicators, 
the successful implementation of a nuclear power 
development policy would presumably require 
even greater government effectiveness, regulatory 
skills, and control of corruption than ordinary large- 
scale infrastructure projects. While a lower rating in 
government effectiveness may suggest a country is less 
able to orchestrate the necessary level of coordination 
to get a project initiated and complete, a lower rating 


in regulatory quality would suggest potential lapses 
in security and safety, and less control of corruption 
would suggest that sensitive materials may be more 
prone to illicit sale and trade. Corruption also matters 
considerably in terms of the financing of large- 
scale infrastructure projects. The "corruption tax" 
on a large project can significantly balloon costs and 
delay completion. These discrepancies in governance 
indicators would suggest that the nuclear generation 
growth rates targeted by the Government of Pakistan 
may not be achievable. 

Government effectiveness Regulatory quality Control of corruption 

Figure 10. Governance Indicator Comparison, 2007, 


At the same time, the regulatory and policy 
environment for renewable energy development, 
including wind and solar power, is being increasingly 
strengthened and geared towards enhancing and 
accelerating development. Legislation that has been 
passed includes sales tax, income tax, and customs 
duty exemptions for imported plants, machinery, and 


equipment for renewable energy power generation. 27 
Further incentives for private sector development of 
wind power even includes "Wind Risk Coverage," 
which covers the risk of wind speed variability, making 
the power purchaser (the Government of Pakistan) 
absorb the risk of such variability. 28 The AEDB continues 
to lobby aggressively for investments and, in the case 
of wind, roughly 93 letters of intent have already been 
signed for development. 29 This push has benefited 
from foreign assistance, such as support from the U.S. 
National Renewable Energy Laboratories under a 2007 
U.S. Agency for International Development (USAID) 
assistance program. 30 

Relative Costs. 

The likely development of various supply options 
is influenced by a number of factors, including the 
relative costs of those options (see Figure 11). Estimates 
of the relative costs of different supply options vary 
widely. By far, the lowest cost options are coal and 
hydro, while some of the most expensive options are 
solar photovoltaic and solar thermal. Local costs of 
supply options can vary considerably, and Pakistan- 
specific estimates suggest nuclear energy could be on 
the high-end of the range, at roughly $0,057 cents per 
kilowatt-hour (kWh). 

It is also important to note the trend for the cost 
curves of renewable energy technologies (see Figure 
12). Wind has led the way in becoming economically 
viable, and solar is expected to follow suit in the 
medium term. The price of concentrated solar power 
has dropped at a faster rate than solar photovoltaic 
(PV), but recent advances in solar PV technology also 
suggest increased commercial viability. 


□ High 

■ Medium 

■ Low 

estimates are 

Casts are lisied 
from lowest to 
highest, generally 
based on their 

■SO .4 36 

SO. 10 



Figure 11. Relative Costs of Various Resource 
Options. 31 

Furthermore, for many nongrid connected 
Pakistanis, the trade-off is not necessarily between 
cheap sources of electricity or renewable options. 
Rather, it lies in which resources can, or will, be 
developed in the near-, medium-, and long-term. A 
more expensive option per kilowatt-hour, like solar 
or wind, may have lower up-front costs and not rely 
on the central government to invest in infrastructure 
requirements for transmission and distribution. 

One significant benefit of renewable energy 
technologies like wind and solar, however, is that 
they both have predictable (i.e., zero) fuel costs 
and can also be expanded incrementally. Wind 
and solar farms can largely be built in stages, 
with the first phases of installation becoming 
immediately productive, while a fractional build- 
out of a nuclear facility cannot produce electricity. 


Concentrating Solar Power 

Figure 12. Cost Curve for Solar Photovoltaic, 

Concentrating Solar Power, 

and Wind, 1980-2025. 32 

It is also important to note the potential ramifications 
of the current global financial crisis. As access to 
capital becomes constrained, it will likely become 
more difficult to finance large scale investments like 
nuclear, especially where the production of electricity 
and generation of cash flows comes much later. 
Less capital-intensive projects that can be built-out 
incrementally are more likely to be favored and will be 
used to meet electricity demand that itself is likely to 
be reduced due to economic growth constraints. 


Cost of power generation comparisons per kWh {USS) 


I I I 

Fuel costs 

Operations & Maintenance 

Capital Costs 

thar irn ported 

Hydro NliUl-ut Wind 

Figure 13. Cost Structure Comparison of Various 

Supply Options 

(per kWh, US$). 33 

In the end, it is important to compare the relative 
costs of different supply options, but meeting Pakistan's 
electricity needs will require a portfolio strategy. No 
single option, no matter how attractive from a cost 
perspective, can meet the full need by 2030. Numerous 
options need to be pursued, leveraging the strengths 
and mitigating the risks associated with each. 


Given the very real risks of climate change, it is vital 
to consider environmental issues when evaluating 
electricity supply options in any region of the world. 
Nuclear is often judged against a "clean" generation 
technology due to the lack of carbon emitted during 


electricity generation. While this is true, renewable 
energy technologies are equally climate-change 
friendly and are not accompanied by the problems 
associated with long-lasting radioactive spent fuel and 
its transportation, storage, and disposal. 

It is also important to look at the sources of carbon 
emissions by country to determine the appropriate 
intervention to reduce those emissions. In Pakistan, 
a significant amount of carbon emissions comes 
from petroleum which serves transportation needs 
and would not be offset by switching to electricity 
generation resources, at least until electric cars are 
widespread in Pakistan. A promising trend in Pakistan' s 
transportation sector, however, is the increased use of 
compressed natural gas for transportation. 34 Also, while 
a significant amount of Pakistan's emissions come 
from natural gas (including for electricity generation), 
natural gas produces just about half the emissions of 
coal. (See Figure 14.) 






Natural Gas 

J> .# ^ .# .# J> <# «,# J> „<$> ^ ^ -o" 

Figure 14. Pakistan's C02 Emission by Source, 
1980-2005 (million metric tons). 35 


Finally, while all emissions reductions contribute 
to addressing the issue of climate change, Pakistan's 
emissions should be considered in context when 
weighing the attractiveness of other options involving 
different types of risks. In 2005, Pakistan produced 
just 0.4 percent of total global carbon emissions. By 
comparison, Pakistan produces only 0.77 metric 
tons per capita versus 20.14 metric tons per capita in 
the United States. As such, the degree of the carbon 
emissions problem in Pakistan may not outweigh other 
the risks associated with nuclear power generation. 
This is especially true when considering the ample 
renewable energy potential in Pakistan, the benefits 
of decentralized power generation in the country, the 
decreasing costs of renewable energy sources, and the 
lack of fuel risks attaching to renewable energy sources 
(both in terms of price volatility and spent-fuel risks). 


Numerous countries, including Pakistan, are 
pushing to develop nuclear power generation capacity. 
These countries often highlight the requirements of 
economic development to increase their electricity 
generation. In a carbon constrained world with 
increasing global awareness of the risks of climate 
change, nuclear power is judged as a clean and efficient 
way to meet economic development objectives while 
limiting carbon emissions. Furthermore, nuclear 
power is often seen as a means of ensuring greater self- 
reliance and independence from petroleum imports 
from unstable neighbors or regions. With the recent 
approval of the U.S.-India Civil Nuclear Cooperation 
agreement, Pakistan is also calling for access to nuclear 


equipment and supplies from Western sources as 
a measure of fairness and support for its economic 

However, in the case of Pakistan, the promises 
of nuclear power generation are largely exaggerated 
through 2030. While it remains true that Pakistan 
currently has an electricity generation capacity 
shortage and will need considerably more capacity by 
2030, there is ample potential supply from numerous 
other sources. Traditional sources such as natural gas 
and hydro will continue to be important for Pakistan, 
but increasingly, the potential of renewable energy 
will be harnessed. Pakistan is extremely well-endowed 
not only with large-scale hydro, but also world- 
leading solar and wind resources. The government 
has recognized this by establishing the AEDB, and has 
increased the amount of investments in this sector. 

With a portfolio approach encompassing 
traditional and renewable energy sources along with 
energy efficiency measures, Pakistan can meet its 
electricity needs through 2030 if it chooses to forego 
nuclear power development. The role of nuclear in 
the mix of electricity generation sources by 2030 is 
not vital. First, the estimates for nuclear development 
are quite ambitious and rest on the assumption that 
Pakistan could replicate the development trajectory 
of the United States, France, and South Korea. Second, 
nuclear development requires significant private and 
public sector coordination resting on a solid foundation 
of government effectiveness, regulatory quality, 
and control over corruption. Compared with those 
countries that have successfully developed nuclear 
power in the past, Pakistan falls short of these metrics. 
Finally, even if the high estimates are achieved by 
Pakistan, the resulting contribution would represent 


only 3-6 percent of total electricity generation capacity. 
Furthermore, Pakistan's overall contribution to global 
carbon emissions remains miniscule at 0.4 percent, 
so substitution through an aggressive nuclear energy 
program does not suggest meaningful progress on the 
climate change agenda. 


1. Damien McElroy and Rahul Bedi, "Pakistan Demands 
Rights to Nuclear Power after India Deal Is Sealed," Telegraph, 
October 2, 2008, available from 

2. Pakistan in the 21st Century: Vision 2030, Islamabad, 
Pakistan: Government of Pakistan, 2007; "Pakistan Approves 25- 
year Energy Security Plan, 2005," Pakistan Times, 2005. 

3. Vladislav Vucetic and Venkataraman Krishnaswamy, 
"Development of Electricity Trade in Central Asia-South Asia 
Region," available from mea. gov. in/ srec/internalp ages/ drafteti.pdf. 

4. Energy Information Administration, available from www. 

5. Medium Term Development Framework and Vision 2030; 
Pakistan Statistical Yearbook 2007, Islamabad: Government of 
Pakistan, Federal Bureau of Statistics, 2007; Pakistan 25-year Energy 
Security Plan 2005, Dalberg analysis, Pakistan Times, 2005. 

6. Energy Information Administration Country Analysis Briefs- 
Pakistan (EIA Pakistan Country Analysis Brief), available from 

7. Pakistan In the 21st Century; Pakistan Times, 2005; Pakistan 
25-Year Energy Security Plan, 2005; Angelica Wasielke, ed., Energy- 
Policy Framework Conditions for Electricity Markets and Renewable 
Energies, Eschborn, Germany: ETZ, 2004; 23 Country Analysis, 
2007, Pakistan Chapter, pp. 339-359. Notes: Nuclear represents 


the projected 13 percent growth rate for the high estimate and 
an 8 percent growth rate which is still very high compared with 
other countries histories of nuclear development. 

8. Pakistan 25-year Energy Security Plan, 2005, Pakistan Times, 

9. Wasielke, ed., p. 11. 

10. Ibid. 

11. "Completed Projects, Solar Home Systems," Islamabad: 
Pakistan's Alternative Energy Development Board (AEDB), 
available from 

12. "Resource Potential of Wind Project," Islamabad, Pakistan: 
AEDB, available from 

13. Wasielke, ed., p. 9. 

14. Ibid. 

15. Wasielke, ed., p. 10. 

16. "Resource Potential of Solar Protovoltaic Project, 
Islamabad, Pakistan: AEDB, available from 

17. Estimates of 30 percent by the Energy Information 
Administration, www .html. 

18. Mid Term Review of Medium Term Development Framework 
Framework, 2005-2010, Islamabad: Government of Pakistan, 
Planning Commission, 2008, p. 84. 

19. Energy Information Administration. 

20. Ibid. 

21. "Nuclear Power Programme of Pakistan," paper by Zia 
H. Siddiqui, Tariq Mahmud, and Ghulam R. Athar, presented to 
World Nuclear Association Symposium, 2006. 


22. "Pakistan 25-year Energy Security Plan," Pakistan Times, 

23. DoE Energy Information Administration report on 

24. Ibid. 

25. Ibid. Note: The fastest growing installed nuclear capacities 
are in South Korea (14.3 percent), Spain (8.1 percent), and France 
(6.1 percent). 

26. World Bank Governance Indicators, available from info. 

27. AEDB, available from 

28. Ibid. 

29. "Resource Potential of Wind Project," AEDB, available 

30. Ibid. 

3 1 . Sources: Pakistan-specificestimates (others are benchmarks, 
with some estimates from elsewhere in South Asia) from Mukhtar 
Ahmed, "Meeting Pakistan's Energy Needs," Woodrow Wilson 
Report, Fueling the Future: Meeting Pakistan's Energy Needs in the 
21st Century; Energy Information Administration, Annual Energy 
Outlook, DOE/EIA-0383(2006), Washington, DC, February 2006; 
Government of India, Planning Commission, Integrated Energy 
Policy: Report of the Expert Committee, New Delhi, India: Government 
of India, August 2006; David G. Victor, "The India Nuclear Deal: 
Implications for Global Climate Change," Testimony before the 
U.S. Senate Committee on Energy and Natural Resources, July 18, 
2006, available from 
deal.html. Notes: For the levelized cost comparison of coal, natural 
gas (advanced combined cycle), the low estimate for wind, and 
nuclear, the cost comparison is for U.S. plants that would come 
online in 2015. For the nuclear generation estimates by David 
Victor, for light water reactors: the lowest at 3.8 U.S. cents comes 


from Bharadwaj, Anshu; Rahul Tongia, and V. S. Arunachalam, 
"Whither Nuclear Power?" Economic and Political Weekly, Vol. 41, 
No. 12, 2006, pp. 1203-1212. The medium cost of 4.2 cents per kWh 
and 6.7 cents per kWh come from The Future of Nuclear Power: an 
Interdisciplinary Study, Cambridge, MA: MIT Press, 2003. Using 
the US DOE's levelized costs and incorporating the fact that Indian 
fuel is 2-3 times costlier, a cost of 6.6 cents per kWh is estimated. 
"HSFO" is heavy fuel oil. 

32. U.S. National Renewable Energy Laboratory. 

33. Mukhtar Ahmed, "Meeting Pakistan's Energy Needs." 
U.S. DOE levelized cost calculations. 

34. Energy Information Administration. 

35. Ibid. 






Shahid Javed Burki 


Pakistan currently faces a grim economic situation. 
There is likely to be a sharp reduction in the rate of 
economic growth, an unprecedented increase in the 
rate of inflation, a significant increase in the incidence 
of poverty, and a widening in the already large regional 
income gap while the fiscal and balance of payments 
gaps increase to unsustainable levels. The country has 
been though many crises before, but the one that it is 
currently experiencing is uniquely severe. Should the 
economic situation continue to deteriorate, the country 
could be plunged into social and economic chaos that 
would affect the rest of the world. Pakistan is already 
considered to be the center of Islamic extremism, so 
how should it tackle this situation? 

In an article published by Dawn on July 22, 2008, 1 
I suggested that Pakistan should not approach the 
donor community with a begging bowl in hand and 
ask for help to resolve the current economic crisis. I 
did not advocate going to the International Monetary 
Fund (IMF) for support since that would compromise 
the effort to keep the economy growing. This is what 
the country did in 1999 and gave up growth in favor 
of stabilization. In an effort to increase growth, the 
Musharraf administration loosened fiscal and monetary 
controls over the economy and laid the foundation of 


the current crisis. It is not good for the economy to go 
through such deceleration and acceleration in growth; 
repeated shifts are destabilizing, and it would not be 
prudent to send the economy through such a cycle 

Instead, I suggested that the country should seek 
help on the basis of a well-thought-out program of 
economic reform and focus on bringing about structural 
changes that have long been postponed. An important 
structural change would be to make the economy less 
dependent on external help for sustaining growth. This 
will take time, but the process must begin. 

By initiating a program of structural reform, the 
country may be able to secure long-term finance, 
perhaps as much as $40 to $50 billion for a 5-year 
period. Financing should be equally shared between 
the donor community and Pakistan, with the donors 
requested to front-load the effort with $20 to $25 billion 
provided in the first 2 to 3 years, and the Pakistani 
government providing a matching amount at the 
end of the program period. However, the Pakistani 
authorities should clearly and persuasively describe 
how it would raise this amount of money. 

I cannot tell whether my thinking influenced 
the policymakers in Islamabad, but I am struck by 
two developments. First, Pakistani Finance Minister 
Naveed Qamar made a statement on September 19, 
2008, that his government had no intention of going to 
the IMF for support and that instead it would develop 
its own package of reform. To reinforce the point, he 
announced the withdrawal of a number of consumer 
subsidies that weighed heavily on the federal budget. 
Secondly, President Asif Ali Zardari, while on a visit to 
New York to attend the opening session of the United 
Nations (UN) General Assembly a week later, met with 


a group of donors he called the "Friends of Pakistan." 
The group promised support but did not elaborate a 
plan as to how that would be delivered. This is the 
situation today as the country continues to diminish 
the respectable level of foreign currency reserves it had 
built up over the last 8 years. Within a few months, it 
will run out of reserves and may have to default on its 
foreign obligations. 

Soliciting donations is only half of the solution to 
the mounting crisis. The second half of the effort would 
be to develop a strategy to reassure the community 
of donors that the new leaders are up to the task of 
bringing the country out of the stiffest challenge it has 
faced in its history. Such an effort will need a great 
deal of thought, the full commitment on the part of 
the leadership, and public support. It will also need 
the creation and development of the institutional 
infrastructure that is needed to support a far-reaching 
program of economic and social restructuring. 

Time is running out for Pakistan. The approach 
to the donor community for help should include the 
presentation of a well-developed, carefully budgeted, 
and implementable program of economic change and 
reform. We need to dispense with the begging bowl 
approach and adopt one that makes a selected number 
of countries Pakistan's economic partners rather than 
providers of charity. At this point, it would be useful 
to provide a brief historical overview of Pakistan's 
economic history before examining the current 
problems the country faces and the policies it could 
adopt to resolve them. 



Pakistan's performance has been fairly impressive 
in terms of economic growth and development over 
the last 60 years. If we construct three indices: growth 
in population, increase in gross domestic product 
(GDP), and increase in per capita income for the past 
60 years (see Table 1), we notice reasonable progress. 
While the population increased more than five times, 
from 30 million in 1947 to over 162 million now, 
both GDP (which increased 18 times) and per capita 
income (which increased more than 4 times) also grew 





































Source: Calculated from Government of Pakistan, Pakistan Economic 
Survey, various years, Islamabad, Pakistan. 

Table 1. Indexes of Growth in GDP, Population, and 
Income Per Capita. 

However, progress was neither gradual nor even. 
There were three periods of high growth (1958-69, 
1977-88, and 2002-07) -27 years out of 61 years - 
during which GDP increased by an average of 6.2 


percent a year. (See Table 2.) This means that one-half 
of the GDP expansion came in those 27 years. Before 
identifying the reasons for the booms and busts of the 
Pakistani economy, it would be instructive to compare 
the country's performance with that of its neighbor, 








GDP Per 



































Source: Government of Pakistan, Pakistan Economic Survey, 
various years, Islamabad, Pakistan. 

Table 2. Economic Performance during Various 
Political Periods (Percent). 

Comparing the performance of the Indian and 
Pakistani economies in terms of the growth in GDP 
highlights one important conclusion. The acceleration 
in the rate of growth of India since the mid-1980s 
represents a paradigm shift. Between 1947-87, the 
Indian economy registered what Raj Krishna, an Indian 
economist, famously called the "Hindu rate of growth." 
This was about 3.5 percent a year and represents a 
relatively low level of increase in per capita income. 
Since the mid-1980s, the Indian economy has been 
growing annually at rates between 6 and 9 percent. It is 


fair to conclude that the Indian policymakers were able 
to put the economy through a deep structural change 
that enabled it to nearly double the rate of the "Hindu" 
GDP growth and as a result, the country was able to 
sustain this much higher growth rate over 2 decades. 
Pakistan's economy, on the other hand, has stayed on a 
roller coaster with periods of high growth followed by 
periods of sluggish performance. Today, it is entering 
another period of low growth. 

There are a number of reasons why Pakistan was not 
able to sustain high growth rates. A significant share of 
the investment that financed growth spurts came from 
the influx of foreign capital that augmented the low 
level of domestic savings, most of it from the United 
States . External finance became available to compensate 
the country for the strategic help it provided America. 
The Pakistani government closely aligned the country 
with America in the 1960s in support of Washington's 
efforts to deny additional strategic space to European 
and Asian communism. 3 The country was rewarded 
for its loyalty with large amounts of military and 
economic assistance. In the 1980s, 4 Pakistan chose to 
become the front-line state in the American effort to 
expel the Soviet Union from Afghanistan. Once again, 
the reward was military and economic assistance. More 
recently, Pakistan was recruited to join America's war 
on terror and for its support was given an estimated 
$10 billion of assistance over the 6-year period from 
2001 to 2007. 5 In other words, the country did little to 
generate high rates of economic growth by using its 
own resources. It also did not improve the quality of 
governance or ensure continuity in policymaking. 
These factors have been identified by economists as 
important contributors to growth. 


There is now a vast body of literature that addresses 
the question: What makes economies grow? 6 Apart 
from the generation of domestic resources to sustain 
a high level of investment, two other determinants are 
very important: well-developed human resources, and 
institutions that can support development. Successive 
administrations in Pakistan did little to create these 
two conditions, resulting in an economy that grew 
only when large amounts of external capital became 
available. The rate of growth plunged when, for 
whatever reasons, the quantity of resources being made 
available declined. Pakistan has not been through the 
kind of paradigm shift that made it possible for India 
to climb on to a high growth trajectory. 

Even though the economy has continued to 
be volatile, it did make considerable progress. Its 
structure changed quite significantly. As shown 
in Table 3, since Pakistan's establishment as an 
independent state, the economy, as well as the society, 
was basically rural. Agriculture was by far the most 
important sector of the economy, representing nearly 
62 percent of the GDP. Manufacturing contributed a 
very small amount, less than 7 percent. Now, the share 
of agriculture has declined to below 22 percent, while 
that of manufacturing has increased to more than 18 
percent. The service sector is now the largest part of 
the economy by far, contributing more than 50 percent 
of the GDP. 









Mining and Quarrying 








Large Scale 







Wholesale-Retail Trade 




Finance and Insurance 




Public Administration and 








Electricity and Gas Distribution 




Source: For 1949-50, J. Russel Andrus and Aziz F. Mohammed, 
Pakistan's Economy, London, UK: Oxford University Press, 1957. 
For 1969-70 and 2005-06, various issues of Government of 
Pakistan, Pakistan Economic Survey. 

Table 3. Sectoral Shares of GDP. 

While agriculture still remains a significant source 
of employment, its share has declined. As shown 
in Table 4 below, it employed over 60 percent of the 
labor force in 1949-50; 6.7 million out of the total work 
force of 10.3 million. In 2005-06, agriculture's share of 
employment had fallen to less than 45 percent. The 
number of people employed in agriculture tripled in 
60 years, from 6.7 million to 21.3 million, but in the 
same period the number of people in nonagricultural 
employment increased seven-fold, from 3.6 million to 
26.3 million. As a result, the structure of the economy 
is considerably different from the one the country 
inherited at the time of independence. 


1949-50 (Million) 

1949-50 (Percent) 





Female Total 

Civilian Labor Force 





1.0 30.7 






0.7 20.1 






0.3 10.6 

Total Population 

Percent in Labor 



Source: Chap. 7, Pakistan Econo 

mic Survey, 

Islamabad: Government of Pakistan, 


Table 4. Economic Distribution of Total Population. 

Another change — not as significant as those noted 
above, but important nevertheless — is the larger role 
women play in the economy by participating in the 
work force. As shown in Tables 4 and 5, women were 
almost totally absent from the work force at the time 
of Pakistan's birth. In the late 1940s, there were only 
300,000 women formally recognized as participants in 
the labor force, only 3 percent of the total work force. 
Most women stayed home in this period, one reason 
why Pakistan, at less than 31 percent of the work force, 
had one of the lowest worker participation rates in the 
developing world. That changed over 60 years and the 
participation rate has increased to nearly 45 percent. 
There was a 20-fold increase in the number of women 
taking part in the work force. In 1949-50, only 300,000 
women were formally part of the work force; 55 years 
later, their number had increased to over 9.2 million. It 
should be stressed, however, that the number of women 
formally recognized to be working is considerably less 
than those who actually work. In most economies, not 
just in the developing world, women's work in the 


house is not recognized as work in a formal sense. In 
a country such as Pakistan, women put in hard work 
in both rural and urban areas, particularly among the 
lower income groups. Even young girls labor hard to 
help their mothers take care of their younger siblings. 
Women put in many hours a day caring for animals, 
which are an important source of income for poor 

2005-06 (Million) 

2005-06 (Percent) 




























Whole Sale-Retail Trade 













Community, Social and 

Personal Services 












Total Labor Force 








Percent in Labor 





Source: Chap. 7, Pakistan Economic 



Government of Pakistan, 


Table 5. Economic Distribution of Labor Force, 

The last significant change I would like to recognize 
is a large increase in the urban population. In 1947, 
the proportion of Pakistanis living in urban areas was 
no more than 12 percent, some 3.6 million out of a 
total population of 30 million. The arrival of 8 million 


refugees from India, 2 million more than the 6 million 
Hindus and Sikhs who migrated in the other direction, 
resulted in a significant increase in urban population. 
In 1951, when the first population census was taken, 
17.6 percent of the population lived in urban areas. By 
1972 the proportion of the urban population increased 
to 22.4 percent, with a further increase to 28.3 percent 
in 1981. The last census taken in 1998 estimated the 
proportion of people living in the urban areas at 35.4 

The Current Economic Situation; Macroeconomic 
Imbalances Return 7 

In 2008, Pakistan's economy is once again at a critical 
juncture. After a period of strong economic expansion, 
relative macroeconomic stability, and increased 
foreign investor confidence during the years 2003-06, 
the country is facing very serious economic strains 
and a number of social challenges. Macroeconomic 
indicators deteriorated very sharply over the last 
few years. Inflation touched record levels in the first 
9 months of 2008 following 3 previous years of high 
single-digit increases in the level of prices. This is 
despite the fact that the sharp increases in international 
oil prices during most of 2008 were not fully passed 
on to consumers and the price of wheat for urban 
consumers was subsidized. The burden of high prices, 
especially of basic food items, became intolerable for 
poor households. One of the primary causes of inflation 
since 2004 may have been monetary in character, but in 
2008 they acquired a structural nature, given the high 
dependence on imported energy. 

Over the same period, poverty levels increased 
again. 8 There was some decline in the poverty rates 


from 1999-2005, but the unprecedented rise in food 
prices since 2004, along with the shortage of wheat 
flour and a slowing economy, eliminated any gains 
that had been made. Also, there was evidence that 
labor absorption was limited despite rapid economic 
growth in the 2002-07 timeframe. 

Structural problems constraining long-term 
growth came dramatically to the forefront in the first 
half of 2008 with major power shortages and large- 
scale load shedding. In addition, the erosion of the 
competitiveness of the country's dominant exports, 
textiles, and clothing, and a sharp slow down in export 
growth since 2006-07 led to a large increase in the trade 
imbalance and limited the prospects for growth in 
labor- intensive manufacturing. 

Given this backdrop, I will take stock of the 
economy by focusing on: 

• the immediate financial problems arising out 
of large and virtually unsustainable twin fiscal 
and balance of payments deficits; 

• a high and rising rate of inflation, especially in 
food and energy prices; 

• a slowing down of the economy, especially in 
the sector of manufacturing, and the need to 
remove the principal constraints on long-term 
growth like the power deficit and water scarcity; 

• widespread poverty incidence, as well as 
growing income disparities, among income 
groups and across regions; and, 

• the governance and institutional problems 
that not only hamper productivity and growth 
but also prevent the poor from accessing 
government resources, public services, and 
participating in government decisionmaking. 


In attempting to assess the present position, 
this chapter analyzes the short-term causes of the 
unraveling of the economy in the first half of 2008 as 
well as the underlying longer-term issues that continue 
to impede economic growth and social progress. Both 
perspectives are critical because not only is Pakistan 
quite a distance away from matching the record of the 
Asian tigers, Hong Kong, Singapore, South Korea and 
Taiwan, but also is also seriously falling behind India. 

The second and central objective of this chapter is 
to outline a comprehensive and integrated economic 
and governance strategy that will facilitate the tackling 
of the previously mentioned challenges and that will 
require the urgent attention of the new economic and 
political leadership. 

The chapter recognizes that efforts to restore mac- 
roeconomic stability from the position of almost un- 
controllable fiscal and balance of payments deficits 
could dampen short-term growth and investment and 
make the addressing of poverty and distribution issues 
harder during the period of adjustment. The agony of 
a sharp adjustment is unavoidable though it should be 
possible through public policy measures and well-de- 
signed interventions to protect the poor who account 
for around 10-11 percent of total private consumption. 
In the absence of a strong adjustment the country runs 
the risk of a deep financial crisis with catastrophic con- 
sequences for its citizens. 

In the longer run, the goals of financial stability, 
rapid growth, and fairer income distribution can be 
achieved. These objectives are not only consistent with 
each other but can be mutually reinforcing and inter- 
dependent with the appropriate public policies and re- 
silient national institutions. 

In looking at future prospects for growth and 
seeking better distribution outcomes, this chapter 


highlights both the gains made in the last few years 
as well as the many unmet challenges and unexplored 
opportunities, especially in the context of development 
in the global economy. In looking at the choice of 
policy instruments to advance the economic and 
social agenda, the chapter stresses the need to move 
simultaneously on a number of fronts because of 
the interlocking and mutually reinforcing effects of 
many policy and institutional changes. For example, 
improvements in governance could partly alleviate the 
pain of economic adjustment. 

The Road to the Present Crisis. 

The macroeconomic situation unraveled very 
quickly. The fiscal deficit (excluding grants) grew 
eight-fold over the 4-year period between 2004 and 
2008, approaching 8 percent of GDP. The first finance 
minister of the coalition government that took office 
in March 2008, in fact, projected the fiscal deficit at 
9.5 percent of the GDP on the basis of current trends. 
However, an adjustment of 1.5 percent of the GDP was 
made by the government in the second quarter of 2008, 
primarily because of a rationalization of the Public 
Sector Development Program (PSDP). 

The current account of balance of payments which 
had a surplus of almost 2 percent of the GDP as late as 
2003-04 reached the record level of $12 billion or 7.5 
percent of GDP in 2007-08. Here again, the then finance 
minister projected a higher deficit at above 9 percent of 
the GDP. The large deficit cut into the foreign exchange 
reserves at a most worrying rate. In the first 4 months 
of 2008, the decline in reserves accounted for nearly 
40 percent of the current deficit. By the end of 2007- 
08, the foreign exchange reserves had dropped to $11 


billion and were $5.5 billion below the level at the end 
of October 2007. By October 2008, the reserves were 
estimated at only $6 billion. 

Pakistan's present predicament is the result of a 
combination of factors; large exogenous shocks, wrong 
or the absence of policy responses, and a neglect of 
emerging structural problems in three key sectors — 
energy, agriculture, and exports. 

The negative shocks, including a devastating 
earthquake in 2005, the inexorable rise in international 
oil and food prices, especially of grains and edible 
oil, have all placed a huge tax on the economy and 
have effectively reduced the real growth of income in 
Pakistan by about 2.0 percent per annum on average 
during the last 4 years. Another increase in oil prices 
could cost Pakistan another 2 percent of its GDP in 

The policy response to this state of affairs has been 
poor or misguided. These developments required 
a major adjustment in consumption and possibly 
investment plans. But the need to reduce aggregate 
demand, especially by reining in the expansionary 
monetary policy, was ignored partly because the 
revenues from the privatization of the economic assets 
owned by the government and sovereign borrowing in 
world markets were easily available to finance growing 
deficits and partly because delivering high growth 
was considered a political imperative for winning the 
elections of February 2008. It was a false assumption, 
and the ruling party lost the elections and the burden 
on the economy remained. 

Domestic absorption of resources increased 
very sharply from 2004-07. Real consumption and 
investment collectively increased by 35 percent over 
the 3 years in contrast to the growth in national 


income, adjusted for terms of trade loss, which only 
grew by little more than 25 percent. The imbalance was 
directly reflected in the deterioration of the balance of 
payments. Consequently, the propensity to import 
jumped markedly three times during the last 5 years 
as the economy sucked in more resources from abroad. 

The hardest challenge will be to avoid a balance 
of payments crisis that would further shake the 
confidence of foreign investors and citizens and could 
accelerate capital flight as well as limit Pakistan's 
access to the international capital markets. The 
rapid accumulation of foreign assets resulting from 
the quantitative jump in home remittances and 
the emergence of a current account surplus after 
September 11, 2001 (9/11) encouraged the government 
to resort to an expansionary monetary policy from 
2002-03 onwards. This policy was too easy for too long 
and led to a precipitous fall in interest rates which 
promoted the rapid growth of consumer financing. 
By 2004-05 there was evidence that the economy was 
beginning to overheat, as evidenced by the inflation 
rate jumping to over 9 percent, even in the absence of 
international inflation and rising commodity prices. 
Expansionary policies did succeed in reviving growth, 
but they put the economy on a highly inflationary 
path. After nearly 4 years of high single-digit inflation, 
inflationary expectations have become built into the 
behavior of economic agents, especially with regard to 
consumption and savings. Even stronger policy action 
is now required to counter these expectations. 

Superimposed over the history of inflation is the 
recent upsurge of oil and food prices. This gave rise 
to upward spiraling prices, even though full domestic 
adjustments to higher international prices have not yet 
been made. The inflation of food prices was running at 
20 percent in the first half of 2008. 


Fiscal policy began to reinforce monetary policy 
and added to inflationary pressures. On the surface, 
the actual deficits of 4.3 percent of GDP (including 
earthquake related spending) in 2005-06 and 2006- 
07 may not appear excessive. But the way they were 
financed triggered further strong monetary expansion. 
The government experienced difficulty since 2005-06 
in meeting the growing domestic borrowing amount 
from the market on longer-term Pakistan Investment 
Bonds (PIBs) without offering higher interest rates. It 
thus resorted to the low cost alternative of borrowing 
huge amounts from the State Bank of Pakistan 
(SBP), the central bank. This moderated the cost of 
government borrowing (thus helping to keep interest 
payments on domestic debt in the budget low), but it 
also contributed to higher rates of monetary expansion 
by creating excess liquidity in the banking system. 

Despite the measures taken to tighten monetary 
policy in 2006-07, broader money grew by over 19 
percent during the year, even somewhat higher than 
the average annual rate in the previous 3 years. During 
2007-08, the growth of the money supply was running 
at approximately 7 percent, but this was mainly due 
to a decline in foreign assets. Government borrowing 
from SBP during July-March was at the record level of 
almost 4.5 percent of the GDP. 

The SBP correctly tightened monetary policy in 
early 2008. The space in which the central bank can 
maneuver should be expanded by largely eliminating 
the sizable amount of government borrowing. 
Market borrowing by the government through the 
PIBs will help to identify the true cost of public debt 
service, improve the interest rate structure, and thus 
encouraging savings and reducing the supply of 
reserve capital. 


The major instrument of economic adjustment, 
however, must be fiscal policy. Fortunately, fiscal 
adjustment can take place in an environment much 
more favorable than in the 1990s when elected 
governments had little fiscal space because of the 
extraordinary burden of interest payments on public 
debt. Real public noninterest spending, which had 
shown no increase in the decade of the 1990s because 
of the growing burden of interest payments, expanded, 
adjusted for inflation by over 60 percent from 2004-07, 
and would show a further increase this year because of 
large subsidies for oil. 

The details of a desirable fiscal adjustment are 
discussed below. A strong fiscal adjustment and a 
tight monetary policy will send strong signals to the 
markets that Pakistan seriously intends to tackle the 
disequilibrium in its foreign transactions and avoid 
any disruptive change in the value of its currency or a 
flight of capital. 


Since independence, Pakistan's average annual 
growth rate has been less than 5 percent per annum, 
much below the 8-9 percent growth enjoyed by East 
Asian countries. Even in boom periods, average 
growth never exceeded 7 percent per annum. Pakistan 
has some fundamental demographic governance and 
growth problems that have kept it from joining the 
ranks of the Asian Tigers. These problems have deep 
roots, which include a high population growth rate; 
a low rate of savings, and consequently inadequate 
investment not only in human capital but also in 
infrastructure, industry, and agriculture; a weak 


industrial and export structure dominated by cotton 
based exports; an ambivalent attitude towards the 
private sector and the absence of liberal economic 
framework till the early 1990s; a level of defense 
spending that the country could ill afford; inability of 
the government to collect enough revenues; a major 
neglect of human development; an inability to develop 
viable democratic political institutions and effective 
governance structures resulting in over-centralized 
decisionmaking, weakening public institutions and rule 
of law, public corruption, and lack of accountability. 

These problems notwithstanding, there are several 
positive indications that could signal a better economic 
future for the country. They include changing 
demographics; liberalization, privatization and reform 
of the financial system; and increased confidence in the 
economy, which helped to energize the private sector 
and increased foreign investment flows for some time, 
all symbols of increasing economic efficiency. Greater 
depth in the capital market has enabled it to handle the 
recent economic crisis well. However, these positive 
trends will need to be reinforced, something which 
could have been done when the new government 
announced its budget proposals for the 2008-09 fiscal 
year. Unfortunately, this did not happen. 

There are still major problems that relate to the 
private sector development and public sector priorities. 
There is a crisis in the electricity sector. Insufficient 
investment in generation and distribution and 
inefficiencies not only increase the costs for the private 
sector by requiring alternative generating capacity, 
but also result in large losses for public entities, which 
are a significant drain on their resources. Government 
policy favors the traditional private sector industries, 
such as textiles, far too much. The medium and small 


industries, though faring better than before, are not 
getting the support they deserve. Also, large foreign 
investment flows are taking place in the areas that do not 
contribute directly to export development. Since export 
growth remains critical for Pakistan's development, an 
imbalanced pattern of foreign investment could prove 
costly in the long run. 

The poor in Pakistan continue to face markets, 
institutions, and local power structures that 
discriminate against their access to resources and 
public services and that impede their influence on 
governance decisions. Due to the unequal access to 
capital and land and labor markets, inequality and 
poverty are built into the structure of the growth 
process itself. On the basis of new estimates, statistics 
have been provided for the first time on the incidence 
of poverty from 2005 to 2008, with forward projections 
for the next 4 years. The evidence shows that after a 
decline in the poverty rate from 2000 to 2006, poverty 
levels have since increased neutralizing the earlier 
gains, as food inflation accelerated and GDP growth 
declined. For the Musharraf period as a whole (1999- 
2008), the percentage of population below the poverty 
line increased from 30 percent in 1998-99 to almost one- 
third currently, with an additional 16 million people 
being pushed into poverty during this period. The 
central policy lesson of the economic performance of 
the Musharraf regime is that poverty levels increased 
in spite of high GDP growth in later years because 
growth was heavily tilted in favor of the rich and high 
food inflation was not controlled. Recent analyses 
highlight the importance of controlling food inflation 
and at the same time bringing about the institutional 
changes necessary for pro-poor growth. 9 



If Pakistan is to get on to a sustainable development 
path, the government has to follow a different route. 
The main conclusion of this chapter is that growth, 
equity, and financial soundness must be pursued 
simultaneously. Listed below are some strategy 
changes that the government should take: 

• Make radical macroeconomic adjustments 
by eliminating energy and wheat subsidies, 
significant cutbacks, and a restructuring of 
public spending, which has grown sharply 
during the last 5 years. The government should 
make a determined effort to generalize tax 
revenue from the segments of the society whose 
taxation rates have been drastically cut and 
those who escape the tax net, while improving 
incentives for savings and discouraging luxury 

• Substantially expand the safety net for the poor 
by allocating significant resources, perhaps as 
much as rupees (Rs.) 50 billion, to minimize the 
impact of the elimination of the wheat subsidy 
and potential increases in food prices. 

• Make the expansion and diversification of 
exports a key tenet of any growth revival 
strategy with a special focus on agriculture 
and promising labor-intensive manufactured 
exports, based on geographical comparative 

• Strengthen devolution by shifting governance 
and expenditure from the center to provinces 
and from provinces to local governments. 


• Expand education at all levels, especially by 
improving the quality of public education 
and increasing the access by relatively poorer 
families to the privately run educational 

• Increase outlays for research and development, 
especially agricultural research in recognition of 
the fact that high growth in Pakistan will require 
a faster pace of productivity improvements and 
efficiency gains because low domestic savings 
remain a major constraint on investment. 

The economic and political costs of adjustment in 
terms of consumption restraint and popular support 
will be real but should not be exaggerated. The growth 
of GDP could decline to 5 percent per annum for a year 
or so but the combination of a necessary reduction in 
the current account balance of payments of at least 
2.5 percent of GDP and a significant cut in current 
government expenditures, would make moderate 
increases in real consumption of 0.5-1.0 percent per 
capita possible for most income groups. Considering 
that average private consumption per capita grew by 
well over 20 percent during the period 2003-07, the 
transition should be manageable, provided the burden 
of adjustment is equitably distributed. 

It needs to be emphasized that if the macroeconomic 
adjustments are simultaneously combined with 
measures that improve the fairness of policies, increase 
participation, and employ the people following the 
return to democracy, a temporary slow down in 
consumption growth might be publicly acceptable. 
Greater control over a somewhat smaller pie would be 
welcomed by the lower tiers of government because 
the pain of expenditure cuts would by balanced by 


gains in efficiency and a reorientation of priorities 
towards the poor. 

Policy changes necessary to achieve more 
sustainable and inclusive growth are elaborated below. 

Balance of Payments Adjustment. 

The current account deficit is so large and the 
need for curtailing it, as well as curbing speculative 
pressures on the exchange rate, is so urgent that fiscal 
and monetary policies would have to be strongly 
supported by trade, exchange rate, and foreign 
exchange reserve policies and confidence-building 
measures such as adopting a strong export orientation 
and clearly articulated external finance strategy. 

As mentioned above, the current account balance 
of payments deficit in 2007-08 was around 7.5 percent 
of GDP. This should be reduced to 5 percent of GDP in 
2008-09 and 4 percent in 2009-10. Pakistan can safely 
run an account balance of payments deficits of this latter 
magnitude provided export growth recovers to at least 
10 percent per annum, private transfers remain strong, 
and the supply of concessionary assistance ample. 
Equally important would be to limit the deficit to 4 
percent of GDP and bring the saving-investment gap 
(a measure of self reliance) to the 15-20 percent range 
from a record 33 percent imbalance likely recorded in 

The biggest contribution to reducing the saving- 
investment gap would be the early elimination of 
negative savings on the general government revenue 
account, which reemerged and became very sizable 
(3.5 percent of GDP) during 2007-08. Strengthening 
incentives for small savers by improving what are 
now negative returns on bank deposits and improving 


returns on government saving schemes should also 
help to curb consumption. 

Some restraints on imported consumer goods, 
especially luxury goods should also be considered 
through imposition of moderately higher tariffs, as 
was done in July 2008. Similarly, in reviewing defense 
expenditures, the postponement of foreign exchange 
intensive expenditures on weapon systems should be 
seriously considered. One proposal that merits serious 
consideration is the levy of a temporary regulatory 
import duty on all imports, excluding essential 
imports like food (wheat and edible oil); fertilizer; and 
petroleum, oil, and lubricant (POL) products, with a 
higher rate on luxury goods. 

The biggest challenge for short-term balance of 
payments management is to maintain and restore 
foreign exchange reserves to a level of around $15 
billion over the next few months while financing the 
substantial uncovered gap in financing. More adequate 
reserves are necessary to ward off the speculators 
in the liberal global framework in which Pakistan is 

With the recent downward trend in the value of the 
rupee (in the first 9 months of 2008, the rupee-dollar 
exchange rate fell by 25 percent to nearly 80 to a dollar), 
Pakistan's exchange rate does not need any significant 
once-and-for-all realignment. However, it is important 
to annunciate the policy that the real effective exchange 
rate will not be allowed to appreciate in the near future. 
In other words, the much higher rate of inflation in 
Pakistan compared to its competitors will be allowed to 
be reflected in the change in the nominal rate against a 
variety of currencies. Otherwise, the competitiveness of 
the country's exports would suffer, and import growth 
will be artificially stimulated. The approximately 6 


percent appreciation of the rupee between 2004-05 and 
2006-07 may be one factor explaining the slowdown in 
exports and continued rapid growth of imports. 

Pakistan cannot hope to solve its fundamental 
growth and balance of payments problems without 
making export development a centerpiece of its 
development strategy. Rapid export development 
helps to create jobs, raise wages, and meet the rising 
obligations of debt servicing and investment income 

The major elements in an export-focused strategy 
should be: 

• Strong national commitment at the highest 
political level. 

• Recognition that while textiles and clothing will 
remain a vital and expanding export sector, 
it cannot be the future engine of growth. The 
limits of government support for textiles have 
been reached, and the industry must learn to 
be competitive through investments in physical 
capital and skills. 

• Diversification deserves the highest priority, 
and manufactured goods other than textiles, 
clothing, and agricultural exports should lead 
the way and get the necessary government 
attention and support. 

• The role of the state can be crucial in the 
early stages of export diversification through 
aggressive targeting of markets and products, 
improving access, and speedily removing 
obstacles to trade. 

• Foreign direct investment should be especially 
encouraged in export fields. 


Pakistan also needs an external finance strategy 
and a framework for balance of payment management 
to complement the Fiscal Responsibility Law passed 
by the National Assembly in 2006 that put limits on 
public debt, fiscal deficits, and contingency liabilities. 
To avoid future balance of payments difficulties, the 
adoption of a few specific guidelines to implement a 
viable external finance strategy should be attempted. 
The first guideline should establish a ceiling of 20 
percent of total investment to be financed from foreign 
savings. A second guideline should place limits on 
total external debt and foreign investment obligations 
in relation to total foreign exchange earnings at the 
present level of 100-110 percent. Another guideline 
should define the balance between equity and debt 
financing at 2:1 to meet a given balance of payments 
Fiscal Adjustment. 

The objectives of fiscal policy must be to, first, 
stabilize the economy by reducing the size of the 
fiscal deficit and financing it to the extent possible by 
noninflationary sources. The resulting restraint on 
aggregate demand can also exercise a favorable impact 
on the external balance of payments. Second, fiscal 
policy must play a strong redistributive role and help 
in reducing the income disparities that have emerged 
between the rich and the poor and among various 
regions of the country in recent years. Third, the goal 
of fiscal policy should also be to sustain the rate of 
economic growth as much as possible. This would be 
achieved by generating resources for development 
and guiding the allocation of these resources towards 
agriculture and labor-intensive manufacturing with 


export potential and away from capital-intensive 
nontradable services in particular. 

The task of fiscal adjustment will require drastic 
changes in revenue and expenditures if the deficit is 
to be brought down to the sustainable level of about 4 
percent of the GDP. This would help avoid an increase 
in the public debt-to-GDP ratio and eliminate of any 
deficit on the revenue account, such borrowing should 
only be used to finance development projects. Fiscal 
deficit reduction from 8 percent of the GDP to 4 percent 
should be completed within 2 years if inflationary 
pressures are to be contained and there is to be less 
pressure on the external current account deficit. In 
2008-09, the target financial deficit must be brought 
down to 6 percent of the GDP and in 2009-10 to 4 
percent of the GDP, with development expenditure 
sustained at the minimum level of 4 percent of the 
GDP each year. This would imply a revenue deficit 
of about 2 percent of the GDP in 2008-09 which will 
be eliminated in 2009-10, allowing the economy to get 
back to a fiscally sustainable path consistent with the 
Fiscal Responsibility Debt Limitation (FRDL) Act of 

Beyond the concern with the size of the fiscal deficit 
is the issue of how the deficit is financed, especially 
with regards to the impact of inflation. During the 
next 2 years, in the period of fiscal adjustment, the 
government will have to operate strictly within the 
safe limits of deficit financing. Earlier studies reveal 
that the scope for "seignorage" in the Pakistan 
economy is about 1 to 1 1/2 percent of the GDP, 10 if 
a low single-digit rate of inflation is to be achieved. 
Other noninflationary sources of financing will have to 
be used. Up to 1 percent of the GDP can be mobilized 
from commercial banks through the market flotation 


of the PIBs of varying maturities. At this level, there 
should not be a significant crowding out of credit to 
the private sector. 

Beyond this, the biggest increase in borrowing 
will have to come from nonbank sources; the national 
savings schemes. In the face of large reductions in 
the rate of return on certificates, the net inflow has 
plummeted to only about half a percent of the GDP in 
recent years. This will have to be raised substantially 
to between 1 to 1 1/2 percent of GDP by linking the 
return to that of PIBs, with the expectation that the 
return will rise by 2 to 3 percentage points. In addition, 
an effort must be made to develop a secondary market 
for the PIBs. The offering of positive real rates of return 
on savings instruments should help in raising the rate 
of domestic savings and reducing the dependence on 
foreign savings. The residual deficit will have to be 
ameliorated by the continued resort to concessionary 
external assistance at the more or less unchanged level 
of about 2 percent of the GDP. 

The government's strategy should be focused on 
eliminating the revenue deficit in the next 2 years, while 
keeping the PSDP at about 4 percent of the GDP to 
avoid jeopardizing growth. A balanced and politically 
acceptable strategy will require the same effort to be 
directed at the containment of current expenditure 
and mobilization of resources. If the focus is only on 
the expenditure side, then this will severely limit the 
possibility of providing social protection to the poor, 
especially through an expanded program of food 
subsidies. On the other hand, if the deficit reduction 
strategy relies solely on additional taxation, then this 
could have adverse effects on investment and growth. 
Consequently, a balance is required. 


As highlighted above, noninterest current 
expenditure has risen rapidly since 1999-2000 by 
almost 2 percent of the GDP. The fiscal space that was 
available earlier has been largely taken up by rapidly 
increasing outlays on general administration, growing 
subsidies (especially to the power utilities), rising 
defense expenditure, and buoyant expenditure on 
services (particularly by the provincial governments). 
The bloated size of federal and provincial cabinets 
during the Musharraf period became symbols of 
extravagance by the government. The hiring of large 
number of consultants and retired officials on lucrative 
salaries with perks, the removal of recruitment bans, 
the import of large fleets of luxury vehicles, and the 
expensive foreign missions of dignitaries all became 
signs of systematic government excess. 

As a result, there is significant scope for reductions 
in current expenditure without adversely affecting the 
delivery of services . The new prime minister announced 
a reduction in the costs of running his secretariat by 40 
percent after taking office. This example of reduction 
in nonsalary expenditures should guide all federal 
and provincial governments and all semi-autonomous 
organizations and attached departments over the next 
2 years. This could yield up to 1 percent of the GDP or 
about Rs. 100 billion by the end of 2009-10. 

The large oil subsidy will have to be reduced 
gradually by the end of 2008, to yield a saving of 
about Rs. 100 billion. This is essential if demand for 
POL products is to be contained to maintain the oil 
import bill at a sustainable level. Of course, the impact 
on the poor can be limited by a lower increase in the 
price of products like kerosene oil, high speed diesel 
oil, and light diesel oil, and a greater increase in the 
price of gasoline, which is consumed mostly by upper 


income groups. If the oil price remains at about $100 
per barrel, then further adjustments in domestic prices 
are inevitable if the fiscal and current account deficits 
are to be contained. This will also release resources for 
supporting food programs for the poor and bolster 
social safety nets. 

The big disappointment in the area of public 
finances is that 4 years of continuously high growth 
did not lead to a rise in the tax-to-GDP ratio in the 
economy, which remained stagnant at between 10 to 
11 percent. This is despite the buoyancy of major tax 
bases, like value added in large-scale manufacturing 
and imports. The explanation for the failure of the 
tax-to-GDP ratio to rise lies in the decline in effective 
tax rates. Import tariffs have been brought down to a 
maximum of 25 percent. Concomitantly, this has also 
affected revenues from the sales tax on imports. Excise 
duties have been replaced by sales tax in a number 
of sectors, and the specific rates have not been fully 
indexed to inflation. 

The large decline in tax rates is from direct taxes. 
The maximum personal income tax rate was reduced 
from 30 percent to 20 percent for salaried tax payers 
and from 35 percent to 25 percent for the self- 
employed. Simultaneously, the corporate tax rate has 
been reduced from 45 percent to 35 percent for private 
companies and from 50 percent to 35 percent in the 
banking sector, at a time of sharply rising profitability. 

Major tax concessions and exemptions have been 
granted since 2000 starting with the abolition of the 
wealth tax. The most dramatic example is the continued 
tax exemption for capital gains at a time when massive 
unearned incomes were accruing to the relatively well- 
off due to the exceptional performance of the stock 
market in 2005-08 and rising property values. By the 


government's own estimate, as much as Rs. 112 billion 
in revenue were lost in 2006-07, almost 1.2 percent 
of GDP. The cost of other exemptions or concessions 
adds up to another Rs. 200 billion. This includes the 
cost of exemptions from import duty, income tax 
holiday and accelerated depreciation allowance, lack 
of coverage of sales tax on wholesale and retail trade, 
effective exemption of a large number of services 
from General Sales Tax (GST), and the effective zero 
rating of domestic sales of export-oriented sectors 
like textiles. If all these concessions and exemptions 
are accounted for, then the aggregate loss of revenue 
is roughly Rs. 300 billion. This is equivalent to over 3 
percent of the GDP and about one-third of the revenue 
actually collected. 

The provincial governments have also 
demonstrated little fiscal effort. Currently, provincial 
tax revenues aggregate to only half a percent of 
the GDP. The agricultural income tax, which was 
introduced in late 1996, has been languishing as a 
source of revenue despite the rising incomes of large 
farmers. Consequently, land taxes represent less than 
1 percent of agricultural incomes in the economy. 
The urban immovable property tax also remains 
underdeveloped, currently exploiting only one-fourth 
of its revenue potential. Despite the boom in real estate 
values, stamp duty revenues remained stagnant during 
the last 3 years, and a capital gains tax on property was 
not introduced. 

The elite has had unprecedented control of the state 
and granted itself large tax breaks during the last 8 
years. 11 There is no doubt that considerable slack exists 
in the tax system not only for significantly raising the 
tax-to-GDP ratio, but also for simultaneously achieving 
a measure of redistribution through the tax system to 


arrest the rising inequality between the rich and the 
poor in the country. 

A recent study by the Institute of Public 
Policy identified a series of taxation proposals for 
implementation by either the federal or provincial 
governments over the next 2 years with a potential 
yield of up to 2 percent of the GDP by 2009-10. 12 These 
include an excess profits tax, higher tax on private 
companies; introduction of a capital gains tax; a more 
progressive personal income tax; higher taxation 
on imports, especially luxury goods; a broad-based 
services tax; and development of provincial taxes. 

Overall, the proposals outlined above are oriented 
toward mobilization of revenues from direct taxes or 
from indirect taxes on goods and services consumed 
by upper income groups. Implementation of these 
proposals will make the tax system more progressive 
while improving public perception about a more 
equitable distribution of the tax burden. 


At this stage it would be useful to consider some 
structural weaknesses in the growth process and 
indicate how they could be overcome. The purpose 
is to understand how high rates of growth could be 
attained and sustained over time, while ensuring that 
the benefits are spread more widely. 

Sectoral Strategy. 

Sectors like banking, telecommunications, and 
automobiles, which were in the lead during the last 
5 years, will not keep the economy on a high growth 
track for very long. They will also not do enough for 


the poor. The number of jobs created by these sectors 
and the types of employment they generated did little 
to reduce the incidence of poverty, as demonstrated 
earlier. In addition, the pattern of growth widened 
interpersonal, interprovincial, and intraprovincial 
income disparities. Increases in such disparities usually 
lay the groundwork for social and political instability, a 
development Pakistan does not need at such a difficult 
period in its history. 

An increased focus on the basic commodity- 
producing sectors of the economy — agriculture and 
manufacturing— is needed. This change in sectoral 
focus will require actions from all three tiers of 
government— federal, provincial, and the local — as 
well as from the private sector. This raises the question: 
how could this be done? 


Pakistan has one of the best endowed agricultural 
sectors in the world. It has one of the world's largest 
contiguous irrigated areas; it has rich soil created by 
deposits made by rivers over thousands of years; it has 
hard working farmers who have shown their ability 
to absorb new technologies when presented with the 
opportunities to do so; and it now has rapidly growing 
internal and external markets for the products produced 
by high value added agriculture. While the agricultural 
system is entirely operated by the private sector, these 
operators are responsive to the incentives provided by 
the public sector. The public sector, therefore, has an 
important role to play. In this context, three aspects of 
public policy are particularly important. 

Among the more important ones are the price 
signals embedded in public policy. These have a 


profound impact on cropping patterns. The most 
important price signal the government provides is 
the wheat procurement price. Wheat is the country's 
most important crop. The anticipated income that 
farmers receive from cultivating wheat significantly 
affects what else they grow. The federal government 
should continue to handle the procurement price of 
wheat while monitoring the level and expected trends 
of international prices. The recent rise in world wheat 
prices represents a trend caused by the increase in 
demand for food grains in rapidly growing populat- 
ions such as China and India and the increasing return 
given for bio-fuel production by such large consumers 
of energy as the United States. The rise in the price of 
wheat has affected the prices of other food grains — 
commodity prices normally move in tandem — and 
has changed the sectoral terms of trade in favor of 
agriculture. The benefit of these should be passed 
on, to the maximum extent possible, to agricultural 
producers. 13 For that to happen, there should not be 
a large difference between the government's procure- 
ment price and the price in international markets. 
In the context of the need to make fiscal adjustment, 
an increase in the price of wheat will have to be 
mitigated by directly helping the poor through initia- 
tives such as the Baitul Maal (a Pakistani nongovern- 
mental organization) and Food for Work programs. 

The next important area for government promotion 
of agriculture is in improving the technological base. 
Here, Pakistan seriously has lagged behind. Very little 
research and development work gets carried out by 
the private sector, not surprising given the absence 
of large commercial operators. The little research that 
gets done is by the public sector, but it is too widely 
scattered among too many government departments 


and agencies to be effective and does not reach the 
farmers. The result is that Pakistan has developed 
gaps between average yields and yields obtained 
by the best farmers; between the best farmers and 
those obtained by research institutions; and between 
research institutions and those obtained by farmers 
in the large agricultural systems in other parts of the 
world. 14 The role of government must help to close the 
technology gaps. This can be done in two ways: (1) by 
focusing on the development of research in agricultural 
universities (an approach followed by the United 
States) and (2) by establishing crop or product specific 
research institutions (as is being done by China). At 
the same time, incentives should be provided to the 
private sector to encourage research and development. 

The third role of the state in promoting agriculture 
development is to provide the infrastructure the sector 
requires. Pakistan has inherited an elaborate irrigation 
system, and impressive improvements to this network 
were made as a part of the agreement with India 
on the distribution of the waters of the Indus River 
systems. But these were replacement works; they did 
not result in bringing much additional land under 
cultivation. 15 However, not enough attention was paid 
to maintaining this system and for improving it to 
preserve water. In recent years, the Punjab and Sindh 
governments, encouraged by the World Bank, have 
begun to devote sizeable resources to maintenance. 

Punjab, in particular, has gone further by producing 
a fairly elaborate system of information available on the 
internet that can be used to monitor the flow of water. 
This information is available to both users of water as 
well as those who manage the system. As the provinces 
strengthen their capacity to get engaged in economic 
development, it is important that irrigation system 


maintenance and efficiency improvements are high 
government priorities. The resources being committed 
to it by the public sector should be protected during 
the period of adjustment as discussed above. 

Livestock husbandry has become an increasingly 
important part of the agricultural sector, and the 
modernization of livestock markets need to be 
promoted. The sector contributes almost 50 percent 
of agriculture's gross output, which translates into 
a contribution of over 10 percent of the GDP. It 
engages 35 million people in the rural economy and 
provides almost 40 percent of the total income of the 
farming community. The sector is dominated by small 
operators; those owning less than two animals account 
for slightly more than two-fifths of the total population 
of cattle and buffaloes. As in the case with the crop 
sector, yields are low. The government estimates the 
yield gap — outputs of the current livestock population 
compared with the output obtained in more developed 
systems — at between 60 to 80 percent. The reason for 
low productivity has been identified as inadequate and 
poor quality feed and fodder, limited animal health 
coverage, widespread breeding of genetically inferior 
livestock, poor marketing infrastructure, shortage of 
trained manpower, inadequate incentives for small 
producers, and a lack of extension services. 

Improving yields in the livestock sector would 
make a significant contribution to increasing value 
added in agriculture. It would also have the profound 
impact of reducing the incidence of poverty in the 
countryside. A strategy aimed at achieving this 
objective should provide better education and training 
to the people engaged in work with livestock and 
better health coverage for animals. For the quality of 
food and fodder to be improved, the flow of credit to 


livestock owners also needs to be increased. At this 
time, 90 percent of bank lending to agriculture goes to 
the crop sector, with the livestock sector receiving 10 
percent. The proportion going to the latter needs to be 
raised to better reflect its value added. 


The other objective of the strategy for developing 
the real sectors of the economy is to encourage the 
growth, modernization of, and exports from small 
and medium-sized enterprises. Numbering some 3.2 
million, these enterprises follow a long tradition of 
entrepreneurship and craftsmanship, particularly in 
the provinces of Punjab and the Northwest Frontier 
Province (NWFP). The sector represents almost 30 
percent of the manufacturing output, over 5 percent 
of GDP and 20 percent of nonfarm rural employment. 
An industrial policy aimed at the development of this 
sector would also have three components. 

The first is the identification of subsectors and 
enterprises within these subsectors that will receive 
government assistance. Not only should the chosen 
enterprises receive subsidies, but they should also be 
exposed to the opportunities available in the rapidly 
evolving global systems of production and trade. 
The second is the facilitation and development of the 
chosen sectors. The third is to help the chosen sectors 
with financial support. While the second component of 
the strategy is in the mandate of the Small and Medium 
Enterprises Development Authority (SMEDA), a 
federal corporation established in 1998 to promote the 
development of the long neglected industries — the 
first and the third components have not engaged the 
state. This needs to be remedied. 


Underscoring the need to make additional financing 
available to the SME sector, it is important to note that 
the government should not provide the subsidized 
credit, neither should it direct the banking system 
to finance these enterprises. What is needed is the 
introduction of relatively new instruments of finance 
into the sector. These include private equity and 
venture capital funds that share risks with the owner- 
entrepreneurs in which they invest while expecting 
high returns for themselves. Making these finance 
instruments available to the SME sector would help to 
liberate the generations of untapped capital potential 
in small enterprises, while examining the country's 
underdeveloped capital markets. 

Human Resource Development. 

The priority areas to be addressed by public 
policy change will only produce the desired results 
if the quality of the human resources available in the 
economy is improved. Concentrating on developing 
human resources would mean placing focus on at least 
four areas of public policy. These are improvements 
in primary and secondary education, increasing 
literacy rates for women, providing modern skills to a 
large proportion of the country's youth, and creating 
synergies between the research and development 
of the various sectors of the economy. After years of 
experience with using human resource development 
as an important contributor to growth, practitioners 
have realized that they need to promote not only 
universal primary education but also getting children 
to stay in school for at least 8 to 10 years. It is only 
then that children are prepared to enter institutions 
of higher learning or to make a contribution to the 


economy by entering the work force. Past emphasis 
has mostly been on primary education. Such was 
the case in the World Bank-sponsored Social Action 
Program (SAP), which was implemented in Pakistan in 
the early 1990s. While the program increased the rate 
of enrollment in primary schools, it had a negligible 
impact on improving the country's human resources. 
The failure of SAP to achieve its promised results was 
because of institutional failure at the level of weak 
education departments in the provinces, which were 
unable to efficiently absorb the resources that were 
made available to them. Development experts have 
reached the conclusion that pupils need much more 
than 5 years of schooling to change behavior and to 
prepare themselves for the modern sectors of the 
economy. As a result, priorities must be shifted more 
towards secondary education. 

The provinces will have to play a key role in 
promoting agricultural development and SMEs. For 
this, they will need more authority. With greater 
economic authority, the provincial governments will 
be in the position to lend strategic coherence to their 
development programs. Their focus should be oriented 
towards building analytical and planning capacity, 
establishing a stronger relationship with the private 
sector, and emphasizing opportunities that could 
emerge from favorable international developments. 

Poverty Programs. 

While the implementation of an inclusive growth 
strategy of the type described above will strengthen 
the process of poverty reduction in the medium term, 
there is need to ensure that the aggregate demand 
management of the economy and the withdrawal 


of subsidies does not lead to a sharp rise in poverty. 
Strong social safety nets will have to be put in place to 
ensure that there is adjustment with a human face. In 
particular, food security for the poor will have to be 
protected to avoid a reduction in nutrition levels. This 
can best be achieved by a combination of cash transfers 
and employment guarantees. Hitherto, the subsidized 
sale of food items through the utility stores has been 
fraught with problems of limited coverage, especially 
in the rural areas, and ineffective targeting. 

The cash transfer scheme will primarily benefit 
more vulnerable groups such as the disabled, the 
elderly, female-headed households, and widows. 
The employment guarantee program can provide 
an opportunity for able-bodied workers to earn an 
income, especially in the off-peak season. 

In his 100-day plan, the new Prime Minister 
announced the intention of his government to 
launch an employment guarantee program in the 
underdeveloped districts of the country. Baitul Mai 
already runs a cash supplement scheme for food 
support, which can be scaled up to cover a larger 
proportion of poor households. 

In 2006, India was the first country in the world 
to introduce a national rural employment guarantee 
program, based on the experience gained in one state, 
Maharashtra. The program is being run in over 40 
percent of the districts with the help of Panchayati 
Raj (local communal assemblies) institutions. It is 
estimated that at full coverage, the program could 
cost up to 2 percent of India's GDP. A similar program 
should be tested in a few of Pakistan's poorest districts. 
It would also be appropriate to give this program the 
characteristics of a food for work initiative, so that 
the poor workers are automatically protected against 


An ideal cash transfer program should be based 
on the identification of the poor beneficiaries by the 
lowest tier of local governments, the Union Councils. 
Efforts must be made to reduce the transaction costs 
and program inefficiencies. Initially, Baitul Mai would 
be given funds to at least double the coverage of the 
program to about three million households, with cash 
support per household of about Rs. 1,000 per month. 
It is expected that the total cost of running the two 
programs for protecting the poor will be in the vicinity 
of Rs. 50 billion, and implementation of these programs 
must proceed on a priority basis. 

Over and above the sectoral strategies and strategies 
aimed at alleviating poverty, the government, as 
discussed above, will also have to use other policy 
instruments to encourage and promote growth. 
One such instrument is fiscal policy. It is vital that 
in the process of fiscal adjustment that the level of 
development expenditure does not fall sharply as 
happened in the earlier years of this decade. Not only 
will the size of PSDP have to be sustained at a minimum 
of 4 percent of GDP until 2009-10, but there will also 
have to be a more strategic and rational allocation 
of development funds to projects. Clearly, public 
investment in the water and agricultural sectors and in 
power generation will have to receive higher priority, 
along with larger allocations for the development of 
the poorer and more isolated areas of the country. 
There will be a need for a moratorium on new projects 
except in the priority sectors. 

In addition, fiscal policy will have to be selectively 
used to incentivize the agricultural and manufacturing 
sectors as follows: 

a. The general sales tax introduced on fertilizer and 
pesticides needs to be withdrawn so as to improve the 


ratio of output to input prices and thereby stimulate 
agricultural production. 

b. Power load shedding has adversely and 
significantly impacted production, especially in the 
industrial sector. As such, a tax credit (chargeable 
against all tax liabilities) should be made available 
to manufacturing enterprises on the capital cost of 
captive power generation or energy-saving equipment. 
A similar tax credit can be offered on investments in 
renewable energy. 

c. In order to stimulate nontraditional exports, 
the presumptive income tax on such exports should 
be withdrawn and the research and development 
allowance be made available to all exports. 

It is expected that these measures will not cost the 
exchequer more than a quarter of a percent of the GDP 
or Rs. 25 billion, but could play a significant role in 
raising production and export rates of the commodity 
producing sectors and reduce the energy deficit in the 

Reducing Regional Disparities. 

Fiscal federalism will play a key role in addressing 
the issue of regional disparities. There is the need to 
ensure that the pattern of intergovernmental fiscal 
relations evolves in such a way that recognizes the 
need for more support to the more underdeveloped 
provinces. There is a constitutional requirement that 
the National Finance Commission (NFC), representing 
the federal government and the four provinces, be 
established every 5 years and should issue an award 
to resolve two problems. It must first address the 
vertical imbalance in resources between the federal 


government and the four provincial governments 
combined and then secondly, the horizontal imbalance 
among the provincial governments. 

Over the last 7 years since 2002, the NFC has failed 
to arrive at a consensus on a new award to replace the 
one given in 1997. 16 Consequently, President Musharraf 
promulgated an interim arrangement for transfers that 
came into effect in 2006-07. With respect to the 1997 
award, there are two significant changes. First, the 
share of revenues provided to the provinces from the 
divisible pool of revenues has been increased from 
37.5 percent to 41.5 percent in 2006-07, rising to 46.25 
percent by 2010-11, and second, these benefits have 
now been extended to all four provinces on the basis of 
predetermined shares, whereas in 1997 they were given 
to NWFP and Balochistan. Overall, it is expected that 
revenue transfers from the divisible pool and grants- 
in-aid will constitute 50 percent of the revenues in the 
divisible pool by 2010-11. The sharing of revenues in 
the divisible pool on the basis of population and the 
coverage of straight transfers remains unchanged. 17 

The basic issue is whether over the last 7 years fiscal 
transfers have been adequate and if the goal of fiscal 
equalization has been achieved, and the two smaller 
and less developed provinces, NWFP and Balochistan, 
have received higher transfers on a per capita basis. 
Incidentally, in the Pakistani context, straight transfers 
have historically been performing an equalization 
function. The NWFP has access to hydroelectricity 
profits and Balochistan has revenue from natural gas, 
which raise per capita transfers significantly. 

A review of the four provincial budgets reveals 
that transfers have probably been high enough to 
support an increase in their combined share of public 
expenditure. But a more in-depth analysis reveals that 


provincial expenditures have risen because of greater 
resort to borrowing, which is now financing as much 
as two-thirds of development expenditure. Also, the 
share of total transfers to provincial governments 
in federal revenues (tax plus nontax) has remained 
virtually unchanged at 35 percent over the last 7 years. 

What has been happening to fiscal equalization? 
The overall growth in per capita transfers of all types 
to the provinces from 2000-01 to 2006-07 has been 
144 percent for Sindh, 106 percent for NWFP, 103 
percent for Punjab, and 75 percent for Balochistan. 
It appears that the process of fiscal equalization has 
largely broken down with the highest growth in 
transfers going to the most developed province, Sindh, 
and the lowest growth in transfers going to the least 
developed province, Balochistan. Today, the level of 
transfers per capita to Sindh is higher than to NWFP, 
while Balochistan is unable to meet even its current 
expenditure obligations. 

Over the last 7 years, a review of the process of 
intergovernmental relations reveals the emergence 
of serious imbalances. This has been one factor 
contributing to faster growth of the economies of Sindh 
and Punjab as compared to Balochistan and NWFP. 
Clearly, there are justifiable reasons why the smaller 
provinces are dissatisfied with the workings of the 
federation during the tenure of the last government. 

Now that elected coalition governments are in place 
in Islamabad, and at least three provincial capitals 
are led by the Pakistan People's Party (PPP), there is 
urgent need to arrive at an early consensus award that 
ensures the following: 

1. Further expansion in transfers from the divisible 
pool to cover the emerging sizeable deficits of the 
provinces with the understanding that they will 


henceforth face tighter budget constraints with only 
limited access to borrowings. Provision will also have 
to be made for higher transfers to cover the costs of 
taking on more functions by the provinces, as required 
by the constitution. 

2. Adoption of multiple criteria for the determination 
of transfers from the divisible pool to ensure more fiscal 
equalization. The collection criteria could also be given 
some, albeit small, weight. Punjab should be willing 
to support this plan since the collection rate from the 
province of apportionable taxes (all taxes, excluding 
taxes on imports) has approached its population share. 

3. Higher grants-in-aid to be made to the more 
underdeveloped provinces (NWFP and Balochistan). 

4. Review of the formula for determination of 
hydroelectricity profits to NWFP, a long standing 
demand of the province. 

There is no doubt that the transition from an ad hoc 
award by the President to a consensus-based NFC 
award will be a major step forward in strengthening 
the federation and be a key indicator of the success of 
the newly elected governments. 

Decentralizing Governance. 

One of the more important elements of the strategy 
developed in this chapter is to give greater operational 
space to the provinces and to the institutions of local 
government. The new Prime Minister Yousaf Raza 
Gillani made an encouraging start in his initial speech 
before the newly elected parliament, saying that his 
administration will, within 1 year, transfer all the 
subjects listed in the constitution's concurrent list. A 
great deal of work at the two upper tiers of government 


will be required for this to be effectively and efficiently 
done within the current governance structure. This 
effort should lead to a reduction in consolidated current 
expenditure by eliminating the duplication of coverage 
by the government at the federal and provincial levels. 
In building their own capacity to handle the transferred 
subjects, the provincial government should place 
emphasis on the quality rather than the quantity of the 
staff they employ. 

While the decentralization of a significant 
amount of economic responsibility from the federal 
government to the provinces would be an important 
part of the strategy for promoting inclusive growth, 
it is equally important to continue with the process 
of devolution to the institutions of local government. 
A new system established in 2001 is in place and 
should be continued. However, Pakistan has not been 
able to develop a viable system of local government 
because of the continuous experimentation that it 
has undergone since its independence. Five different 
systems have been tried in the past. Now, the need is to 
further develop the existing system rather than create 
something new from scratch. That said, a number 
of reforms are needed. The new Prime Minister said 
that his government will reform the local government 
system after evaluating how it has performed since 
2001. The areas where the structure needs to evolve 
include the direct election of the nazims (indirectly 
elected managers in the system) to make them more 
accountable to the people. Governance related services 
such as law and order should be decentralized, perhaps 
initially on a trial basis, with responsibility resting 
with the nazims. District service cadres should also be 


Budget 2008-09: A Lost Opportunity. 

This is a good time for Pakistan's new rulers to make 
some decisions that will not only heal the economy 
but also change some of its structures. Policymakers 
respond in two different ways to serious economic 
crises. Those who are bold use the opportunity to 
deal with the causes behind the crises since most of 
the time crises are produced by structural flaws in the 
economic system. They correctly assume that it is best 
to identify the flaws and remove them from the system 
and prevent problems from recurring. Those who are 
less bold implement temporary measures and hope 
that the underlying problems will not reappear. 

Pakistan's policymakers have usually opted for the 
second approach, preferring short-term fixes rather 
than deep structural changes. Not surprisingly, the 
result was a recurrence of crises produced by the same 
fault lines in the economy. Of the many structural 
problems faced by Pakistan for the past 60 years, two 
have been particularly important. The first is poor 
human development; the second is a low domestic 
savings rate that did not yield enough resources for 
the economy to invest. If the economy is to grow at 
7 to 8 percent a year — a rate of growth sustained by 
a number of economies in Asia — it must invest close 
to 30 percent of the GDP. Pakistan has a domestic 
savings rate of only 22 percent, which can only support 
a growth rate of less than 6 percent, perhaps no more 
than 5.5 percent a year. 

The country has done well when domestic resources 
were augmented by foreign capital flows. The reliance 
on external savings is not a wise policy to follow 
since foreign investment is unreliable. On a number 
of occasions, foreigners have reduced the amount of 


money they were providing the country. Each time 
that happened, the amount invested and hence the 
rate of GDP growth declined. If Pakistan is to stop the 
volatility of GDP growth, it must increase the amount 
of resources generated from within the economy. 

Domestic savings come in three forms — savings 
by the government, those by the corporate sector, 
and those by individual households. Public policy 
influences all three, especially government savings 
(or dissavings), and this is where budgets become 
particularly important. 

Ever since the state stopped playing a dominant 
role in the economy — as happened during the period 
of President Pervez Musharraf— the available policy 
instruments used to affect the economy have been 
reduced to basically two, the fiscal and monetary 
policies. Whereas the monetary policy is controlled by 
the SBP, the country's central bank, the fiscal policy 
is the responsibility of the Ministry of Finance. The 
SBP can change the monetary stance at any time; the 
Ministry of Finance usually alters the fiscal policy 
only once a year when it announces the budget for the 
year that follows. This is one reason why the budget 
receives so much public attention. (See Table 6.) 













































































































Source: Pakistan Economic Survey 2006-07 and my estimates using the budget proposals announced on 
June 11, 2008. 

Table 6. Government Revenues and Expenditures 
(Percent of GDP). 

The budget for the financial year 2008-09, 
announced by the Finance Minister on June 11, 2008, 
is a particularly important policy statement for two 
additional reasons. First, it is the first major policy 
statement that assumed power following the elections 
of February 2008. Second, it comes at an exceptionally 
difficult time for the economy. After a 6-year period of 
relative calm, the economy has become sluggish and 
unbalanced. This is evident on three fronts — inflation, 
fiscal deficit, and balance of payments deficit. The 
budget can influence all of them. Before examining the 
policy embedded in this budget, it would be useful to 
look at the way the fiscal deficit has evolved over the 
last several years. 

Fiscal deficit is the difference between government's 
revenue and expenditure. Government's revenues 
come in two forms, tax and nontax. Expenditures also 
come in two forms, current and development. The data 
provided Table 6 show some interesting trends over 
the last decade. The government of President Pervez 


Musharraf inherited a difficult fiscal situation in 1999. 
In the 2 previous years, the fiscal deficit had averaged 
7 percent of the GDP; 2 percentage points higher than 
what experts consider to be the sustainable level for 
Pakistan. While government revenues were reasonably 
high— about 16 percent of GDP — expenditures 
were even higher. The difference was in the order 
of 7 percent mostly because of current expenditures. 
Nondevelopment expenditure was close to 20 percent 
of GDP. It was clear to the new policymakers who took 
office after General Pervez Musharraf intervened that 
major adjustments had to be made to restore economic 
balance. They went to the IMF for assistance and 
received the advice that significant adjustments had to 
be made. 

This was done over a 3-year period by putting 
the lid on current expenditures, which declined to an 
average of 16 percent a year, a reduction of nearly 4 
percentage points compared to the levels reached in 
the late 1990s. The most significant reductions were 
obtained by constraining government employment 
and putting a cap on government salaries. Further 
reductions in nondevelopment expenditures became 
possible after 9/11 when, led by the United States, the 
donor community reduced the country's outstanding 
debt by a significant amount. This lowered the interest 
payments Islamabad paid to its creditors. 

These adjustments, while reducing the fiscal deficit, 
also made it possible for the Musharraf administration 
to increase development expenditure. In the last 3 years 
of the Musharraf period, development expenditure 
increased to an average 4.5 percent of GDP. This was 
1 percentage point higher than in the late 1990s and 
almost double the share in the first 3 years of the 
Musharraf period. 


The policymakers faced the same type of challenges 
while preparing the budget for 2008-09 that confronted 
the Musharraf government in 1999. The fiscal deficit 
and the balance of payments deficit in terms of the 
proportion of GDP had reached unsustainable levels. 
Adjustments needed to be made to reduce the fiscal 
deficit by raising taxes and constraining government 
expenditure. Islamabad also had to deal with the 
pressure on lower income groups as a result of the 
increase in the prices of food and fuel. However, in 
preparing their proposals and presenting them to the 
National Assembly, the policymakers opted for the 
approach adopted by their predecessors: they did 
not attempt to bring about structural changes in the 
economy, preferring to tinker at the margin. That said, 
there were some attractive features in the budget. 

An attempt was made to help the poor by creating 
a new fund to provide them with cash transfers. On 
the revenue generation side, some rates were adjusted 
to increase the burden on the rich. Some luxury items 
will cost more, and the higher income groups will pay 
more for some of the services they use, such as cash 
withdrawals from the banking system. These changes 
will help to raise some additional tax revenues for 
the government. I have calculated the impact of these 
proposals on government revenues and expenditures 
and the size of the fiscal deficit. These calculations are 
shown in Table 6. They are more reasonable than the 
estimates provided in the budget. 

The budget proposals may also reduce conspicuous 
consumption by the rich. The changes, however, will 
be marginal and will not make much of a difference 
to one of the most important structural weaknesses 
in the economy: dependence on external flows for a 
significant proportion of gross investment. 


What could the policymakers have done to deal 
with the structural problems that continue to affect 
economic performance? Those who made the budget 
could have taken four additional measures. One, they 
could have created fiscal space for the provinces, 
thus creating the opportunity to both raise additional 
government revenues and grant greater provincial 
control over public expenditure. This could have laid 
the basis for increasing domestic resources by bringing 
government closer to the people. Two, they could have 
significantly reduced current government expenditure 
by eliminating some of the functions it should devolve 
to the provinces. Three, they could have provided 
for public works programs for employment-creating 
opportunities for the poor in both rural and urban 
areas. And four, they could have further rationalized 
the tariff structure by levying regulatory duties on 
imports that feed consumption by the rich without 
doing much to increase investment in the economy. 
A quick glance at the budget gives the impression of 
a glass half full; it could have been filled a bit more 
to address the problems that continue to produce 
recurrent crises in the economy, but the policymakers 
chose not to follow that route. 


Will the new government be able to address the many 
economic problems facing the country? This will need 
political resolve as well as careful planning. A small 
step in that direction was taken by the appointment of 
a panel of experts to assist the Planning Commission 
to come up with a program of change and reform. The 
panel is made up of the best economists available, and 
they should be able to recommend a program that 


focuses on structural reform. The fact that the Planning 
Commission has taken that step suggests that the new 
government is empowering the organization that was 
created for this purpose more than half a century ago. 
The Commission was overshadowed by the Ministry 
of Finance during the Musharraf period because the 
man who headed the ministry did not have the self- 
confidence to ask for advice. During his tenure, 
economic policymaking became ad hoc, subject to 
personal whims and pressures exerted by powerful 
groups of lobbyists. 

What should the panel focus on in attempting 
to develop a program? It must aim to achieve three 
goals. First, it must convince those interested in the 
economy that the country is serious about reform and 
development. Two, it must devise a plan to rescue the 
country from the economic meltdown it is currently 
experiencing. Three, it must put the economy on a 
trajectory of growth that is not only sustainable but 
would increase national income at a rate comparable 
to that of other large Asian economies. A high rate of 
economic growth is needed to provide employment 
to those seeking work, bringing women into the work 
force, and reducing interpersonal and interregional 
income disparities. 

It always helps to focus on the positive when 
thought is being given to the development of a 
medium-term growth strategy. All the talk about 
current economic stress has diverted attention away 
from what are the positive features of the Pakistani 
economy. I would like to mention at least three of 
these. First is the agriculture sector, long neglected 
by the federal government's policies in favor of some 
other parts of the economy. I have held the view for 
a long time that Pakistan's policymakers should give 


a very high priority to agriculture. The sector should 
lead the rest of the economy, provide jobs in both rural 
and urban areas, and increase exports. The second 
advantage resides in the country's large population 
that should be educated and trained to become an 
asset rather than a burden for the economy. The third 
is Pakistan's location in the middle of the most rapidly 
growing parts of the global economy. 


1. Shahid Javed Burki, "Time for Donors to Assist," Dawn, 
July 22, 2008. 

2. Among the recent books on Pakistan's economic history, 
the most useful are Shahid Javed Burki, Changing Perceptions, 
Altered Reality, Pakistan's Economy under Musharraf, 1999-2006, 
Karachi, Pakistan: Oxford University Press, 2007; S. Akbar 
Zaidi, Issues in Pakistan's Economy, 2nd edition, Karachi, Pakistan: 
Oxford University Press; and Pervez Hasan, Pakistan's Economy at 
Crossroads, Karachi, Pakistan: Oxford University Press, 1998. 

3. President Ayub Khan provided a detailed background of 
the relationship that was developed with the United States during 
his tenure in office in his autobiography. See Mohammad Ayub 
Khan, Friends, not Masters: A Political Autobiography, London, UK: 
Oxford University Press, 1967. 

4. The most detailed account of the way this relationship was 
built is in Steve Coll, Ghost Wars: The Secret History of the CIA, 
Afghanistan, and Bin Laden, from the Soviet Invasion to September 10, 
2001, New York, The Penguin Press, 2004. Also see George Crile, 
Charlie Wilson's War: The Extraordinary Story of the Largest Covert 
Operation in History, New York, Atlantic Monthly Press, 2003. 

5. Once again the most detailed account of this relationship is 
from the head of the Pakistani state during this period. See Pervez 
Musharraf, In the Line of Fire: A Biography, New York, Free Press, 


6. For a recent story of the way the discipline of economics has 
developed, see David Warsh, Knowledge and ike Wealth of Nations: 
A Story of Economic Discovery, New York, W. W. Norton, 2006. 

7. This part of the report draws upon the first annual report 
published by the Institute of Public Policy, Lahore, Pakistan, 
headed by the author of this chapter. The report was written 
by a group of six economists that included Sartaj Aziz, Shahid 
Javed Burki, Aisha Ghaus-Pasha, Pervez Hasan, Akmal Hussain, 
and Hafiz Ahmed Pasha. See State of the Economy: Challenges and 
Opportunities, Lahore, Pakistan: Institute of Public Policy, 2008. 

8. There was intense debate in the country about the incidence 
of poverty. While the government claimed that the incidence 
declined by 10 percentage points during the last 4 years of the 
Musharraf regime from about 35 percent to 25 percent (see 
Government of Pakistan, Pakistan Economic Survey, 2006-07, 
Islamabad, Pakistan: Finance Division, 2007). Some independent 
analysts thought that the decline was considerably more modest. 
See Akmal Hussain, "A policy for Pro-Poor Growth," presented at 
the seminar Pro-Poor Growth Strategies sponsored by the UNDP 
and Pakistan Institute of Development Economics, Islamabad, 
Pakistan, March 17, 2003. 

9. State of the Economy. 

10. Hafiz Pasha and Aisha Ghaus-Pasha, Growth of Public Debt 
and Debt Servicing in Pakistan, Research Report, No. 17, Karachi, 
Pakistan: Social Policy and Research Center, 1997. 

11. This is not a new development. In fact, it was the subject of 
a book length study by Ishrat Hussain while he was at the World 
Bank. Hussain was an important player in the team assembled 
by President Pervez Musharraf to manage the economy. He was 
Governor of the State Bank of Pakistan, the country's central bank, 
from 1999 to 2005. See Ishrat Hussain, Pakistan: The Economy of an 
Elitist State, Karachi, Pakistan: Oxford University Press, 1999. 

12. State of the Economy. 


13. This theme was developed by the author in a series 
of articles written for Dawn, Pakistan's largest selling English 
language newspaper. See Shahid Javed Burki, "Agriculture: A 
Shift in Paradigm," Dawn, June 9, 2008; and "Agriculture: Public 
Policy Options," Dawn, June 23, 2008. 

14. For a discussion of the problems in agricultural research, 
see Punjab Economic Report, 2007, Lahore, Pakistan: Government 
of Punjab, 2007. 

15. For a discussion of the Indus Water Treaty, see Aloys A. 
Michel, The Indus River, New Haven, CT: Yale University Press, 

16. The award was given by the NFC that I headed as Minister 
of Finance in the caretaker government that was in office from 
November 1996 to February 1997. 

17. The new government constituted a new Finance 
Commission in May 2008. 






S. Akbar Zaidi 

This chapter was originally meant as a comment on 
Chapter 4 of this book by Shahid Javed Burki, "Paki- 
stan's Economy: Its Performance, Present Situation, 
and Prospects." However, given the very detailed and 
comprehensive nature of Mr Burki' s arguments, I find 
myself with few disagreements, if any at all. Mr Burki 
has laid down a substantive manifesto and policy 
document with which few economists would disagree. 
Consequestly, my chapter, refers to Mr. Burki's as 
needed, but does not repeat any of his arguments, or 
the large amount of his data and facts with which I 
agree. My chapter builds on Mr Burki's thesis by raising 
issues that he did not discuss, although he has written 
about many of them quite extensively in the past. Both 
chapters should be seen as complementing each other 
rather than as responses or critiques and should be read 
in tandem. Where Mr. Burki's chapter provides ample 
economic data and analysis, my chapter enhances the 
debate by building on its economic base through the 
use of a political-economy perspective. While many 
of Mr. Burki's economic interventions are logical, 
appropriate, and timely, many will be confronted by 
vested and institutional interests that hamper any 
attempt to implement these urgently needed reforms 
that he proposes. Moreover, I argue that unless some 
key political issues, no matter how symbolic they may 
appear to be, are resolved, much of the substantive part 


of the economic policy will remain unimplemented, 
and the economic meltdown will become far worse, 
perhaps even threatening the democratic transition 
currently underway in Pakistan. 

The Structural Transformations of Pakistan's 
Economy and Social Structure. 

Mr. Burki presents a number of key structural 
factors that have affected Pakistan's economy over the 
last 60 years and demonstrates how these shifts are 
affecting economic and social structures. In this section, 
I add a number of other factors that have changed over 
time and are going to affect how Pakistan's economy, 
its social sector, and politics respond to such dynamic 

Perhaps the most important factor that has 
undergone substantial change and transformation, as 
Mr. Burki has also pointed out in his chapter, one that, 
sadly, many other Pakistani social scientists still do 
not comprehend, is that Pakistan is neither a so-called 
feudal, agricultural, rural, or even traditional society or 
economy. Only those social scientists who write their 
chapters on anecdotal evidence still talk of Pakistan 
as being feudal. Even a cursory examination of any 
kind of economic data suggests that this is not so. With 
the agricultural share of the gross domestic product 
(GDP) falling drastically from 26 percent in 2000 to 20 
percent in 2007, agriculture has lost its predominance 
in the economy. The share of agricultural labor has 
also fallen from more than half of the total in 1990 to 
43 percent today, and land tenure relationships and 
landholdings have changed markedly. In terms of 
social values and behavior, many analysts still refer to 
them as feudal, perhaps authoritarian, discriminatory, 


or undemocratic. However, these adjectives describe 
the nature of social relations between people, values, 
and behavior in many highly developed countries as 
well. Therefore, if we are to understand social change 
and transformation, it is critical that we look beyond 
stereotypes, which will only limit our ability to observe 
and understand. 

This is particularly so with regard to stereotypes 
such as Pakistan is an agrarian economy, and the view 
that Pakistan is largely rural. Raza Ali's extraordinary 
research on the 1998 Census 1 clearly showed that 
Pakistan was an urban country with perhaps 50-55 
percent of the population living in settlements that by 
no stretch of the imagination could be called rural. A 
decade later, the forthcoming census will most certainly 
help us define the present social and economic relations 
of exchange and production and will reveal an even 
larger urban population. Moreover, with the increasing 
prevalence of communications technology of all sorts 
such as phones, electricity, roads, and other social 
services that are easily accessible, if not available, to 
so-called rural dwellers, the arbitrary binaries between 
urban and rural begin to fade. While much data can 
be shown to emphasize this point, the simple fact is 
that of the one million mobile phones added to the 81 
million in service in Pakistan every month, the large 
majority are rural users, or those outside the geography 
that is administratively defined as urban. Pakistan is 
increasingly, if not now predominantly, urban, which 
engenders far more possibilities and opportunities to 
build on its economic and social structures. However, 
one must also recognize that there is the possibility that 
unless this urban transition is adequately managed, it 
could implode. 


A particularly interesting consequence of this 
demographic change is how it affects Islamic political 
parties. Results from the most recent election— 
probably the fairest in Pakistan's history — show that 
for the most part, electoral Islam has been reduced to 
being primarily a rural phenomenon, Islamic political 
parties won largely in rural areas — from Balochistan 
and the Northwest frontier Province (NWFP) — and 
from the least developed districts in these provinces. 

These structural shifts in economic and 
consumption patterns have finally given rise to the 
emergence, substantial growth, and consolidation 
of a Pakistani middle class. The consumer boom that 
has taken place in Pakistan over the last decade or so 
would not have been possible without the existence of a 
sizeable middle class. The exact size of the middle class 
is difficult to estimate or measure, and one hopes that 
some approximation of its size will emerge through 
research. On account of easy availability of credit, an 
argument can be made that supports the claim that 
a consumer-based middle class is the true stimulus 
of the economy. For instance, the numbers of cars 
and of motorcycles doubled in Pakistan between the 
period 2001-07; mobile phones, which had a density of 
just 5 percent of the population in 2004. By 2008, that 
percentage skyrocketed to 51 percent of the Pakistani 
population. Moreover, despite growing regional and 
income disparities, per capita income has almost 
doubled since 2000. 

While an economic middle class clearly exists, one 
can perhaps surmise that along with the substantial 
growth in the news and information media, this class has 
also become more aware of its rights and perhaps even 
responsibilities. Perhaps it was these new emergent 
and assertive groups who participated in, and gave 


direction to, the political and civil society movements 
of 2007, of which Pakistan's media revolution played 
a key role. When the last elections were held in 2002, 
there was only one private TV channel in the country; 
today there are perhaps more than 30 private news 
and information channels broadcasting in all major 
languages. With constant information, analysis, and 
chatter about even miniscule political issues and 
developments, much of Pakistan's society has become 
involved and informed about what is happening 
throughout the country. While there are numerous 
rumors and justifications concerning a host of political 
stories, no one can any longer claim to be uninformed. 

However, one must add a word of caution here. If 
the economic transformations from the agrarian, rural, 
and feudal structures have given rise to these new 
groups or the middle class, it is important to state that 
the political role of such classes need not be progressive, 
as is often incorrectly assumed and romanticized. The 
category of the middle class has no particular moral 
or ideological mooring. This group or class, can be as 
democratic and revolutionary as it can be fascistic. 

Another factor that is affecting society and its 
relations is the increasing visibility of women in 
public, and not merely in Parliament. While the 
largest number of women have been elected from 
the General seats in the last elections, evidence from 
most urban population centers suggests that women 
are more visible at higher tiers of education, in the 
media, and in the growing service sector. It is not just 
that young women predominate in liberal arts and 
humanity colleges, but rough estimates suggest, for 
example, that in the case of Karachi University and 
the Government College University, women dominate 
the campuses by a huge margin, perhaps four-to- 


one. While many observers point out that while on 
university and college campuses more women are 
certainly more visible, they immediately add that most 
wear some version of the hijab, suggesting a form 
of growing conservatism. These visual descriptions 
perhaps confirm the view of some that Pakistani 
society has become far more socially conservative, yet 
obscure the liberating element experienced by many of 
these women who have escaped from their oppressive, 
traditional, patriarchal, and familial bonds, if only for a 
few hours in the day. Clearly, just the fact that women 
are being educated in growing numbers and that they 
are working is a revolutionary transformation, which 
has multiple and diverse social, demographic, and 
economic repercussions that many would consider 
highly progressive. 

A dramatic shift that has occurred in the last 
6 years, and this might be the only benefit from the 
consequences of September 11, 2001 (9/11), is the 
substantial change that has taken place in India- 
Pakistan relations. On the one hand, little seems to 
have changed, with an inhospitable visa regime still 
in place, with bureaucrats trained in older schools 
of thought still determining relations between the 
two countries. While on the other, an astonishing set 
of figures paint a completely different picture. For 
example, India is today Pakistan's seventh largest trading 
partner as a source of imports, and the first three in this 
list primarily supply oil to Pakistan. Pakistan imports 
more from India than it does from France, Germany, 
Canada, Switzerland, Iran, Turkey, or even Thailand! 
Overall, India is Pakistan's ninth largest trading partner. 
In 2000, the official trade between the two countries 
amounted to approximately $235 million. Today, that 
number has grown to over $1.4 billion. And this despite 


challenging travel and visa restrictions for both traders 
and businessmen. One of the few positive policy 
actions taken by the new democratic government was 
the extended set of measures outlined in the Trade 
Policy for 2008-09 announced on July 18, 2008, in 
which trade with India was encouraged and a number 
of new concessions given. Early estimates suggest 
that if these opportunities are taken, trade with India 
will cross the $3 billion mark, an astonishing turn- 
around from just 8 years ago. In this case, India may 
become Pakistan's third major nonoil trading partner. 
The consequences of such a positive development is 
that it could substantially change Pakistan's political 
economy. 2 

In terms of investment interests, a new phenomenon 
is the emergence of business interests from the United 
Arab Emirates (UAE) and other Gulf States. Awash 
with excessive amounts of revenue from the rise in 
oil prices, Arab sheikhs have been buying up key 
sectors in Pakistan. They have invested in real estate, 
banking, telecoms, information technology, and in 
other service sector tie-ups. While it is still too early 
to judge, there are indications that the UAE is getting 
involved in Pakistan's economy and politics to the 
extent that it can influence decisions. Both Nawaz 
Sharif and Asif Zardari have had very close ties — 
business and personal — with many of the rulers in 
the Emirates, and both have lived in Dubai for long 
periods of time. Moreover, the November 3, 2007, 
closure (following General Musharraf's Martial Law) 
of the private channel Geo News which was based 
in Dubai, UAE, suggests that numerous arms of the 
Pakistani state also have close connections with the 
Emirates' sheikhs. If UAE business interests grow, 
and given the overlapping business, personal, and 


political relationships, one can be sure that financial 
capital from the Gulf will influence, or keenly follow, 
developments in Pakistan. 

These are just a few of the many changes that are 
transforming Pakistani society, its economy, its politics, 
and its social relations of exchange and production. 
There are many reasons for these changes, from excess 
capital liquidity to globalization, to the media boom, to 
women's education, and similar trends. Some of these, 
such as trade with India, are reversible, but many 
suggest a more permanent state. There is a need for 
scholars to interpret and further explore such trends 
to examine and understand what, if anything, they 
mean for political transitions and transformations, 
and for economic development. One must understand 
that while there have been substantial and noticeable 
transformations, some institutions and some forms of 
politics have still not changed. 

The Politics of Economics: The 2008-09 Budget. 

Mr. Burki gives a comprehensive assessment and 
critique of the 2008-09 federal budget announced on 
June 11, 2008, the first from the new government of 
Prime Minister Yousuf Raza Gilani. Mr. Burki ends 
his chapter by saying that while the new government 
had an opportunity and perhaps the responsibility to 
undertake a number of reforms, some of them urgently 
needed, the opportunity to do so was lost. One cannot 
agree more with Mr. Burki' s assessment, and many 
economists have criticized the new government for 
not dealing with many of the critical issues that Mr. 
Burki has highlighted, ranging from exorbitant food 
prices, the rising price of oil, the cost of doing business, 
stabilizing the rupee, etc. In this section, I examine 


how the politics of the new government affected its 
ability to act, and I argue that it first had to address 
some important political issues before economic 
management could become the primary focus. 

If the economy is in as bad a shape since March 2009 
as the two Finance Ministers have maintained, then the 
budget presented in Parliament in June 2008 failed to 
address issues to turn the economy around. In fact, by 
not addressing pressing problems at this juncture, the 
government has made things far worse for itself within 
a very short space of time. This lost opportunity to 
move forward on the economy is symptomatic of the 
way this government has functioned, a fact displayed 
in the two other critical arenas with regard to the 
president and the judiciary, where it was unable to act 
and to move forward with deliberate speed. Its failure 
to act clearly, forcefully, and timely on the economic 
front will, in all probability, only add to causes that 
will result in its own undoing. 

Of course, the present government is in no way 
responsible for the numerous problems that afflict 
Pakistan's economy, yet the fact that it is in power 
assumes that it must take responsibility if it fails 
to address these problems. While we celebrate the 
return of the democratization process, albeit one that 
continues to be partial and interrupted, we also expect 
the government to fulfil its responsibilities. 

As Mr. Burki's chapter indicates, the main economic 
indicators show that a deteriorating trend has been in 
process for some months now. The GDP growth rate, 
expected to be 5 percent, is still considerably higher 
than the average for the 1988-2003 period, but is lower 
than the trend seen over the last 5 years. While perhaps 
this slowing of the growth rate was to be expected, 
given adverse international commodity prices 


and because previous growth was built on a weak 
foundation, expectations suggest that growth is going 
to be lower for some years to come. With the growing 
fiscal deficit which is approximately 7.8 percent of 
GDP, the highest in over a decade and that worsened 
as oil prices rose, all estimates for GDP growth seem to 
be overly optimistic. While these three key indicators 
need to be immediately addressed by the government, 
inflation is the single most important issue affecting 
all citizens, and this problem demands action from the 
current democratic and popular government. 

With inflation at approximately 28 percent, the 
highest in the last 3 decades, any government would 
have had a major task dealing with causes that are not 
under its control. The global rise in food and oil prices 
are the main reasons why inflation is so high, although 
a number of poor decisions and an equal number of 
indecisions by the Shaukat Aziz government and the 
caretaker government have made things far worse. 
Moreover, the economic policies of the previous 
government were responsible for creating an artificial 
bubble, which resulted in a substantial deterioration in 
income distribution. 

The Finance Ministry must realize the scale of the 
issues it must confront and quickly deal with them if it 
is to make a difference on the economic front and stop 
the economy from deteriorating further. However, the 
budget represents a substantial attempt to turn the 
economy around, and, although a couple of measures 
have been taken, they are insignificant compared to 
the nature and scale of the problems. The imposition of 
import duties on luxury goods was long overdue, and 
the attempt to provide an income support program 
for the poor is welcomed. Development expenditure 
has also been raised, and one can only hope that better 


and effective targeted provision of all government 
expenditures will take place. However, a number 
of measures that were announced in the budget are 
troubling, and many are conspicuous by their absence. 

The cut in subsidies might help to marginally lower 
the fiscal deficit, but will probably result in higher 
prices for oil, power, fertilizers, and food items for 
consumers, especially the poor. Similarly, an increase 
in the proportion of indirect taxes will also have a 
disproportionately higher impact on lower income 
earners. Neither of these two measures will help the 
poor and will further challenge their ability to survive 
under worsening economic conditions mostly related 
to rising inflation. 

With a tax-to-GDP ratio of a mere 10 percent 
and with a fiscal deficit of 7.8 percent of GDP, one 
would expect the government to be considerably 
more imaginative on the revenue generation front. It 
is unforgivable that the government has allowed the 
exorbitant profits from the stock market to go untaxed 
for another 2 years, a concern also raised by Mr. Burki. 
There is no reason why profits from speculation should 
be untaxed under stable and normal circumstances, 
and under conditions where the economy is facing 
serious crises, such generosity is criminal. 

The government should have gone out of its way to 
give inflation and food shortages its highest priority. 
It should have taken a short-term, immediate focus, 
which would have meant compromising on other 
issues at the moment, and a medium and longer-term 
economic agenda. One would have expected that the 
Peoples Party election manifesto, launched with much 
fanfare, would have had more substantive issues 
addressed with regard to the economy, some of which 
would have found expression in its first budget. 


The democratically elected government in power 
today is struggling with an economic meltdown and 
economic crisis affecting its own constituency, but also 
a crisis of legitimacy, effectiveness, and political control. 
The disappointment one has with regard to the budget 
is just another indication of the democratically elected 
government's failure to act on a number of critical 
issues, both economic and political. Although a new 
president has been elected, it is quite clear that the new 
government in Pakistan seems vulnerable and weak. 
The war on Pakistan's borders seems to be getting out 
of hand, and differences with Pakistan's main ally, the 
United States, bode ill for any economic aid or rescue 
package that was envisioned. Economic and financial 
issues — such as the continuing deterioration of the 
rupee, the lack of foreign direct investment, the stock 
market unable to reflect any bullishness — are all linked 
to political stability in Pakistan. 

Political Stability and Development. 3 

The arguments made in the previous section need to 
be reemphasized; without political stability in Pakistan, 
economic development will not take place. Political 
stability is a prerequisite for economic development. 
There are three arenas where political stability needs 
to be managed and resolved. First, there is the need 
for the newly elected democratic government to deal 
with the regime, institutions, individuals, and power 
structures in place since 1999, and to establish its writ. 
Second, there is a need to resolve provincial, domestic, 
and local political issues, such as the National Finance 
Commission (NFC) Award mentioned by Mr. Burki, 
inter- and intraprovincial disputes and inequalities, 
and issues about devolution and local government. In 


this category, there also is a need to develop a level 
of consensus between the different political parties 
vying for power in a more accommodative political 
framework. Finally, and equally importantly, there is a 
need to address and resolve issues related to Pakistan's 
neighbors, the war on terrorism, and in particular, the 
relationship between Pakistan's newly elected leaders 
and the U.S. administration. This last point is probably 
the most important and affects the other two, hence, it 
is to this I now turn. 

It took the previous U.S. administration under 
President George W. Bush several months to come 
to accept the new reality in Pakistan after the 2008 
elections and that its old and trusted ally since 2001 
was not acceptable to the new government in Pakistan. 
For 6 months, it seems, the United States put pressure 
on Pakistan's new elected leaders to accept General 
(Retired) Pervez Musharraf as President of Pakistan, 
even after he and his political allies were resoundly 
defeated in the February 18, 2008, elections. The U.S. 
administration under President Bush, because of its 
own agenda and need in the region to fight and win the 
war on terrorism, had not been able to move beyond 
its political arrangements in Pakistan since 2001. By 
supporting General Musharraf after 9/11, almost 
unconditionally, the Bush administration was seen as 
the most powerful force propping up a military dictator 
in Pakistan. While political parties were equally to 
blame for not working for democracy and for being the 
General's collaborators and ensuring his longevity, it 
would be fair to say that General Musharraf continued 
to stay in power largely because of U.S. support for 
him. While the U.S. position was understandable, 
perhaps until the February 18 elections, the victory of 
democratic forces since then, and most importantly, 


the rejection of Musharraf's policies by the Pakistani 
electorate, not only delayed the democratic transition, 
but was also the main reason for political instability in 

In the period between early February to the end 
of June, U.S. State Department officials had more 
meetings with the two most important unelected 
Pakistani civilians — Asif Zardari and Nawaz Sharif— 
than they probably had with Pakistan's quasi-civilian 
leadership between 2002-07. These meetings were held 
not just in Pakistan, but apparently in London, United 
Kingdom, and the Gulf States as well, whenever the 
two Pakistani leaders were abroad. Moreover, more 
substantive quantitative research would also support 
the impression that the number of meetings the two 
leaders had with the U.S. Ambassador to Pakistan 
and their excessive public presence in the media has 
seldom been as high as it was in the last 5 months 
before, during, and after the February 18 elections. 
Public announcements by senior State Department 
officials seemed to suggest that these meetings and the 
pressure put on the Pakistani leadership was to garner 
continued support for the U.S. war on terrorism in the 
region and to ensure that President Musharraf was not 

Rather than support the process of further 
democratization and Pakistan's emerging democracy to 
a more sustainable level, the United States continued to 
support the one man who was unpopular and probably 
illegally in power. The needs and requirements of the 
previous Bush administration and the desires of the 
Pakistani people were seen to be at odds. Eventually, 
however, President Musharraf was replaced by the 
leader of the Pakistan Peoples Party (PPP), Asif Ali 
Zardari, who was sworn in as Pakistan's democratically 


elected President. Only time will tell if President 
Zardari is able to gain the same trust and confidence 
of the new U.S. administration under President Barack 
Obama, as the man he replaced enjoyed with the 
Bush administration. With the United States playing 
such a crucial role in the region and particularly in 
Pakistan, and with democracy still emerging and 
establishing itself in the country, the relationship 
between Pakistan's elected leaders and the new U.S. 
administration under President Obama will be crucial. 
Moreover, it is also important for President Zardari 
and his new government to diversify and expand their 
diplomatic relationships with other regional powers, 
such as China and India, and to build alliances that 
look beyond too much reliance and dependence on the 
United States. 

It is important to point out that U.S. intrusion in 
the region and on Pakistan's borders in military terms 
does not bode well for Pakistan's government and 
its democracy. Military attacks by U.S. drones on the 
border region with Afghanistan have already caused 
a great deal of resentment in Pakistan and help to 
increase anti-U.S. sentiment. Moreover, statements 
by Pakistani leaders, both civilian and military, seem 
to be at odds with those of U.S. military leaders, and 
clearly, differences of opinion, priority, and tactics 
have emerged. This relationship between the present 
U.S. administration and the new democratically elected 
leadership in Pakistan, and its relationship through 
the war on terror, may determine far more than just 
the future of democracy in Pakistan. Much more is at 
stake, and a misreading or mishandling of the situation 
will have multiple consequences, most of them ugly, 
on numerous actors and relationships in the region. 



In agreement with Mr. Burki's suggestions of how 
Pakistan should exploit its many positive economic 
trends, my chapter has only added to the debate, 
suggesting that some key political and diplomatic 
issues need to be addressed quickly, alongside issues 
related to the economic meltdown affecting the 
economy and the Pakistani people. Political instability 
and factors related to the war on terror will hinder 
economic development. It is in the interest of the 
new U.S. administration under President Obama to 
support and strengthen the civilian democratic setup 
in Pakistan and to show a longer-term commitment 
to stability in the country. The longer any uncertainty 
lasts, the greater the economic meltdown. The blow- 
back of an economic crisis, along with a political one, 
will benefit neither the people of Pakistan and nor 
the U.S. administration in its war on terrorism in the 
region. Continuing instability and the unravelling of 
the Pakistani economy and the state are likely to have 
consequences far beyond Pakistan itself. 


1. Raza Ali, "Underestimating Urbanisation?" in S. Akbar 
Zaidi, ed., Continuity and Change: Socio-Political and Institutional 
Dynamics in Pakistan, Karachi, Pakistan: City Press, 2003. 

2. For domestic linkages and political-economy consequences 
of trade with India, see Chapter 20 of my Issues in Pakistan's 
Economy, Second Ed., Karachi, Pakistan: Oxford University Press, 
2005; my Pakistan's Economic and Social Development: The Domestic, 
Regional and Global Context, New Delhi, India: Rupa and Co., 2004; 
and South Asian Free Trade Area: Opportunities and Challenges, 
Washington, DC: U.S. Agency for International Development 


(USAID), 2006. I must also acknowledge that Mr Burki was one 
of the first Pakistani economists to talk and write publicly about 
improving Pakistan's economic relations with India. 

3. See my unpublished background paper presented at the 
International Debate Education Association (IDEA)/ Centre 
for Security and Defence Studies (CSDS) Conference entitled 
"Democracy, Development, Dictatorship and Globalization: The 
Complicated Histories of Pakistan," held in New Delhi, India, 
June 17-18, 2008. 






Craig Cohen* 

Pakistan poses a unique challenge to U.S. foreign 
policy. The government has been a front-line partner 
in the Bush administration's War on Terror, but is 
also home to the Taliban, al Qaeda, and remnants of 
the nuclear proliferation network of A. Q. Khan. The 
United States depends on Pakistan's cooperation, but 
its people and government remain wary and at times 
hostile toward the United States. Even Pakistanis 
sympathetic to U.S. goals often call for greater patience 
on the part of Washington, but Americans are unlikely 
to become disinterested observers in Pakistan any time 

One of the toughest short-term challenges facing the 
next U.S. administration is how to address the problem 
of militancy on Pakistan's western border. Success in 
Afghanistan and security at home depend on finding 
effective solutions in Pakistan's Tribal Areas. Success 
is likely to remain elusive as long as Pakistan and 
the United States remain on different time horizons. 
The United States feels the urgency of the threat, 
while Pakistanis take a longer-term view of progress. 
Only months after the February 2008 parliamentary 
elections, Washington became frustrated with the 
weakness of Pakistan's new civilian government and 

* The author wishes to thank Tara Callahan, who provided 
research assistance for this chapter. 


its unwillingness to address the problem of militancy 
head-on. For its part, many in Islamabad see containing 
the militants as a viable option, and incorporating the 
Federally Administered Tribal Areas (FATA) as a 
generational task only made more difficult by direct 
U.S. action. 

This is a time of great unpredictability in Pakistan 
and for U.S. decisionmakers. Major questions surround 
Pakistan's leadership, economic future, and social 
stability. Could Pakistan become a steadfast ally of 
the United States? Or will the United States find itself 
in direct military confrontation with Pakistani forces? 
Is Pakistan sliding toward collapse? Does it pose a 
clear and present danger to the United States? If so, 
what are the policies that could mitigate this threat? 
With Pakistan, everything is on the table, from billions 
of dollars of U.S. aid to Predator missile strikes and 
pariah status. It is no wonder that U.S. policy toward 
Pakistan has been trapped in a short-term mindset 
since September 11, 2001 (9/11). 

Forecasting Pakistan's near-term political future 
may be a fool's errand, but anticipating trends that will 
shape its evolution over the long-term is possible and 
necessary. A closer look at Pakistan's demographic 
challenges raises a number of policy imperatives for 
Pakistan's government and the United States. Both 
will have to contend 

with an ongoing demographic transition characterized 
by a shifting age structure and migration pattern that 
are likely to place newfound resource pressures on 
food, water, and energy, and heighten the importance 
of addressing poverty, education, and violence. 
Population trends are not destiny. They simply present 
new challenges and opportunities for governments and 
outside actors. How well the Pakistani government 


and the United States recognize, adapt, and get ahead 
of these trends will shape the Pakistan that will emerge 
in the years to come. 

Pakistan's Demographic Future. 

A chapter on demographics may seem out of 
place in a book on Pakistan's nuclear future. What do 
population trends have to do with nuclear weapons? 
One possible way to think of the correlation is that 
nuclear weapons are the deadly tip of the iceberg, 
while demographics are the danger lurking far below 
the surface. Demographic visions traditionally have 
alerted us to external threats that could have destructive 
consequences for our own society. 1 Demographic 
projections have become a sort of "geopolitical 
cartography" for national security planners, helping 
them to avoid dangers hidden in the future's hazy 
unknown. 2 Since the earliest days, demographics have 
been viewed as a determinant of other societies' hostile 
actions, capacity, and intent, and the nuclear age is no 
exception. 3 

The size, security, and possible use of Pakistan's 
nuclear arsenal in 2020 will be a function of individual 
decisions by Pakistani leaders and its national 
security community. These decisions, however, will 
be shaped by a broader domestic and international 
context. Demographics will play an important role in 
determining this context, helping to shape Pakistan's 
politics, social cohesion, and economic growth. The 
demographic effects will be indirect, and they will 
operate on a longer time frame than any democratic 
political calendar. Demographic change, in the words 
of one recent study, "shapes political power like 
water shapes rock. Up close the force looks trivial. 


But viewed from a distance of decades or centuries it 
moves mountains." 4 

Population has always been linked to security. 
Traditionally, the size of a body politic has been 
leaders' main demographic concern: the larger the 
population, the greater a society's wealth and power. 
In the most elementary sense, a larger population 
provides more men to field in battle. Pakistan had 
just under 40 million citizens in the years immediately 
following partition, but today it has somewhere in the 
neighborhood of 170 million people and is the seventh 
largest country in the world. Pakistan's population 
doubled between 1961 and 1982, a period of just 21 
years. 5 The United Nations (UN) projects that by 2050 
Pakistan's population could double again to more 
than 350 million people, making it the world's third 
or fourth most populous country. 6 One would expect 
a Pakistan of 350 million people to wield significant 
influence on the world stage, particularly in the 
Muslim world. The question of whether Pakistan can 
become a global or even a regional power, however, is 
very much tied to its stability and economic growth. 
India, its main strategic rival, already dwarfs Pakistan 
with over one billion people. It is expected by some 
to grow to more than 1.6 billion by 2050, overtaking 
China's own growth projections for this period. 7 

Population growth is not always a positive 
occurrence. As far back as Malthus' writing in the 
late 18th and early 19th centuries, commentators 
have worried about populations outstripping their 
environments. Theories of Social Darwinism have 
been discredited in most circles, but many leaders 
today recognize that high population densities and 
high rates of population increase can undermine gains 
from economic growth and potentially contribute to 


social and political instability. Three factors determine 
population: fertility, mortality, and migration. For its 
part, Pakistan has successfully curbed its fertility rates 
after decades of effort. Pakistan first implemented an 
anti-natalist policy in 1965, but it was not until the 
1990s that it experienced a fertility downturn. Since 
the 1960s, Pakistan's population grew at a staggering 
rate of close to 3 percent per year. Fertility rates in 
the 1970s and 1980s hovered between six and seven 
births per woman. Fertility began to decline as families 
migrated to urban areas, women married later, and 
family planning became more accepted practice. 
During this decade, fertility rates stand around four 
births per woman in Pakistan. 8 By 2050, some expect 
the total fertility rate to fall to between 1 and 3 births 
per woman. 9 

Falling fertility rates has meant that Pakistan 
is presently undergoing a demographic transition. 
Demographic transition explains the shift from the 
high death rates and high birth rates of a preindustrial 
society to the low birth rates and low death rates of 
industrialized economies. Pakistan's crude death rate 
declined progressively from 24 deaths per 1,000 in 1950 
to 8 deaths per 1,000 in 2006. 10 Pakistan's death rate 
declined during this time at a much faster rate than its 
fertility rate. The result has been a shifting population 
demographic away from the classic pyramid model 
to a more cylindrical shape. The main reason the 
structure of population aging matters is that there is a 
"mismatch between the timing of human productivity 
and human consumption." 11 

Because of the time lag between changes in fertility 
and changes in mortality, Pakistan is experiencing the 
possibility of what is called a "demographic dividend." 
The potential for a demographic dividend occurs 


when a lowered birth rate leads to changes in the age 
structure of a population. In this case, an increase in 
working age population and decline in dependent 
age population results in economic gains. 12 Simply 
put, young people require a society's investments 
in health and education, working-age adults supply 
labor that fuels this investment, and the elderly 
again require investments in health. A country with 
a large labor supply relative to its young and old has 
the potential to realize significant economic growth 
because the dependency burden is low. Demographic 
dividends create the possibility for economic growth 
by "improving labor supply, increasing savings, and 
allowing development of human capital." 13 Pakistan's 
median age in 2006 was 20 years. By 2050, it is projected 
to be 33 years. 14 The proportion of Pakistan's working 
age population of 15 to 64 reached 59 percent in 2006. 15 
Capitalizing on the possibility of a demographic 
dividend is currently up to the Pakistani government. 
This dividend can only be realized in the right 
policy environment such as occurred in South Korea 
over the second half of the 20th century or is occurring 
in China and India now. Studies have demonstrated 
that as much as one- third of East Asia's economic 
miracle can be attributed to a demographic dividend. 16 
What Pakistan is currently experiencing is a once in 
a lifetime opportunity as the working age swells and 
dependency ratio declines. Demographers believe that 
Pakistan's window of opportunity probably opened in 
1990 and is likely to close by 2045. The critical question 
is whether the labor market will be able to absorb an 
influx of new workers. As one commentator has asked, 
"Would these teeming numbers be actually a 'dividend' 
or would they be more of a threat?" 17 By 2030 Pakistan 
is estimated to have 175 million potential workers, 


85 million of whom could be women. Realizing 
a demographic dividend is closely tied to female 
education and empowerment, as it depends upon 
sustaining lower fertility rates. 18 By 2050, the number 
of potential workers is expected to rise to 221 million. 19 
If Pakistan fails to adequately train and educate its 
labor supply and grow its economy to provide jobs, 
difficult times could be ahead. 

The other side of the demographic dividend coin is 
demographic danger. The most commonly discussed 
demographic threat is known as "youth bulge." This is 
the period typically before the demographic dividend 
can be realized when the huge tide of young people has 
not yet entered the labor market. This creates enormous 
pressures on the state to provide health, education, and 
other services. As this population becomes adolescents, 
the theory holds that single teenage men without 
the discipline of a good public, private, or military 
education and without the prospects of employment 
are more likely to engage in violence directed against 
the state and other groups in society, or engage in 
terrorism. Many have looked to the failures of the state 
education system in Pakistan, for instance, as a primary 
reason for the greater role madrassahs have played in 
educating young Pakistanis today. Madrassahs do not 
necessarily produce terrorists, but they do play a role 
in proselytizing an anti-modern, anti-Western world 

There is no guarantee that Pakistan has weathered 
its period of youth bulge as it transitions to its dividend 
period. One recent study has argued that, similar 
to the aftershocks of an earthquake, "echo booms" 
reverberate every 2 decades after periods of booming 
fertility which are followed by a steep decline. This 
would mean that the number of Pakistanis between 


the ages of 15 and 24 would grow from roughly 7 
percent of the population between 2005 and 2020 to 
over 30 percent between 2020 and 2035. 20 This would 
create a new period of stress for both state and society. 
Demographic transitions ultimately reduce threats of 
violence and instability, but these transitions proceed 
unevenly. It is in the midst of the transition — when 
inequality is growing, urbanization and migration are 
high, and contact with the global marketplace is on the 
upswing — that political instability and authoritarian 
reactions are most likely. 21 

Other than fertility and mortality, urbanization is 
the third demographic effect that shapes the contours 
of a country's population. Urbanization is a form of 
migration: citizens migrate internally from rural to 
urban areas, often in search of jobs and a better life. 
Migration has been an integral and often painful part 
of Pakistan's history. Four main migratory waves have 
shaped Pakistan's demographics: at partition from 
India; the war in neighboring Afghanistan; workers' 
migration to the Gulf; and urbanization, including the 
growth of the megacity Karachi. The continuing effects 
of each are likely to play an important role in Pakistan's 
economic, social, and political stability for decades. 

Between partition in August 1947 and the end of 
open borders in 1951, 6 million non-Muslims moved 
from Pakistan to India, and 8 million Muslims moved 
from India to Pakistan. 22 Most of the migrants to 
Pakistan were East Punjabis who settled in Punjab. 
Twenty percent, though, were so-called Muhajirs, Urdu 
speakers who settled in Sindh and had a significant 
influence on provincial and national politics. 23 During 
the 1980s, there was a comparable influx of people into 
Pakistan on account of the Afghan war. More than 2.5 
million Afghans fled to Pakistan to escape the violence, 


settling primarily in Peshawar and Quetta in tight 
kinship and tribal networks. 24 Many of these Afghans 
still remain, despite large scale repatriation efforts after 
the fall of the Taliban in 2001. 

Migration from Pakistan to the Gulf states took off 
in the 1970s as a construction boom drew workers from 
uneducated, rural areas of Pakistan. Skilled workers 
later followed. Savings sent back to Pakistan in the 
form of remittances have constituted the largest single 
source of foreign exchange earnings for Pakistan. 25 
While some see remittances as a major financial 
resource that could be harnessed for development, the 
long-term effects of remittances on structural poverty 
are less clear. 26 According to the Pakistan Ministry of 
Finance, the total remittances sent to Pakistan between 
FY2002 and FY2006 were $4.57 billion. The United 
States was the single largest country source, although 
the Gulf states, if lumped together, provided the largest 
single regional total. 

Pakistan has traditionally been a rural, agricultural 
country. In 1951, 83 percent of Pakistanis lived outside 
of cities and towns. Today, this number has fallen to 68 
percent or less. Urbanization is progressing at a rapid 
4.9 percent per year, and Pakistan is projected to be 
predominantly urban by the next decade. 27 More than 
half the urban population of Pakistan lives in the eight 
largest cities, and Sindh is the most urbanized province 
in Pakistan on account of Karachi. Rapid urbanization 
and the ensuing high congregations of people living in 
slums create a host of pressures on state and society. In 
Lahore, Pakistan, for instance, there are 6,500 sanitation 
workers for 7.5 million people. In Delhi, India, by 
comparison, there are 46,000 sanitation workers for 11 
million people. 28 Urbanization also erodes traditional 
social structures and exposes migrants to "the social 
and cultural crosscurrents of modernity." 29 


The effects of these four migratory waves will 
continue to shape Pakistan. The pace of urbanization 
will create new strains and opportunities that 
could serve as an engine of industrialization and 
modernization, or else be captured by unstable and 
violent crosscurrents. The large presence of Afghans 
in western Pakistan continues to blur the Durand line 
separating the two countries and further complicates 
efforts to tie the Northwest Frontier Province (NWFP) 
and Balochistan more squarely to Pakistan's center. 
Muhajirs continue to play an important role in 
Pakistani and Karachi politics. Muhajir-Sindhi ethnic 
violence like what occurred in the 1990s remains a 
continuing possibility in Karachi. The Gulf has proved 
an important source of capital for Pakistan, but it is 
unclear what sort of political influence the transfer of 
wealth will have on Pakistan over time. 

The critical point to note is that while Pakistan 
has undergone remarkable changes over the past 60 
years, perhaps none have been greater than what has 
occurred over the past decade. Agriculture is no longer 
the lone driver of the economy. Automobiles, mobile 
phones, and an independent media have connected 
Pakistanis to each other and to the rest of the world 
in revolutionary ways. Women play a greater role 
in public life, including at universities. Pakistan is 
continually renegotiating its relationships with Islam, 
India, China, the United States, and the Gulf. 

Understanding these changes and the effects of 
Pakistan's demographic transition are vital to under- 
standing Pakistan's future. The country's ability to 
successfully weather this transition period will depend 
on two primary factors. The first is how its leaders 
manage to address the instability caused by increased 
resource pressures on food, water, and energy. The 


second is how the country manages to address three 
societal ills likely to be heightened by the transition 
period: poverty, lack of education, and violence. This 
chapter will discuss each of these dynamics before 
making a case for why U.S. decisionmakers ought to 
pay attention to Pakistan's long-term future and what 
policy options exist to mitigate peril. The United States 
must help Pakistan through this demographic storm, 
or else risk its worst effects washing up on our shores. 

Food, Water, and Energy. 

Population change is closely tied to resource 
availability. Food, water, and energy are all basic 
requirements for life and economic activity. Pakistan, 
like many countries, faces severe constraints on all 
three, and the potential for shortages is only likely 
to grow as populations increase. Pakistan was hit 
particularly hard by the global food crisis this year. 
The World Food Program reported that as many 
as 60 million Pakistanis were "food insecure" as a 
result of the global rise in commodity prices. Despite 
6 years of sustained economic growth, roughly a 
quarter of Pakistan's population still lacks potable 
water. 30 The United Nations Development Program 
(UNDP) Human Development Report has predicted 
a global water crisis by 2025 that Pakistan is unlikely 
to escape. 31 Energy shortages continue to be endemic 
in Pakistan. This past summer, Pakistan's government 
set the nation's clocks forward by 1 hour to ease 
energy demand. These pocketbook issues traditionally 
have led to political instability in Pakistan, but few 
political leaders have been able to devise a long-term 
countrywide strategy for addressing food, water, and 
energy insecurity. 


The global food crisis hit the world this year 
with "alarming speed, force, and depth," presenting 
a humanitarian, development, and strategic threat 
to countries around the world. 32 The price of basic 
foodstuffs skyrocketed as a result of high energy prices, 
increased demand from rising middle classes in China 
and India, the increased production of biofuels, poor 
weather potentially linked to climate change, and more 
systemic problems in agricultural production, trade, 
and the delivery of food relief. 33 Since the beginning of 
2006, the average world price for rice has risen over 200 
percent, milk by 170 percent, wheat by 136 percent, and 
maize by 125 percent. The new Pakistani government 
was forced to place a 15 percent export duty on wheat 
and to import millions of tons of the country's main 
staple in order to address the shortages. The UN World 
Food Program (WFP) estimated that close to 40 percent 
of Pakistan could no longer afford the poverty-line 
intake for food. Urban areas were hit particularly hard 
as food prices increased. 

What is unfortunate is that Pakistan was near food 
self-sufficiency for wheat in the early 1980s. 34 Pakistan's 
emerging food security problem has been linked 
closely to the unprecedented increase in population. 35 
As early as the 1990s, food projections were showing 
that the demand for rice and wheat would soon 
outstrip supply. 36 This is despite a relatively successful 
record of agricultural growth. Pakistan has always at 
its heart been a rural agricultural society, even though 
it is becoming increasingly urban. Agriculture still 
accounts for one-quarter of Pakistan's gross domestic 
product (GDP) and employs almost one-half of its 
labor force. 37 Seventy percent of export revenue stems 
from agriculture, and over one-half of industrial 
production comes from agricultural business. 38 A 


lasting agricultural crisis in Pakistan will have far 
greater implications than its effect on individual 
families. It is likely to severely impact the country's 
economic growth. 

One of the main challenges to increasing agricultural 
production in Pakistan is low productivity and 
reliability of water. The total irrigated area of Pakistan 
increased by 80 percent between 1960 and 2005, from 
10.4 to 18.8 million hectares. Upwards of 80 percent 
of Pakistan's cropped area is currently irrigated. 39 
Farming is a water-intensive pursuit, taking 1,000 tons 
of water to grow one ton of wheat and 2,000 tons of 
water to grow one ton of rice. 40 According to one study, 
because of water shortages, Pakistan will be forced by 
2025 to import large quantities of wheat amid "famine- 
like conditions." 41 That day may arrive sooner than 

At the root of the problem is that human populations 
continue to grow, but the amount of fresh water stays 
roughly the same over time. 42 Pakistan had essentially 
the same annual renewable water availability for its 
35 million people in 1947 as for its 170 million people 
today. In 1981 there was close to 3,000 cubic meters of 
water for each Pakistani each year. By 2003, the number 
had fallen below 1,500, and by 2035, it is projected 
to fall below 1,000, the baseline that indicates water 
scarcity. 43 The Indus River basin covers 70 percent 
of Pakistan's territory. Its flow depends on melting 
snow, and its irrigation potential is thus limited to the 
months between May and September. The rest of the 
year, Pakistan depends upon stored water. The storage 
capacity of water reservoirs in Tarbela and Mangla are 
decreasing due to erosion from farming techniques 
that increase sediment and displace water. 44 If climate 
change reduces the snowcap on the Himalayan and 


Hindu Kush mountain ranges that feed the Indus, the 
river's flow could shrink even further. The lack of clean 
water impacts sanitation. UNDP estimates that almost 
40 percent of Pakistanis lack adequate sanitation, 
increasing the spread of waterborne disease. 

The Government of Pakistan is aware of what is 
required to address the country's water shortfall: new 
dams that can create new water storage facilities, more 
efficient farming techniques, and updated storage 
and irrigation systems. The government has unfurled 
a string of strategies, action plans and projects, but 
many observers are left with the sense that there is 
not a single, comprehensive plan to tackle the water 
crisis in Pakistan. At least one development bank has 
argued that without the creation of three new dams in 
Pakistan by 2016, the country will experience a severe 
water shortage by 2020. The politics of dam building in 
Pakistan are extremely complicated though, with each 
provincial government fearing that it will somehow be 
shortchanged. It is worth noting that General Pervez 
Musharraf's efforts as the country's de facto military 
ruler to move forward with dam construction in 
Kalabagh, Punjab Province, Pakistan, met with such 
stiff political resistance that he was forced to back 
down in 2006. It took 30 years for the four Pakistani 
provinces to agree on the 1991 water apportionment 
accord following the 1960 Indus Waters Treaty, and 
they are still fighting today. 45 

Water in Pakistan is vital to energy production. 
Electricity production from fossil fuels and nuclear 
energy requires huge quantities of water for cooling 
and other purposes, and one-half of Pakistan's electrical 
energy is hydro-generated. 46 Water is also essential for 
all other types of energy production. Future investment 
in alternative energy sources such as biofuels will 


further depend on irrigated land. At present, Pakistan 
receives roughly half of its energy supply from natural 
gas, 30 percent from oil, 11 percent from hydroelectric 
energy, 8 percent from coal, and 3 percent from nuclear 
energy. 47 Only 20 percent of oil demand is met from 
indigenous sources. In fact, Pakistan's dependence on 
imported energy is expected to increase considerably 
in the near to medium term. 48 This could be particularly 
damaging to Pakistan's economic situation given the 
soaring prices of energy. 

Pakistan is currently experiencing an acute 
energy shortfall. Some have estimated that Pakistan 
is meeting only one-fourth to one-third of its power 
generation needs. Forty percent of households in 
Pakistan lack electricity and 18 percent of households 
have no access to pipeline gas. 49 There is a close 
linkage between power generation and economic 
growth. As the country's economy grows, its power 
generation needs will increase at a proportionately 
higher rate. Pakistan's energy deficit could double by 
2025 if growth continues at its present pace. 50 Energy 
expansion, in turn, could lead to higher economic 
growth, and energy shortages could retard the growth 
process. 51 To meet rising demand, the government 
in the short term has sought to tap unexploited coal 
reserves in the Thar Desert in the Sindh Province of 
Pakistan and hydroelectric power from the north, both 
of which present serious logistical constraints. Over 
the long-term, Pakistan hopes to become an energy 
corridor between the Middle East and Central Asia. 

The majority of Pakistan's natural gas production 
comes from Balochistan, a province that has engaged 
in a longstanding, low-level insurgency against 
Islamabad for decades. Pakistan's energy insecurity and 
its search for assured access to hydrocarbon resources 


has "magnified the economic and strategic importance 
of the province," 52 as Balochistan accounts for almost 
40 percent of Pakistan's natural gas production. The 
province — sparsely populated and underdeveloped — 
consumes under 20 percent of this production, though, 
and receives a "deficient share of revenues from the 
government's sale of natural gas," a main grievance of 
the insurgents. 53 The province's potential as a transit 
point for gas pipelines running between Iran and India 
and from the new Gwadar port to Central Asia increase 
its strategic importance. Balochistan stands as a good 
example of the way energy has fundamentally affected 
political stability in Pakistan over recent decades. 

Pakistan's leaders must develop effective policies 
for addressing the instability likely to be caused by 
increased resource pressures on food, water, and 
energy during the country's demographic transition. 
Addressing the consequences of rapid urbanization 
is critical. When severe drought led to a 40 percent 
decline in wheat production in Sindh in the late 1990s, 
rioters stormed Karachi to protest the food and water 
shortages . 54 Rural poor of ten lack the ability to politically 
or violently mobilize in the way that urban populations 
do. As Pakistan's pace of urbanization continues, we 
are likely to see more rather than fewer disturbances 
in its major urban areas. Street protesters provide a 
unique challenge for the Pakistani military, which 
is relied upon to keep order, but which realizes that 
blood on the streets tarnishes its image as guardian of 
the state. It is possible that sustained shortages in food, 
water, and energy could lead to a decreased capacity 
of the Pakistani state to govern, increased migration, 
and civil unrest particularly in urban settings. The 
degree of instability will largely be a function of how 
the country manages to address three societal ills that 


could be heightened by the transition period: poverty, 
lack of education, and violence. 

Poverty, Education, and Violence. 

Pakistan in 2020 could very well become a wealthier, 
better educated, more stable society. If it can reduce 
its sources of violence and instability, attract foreign 
investment, provide government services, produce 
new jobs, and develop its human capital, Pakistan will 
have taken advantage of its demographic dividend, 
and allay U.S. concerns about Pakistan's nuclear 
future. Demographic trends may be robust predictors 
of population growth and movement, however, future 
availability of resources is largely a known entity, 
but future levels of poverty, education, and violence 
depend almost entirely on human decisionmaking. It 
is impossible to accurately forecast whether Pakistan's 
government will make the right choices and how 
external events may shape and impact those choices. 
What is possible is to provide a baseline assessment 
of the current state of these critical drivers of conflict, 
instability, and extremism, and then analyze how 
demographic pressures may impact these drivers in 
the years to come. 

Poverty, in and of itself, is not a cause of conflict, 
instability, or extremism. It is, however, a phenomenon 
that shapes how communities and individuals perceive 
their future and the opportunities that will exist for 
them and their children. Relative poverty is more likely 
to produce the alienation, isolation, and grievance that 
prove fertile ground for political instability, internal 
conflict, and extremist sentiment. Countries undergoing 
a demographic transition are more likely to experience 
higher levels of income inequality as societies move 


from developing to industrialized economies. There 
are economic winners and losers in any society, but the 
winners and losers tend to move further apart during 
these transition periods. Government programs and 
foreign aid may help to ease the burdens of those who 
suffer most during this transition, but it is ultimately 
economic growth that has the potential to lift millions 
of people out of poverty, as the world is witnessing in 
China, and to a lesser extent, India. 

Pakistan's recent economic growth is well-known. 
From 2002 to 2008, the country' s GDP grew by an average 
of 7 percent per year and per capita income increased 
by 5 percent per year, the highest rate in Pakistan's 
history. 55 Total investment reached 23 percent of GDP 
in FY2007, and foreign direct investment reached $5.1 
billion, or 3.7 percent of GDP in FY2006. 56 Pakistan has 
negotiated trade agreements with China and a number 
of its neighbors, even if regional trade with India has 
remained mostly stagnant. Few could argue that the 
economic turnaround of this decade has not been 
beneficial for Pakistan. Pakistan's economic leadership 
during the 1990s was plagued by corruption, public 
debt, high deficits, and high poverty. 57 Musharraf's 
government brought macroeconomic stability and 
helped to deregulate key industries. The question, 
however, is whether in recent years Pakistan has 
experienced what William Easterly has called 
Pakistan's experience of the 1960s and 1980s: "growth 
without development." 58 

In 2006, six million families in Pakistan were 
still below the poverty line. 59 Pakistan's score in the 
UNDP's Human Development Index is currently 136 
out of 177 countries, sandwiched between Ghana 
and Mauritania. 60 There is widespread sentiment in 
Pakistan that the benefits of this decade's economic 


growth failed to trickle down to the majority of the 
population. Recently, there has been an additional 
worry that despite GDP growth, the country stands 
at the precipice of a major financial crisis stemming 
from the economic policies of recent years. Shahid 
Javed Burki, for instance, has argued that the recent 
GDP growth may have been artificial and is unlikely 
to be sustained without higher rates of investment in 
key industries like power generation and job creation 
for the rural poor. 61 A balance of payment crisis looms 
in Pakistan, and many fear a return to International 
Monetary Fund (IMF) lending. 

Even if growth can be sustained, though, 
investments in health and education remain well below 
what is needed to realize Pakistan's demographic 
dividend. The success of this dividend will depend in 
large part on the country's ability to provide young 
people with the skills they need to succeed in the global 
marketplace. This means producing a work force that 
is globally competitive and can help Pakistan diversify 
from traditional agricultural-based industry like 
textiles. Without serious education reform, Pakistan is 
looking at large numbers of unemployable adolescents 
with few economic prospects who are sure to be the 
prime targets of those seeking to mobilize them for 
violent purposes. 62 

The UNDP Human Development Report in 2005 
gave Pakistan the lowest score for its education index 
of any country outside of Africa. 63 Pakistan's overall 
literacy rate hovers between 40 and 50 percent. 64 For 
women, the literacy rate is below 30 percent, and for 
women in the Federally Administered Tribal Areas 
(FATA), it is only 3 percent. Pakistan's primary school 
enrollment rate in early 2000 was the lowest in South 
Asia. 65 In 2005, Pakistan's secondary school enrollment 


stood at just 27 percent of eligible students and less 
than 5 percent went on for tertiary education. Male 
children in Pakistan receive an average of 3.8 years of 
education, while female children receive an average 
of 1.3 years. 66 A host of problems plague education 
in Pakistan: internal mismanagement, poor quality 
textbooks, ghost schools, shoddy infrastructure, 
and discrimination. The single greatest challenge to 
reforming education in Pakistan is the poor quality of 
its teachers, who lack skills and incentives and who 
often fail to show up for work because of their low 
salaries. The result is that more Pakistanis are turning 
away from public education to attend private schools 
and madrassahs. 

Much of America's attention on education in 
Pakistan has focused on the role of madrassahs. The 
linkage between madrassahs and terrorism is tenuous, 
however. While militant recruitment does take place in 
madrassahs, 67 it is probably more likely, as many have 
suggested, that an al Qaeda commander has graduated 
from the London School of Economics than a Pakistani 
madrassah. Still, these schools fail to educate Pakistanis 
in a way that will make them competitive in the global 
marketplace. They also contribute to an environment 
in which anti-modern and anti-Western views are 
more likely to take root. For those looking for a more 
moderate and tolerant Pakistan to emerge, the answer 
is unlikely to reside in madrassahs, though there is no 
guarantee it will reside in Pakistan's public education 
system either. Public schools in Pakistan continue 
to provide textbooks with historical inaccuracies 
based on religious animosities rather than historical, 
scientific, or economic explanations. 68 The problem for 
the United States, though, is that efforts to try to help 
the Pakistani government address curriculum and 


textbook challenges touch a third rail of sovereignty in 
Pakistan and is sure to provoke significant backlash. 

The U.S. focus on madrassahs is in effect a search 
for a simple explanation of the roots of violence and 
extremism in Pakistan. Unfortunately, there is no single 
structural factor that one can identify. The general 
absence of rule of law in Pakistan means that the police 
are viewed by most citizens as predators rather than 
protectors. Strong secessionist feelings and sectarian 
and ethnic tensions tend to overwhelm weak political 
institutions that have been purposefully kept weak by 
military rule. Regional and great power pressures from 
India and the United States tend to negatively influence 
stability. The country is awash with small arms. In 
such an environment, Graham Fuller's great question 
takes on a profound importance: "who will be able to 
politically mobilize this youth cohort most successfully: 
the state, or other political forces, primarily Islamist?" 69 
The potential exists in complex tribal environments 
like FATA for the emergence of an outside entity with 
"powers of oratory and organization" who, with the 
assistance of outside money, can lead a revolt against 
traditional authority. 70 

Young people have been playing an increasingly 
important role in militant organizations in Pakistan 
today. 71 Baitullah Mehsud, a Pakistani Taliban 
leader who some have blamed for Benazir Bhutto's 
assassination, is only in his early 30s. These militants 
have killed hundreds of tribal chiefs and upended 
traditional authority in FATA, making it less likely a 
tribal uprising will succeed in casting out groups like al 
Qaeda. The interwoven web of militant organizations 
in Pakistan works to al Qaeda's benefit. Al Qaeda has 
no dedicated recruiting infrastructure in Pakistan, 
but relies upon this informal network. 72 Historically, 


militant recruitment has revolved around the Indo- 
Pakistani conflict and has taken place out in the open, 
but since 9/11 it has gone underground and has tended 
to use anti-U.S. sentiment to motivate new cadres. 73 

If Pakistan is unable to sustain its economic growth, 
in part because of rising resource pressures, the 
country in 2020 could have millions or potentially tens 
of millions of unemployed young people who have not 
been properly educated to compete in the globalized 
economy. This will be a population that came of age 
during the War on Terror at a time of great antipathy 
toward the United States. Even if rural areas in Punjab 
and Sindh remain relatively quietist traditional societies 
as they have for decades, the increasingly populated 
cities and the heavily trafficked border regions will 
have access to networks of influence around the world. 
The Gulf, with the rising importance of its Sovereign 
Wealth Funds and growing source of remittances 
returning to Pakistan, is likely to have a heightened 
political influence. Today's interconnected world 
means that vectors of prosperity can quickly become 
vectors of instability. 

Understanding the Risks. 

It is worth asking why Pakistan's future — its 
demographics, growing natural resource pressures, 
and efforts to address social ills — should matter to 
the United States. After all, the short-term dangers in 
Pakistan are numerous and challenging enough to suck 
the oxygen out of any long-term policy discussion. 
Furthermore, many countries around the world 
struggle with similar long-term challenges and sustain 
normal partner relationships with the United States. 
Why can't the U.S. Government continue to focus on 


short-term challenges in Pakistan while supporting the 
traditional programs to promote good governance and 
economic growth? 

The answer is that Pakistan may be the country 
where nuclear risk is greatest— where nuclear material 
is least secure, terrorists most active, and nuclear 
exchange with a neighboring state most likely. The long- 
term stability of Pakistan's state and society matters to 
the United States because the consequences of nuclear 
terrorism or a nuclear war could be catastrophic to the 
region and to American interests and lives. 

The nuclear experts who study Pakistan tend 
to downplay the nuclear threat, but the potential 
for nuclear war, nuclear theft, or nuclear accident 
will increase in Pakistan as domestic instability 
increases. Pakistan's safeguards against these nuclear 
risks — the military's cohesion and professionalism, 
established command and control procedures, a 
robust conventional response capability that reduces 
the potential for nuclear use, a politically moderate 
and generally pro-Western government and military 
leadership — all could erode or disappear in the years 
ahead as demographic pressures rise and the fabric 
of Pakistan's state and society come under additional 

Pakistan's relations with India, for instance, have 
thawed since the 1999 Kargil War, but India continues 
to dominate the thinking of Pakistani national security 
planners. India's growing presence in Afghanistan 
has fueled long-held fears in Islamabad of strategic 
encirclement. As Pakistan's conventional deterrent 
declines relative to India's heightened defense 
spending, Pakistan's nuclear deterrent becomes 
increasingly important. There are no guarantees that a 
conventional conflict between India and Pakistan will 


stay conventional. The greater the stresses endured by 
the Pakistani state, the less stable relations with India 
are likely to be. A Pakistan teetering on the brink of 
collapse is likely to act in unpredictable ways toward 
neighboring states and nonstate actors alike. 

No greater threat faces the United States than 
nuclear material in the hands of terrorists. America's 
inability to deter groups like al Qaeda makes 
developing a comprehensive strategy to address this 
threat a vital national priority. The United States 
must invest in new ways of detecting loose nuclear 
material at home and abroad, but few have faith that 
we will be able to identify nuclear material crossing 
our borders if terrorists get hold of it. This heightens 
the importance of disrupting terrorist networks and 
limiting proliferation at its source. 

The most direct ways to prevent terrorists from 
gaining control of nuclear material are to kill and 
capture terrorist leaders, limit the number of nuclear 
weapons states and stockpiles, and ensure the security 
of existing nuclear weapons arsenals. Each of these 
is a vital mission, but hard to achieve with any full 
measure of success. It was former Defense Secretary 
Donald Rumsfeld who asked in 2003 whether we are 
"capturing, killing or deterring and dissuading more 
terrorists every day" than are being recruited and 
deployed against us. 74 Five years later, we still do not 
have a concrete answer to the question. North Korean 
and Iranian pursuit of nuclear weapons demonstrates 
the complex geopolitics involved in trying to limit 
the number of nuclear weapons states. The United 
States has been more successful with reducing existing 
arsenals, but in Russia alone there still exist upwards 
of 10,000 warheads. 

Classified plans to help secure nuclear stockpiles of 
partner states like Pakistan provide some assurances, 


but scenarios of state collapse could render such plans 
meaningless. One attempt to systematically look at 
collapse scenarios in Pakistan anticipated a requirement 
of one million troops to keep nuclear material from 
leaving the country, and concluded that, "it points to 
the critical importance of doing whatever is possible to 
prevent the collapse in the first place." 75 What, exactly, 
would be a plausible scenario in which terrorists could 
get hold of nuclear material? Determining this could 
help to determine which long-term demographic 
trends could be most worrisome. 

Stephen Cohen, one of the leading U.S. experts 
on Pakistan, has argued that all scenarios involving 
transmission of nuclear material to terrorists "lead 
back to the question of the army's integrity." 76 Possible 
transmission scenarios include: 

• A hostile regime emerging through a coup, 
revolution, or election in which nuclear 
technology is transferred as a matter of policy 
to a terrorist group; 

• Civil unrest that leads to divided command 
and control of the Pakistani military while a 
military faction proliferates nuclear material to 

• The continuing weakness of the state and armed 
forces to the extent that the security of nuclear 
stockpiles is in jeopardy, and material is stolen 
by a terrorist group. 

Each of these nightmare scenarios demonstrates 
why U.S. policy has leaned heavily toward influencing 
state behavior and building closer ties with Pakistan's 
armed forces since 9/11. During the 1990s, the Pakistani 
military operated largely outside of America's sphere 
of influence because of U.S. sanctions that were 


enacted after Pakistan's nuclear test. Of the 10-plus 
billion dollars in overt assistance provided by the U.S. 
Government to Pakistan since 9/11, over 60 percent has 
gone toward coalition support funds that reimburse 
the Pakistani military for its role in the war on terror. 77 
This money, along with another billion-and-a-half in 
security assistance, has ensured the Pakistani military's 
cooperation and presence on the Afghan border, even 
if it has failed thus far to defuse the threat. 

Recent tensions, however, between the United 
States and Pakistani militaries have risen to alarming 
levels and threatened to jeopardize the bilateral 
cooperation. A U.S. incursion into Pakistani territory 
by American Special Operations forces on September 
3, 2008, prompted more than the standard rebuke 
from Pakistan. Pakistani military forces have since 
fired on U.S. helicopters and drones that have crossed 
or approached Pakistan's border with Afghanistan. 
It is impossible to predict whether these skirmishes 
will continue or escalate and how this might affect 
U.S.-Pakistan relations over the long run. The trend is 
worrisome, though, considering how vital the Pakistani 
military is to U.S. interests in Pakistan. 

It is likely that some accord will be reached, and 
the United States will continue its close cooperation 
with the Pakistani armed forces. There is too much 
to lose for Washington not to resolve this crisis. 
The paradox, though, is that despite the Pakistan 
military's importance, the relationship has tended to 
frustrate other U.S. goals. America's ties to Pakistan's 
military have given the impression that the United 
States supports anti-democratic forces instead of the 
Pakistani people, provoking anti-American sentiment 
in the country. 


The centerpiece of U.S. counterterrorism assistance 
in Pakistan today is a multiyear commitment to train 
Pakistani Special Forces and the paramilitary Frontier 
Corps in counterinsurgency doctrine and pour 
hundreds of millions of dollars in development money 
into the Tribal Areas. This attempt to win hearts and 
minds is the latest effort to work with local partners 
to create an environment in Pakistan unfavorable to 
al Qaeda and the Taliban. The difficulty, of course, 
is that our enemies are also seeking to shape this 
environment, and often times have proven more 
successful. While they may lack the resources we bring 
to the table, they have a veil of legitimacy from their 
cultural and religious kinship and anti-imperialist 
rhetoric that plays well to nationalist sentiment, even 
though their ideology is not nationalist itself. Pakistani 
public officials often speak of refusing to relinquish 
their sovereignty to foreign powers, but are too willing 
to accept the diminished sovereignty that comes from 
tolerating non-state actors like the Taliban and al 
Qaeda on their territory. 

Ultimately, terrorists survive because of a lack of 
will to address the problem. As Henry Kissinger wrote 
1 month after U.S. forces began their aerial bombing of 
Taliban-controlled Afghanistan in 2001: 

The overwhelming majority of safe havens occur when 
a government closes its eyes because it agrees with at 
least some of the objectives of the terrorists. . . . Even 
ostensibly friendly countries that have been cooperating 
with the United States on general strategy... sometimes 
make a tacit bargain with terrorists so long as terrorist 
actions are not directed against the host government. 78 

The question that many in Washington have asked since 
9/11 — particularly after Musharraf's government cut 


a deal with militants in September 2006 — is whether 
Pakistan has also made this tacit bargain. 

Even now it is uncertain whether the civilian 
government in Islamabad sees the problem on the 
Afghan border as an insurgency that threatens the 
Pakistani state and is worth years of war and sacrifice 
to subdue. Many in Islamabad believe the violence 
against Pakistanis will dissipate once America eases 
its pressure and militant activity is again directed 
toward external targets. Many in Washington believe 
the United States has not yet found a true partner in 
Islamabad — civilian or military— willing and able to 
stand up to the Taliban and al Qaeda in both word and 
deed. This is why the United States has sought to take 
action into its own hands through unilateral military 
action, and why Pakistan has responded by firing on 
U.S. soldiers. 

The United States may be the foremost power 
in the world, but the tools to protect ourselves from 
tomorrow's threats do not always lie in our hands. 
This is not necessarily cause for panic. Few countries 
in the world expect the freedom of action and ability 
to influence events that resides in American hands. It 
may be cause, however, for a reexamination of how 
America achieves its goals and the tools we need to 

The United States must find ways to deepen its 
partnerships with foreign governments and militaries 
and key stakeholders in civil society to help shape an 
environment supportive of U.S. objectives over the 
long-term. No partnerships are perfect. The challenge 
will be improving those partnership where cooperation 
is inadequate but vital. As Defense Secretary 
Robert Gates has said, "the most important military 
component in the War on Terror is not the fighting we 


do ourselves, but how well we enable and empower 
our partners to defend and govern themselves," 79 or as 
former Senate Armed Services Committee Chairman 
Sam Nunn is fond of saying, "We are in a race between 
cooperation and catastrophe." 80 

U.S. Policy Options. 

The first policy imperative of Pakistan's 
demographics is recognizing that as difficult a 
challenge Pakistan poses to U.S. decisionmakers 
today, it will likely be magnified in a decade's time if 
action is not taken now. The 9/11 Commission said the 
United States should make a long-term commitment to 
Pakistan's future. 

The underlying purpose of all action should be to 
mitigate the risk of nuclear material being transferred 
to terrorists over the long run. Although direct U.S. 
military action on Pakistani territory could prove 
necessary, the U.S. Government should do more 
shaping and influencing and less compulsion of 
friends, adversaries, and those in between. 81 Any 
direct action should be weighed against potential 
long-term consequences that could create conditions 
favorable to terrorist recruitment and broader conflict 
and instability in Pakistan. Are the targets of unilateral 
military strikes directly threatening to U.S. interests 
and lives? If not, the costs of stirring resentment in 
Pakistan may not be worth the immediate benefits of 

U.S. shaping efforts should take the form of 
strengthening the Pakistani military's coherence 
and professionalism, promoting forces of political 
moderation, working to address divisions in Pakistani 
society, and building the capacity of government, 


military, and civil society actors. The U.S. Government 
already engages in much of this type of work, and 
yet the effect seems to be far less than the sum of the 
various parts. 

The United States should recognize that its words 
and deeds can create incentives and disincentives 
for Pakistanis to work toward peace, stability, and 
moderation. It should be content to let politics play out 
in Islamabad without the shadow of U.S. interference. 

At the same time, the United States should quietly 
build deeper and more lasting relationships with 
all levels of the Pakistani military. The purpose of 
this engagement should go beyond general alliance 
maintenance and intelligence collection and seek to 
generate a common threat perception and set of shared 

America's visible presence in Pakistan should 
expand tremendously, but not along a security 
agenda. The Biden-Lugar bill for Pakistan gets many 
elements right: billions of dollars of aid for education 
and health over many years, greater accountability for 
security assistance, building a new relationship with 
the Pakistani people. It is a long-term prescription that 
is necessary for a counterinsurgency war that will take 
years to win. 

Any long-term aid plan for Pakistan must include 
the following elements: 

• Massive new investments in teacher training. 
America should become synonymous with 
quality education in Pakistan, not with the war 
on terror. The only way Pakistan will compete 
in the future is with strong public education. 

• Food, water, and energy assistance. America 
should work closely with the Pakistani state and 
civil society to develop, fund, and implement a 


comprehensive program to address resource 
shortages in Pakistan over the next 20 years. 
The United States has already provided short- 
term food assistance to Pakistan, but longer- 
term programs can be developed, particularly 
in the energy sector. 
• Trade assistance. Even if political realities 
mean that the United States is not going to 
fully open its markets to Pakistani textiles, the 
United States should help Pakistan diversify 
and increase demand for its exports to lower its 
trade deficit. Provinces should have more say in 
the formulation of Pakistan's trade policy, and 
Punjab must become an engine of growth for all 
of Pakistan. Greater linkages must be built with 
China and India. 

America's assistance to Pakistan should be closely 
tied to a strategic communication plan to help counter 
the ideology put forward by groups like the Taliban 
and al Qaeda. The initiative and implementation 
team should have an extensive local presence outside 
the American embassy, and be staffed by Pakistanis. 
There is added risk to operating country-wide at a time 
when anything associated with America could become 
a target, but working in Pakistan is a risky proposition, 
and the United States must be willing to bear more 

Ultimately, Pakistanis will need to make the 
sacrifices and tough decisions necessary to keep their 
country on a path toward peace and prosperity. The 
United States can exercise more patience, but at a 
certain point, Pakistan will need to demonstrate that it 
is committed to effectively reducing the militant threat 
on its western border. Tribal jirgas and a new, more 


balanced counterinsurgency strategy may prove to be 
the answer. The danger is that if these fail, the time 
horizons in Pakistan for U.S. decisionmakers are likely 
to get even shorter than they have been over the past 7 


1. Myron Weiner and Michael S. Teitelbaum, Political 
Demography, Demographic Engineering, New York: Berghahn 
Books, 2001, p. 2. 

2. Richard Jackson and Neil Howe, The Graying of the Great 
Powers: Demography and Geopolitics in the 21st Century, Washington, 
DC: Center for Strategic and International Studies (CSIS), 2008, p. 

3. Weiner and Teitelbaum, p. 46. 

4. Jackson and Howe, p. 19. 

5. Tauseef Ahmed, "Population Sector in Pakistan: Current 
Demographic Situation Sectoral Problems and Issues and the Way 
Forward," Multi-donor Support Unit, No. 30610, October 2001. 

6. Department of Economic and Social Affairs UN Secretariat 
Population Division, "Long-range Population Projections," 
proceedings of the UN Technical Working Group on Long-Range 
Population Projections, UN Headquarters, New York, June 30, 
2003; the World Bank, "World Development Indicators Database: 
Country Data Profile," September 2008. 

7. Population Reference Bureau, "Data by Geography," 
August 2004. 

8. Zeba A. Sathar, "Fertility in Pakistan: Past, Present and 
Future," Workshop on Prospects for Fertility Decline in High 
Fertility Countries, Population Division, Department of Economic 
and Social Affairs, UN Secretariat, New York, July 9-11, 2001. 


9. Durr-e-Nayab, "Demographic Dividend or Demographic 
Threat in Pakistan," Pakistan Development Review, Vol. 47, 2006, p. 

10. Ibid, p. 7. 

11. David Canning, "The Impact of Aging on Asian 
Development," Seminar on Aging Asia: A New Challenge for 
the Region, Kyoto, Japan, May 7, 2007, and Tokyo, Japan, May 8, 

12. Durr-e-Nayab, p. 8. 

13. Government of Pakistan, "The Demographic Dividend — 
Unleashing the Human Capital," Pakistan Development Forum, 
Jinnah Convention Centre, Islamabad, Pakistan, April 25-27, 2007. 

14. Durr-e-Nayab, p. 9. 

15. Ibid. 

16. David Canning, p. 13. 

17. Durr-e-Nayab, p. 15. 

18. Ahmed, p. 3. 

19. Durr-e-Nayab, p. 15. 

20. Jackson and Howe, p. 141. 

21. Ibid, p. 3. 

22. Farhat Haq, "Rise of the MQM in Pakistan: Politics of 
Ethnic Mobilization," Asian Survey, Vol. 35, No. 11, November 

23. Adeel Khan, Pakistan's Sindhi Ethnic Nationalism: 
Migration, Marginalization, and the Threat of Indianization," 
Asian Survey, Vol. 42, No. 2, March/ April 2002. 


24. Afghan Research and Evaluation Unit, "Afghans in 
Quetta: Settlements, Livelihoods, Support Networks and Cross- 
Border Linkages," January 2006. 

25. Haris Gazdar, "A Review of Migration Issues in Pakistan," 
Migration, Development and Pro-Poor Policy Choices in Asia 
Conference, Dhaka, Bangladesh, June 22-24, 2003. 

26. Devesh Kapur, "Remittances: The New Development 
Mantra?" G-24 Technical Group Meeting, Harvard University 
and Center for Global Development, August 25, 2003. 

27. Aqila Khawaja, "Constraints and Challenges Arising 
from Demographic Transitions and Imbalances: Pakistan at the 
Crossroads," Network of Asia-Pacific Schools and Institutes of 
Public Administration and Governance Annual Conference, 
Beijing, China, December 5-7 2005. 

28. Ibid, p. 560. 

29. Jackson and Howe, p. 144. 

30. UN Development Programme, Beyond Scarcity: Power, 
Poverty and the Global Water Crisis, New York: Palgrave Macmillan, 

31. Ibid, p. 14. 

32. Steve Morrison, A Call for a U.S. Strategic Approach to the 
Global Food Crisis, Washington, DC: CSIS, July 28, 2008, p. 2. 

33. Ibid., pp. 2-4. 

34. Ather Maqsood Ahmed and Rehana Siddiqui, "Food 
Security in Pakistan: Can it be Achieved?" The Pakis tan Developmen t 
Review, Vol. 34, No. 4, part 2, Winter 1995, p. 723. 

35. Ibid., p. 724. 

36. Ibid. 


37. Ismail Quereshi, "Agriculture for Growth and Poverty 
Alleviation: Policies and Programs of the Government of 
Pakistan," Pakistan Development Forum: The Demographic 
Dividend- Unleashing the Human Capital, Jinnah Convention 
Centre, Islamabad, Pakistan, April 26, 2007. 

38. Ibid, 

39. So hail Jehangir Malik, "Agriculture in Pakistan: Challenges 
and Prospects," Pakistan Development Forum: The Demographic 
Dividend- Unleashing the Human Capital, Jinnah Convention 
Centre, Islamabad, April 26, 2007. 

40. Naser Faruqui, "Responding to the Water Crisis in 
Pakistan," Water Resources Development, Vol. 20, No. 2, June 2004, 
pp. 177-192. 

41. Ibid. 

42. Aaron T. Wolf, "Water and Human Security" AVISO 3, 
June 1999. 

43. Government of Pakistan, "Pakistan: a Hydraulic Nation," 
Pakistan Development Forum: The Demographic Dividend- 
Unleashing the Human Capital, Jinnah Convention Centre, 
Islamabad, Pakistan, April 27, 2007. 

44. Faruqui, p. 179. 

45. Faruqui, p. 180. 

46. Sandia National Laboratories, "Energy-Water Nexus 
Overview," available from 
overview Mm. 

47. Mukhtar Ahmed, "Meeting Pakistan's Energy Needs," 
Woodrow Wilson International Center for Scholars Presentation, 
Washington, DC, June 2006. 

48. Ibid., p. 6. 

49. Ibid., p. 1. 


50. Tauseef Ahmed, "Population Sector in Pakistan: Current 
Demographic Situation Sectoral Problems and Issues and the Way 
Forward," Multi-donor Support Unit, No. 30610, October 2001. 

51. Rehana Siddiqui, "Energy and Economic Growth in 
Pakistan," The Pakistan Development Review, Vol. 43. No. 2, 2004, p. 

52. Robert G. Wirsing, Baloch Nationalism and the Geopolitics 
of Energy Resources, Carlisle, PA: Strategic Studies Institute, U.S. 
Army War College, 2008. 

53. Ibid., p. 8. 

54. Ibid. 

55. Michael Kugelman and Robert Hathaway, Hard Sell: 
Attaining Pakistani Competitiveness in Global Trade, Woodrow 
Wilson International Center for Scholars Asia Program, 2008. 

56. Robert Looney, "Failed Economic Take-Offs and 
Terrorism: Conceptualizing a Proper Role for U.S. Assistance to 
Pakistan," Asian Survey, Vol. 44, No. 6, 2004, p. 781.57. Ibid, p. 771. 

58. Ibid, p. 778. 

59. Khawaja, p. 558. 

60. UN Development Program, "Human Development 
Reports," available from 

61. Shahid Javed Burki, "Pakistan's Economy: Challenges and 
Opportunities," CSIS presentation, Washington, DC, March 25, 

62. Robert M. Hathway, ed., Education Reform in Pakistan: 
Building for the Future, Washington, DC: Woodrow Wilson 
International Center for Scholars, 2005. 

63. Ibid. 


64. Shahid Javed Burki, "Educating the Pakistani Masses: The 
World Needs to Help," Testimony before the Senate Committee on 
Foreign Relations on Combating Terrorism Through Education: 
The Near East and South Asian Experience, Washington, DC, 
April 13, 2005. 

65. Robert Looney, "Failed Economic Take-Offs and 
Terrorism: Conceptualizing a Proper Role for U.S. Assistance to 
Pakistan," Strategic Insights, Vol. 2, No. 2, February 2003, p. 783. 

66. Javed Hasan Aly, Education in Pakistan: A White Paper, 
National Education Policy Review Team, 2007, p. 39. 

67. C. Christine Fair, "Militant Recruitment in Pakistan: 
Implications for al Qaeda and other Organizations," Studies in 
Conflict and Terrorism, Vol. 27, No. 6, 2004, p. 489-504. 

68. A. H. Nayyar and Ahmad Salim, eds., The Subtle Subversion: 
The State of Curricula and Textbooks in Pakistan: Urdu, English, Social 
Studies and Civics, Islamabad, Pakistan: Sustainable Development 
Policy Institute, 2002, pp. 9-62, 70. 

69. Graham E. Fuller, The Youth Factor: The New Demographics 
of the Middle East and the Implications for U.S. Policy, Washington, 
DC: The Brookings Institution, 2003. 

70. Akbar S. Ahmed, Resistance and Control in Pakistan, New 
York: Routledge, 2004, p. 148. 

71. Nicholas Schmidle, "Next-Gen Taliban," New York Times 
Magazine, January 6, 2008. 

72. Fair, p. 490. 

73. Ibid. 

74. Donald Rumsfeld, "Rumsfeld's War-On-Terror Memo," 
USA Today, October 16, 2003. 

75. Michael O'Hanlon, "Dealing with the Collapse of a 
Nuclear-Armed State: The Cases of North Korea and Pakistan," 
Princeton Project on National Security, Princeton, NJ: Princeton 


University, and Washington, DC: Woodrow Wilson School of 
Public and International Affairs, 2005. 

76. Stephen Cohen, "Fractured Pakistan: Potential Failure of a 
Nuclear State," Fund for Peace Threat Convergence Conference, 
November/ December 2006, p. 43. 

77. Craig Cohen, "When $10 Billion Isn't Enough: Rethinking 
U.S. Strategy and Assistance to Pakistan," The Washington 
Quarterly, Spring 2007; Craig Cohen, A Perilous Course: U.S. 
Strategy and Assistance to Pakistan, Washington, DC: CSIS, 2007. 

78. Henry Kissinger, "Where Do We Go from Here?" The 
Washington Post, November 6, 2001. 

79. Robert Gates, "Landon Lecture," Kansas State University 
speech, Manhattan, Kansas, November 26, 2007. 

80. Sam Nunn, "The Race Between Cooperation and 
Catastrophe," The American Academy in Berlin, June 12, 2008, 
available from 

81. Robert Gates, "Pre-Alfalfa Luncheon," CSIS speech, 
Washington, DC, January 26, 2008. 




Maya Chadda 


Pakistan's growing crisis of governability is dis- 
turbing to policymakers across the world. A group of 
top U.S. experts on Pakistan conclude that "The United 
States cannot afford Pakistan to fail nor . . . ignore the 
extremists operating in Pakistan's tribal areas." 1 Why 
is Pakistan important to the United States, and what 
would make it more stable and democratic? The first 
question is less difficult to answer. Throughout the 
19th century, Afghanistan was the cockpit of a titanic 
struggle that came to be called the Great Game. In a 
similar, but modern context, that role has now devolved 
to Pakistan. What makes its growing instability a 
particular cause of concern is that far from being a 
steadfast ally, capable of promoting and projecting 
U.S. interests in the region, internal developments in 
Pakistan are in danger of compounding threats to U.S. 

As a nuclear-armed, predominantly Muslim nation 
of 165 million, Pakistan is important to the United 
States in several ways. It is located adjacent to the oil 
rich Persian Gulf states and Central Asia; it borders 
on China and India, the two principal rising and rival 
states in Asia. As a result, Pakistan is strategically 
central to any attempt to prevent war and maintain 
peace in the region. All three states — India, Pakistan 
and China — are nuclear power states and historic 
rivals or allies. India is regarded as an adversarial 


state by both Pakistan and China, while China has 
built close security ties with Pakistan. At the same 
time, it is an Islamic nation with a declared interest 
in building a modern democracy, Pakistan can serve 
the United States both as a shield and as a sword; it 
can shield against expansion of radical Islam currently 
entrenched in the tribal areas between Pakistan and 
Afghanistan and act as a sword to eliminate their 
presence from the region. Should Pakistan become a 
successful democracy it would serve as an exemplar to 
the Islamic world in its own ideological battles. 

However, Pakistan has had trouble establishing 
stability let alone a democracy over the past 65 years 
of its history. Military dictators have ruled the country 
close to 50 percent of the time. 2 The remaining years 
have witnessed populist leaders backed by cults of 
personality attempting to establish a party system but 
with little success given the way that the military has 
spread its tentacles throughout Pakistani society and 
permeated its institutions. Preoccupied with political 
survival, Pakistan's civilian leaders have paid little 
attention to reforms that could have prevented the 
state's slide towards failure. Even a cursory glance at 
Pakistan's history shows how it has lurched from one 
political crisis to another. The first decade of uncertain 
bureaucratic democracy ended in a military takeover 
in 1958 by General Ayub Khan, whose rule lasted for 
the next 10 years. Since then the army has, in a sense, 
never been out of power. Pakistan has slipped in and 
out of military rule three more times. It has been ruled 
directly by the military for 22 of the following 40 years, 
and even in the interregnums, civilian governments 
have only survived so long as the military acquiesced. 

In retrospect, the 11 years of military rule from 
1977 to 1988 under General Zia-ul-Haq was the 


beginning of Pakistan's steady slide into Islamization. 
Zia maneuvered and revived a strategic alliance 
with the United States in which Pakistan agreed to 
serve as a conduit to Afghan Mujahedin fighting the 
Soviets forces. In return, the United States agreed to 
provide Pakistan with military assistance and turn 
a blind eye to its acquisition of nuclear technology, 
although officially the United States insisted on a 
policy of nonproliferation. In fact, the adventurous 
policy of cross border infiltration to foment rebellion 
in Indian Kashmir originated in the Zia years. To gain 
popular support for his illegitimate rule, Zia turned 
to the mullahs and Islamic leaders while Pakistan's 
civilian political leaders and parties were banned. 
The subsequent 10 years of uncertain democracy can 
be characterized as a period of diarchy, indirect rule 
by the military behind the facade of civilian rule and 
elections. Not one elected government was able to 
complete its term in office during those 10 years. 3 

The era of democratic experiment ended in war 
and a coup in 1999 by General Pervez Musharraf who 
dismissed Prime Minister Nawaz Sharif and arrested 
him on charges of corruption and mismanagement. 
These charge sheets were trotted out every time the 
Pakistani military decided to stage a coup and take 
over power and had become something of a template 
for takeover. 

The year 2008 saw yet another transition from 
military rule to an uncertain coalition government, 
this time from General Musharraf to President Asif Ali 
Zardari and Prime Minister Yousuf Reza Gilani. But the 
new elected government must manage a Pakistan that 
is weakened by economic crisis, political discontent, 
and radical Islamists spreading violence and terror. 4 



Pakistan began life with all the disadvantages of a 
newly born state. In sharp contrast to India, its lack of 
a preexisting state structure is the main reason why it 
succumbed repeatedly to military rule. The areas that 
were pulled together as Pakistan in 1947 had powerful 
local ethnic parties, such as the Awami League in East 
Pakistan and Khudai Khidmatgars in North West 
Frontier Provinces (NFWP). These parties consented 
to join Pakistan in the 1940s, largely because M. A. 
Jinnah, the leader of the Muslim league and founder 
of Pakistan, promised them self-rule and political 
autonomy. However, the idea of Pakistan as a homeland 
for the Muslims of the subcontinent had little space 
in it for ethnic and cultural diversity. The nationalist 
narrative of Pakistan was forged on the anvil of Islam. 

The geographical anomaly of a single nation 
composed of two halves divided by the entire body of 
India only heightened the pressure on the early leaders 
to deemphasize its cultural and linguistic diversity. A 
geographically divided Pakistan could not become a 
democracy unless it accepted the possibility of electoral 
advantage going to its more populous eastern wing. 
This proved too much for the West Pakistan based 
military-feudal elite to swallow. 

Despite the turbulence caused by repeated military 
coups, the surgical dissection of the country in 1971, and 
the temporary loss of U.S. interest in South Asia after 
the Vietnam War, every Pakistani government adhered 
firmly to two principles of foreign policy: strong 
security ties with the United States, and an enduring 
conflict with India. Conflict with India was inevitable 
because of the way the partition had occurred in 1947, 
unleashing a communal holocaust and leading to war 


between India and Pakistan over Kashmir. Each of these 
relationships contributed to the ascent of the military 
to power in Pakistan. A hostile India justified putting 
the armed forces in charge; alliance with the United 
States helped Pakistan defend against the larger India. 
But this strategy came at huge domestic costs because 
swollen military budgets preempted expenditure on 
social development, particularly education and health. 

It is against this complex intertwining of domestic 
and international forces that we need to imagine an 
alternative ethnic future for Pakistan. What would make 
it more stable? What would lead to a consolidation of 
democracy in Pakistan? There is no consensus among 
observers in the United States on how this can be 
achieved. One view advocates a firm adherence to the 
conventional road of free and fair elections. It believes 
that this will guarantee the inclusion of all sections of 
society and facilitate the emergence of a stable polity. 
A second view is that political institutions need to be 
strengthened first, through a reform of the political 
parties as well as the legal and constitutional framework 
of the state. The conclusion is that only then will free 
elections yield the desired results. More community- 
oriented observers stress education, health, and 
transparency and consider advances in these to be a 
necessary precondition for the emergence of a stable 
democracy. There is thus no clear consensus on where 
to start and how to proceed. 5 

In the United States this debate is understandably 
focused on rolling back the advancing Taliban groups 
that are now entrenched in the Federally Administered 
Tribal Areas (FATA) and the North West Frontier 
Province (NWFP). 6 Under U.S. pressure, Pakistan's 
government abandoned the strategy of negotiating 
with some factions of the Taliban, provided they 


gave up arms and accepted the suzerainty of the 
government in Islamabad. General Musharraf had 
strongly supported the deal and the later leader of 
the opposition in Pakistan's Parliament, Nawaz Sharif 
and Prime Minister Gilani also thought it to be a 
prudent strategy. The idea was to use a carrot and stick 
approach to divide the Taliban and regain control of 
the FATA. General Musharraf was convinced that the 
FATA areas had to be incorporated into Pakistan, but 
this meant changing its current status and turning it 
into another province of Pakistan. As a result, the deal 
was to be an interim arrangement. 

But the idea of a deal with the radical Taliban was 
deeply disturbing to the U.S. Government. It smacked 
of appeasement and weakness; it also institutionalized 
the territorial gains made by the Taliban. This was 
not acceptable to the United States largely because it 
undermined its goal of weakening the Afghan Taliban 
and stabilizing the Afghan government under a non- 
Taliban rule. 

Many in the United States argued that the Taliban 
had a larger agenda and allowing them to gain 
legitimacy would threaten Pakistan while undermining 
in the interim U.S. efforts at strengthening the Karzai 
government in Kabul. The short-term U.S. objective 
was to help Pakistan's military eliminate the Taliban, 
but strengthening the Pakistani army created serious 
problems for all future civilian governments. And 
many in the policy circles close to both the Clinton 
and Bush administrations had argued that in the 
ultimate analysis, the only effective answer to Islamic 
radicalization was a stable and democratic Pakistan. 
But how could the United States promote democracy 
while supporting the military in Pakistan? The U.S. 
strategy of backing the military had produced only 


aborted democracy in Pakistan. It was unlikely to 
succeed this time around. Neither the objectives of 
democracy nor the narrow focus on the U.S. war on 
terrorism tells us how Pakistan can build a stable state 
as a first step towards democracy. 

This chapter seeks to explore ways in which 
this objective can be achieved despite the political 
constraints under which any Pakistani government 
has to operate. I argue that democracy is not a panacea 
for instability, at least not in the short run. Democratic 
competition can exacerbate conflict, and, while 
democracy ought to be the goal, ethnic reconciliation 
and conflict management capacity are more important 
as first steps towards that goal. This interim course 
of action does not need a full-fledged democracy 
to be in place. Pakistan has possessed a partial and 
rather unsuccessful federal system since at least 1973, 
although its record of accommodating its nationalities 
has been dismal. Integrating these in an enduring way 
is an existential imperative for a stable Pakistan. If the 
United States is interested in Pakistan's stability, then 
it needs to help Pakistan find a formula to forge a new 
ethnic bargain that will revive its federal mandate. 

Pakistan is not alone in having to balance ethnic and 
regional influences against the need to unify; nor is it 
the only country in South Asia to fear disintegration 
because of ethnic overlap, religious fundamentalism, 
civil strife, and disputed borders. In all these respects, 
countries in South Asia share Pakistan's problems: 
One is an ethnocracy (Sri Lanka), two are partial and 
episodic democracies (Bangladesh, Nepal), while one 
is a fully-fledged but still flawed democracy (India). 
South Asia provides a valuable context to imagine an 
alternative future for Pakistan. This context suggests 
that, short of a fully functioning and vibrant democracy, 


a revitalized power-sharing agreement between the 
central Pakistani state and its parts can be a viable path 
to stability. 


Ethnically and linguistically, Pakistan, like 
neighboring India, is one of the most heterogeneous 
countries in the world. At its inception, Pakistan was 
made up of five large distinctive nationalities, Bengalis 
in East Pakistan and Sindhis, Punjabis, Pushtuns, and 
Balochis in West Pakistan. There was a sixth large 
group, but it had no territorial base: the Muhajirs, 
who had migrated to the newly created Pakistan 
and settled largely in Punjab and Sindh. Leaders of 
Pakistan presumed that Islam would hold the fragile 
union together, but support for the idea of a separate 
nation of Pakistan had been tepid among the Baloch, 
Pushtuns, Sindhis, and even to some extent among 
the Punajbi Muslims, until weeks before the partition. 
These ethnic communities had agreed to join Pakistan 
on the promise of a large degree of autonomy and self- 
rule. But Pakistan's post-independence history belied 
these hopes, and produced instead a serious imbalance 
between ethnic nationalities and the central state. 

Pakistani leaders shared a common fear in the 
early years of independence that granting concessions 
to ethnic nationalities might spiral into separatism. 
Exhorting his countrymen, M. A. Jinnah, Pakistan's 
founding father had said, "You have carved out a 
territory, a vast territory. It is all [yours]; it does not 
belong to a Punjabi, or a Sindhi, or a Pathan or a 
Bengali. It is all yours." Therefore, "If you want to 
build yourself up into a nation," he said, "for God's 


sake, give up this provincialism." 7 And although 
India was committed to creating a federal structure 
from the very beginning, India's first Prime Minster, 
Jawaharlal Nehru, had voiced strong misgivings about 
provincialism and railed against it in the early 1950s. 

Nehru and Jinnah had good reason to fear 
provincialism. No state can be formed without some 
concentration of power at the center, and the power has 
to be exercised most decisively at the very beginning of 
nation-building. 8 Progressive consolidation, however, 
requires an institutionalization of the means to 
circulate and share power. Democracy, or at the very 
least, negotiated power sharing are the only ways to 
ensure that this takes place. 

Neither development had occurred in Pakistan. 
India offers an interesting contrast. "In India, 
federalism was the mechanism to accommodate great 
linguistic heterogeneity, creating multiple identities. 
But the elite of Pakistan viewed regional and linguistic 
identities as inherently dangerous and as undermining 
the 'nation project'. The adoption of Urdu as the state 
language was an indication of interregional identity 
projected by the center." 9 

While Pakistani leaders feared power-sharing, 
the denial of autonomy was precisely what led to the 
breakup of East from West Pakistan in 1971. The loss 
of Bengali-dominated East Pakistan, however, made 
accommodation with ethnic identities more, and 
not less, urgent. The Bengali majority in undivided 
Pakistan had counterbalanced the Punjabi majority 
in West Pakistan to give the other ethnic groups the 
political space to assert themselves. The secession of 
East Pakistan therefore triggered powerful movements 
for provincial autonomy for a Sindhu Desh, an 
independent Balochistan, a NWFP tied to Afghanistan, 


and even a Mohajir state that aspired to turn Karachi 
into another Singapore. What complicated matters 
even more was the injection of Islamist ideology into 
FATA and northern Balochistan after 1990. 

Why did these grievances eventually morph into 
a violent movement against the state of Pakistan? 
In addition to denial of autonomy, two other factors 
were responsible: the preponderance of Punjabis, 
not only in numbers but also in wealth and power 
within the army; and the repeated military takeovers 
of Pakistan's government after 1971. Together these 
three conditions destroyed the political channels that 
might have established a new more equitable balance 
between Pakistan's ethnic nationalities and its central 


If Pakistan did not become a democracy, it was 
not for want of trying. Between 1947 and 1956, there 
had been no constitutional representation in the 
newly created Pakistan. The constitutional crisis that 
developed during the existence of the first Constituent 
Assembly strengthened the role of central institutions — 
the bureaucracy and army — at the expense of regional 
parties in the provinces. The 1956 constitution and the 
governments it created were short-lived and gave way 
to political chaos. Acutely conscious of its weakness 
in comparison to the well-led larger India, Pakistan's 
elite opted for military rule to jettison democracy. The 
unsuccessful conclusion of the first war with India in 
1948 had already frozen the Indo-Pakistan frontier 
into a hostile border. By 1956, the Cold War was jelling 
into military alliances led by the United States and 


Soviet Union. It is in this context that General Ayub 
Khan decided to assume control in 1958, suspend the 
constitution, and link the course of Pakistan's foreign 
policy to U.S. containment objectives. 

President Ayub ruled the country with an iron fist 
and ignored the demands of Pakistan's ethnic nation- 
alities. Instead, he strengthened the role of the bur- 
eaucracy and military within a new constitutional set 
up that transformed Pakistan into two administrative 
units, West and East Pakistan. The purpose was to 
balance the Bengali-dominated East Pakistan and to 
deny the latter power proportionate to its numerical 
majority. But it also had the unfortunate side effect 
of forcing the merger of all ethnic nationalities in 
the west— the Baloch, Pushtun, Punjabi, Sindhi and 
Muhajirs — into a single unit. 10 

The single unit plan (meant to establish a parity 
between the two halves of Pakistan) was the starting 
point of all of Pakistan's subsequent problems, and 
indeed of its drift towards Islamism in the 1980s. It 
sowed the seeds of secession in East Pakistan. It also 
effectively disenfranchised the Sindhis, the Balochis, 
and to a lesser extent the Pushtuns. The years between 
1969 and 1972 were chaotic and violent. Ayub Khan's 
fall from power led to the first authentic elections, but 
these resulted in a majority for the Awami League 
party of East Pakistan. Unable to tolerate the prospect 
of an East Bengali prime minister, General Yahya 
Khan staged a preemptive coup that settled the fate 
of Pakistan's democracy for the second time since its 
birth. What followed was a civil war, intervention by 
the Indian army, Pakistan's defeat, and the secession of 
East from West Pakistan. Since the military had been 
discredited, political parties, particularly the Pakistan 
People's Party (PPP), emerged as the alternative. Prime 


Minister Bhutto gave Pakistan its third constitution. 
This constitution has been in abeyance for much of 
the last 3 decades, but it subsequently became the 
basis for constitutional modifications. These occurred 
largely in response to the shifts in the balance of 
power between the military and civilian leadership 
in Pakistan. The 1973 constitution repealed the One- 
Unit Plan (returning West Pakistan to the original four 
provinces and tribal areas) and put in place provisions 
for regional autonomy within a federal state. Its 
adoption was tantamount to an admission that ethnic 
accommodation was an existential imperative for 

The 1973 constitution, framed in the aftermath of 
Bangladesh's secession, formally restored the principle 
of federalism, redefining the term as maximum 
provincial autonomy. The residual powers were vested 
in the Provincial Assemblies, and for the first time a 
bicameral legislature was elected. The Senate was 
elected for 4 years on a basis of regional parity. The 
provinces, Punjab, Sindh, NWFP and Balochistan were 
to elect 14 members each for 4 years and half of the 
members retired after 2 years. 11 The 1973 constitution 
contained two lists: Federal and Concurrent. The 
Federal list comprised two parts. Part I contained 
items over which only the Parliament could legislate, 
encompassing 67 subjects. Either the Federal and 
Provincial governments could legislate over the items 
in the Concurrent List; however, in case of conflict over 
the exercise of power, the central government's right 
prevailed (article 143). 

The 1973 constitution created a federal structure, but 
it did so in the absence of any genuine understanding, 
or indeed respect, for the federal principle. While 
it devolved a large share of legislative power on the 


provinces, Prime Minister Bhutto remained deeply 
reluctant to devolve power to the provinces. This 
became evident in his treatment of Baloch nationalism. 

The weaknesses of the One-Unit Plan had been 
exposed by events in Balochistan even before the 
secession of Bangladesh. In an effort to curb the 
growing secessionism there, General Yahya Khan had 
granted Balochistan the status of a separate province in 
1970. But in the aftermath of Pakistan's breakup, fearful 
that Balochistan would go the same way, Zulfiqar 
Ali Bhutto, operating as interim President under an 
interim constitution, dissolved Balochistan' s coalition 
government led by Attaullah Mengal on February 15, 
1973. When the National Awami Party (NAP) and 
Jammat-Ulemma-Islami QUI) coalition in the NWFP 
resigned in protest against Bhutto's arbitrary action, 
he drew no lessons from it and instead banned the 
NAP in February 1975 and arrested its leaders under 
charges of conspiring against the state. They remained 
behind bars until 1977. As a result, throughout the 
Bhutto period there was no effective opposition in the 
National Assembly. 

Federalism received a body blow when General 
Zia-ul-Haq engineered another military coup in 1977. 
For the following 8 years, the 1973 constitution went 
into abeyance, and federalism came to be substituted 
by a party-less democracy which slid rapidly toward 
Islamization of Pakistan's state and society. The 
accidental death of General Zia brought another 10 
years of uncertain and unstable democracy to Pakistan, 
but no elected governments finished their terms 
during those 10 years. The military dismissed ruling 
coalitions led by Benazir Bhutto and Nawaz Sharif two 
times each on the standard charges of mismanagement 
and the endangerment of national security. It was clear 


that Pakistan's constitution would operate in breach 
and federalism would disintegrate under the force of 
struggle among Pakistan's political elites. Indeed this 
period witnessed the crass manipulation of ethnic 
movements through the tactics of divide and rule, 
cooptation, and bribery. Ethnic parties participated in 
the four coalition governments, but the fear of military 
intervention exacerbated uncertainty and let loose the 
very worst features of democracy in Pakistan: alliances 
for pecuniary and political purposes that were devoid 
of a larger purpose. 

The only power-sharing experiments worth noting 
during the Zia and then the Musharraf governments 
were the devolution plans each had introduced. These 
plans came at different times in Pakistan's history 
but were similar in motivation, general outline, and 
purpose. The International Crisis Group (ICG) report 
on these plans points out that "The primary motivations 
for Zia to create local bodies was to legitimize the 
military government, broaden its support base beyond 
the military, and use the newly created and pliable local 
elite to undermine its political opponents." 12 In essence, 
the local bodies provided the "civilian base of his military 
government, supporting it in return for economic and 
political benefits." 13 Gradually, these local governments 
became a vast mechanism for extending state patronage 
to promilitary politicians, providing the military 
government with ample scope for staging favorable, 
nonpartisan elections. In due course, the new local 
elites formed the core of Zia's rubber stamp parliament, 
elected in nonparty national elections in 1985. But these 
local bodies could not assuage popular demands for 
participation or bestow any lasting legitimacy on the 
military government. 14 


The report goes on the say that "Devolution, in 
fact, has proved little more than a cover for further 
centralized control over the lower levels of government" 
in Musharraf's plan. The ICG report also points out: 

Despite the rhetoric from Islamabad of empowerment 
. . . local governments have only nominal powers. 
Devolution from the centre directly to the local levels, 
moreover, negates the normal concept of decentralisation 
since Pakistan's principal federal units, its four 
provinces, have been bypassed. The misuse of local 
government officials during the April 2002 presidential 
referendum and the October 2002 general elections has 
left little doubt that these governments were primarily 
instituted to create a pliant political elite that could help 
root the military's power in local politics and displace its 
traditional civilian adversaries. 15 

Time and again, Pakistan was denied democracy, 
which could have welded the country into a coherent 
nation-state. It could not settle on a legal political 
framework that could have channeled protests and 
integrated its diversity into a coherent whole. Still, the 
absence of a legal political framework alone cannot 
explain why Pakistan's ethnic nationalities turned to 
violence and separatism. For that we need to briefly 
sketch a short profile of their key grievances. 



Sindhi separatism can be traced all the way 
back to the group's marginalization in the creation 
of Pakistan in the 1940s and to the demographic 
changes that followed Partition. Sindhi is not only 


a distinctly different language from Punjabi, Urdu, 
and Pushtu, it has a rich and long literary tradition. 
Partitioned Sindh, not unlike partitioned Bengal in 
1947, was divided between the more modern, urban, 
and prosperous Hindu minority and the feudally 
dominated Muslim peasantry in rural Sindh. During 
the partition most of the Hindus migrated to India 
while Urdu-speaking Muslim refugees (Muhajirin) 
settled in Sindh, particularly Karachi. These migrants 
were better educated and soon entrenched themselves 
among Pakistan's ruling elites. In contrast, Muslim 
Sindhis lagged far behind with only 10 percent levels 
of literacy compared to 70 percent among the new 
comers. Wright comments: 

This handicap might have been compensated politically 
as Sindhis still had a two-thirds majority in the province 
as a whole had it not been for the exigencies of national 
politics in the new country. During the first republic of 
Pakistan (1947-58) and certainly until the assassination 
of Prime Minister Liaquat Ali Khan in 1951, politics was 
dominated by the refugee leaders from northern India 
and Bombay, but they lacked constituencies and were 
consequently reluctant to hold national elections." 16 

The first cause of friction between the government of 
Sindh and the central government was the choice of 
Karachi as the national capital. The city of Karachi, 
which the Sindhis claimed always to have belonged 
to Sindh, was "demarcated and placed in 1948 under 
central administrative control." 17 Later Sindh was 
merged into West Pakistan as a result of the Two-Unit 

In 1960, President Ayub Khan moved the national 
capital to Islamabad leaving Sindh without the 
national capital or any capital whatsoever. Ironically, 


this also marginalized the Muhajirins (refugees) 
who had migrated to Pakistan in 1947 and settled 
in Karachi in large numbers. In the early 1950s, 
attempts to impose Urdu as the national language 
led to rioting and demonstrations in Sindh, but the 
government adamantly replaced Sindhi as a medium 
of instruction with Urdu. The espousal of Urdu as the 
national language was implicit in the Two-Unit plan 
and the centralization under the military government 
in Pakistan. The imposition of Urdu on East Pakistan 
led to similar rioting and violence and forced the 
government to withdraw the directive that declared 
Urdu's exclusive national status. 

In 1970, Ayub Khan's successor, Yayha Khan, 
returned Karachi to Sindh, but by then the conflict 
between the Sindhis and Muhajirins had become 
institutionalized. It was also a harbinger of the extreme 
communal violence that was to tear the city apart in 
the 1980s and 1990s. Intraethnic tensions in Sindh 
were caused largely by the Ayub government's policy 
to settle Punjabi officers in Sindh through land grants; 
especially irrigated land along the Indus. Pakistan had 
failed to carry out land reform in a system where the 
distribution of ownership was extremely uneven and 
dominated by an oppressive feudal system. This was 
particularly so in Sindh. 18 

Political interference by central governments as 
well as the manipulation and repression of local leaders 
added further fuel to popular discontent, but the fate 
of Sindhi nationality was no different from that of the 
other nationalities in Pakistan. When Sindh' s first chief 
minister, Mohammed Ayub Khushro, "opposed the 
establishment of Karachi as the federal capital in 1948, 
he was dismissed by his rival and fellow Sindhi, the 
provincial governor, G. H. Hidayatullah, on grounds of 


maladministration and corruption, although Khushro 
still had the support of a majority in the assembly." 
This was only the first in a series of interventions that 
culminated in a bitter fight over the imposition of the 
Two-Unit plan. Political manipulation forced Sindh 
to accept the plan but "Sindhis were [left] without 
an adequate voice to represent their aspirations and 



"This process was repeated under General Zia- 
ul-Haq's martial law regime (1977-85), but even the 
second Sindhi Prime Minister, Mohammed Khan 
Junejo (1985-88), encountered major dissidence in his 
home province." 20 In early 1970s, Prime Minister Z. A. 
Bhutto had tried to address the Sindhi grievances but 
he could do little, "perhaps because," explains Wright, 
"he did not dare antagonize either the army or Punjabi 
voters on whom he relied for continuance in power." 21 

While Sindh has not declared open rebellion 
against the Pakistani state, tensions continue to fester 
even today, and resentments have accumulated that 
flare up frequently in the form of violent confrontation 
between Sindhis and Muhajirs in Karachi. Indeed 
Karachi, a huge city and the hub of commerce and 
trade in Pakistan, presents a special case of interethnic 
conflict. Economic factors, demographic pressures, 
and militant Islam have turned Karachi into one of the 
most unsafe cities in the world. 


The motivating cause behind the mobilization of 
the Muhajirins was different. It occurred not because 
of discrimination or lack of representation, but because 
of the Muhajir leaders' gradual loss of status and 
influence among the Pakistan's ruling circles. This 


became especially pronounced after 1971 and the 
secession of Bangladesh. In 1979, in response to events 
in Karachi, the Muhajirs founded the All Pakistan 
Muhajir Students Organization (APMSO) to compete 
with other ethnic student groups, particularly the 
Jama'at-i-Islami youth group, the Jamiat-e-Tulaba, 
on campus. In March 1984, when President Zia-ul- 
Haq banned all student organizations, Altaf Hussain, 
then the head of the APMSO, transformed his student 
organization and founded the Muhajir Qaumi Mahaz 
(MQM), a party that dominated Karachi throughout 
the 1980s and 1990s. In August 1986, it issued a charter 
of demands that included full representation in 
provincial as well as federal government departments 
on the basis of population; the grant of voting rights 
to the real Sindhis and Muhajirs, while non-Sindhis 
(including nondomiciled and non-Muhajirs) were to 
be given only a business permit to operate in Sindh; 
the setting of quotas and reservations for Muhajir 
students; a ban on outsiders buying property in Sindh; 
an extension of citizenship rights to Bengali Muslims 
(Biharis) stranded in Bangladesh, the confinement of 
Afghan refugees in their camps and the nationalization 
of bus services owned by "Pathans" (Pushtuns). Most 
importantly, the MQM demanded that its people be 
recognized as the fifth nationality of Pakistan, along 
with Punjabis, Sindhis, Pathans and the Baloch. 22 

Baloch and Pushtun Ethnic Demands. 

While disaffection simmered in Sindh, it was in 
Balochistan that ethnic resentments burst into flames. 
After the secession of East Pakistan, Baloch separatism 
became the most dangerous challenge to the security 
and authority of governments in Islamabad. The 


previous discussion has already explained why 
tensions exploded in 1973 and how the government 
of Z. A. Bhutto crushed the Baloch revolt. But Baloch 
nationalism has refused to die out. There are at least 
three reasons why the Baloch demand a separate state: 
changing demographic distribution in the province, 
the effects of socio-economic modernization on the 
traditional Baloch life style, and the enduring struggle 
for power in Pakistan. 

The Baloch are a small minority in a large province, 
accounting for only 2 percent and then 5 percent of 
Pakistan's population before and after the secession 
of East Pakistan. Compared to Punjab and Sindh, the 
Baloch province is grossly underdeveloped. The Baloch 
have migrated to other provinces in search of jobs. 
This out-migration has reduced their number in their 
ethnic homeland. At the same time, a huge number 
of Punjabis, Pathans, and Sindhis have migrated to 
Balochistan in search of economic opportunities. The 
migration from Afghanistan increased markedly after 
the 1978 Marxist coup in Kabul and the Soviet invasion 
of that country in 1979. Rajat Ganguly writes, "The 
consequences of demographic transition in Balochistan 
have been severe for the continued cultural integrity of 
the Baloch and their political control of Balochistan." 23 

The demographic transformation brought mod- 
ernization, which has in turn undermined the Sardari 
system (indirect rule through tribal chieftains) that 
the British had put in place. But the weakening of 
tribal traditions has not advanced to the point where 
the Baloch region can be smoothly incorporated into 
Pakistan. "The ruling elite in Pakistan" writes Ganguly, 
"in their attempt to build a strong, centralized state 
made it imperative to break down the power of tribal 
chieftains as part of a larger effort to merge Baloch 


identity into an all embracing Pakistani identity." 24 The 
central government built roads to make Balochistan 
more accessible and increased the number of army 
retirees (largely from Punjab and NWFP) that were 
settled by land grants in Balochistan. This caused 
friction among the native Baloch and the new migrants. 
The tribal Sardars revolted, and the educated and 
better-traveled among them (for example, Khair bax 
Marri and Mengal, who were both heads of their 
respective tribes) opposed Balochistan' s incorporation 
into Pakistan. 

The Pushtuns 


Pakistan's frontier provinces are populated by 
the Pushtun who live on both sides of the Durand 
line marking the border with Afghanistan and have 
harbored irredentist aspirations from time to time. 
Left alone to live according to their customs, the ethnic 
tribes glorify, 

independence, battle and personal bravery, and 
deeply tribal code of honor (Pukhtunwali) whose three 
cardinal tenets are revenge, sanctuary, and hospitality. 
These tribes have ethnic connections with the tribes in 
Afghanistan; many tribal families in fact live on both 
sides of the Durand line. Movement across the border 
has been free and unhindered for hundreds of years." 26 

Pakistan's governments have followed a two-pronged 
approach to the tribal regions: cooptation of vocal 
and powerful ethnic elites, and neglect of the rest or 
repression when a recalcitrant ethnic leader refused 
to toe the line. On the whole, cooptation of Pathan 
nationalism has worked far better than that of the 
Baloch largely because the Pushtun rose to become 


officers and were recruited into Pakistan's armed 
forces in large numbers. This deferential approach to 
the tribal areas, as opposed to the other provinces of 
Pakistan, had tacit support from the United States. Rajat 
Ganguly writes, "Pakistan's improved military and 
financial capability as a result of joining the western 
bloc also allowed the central regime to implement the 
carrot-and-stick policy more effectively." 27 

Had Afghanistan not been invaded by the Soviet 
Union in 1979 and by the United States in 2001, Pushtun 
ethno-nationalism would have been no different from 
the Baloch or Sindhi variants. Indeed, because the 
Pushtuns were heavily integrated into the framework 
of the Pakistani state, they would probably have been 
assimilated into a new system of power sharing. But 
1979 changed all that. 

The Soviet invasion completed the split that had 
existed since the end of the 19th century between the 
urban, modernized, and largely Russian-influenced 
Afghani elite in Kabul and the deeply conservative 
and traditional tribesmen in the countryside. War 
against the godless heathen radicalized the latter. This 
was actively encouraged by both the United States 
and Pakistan for their own self-serving purposes. The 
ground was then laid for the conversion of a simple 
ethnic movement into a complex insurgency that fused 
religion and nationalism. This conversion took place 
in three stages. During the Afghan war, Pakistan's 
tribal areas and the NWFP became sanctuaries for 
the oppressed and insurgent Afghans alike. There 
was no conflict between Pushtun ethno-nationalism 
and the Pakistani state during this period. This began 
only after the United States declared a war on the 
Taliban regime in Afghanistan in 2001, breaking the 
links between Afghan nationalism and Pakistan to the 


severe detriment of Islamabad's relations with its own 
Pushtun population. 

The third stage followed naturally from the 
previous break between countryside and capital 
in Afghanistan. As the Taliban and large numbers 
of nationalist Pushtuns took shelter in Federally 
Administered Tribal Areas (FATA), Pakistan was 
forced to join the war against the Taliban. This turned 
the complex brew of nationalism and religion, which 
had so far targeted the United States and the North 
Atlantic Treaty Organization (NATO), inwards and 
against the state of Pakistan. The sporadic truce that 
had prevailed between the government of Pakistan 
and the radicalized Pushtuns ended when the Pakistan 
army attacked the Islamic radicals hiding in the Lai 
Masjid in Islamabad in July 2007. 

The current conflict in Pakistan is often characterized 
as a conflict of modernity with retrograde Islam, or 
it is described as a clash between more radical and 
deeply conservative Islam. Only tangentially have 
the commentators acknowledged the role of Pushtun 
ethno-nationalism in it. The current conflict is all of the 
above and more. It is within this context that Pakistan 
has to defend its northwestern borders and prevent 
violence from spreading to its provinces and cities. 
But it has not been able to do this. Islamist extremism 
has gained a strong base in the NWFP ever since the 
Islamist alliance, the Muttahida Majlis-e-Amal (MMA), 
secured an absolute majority in the Provincial Assembly 
elections of October 2002. Islamic parties, which 
never received more than 2 percent of the vote in any 
previous elections, are now commanding double digit 
support. In fact during the past 5 years, the FATA and 
the NWFP have become the primary arena of struggle 
between militant Islam and Pakistan's modern state. 


The erosion of central control is reflected in the 
NWFP's slide from a fairly well-integrated province 
into a rebellious region. The Pakistani state previously 
had a strong presence in and a widely accepted power- 
sharing arrangement with NFWP. 28 Its situation was 
not even remotely comparable to the lightly and 
indirectly governed FATA. But the consolidation of 
the Taliban/ al Qaeda axis in these regions has forced a 
difficult choice on Pakistan: attempts to incorporate the 
tribal regions might mean a long war in the region and 
against its own people; failure to do so will strengthen 
radical Islam and spell an end to the moderate Muslim 
state that Pakistan can become. Aware of these dangers 
and pressured into action by the United States, General 
Musharraf temporized by ordering offensives in 2006- 
07 in Balochistan, and in the FATA in 2007-08. In 
Balochistan the free rein given to the army drove the 
insurgency underground. 29 

In FATA, Musharraf's strategy was more 
ambivalent. This was because the vast majority in 
Pakistan was uncomfortable with the idea of deploying 
the army against its own people in these regions. The 
average Pakistani regards the Taliban as misguided 
youth that deserve understanding and sensitive 
handling. Bin laden is popular and the United States, 
particularly since the military strikes, increasingly 
unpopular. 30 The subsequent reign of terror against 
civilians tilted the public against the Taliban, but the 
raids have cancelled this out. 

The deadly connection between Pakistan's home 
grown Islamic radicals and the war in Afghanistan 
became fully visible in the aftermath of the July 2007 
Lai Masjid episode. The Tehreek-e-Nafaz-e-Shariat- 
e-Mohammadi (TNSM) or the Movement for the 
Enforcement of Islamic Laws which operates in the 


Swat district of NWFP, broke the peace agreement it 
had signed with the provincial government on May 22, 
2007, 31 and declared a jihad against those responsible 
for the military assault on the mosque. What followed 
came close to civil war. Violence is no longer confined 
to the tribal belt between Pakistan and Afghanistan. 

The battle between the Security Forces (SFs) and 
Tehrik-e-Taliban Pakistan (TTP) intensified in 2009. 
According to official data, 1,400 militants were killed 
in a military offensive that commenced on April 26, 
2009, even while close to 3.8 million people were 
fleeing their homes in search for safety and succor. The 
operations were initially confined to Lower Dir, Buner, 
and Swat Districts of the NWFP. These were spread to 
the rest of the FATA and NFWP. While the SFs have 
stepped up their operations, the TTP has responded 
with a welter of attacks across Pakistan's urban areas 
and elsewhere. 32 

What is more, it has spread to Punjab, the heartland 
of Pakistan. During the first half of 2009, 155 persons, 
including 92 civilians and 51 SF personnel, were killed 
in 104 terrorism-related incidents in Punjab. Only 12 
terrorists, including nine suicide bombers, were killed. 
This may be because the Taliban/al Qaeda network 
is securing an upper hand in areas beyond the tribal 
belt. Even the nation's capital, Islamabad, Punjab's 
provincial capital, Lahore, and the garrison town of 
Rawalpindi have not escaped terrorist attacks. Out of 
the 104 incidents recorded in the first half of 2009, nine 
were reported from Islamabad and 18 from Lahore. 

Perhaps the most dangerous outcome of the 
conflict in FATA has been the rapid replacement of 
old, conservative ethnic Pushtun tribal leaders with 
younger and more radical aspirants seeking to lead a 
Jihad against all its enemies — the Pakistan government 


and security forces, the Americans, NATO, and the pro- 
Pakistan co-opted tribal leaders. The radical leaders 
and their followers quarrel among themselves but 
neither the United States nor Pakistan has been able 
benefit from it. As India learned to its consternation in 
Kashmir, divisions among the militants only prolong 
the conflict. 

In summary, the convergence of ethnicity, Islamist 
fundamentalism, Pashtun nationalism, and a hatred of 
the West fostered by al Qaeda, has created a qualitatively 
different situation from anything that Pakistan has 
ever faced before in FATA, parts of Balochistan, and 
a widening swathe of the NWFP. It is a challenge for 
which the feeble and still very young state of Pakistan 
has no effective response . The solution for Pakistan lies in 
separating radical Islam from nationalism, particularly, 
ethnic nationalism. South Asia's experience suggests 
that conflicts based on religious ideology are more 
difficult to resolve because, unlike culturally defined 
linguistic and regional identities, they are not amenable 
to resolution through power-sharing and cultural 
accommodation. Ethnic movements do not usually 
extend beyond the boundaries of the ethnic homeland. 
It may be easier to negotiate and settle with the Baloch 
and the Sindhis by granting them a large measure of 
provincial autonomy than to do so with the multiplicity 
of Islamic radical groups operating in FATA, who are 
determined to capture Pakistan and establish an Islamic 
Caliphate from Kabul to Srinagar. 

None of the policy prescriptions for Pakistan being 
mooted in the United States come to grips with the 
sheer complexity of the challenges they face. Pakistan's 
elites share the deep fear of the Islamic radicals with the 
United States but the single focus of the United States 
on them has made it convenient for Pakistan to ignore 


the problem of ethnic self-assertion. This has given 
the military and civilian governments the pretext to 
postpone the search for power sharing strategies that 
might stabilize Pakistan. 


Seth Jones observed in a well-argued RAND report 
that, "Every successful insurgency in Afghanistan since 
1979 has enjoyed a sanctuary in Pakistan and assistance 
from individuals within the Pakistan government, 
such as the Frontier Corps and the Inter-Services 
Intelligence Directorate (IS!)." 33 To restore peace to 
Afghanistan, Pakistan must be stabilized and made 
free of insurgency and the support base it offers to the 
Afghan Taliban. Failure to do so will cripple long-term 
efforts to stabilize Pakistan, rebuild Afghanistan, and 
might even jeopardize India. 

The United States has been following a three- 
pronged strategy. The first is to press Pakistan to use 
coercion against the extremists while enlisting the 
support of tribal chieftains and local leaders against the 
insurgents with economic and political incentives. The 
second prong is to improve governance by building 
schools, clinics, roads, and other social projects, with 
the aim of infusing confidence, increasing the visibility 
of the central government, and gradually integrating 
these areas into the mainstream of Pakistan. The 
third prong is to secure a stable government and a 
dependable leader in Islamabad. 

But this policy has not worked. Instead, the 
replacement of Musharraf by a far weaker, albeit 
democratically elected, government under President 
Asif ali Zardari and Prime Minister Yousuf Reza Gilani 
has compelled the Bush and Obama administrations to 
step up U.S. military raids in the border areas. 


While strengthening of democracy must wait for 
the success in the war, the two are closely intertwined. 
Many therefore wonder whether the military option 
will open the space for a stable democracy and 
whether the small and weak opening to democracy 
after Musharraf can be transformed into a vigorous 
and stable democracy in Pakistan. The current debate 
among students of Pakistan is polarized between 
optimists who advocate a rapid advance to fully- 
fledged democracy and pessimists who are willing 
to settle for an authoritarian regime because they fear 
chaos more than they desire democracy. 

This debate has discounted the possibility of finding 
an interim solution that looks for a way to expand the 
number of stakeholders in the democratic process. One 
way to do this is to reapportion political power between 
the state and its diverse and so far largely unintegrated 
ethnic communities. This requires understanding 
democracy in a way that is different from the way in 
which it traditionally has been understood in the west, 
i.e, as a relationship between the state and individuals in 
society. That definition is characteristic of unitary states 
and precludes the possibility of layered sovereignty 
and plural citizenship. In South Asia, sovereignty has 
always been layered, and the individual's connection 
to the state has been mediated through kinship groups 
and regional and cultural identities that have a prior 
claim. 34 

Ethnic identities can be efficient, if not ideal, 
building blocs for a liberal democracy. But an edifice 
that is built on these alone will not stand; it needs to 
be buttressed by ensuring the equality of different 
ethnic groups. For instance, the dominant status of 
the Punjabis in Pakistan's military and bureaucracy 
will need to be counterbalanced by empowering the 


numerically inferior Sindhis, Pushtuns, and Balochis. 
This is best achieved by granting equal and fair access 
to state resources. Many of these safeguards are already 
embodied in the 1973 constitution. Pakistan needs to 
go back to it as a basic framework and update it in the 
light of the challenges it is facing today. 

But a constitution is only a piece of paper if it is not 
backed by a social compact between the parties that 
observe and try to meet its unwritten premises. This 
is what has been so conspicuously absent in Pakistan. 
Return to a full-fledged federal arrangement is only the 
first step towards a progressive building of democratic 
institutions in Pakistan. A new ethnic contract would 
mean restructuring Pakistan's federal relations, adding 
real substance and force to the federal provisions 
already enacted by the 1973 constitution. It would 
mean removing formal obstacles to a progressive 
widening of the governing class and the political base 
of Pakistan's civilian institutions. 

The purpose would be to revive and extend 
the Grand Bargain in which ethnic and religious 
communities can exercise power to shape Pakistan. 
Such a process has three dimensions . The first is to secure 
an informal but abiding agreement among proximate 
ethnic communities within a region/ province; second, 
to design an agreement among provinces as coequal 
partners in governing the unified nation of Pakistan; 
and third, to establish and institutionalize an agreement 
between the central state and its parts, the provincial 
units. There are several federal models available 
including Pakistan's own experience to draw upon. But 
the model that might work best for Pakistan is a hybrid 
model that blends regional and multiethnic federalism 
in an asymmetrical fashion. Hybrid federalism 
incorporates unitary features that strengthen the state 


and allow it to exercise an overarching authority within 
which it can bargain on behalf of the nation as a whole. 
The purpose of the overarching authority must be a 
progressive integration of the Pakistani nation and not 
the survival of a particular leader or government. 

While the granting of provincial autonomy is 
essential, that alone will not suffice. The federal 
process also needs to remain open-ended in another 
respect. The empowerment of one ethnic group will 
create a succession of similar demands from other 
ethnic groups and minorities. Every new ethnic 
mobilization needs to be dealt with in a principled 
manner. This requires creating a political process 
that permits representation and accommodation. The 
dangers of an unresponsive state have been amply 
visible in India's turbulent northeast, where scores of 
militant movements compete against ethnically based 
provincial governments. 

There are groups that do not make territorial 
demands. Pakistan contains a number of smaller 
ethnic and religious groups that have no clearly 
defined territorial homeland. Several of these groups 
have seen their rights severely reduced during the 
long period of Islamist-backed military rule. Among 
these are the Christian and Hindu minorities, the 
Ahmediyas and the Shias. 35 The latter have been the 
targets of sustained attacks for decades. Unless their 
status is restored, several key cities like Karachi and 
Hyderabad will never know real peace. The federal 
process therefore needs to be revisited periodically. At 
all times, the central state needs to be not only neutral 
and transparent but must scrupulously adhere to 
canons of fairness. 

Pakistan can go down this path in a step-by-step 
manner, dealing with each new demand as it arises. But 


this could invite charges of political expediency and 
manipulation and exacerbate conflict. It therefore has 
a good deal to learn from the strategy of the linguistic 
reorganization of the Indian states (provinces) in 1957. 
The states' reorganization was enacted for the county as 
a whole. It was accepted despite the fact that it denied 
the claims of separate statehood to several ethnic 
minorities because the overwhelming majority of 
ethnic nationalities found the new federal arrangement 
acceptable and because the criteria upon which 
statehood was denied or conceded were transparent 
and impartially applied. The subsequent struggles in 
India's northeast illustrate why it is important to keep 
even this federal arrangement open-ended. 

The offer of ethno-linguistic autonomy within the 
framework of a federal Pakistan can become a powerful 
countermagnet to Islamist nationalism in FATA and 
NWFP, and even more so in Balochistan, where the 
struggle for self-determination is mainly of the older 
variety. Greater regional autonomy will allow Pakistan 
to isolate these regions, and the benefits that flow from 
separating Islamic extremism from ethnic dissidence 
will benefit the whole country. This is because 
Pakistan's future as a stable state is premised as much 
on accommodating grievances in Sindh, Karachi, and 
Punjab as it is on separating ethnic nationalism from 
religious extremism. 

The process of accommodation has two dimensions: 
One, the strengthening of existing federal structure, 
implementing the laws and regulations on the books 
(the 1973 constitution); and second, informal processes 
by which a new social compact can be secured with the 
genuine representatives of ethnic communities. Such a 
process does not presuppose a full-fledged democracy, 
but it does require a broad and firm agreement among 


all the main political actors. By far the most important 
tacit agreement must revolve around the willingness to 
accept defeat at the polls and wait for the next round. 
Pakistan has already experimented with hybrid 
federalism of an "illiberal" variety. The most striking 
example is the different standard of governance 
applied to FATA. This asymmetrical federalism has 
become counterproductive because of the spillover 
effect of war and ethnic irredentism from Afghanistan. 
If this is to be arrested or rolled back, then an open- 
ended, ethnically defined federal bargain needs to be 
put in place as a counterpoint. This bargain can be 
asymmetrical so as to accommodate specific histories 
and cultural traditions or geographical imperatives. 
Those who would like to see the establishment of a full- 
fledged democracy with all of its elaborate safeguards 
for individual human rights may find this less than 
satisfactory. But for these rights to be given tangible 
form, it is first necessary to end conflict, and restore 
stability to Pakistan. That can only be achieved by a 
progressive expansion of the governing class through 
a genuine devolution of political power, and not the 
sham devolution plan that Presidents Zia-ul-Haq and 
Musharraf had foisted on the country. If this means 
particular leaders and parties in Pakistan have to lose 
their lock on power and policy, then they need to 
accept that outcome. There is no other way to stabilize 
Pakistan or make its people safe from the scourge of 
war and violence that has plagued them since the U.S.- 
Afghan war. 


It is clear that nuclear-armed Pakistan— the world's 
sixth most populous country — has no effective control 


over a large swath of territory along its border with 
Afghanistan. Extremist groups that are intent on 
attacking the United States, such as al Qaeda, enjoy safe 
haven in these border areas. Recent reports indicate 
that ISI elements are engaged with groups that support 
the Taliban and are killing American, NATO, and 
Afghan troops in Afghanistan. 36 The recent increase 
in bombings and murders indicate that these terrorist 
groups have extended their reach into the more settled 
portions of Pakistan. For most people in Pakistan, 
the United States is largely to blame for inciting and 
attacking the Taliban, who had until recently regarded 
Islamabad as friendly and sympathetic to their 
cause. According to a recent poll, "only 15 percent of 
Pakistanis think their country should cooperate with 
the United States to combat terrorism." 37 

Pakistan's security challenge is compounded by 
an acute economic crisis. Rising prices and growing 
violence, the absence of jobs, and poor educational 
services have pushed the Pakistan youth in search of 
Jihad. The February 2008 elections ended the 9 years 
of military rule under Musharraf, but no one is sure 
whether the new government can rise to meet the 
challenge and abandon the usual jockeying for office 
and power. 

As a first preparatory step towards stability, 
Pakistan's leaders and parties need to revive the 
federal compact, remove all draconian measures and 
amendments that have been added since Zia's and 
Musharraf's rule, and devolve power laterally and 
downward to expand the political base of the central 

A key prerequisite is the permanent withdrawal 
of the military from civilian life and political office. 
Pakistani Chief of Army Staff General Ashfaq Kayani 


recently stated that the army would stay out of politics. 
But there is no certainty that the military will honor 
its promise should the civilian leaders fail to restore 
calm. The possibility of a future military takeover must 
be avoided if the United States is serious about its 
commitment to building a stable Pakistan. The United 
States needs to take a hard look at its own reasons for 
backing the military. Many in Washington believe that 
only a determined and forceful government in Pakistan 
can eliminate al Qaeda and therefore the United States 
needs to back the Pakistani military. This may be true, 
but that is only because in the past the United States 
has supported military regimes in Pakistan that have 
perpetuated their stranglehold on society and the 

The United States can play a key role in persuading 
the military to withdraw from politics. Recent literature 
stresses the "rentier" status of Pakistan, which depends 
heavily on external capital, especially from the United 
States, and the periods of accelerated flows of economic 
assistance (the current period being one of them) 
coincide with military rule. 38 The United States has 
given close to $12 billion to Pakistan since 2001, and 
much of this assistance has been directed to service the 
needs of the military establishment. 39 According to the 
recently passed Kerry-Lugar bill, the United States has 
committed to "empower the Pakistani people charting 
a path of moderation and stability." The bill is meant 
to help Pakistan combat al Qaeda and the Taliban by 
initiating good governance, greater accountability, 
and respect for human rights. If the civilian authority 
is strengthened over the military, Pakistan may have a 
chance to build a stable democracy. 40 

Breaking the self-perpetuating cycle of military rule 
in Pakistan will take enormous effort and require large 


scale investment in political and economic assistance. 
The U.S. Senate has already approved $7 billion for 
civilian assistance over the next 5 years and $400 
million per year for military assistance from 2010-2013, 
with considerably more in the pipeline. This assistance 
can come with clearly stated conditions that will urge 
Pakistan to move towards a genuine federation and 
lateral power-sharing with its nationalities. 

The United States also needs to distinguish 
between violence caused by the demands of ethnic 
groups and that caused by Islamic radicalism. Pakistan 
will require help with integrating the former, while 
deploying effective counterinsurgency measures 
against the latter. U.S. assistance should be carefully 
calibrated to incorporate these different purposes. 
In addition to linking its long-term commitment to 
gradual democratization in Pakistan, the United States 
needs to convince Pakistan to abandon the use of 
Islamic elements as an instrument of its foreign policy. 
If this were to happen, India and Pakistan might find 
their way to settling Kashmir more easily. Peace and 
moderation can go a long way toward stabilizing 
Pakistan. The United States can use its considerable 
influence to persuade Pakistan's leaders to seek both. 

Structural changes are usually difficult and most 
political leaders prefer not to make them for fear of 
losing control. But a new power-sharing compact 
among Pakistan's ethnic nationalities will renew the 
promise of Pakistan and strengthen its central state. 
It will do this by broadening its base and providing 
regular channels for resolving ethnic conflict. While 
several commentators on Pakistan have called for 
reforms in political parties and elections, improvement 
in governance, and the accumulation of social capital, 
Pakistan needs to modify the framework within which 


these changes can occur. This new framework can be 
constructed on the basis of a new social compact and 
a renewed promise to share power to build a stronger 

A stable Pakistan is also a Pakistan free from 
wasteful expenditure on military hardware in an 
arms race with its traditional enemy, India. The newly 
forged strategic partnership between India and the 
United States gives the United States the influence 
and good will to urge New Delhi to take additional 
confidence-building measures and encourages 
Pakistan to respond in kind. A friendly India-Pakistan 
relationship can be a basis to forcefully and vigorously 
combat the challenges of religious extremism, violence, 
and poverty in the region. However, the history of 
the 60-year-old Indo-Pakistani relationship does not 
inspire confidence that the United States will follow 
through with these prescriptions. Perhaps with the 
new Obama administration and a newly elected 
government in Islamabad, not to mention the return 
of the Man Mohan Singh government in New Delhi, 
circumstances may be propitious for a recasting of 
policies all around. There is no doubt that the key to 
peace and stability and to a terror-free South Asia is a 
stable and democratic Pakistan. 


1. The Next Chapter, United States and Pakistan, A Report of the 
Pakistan Policy Working Group, Washington, DC: United States 
Institute of Peace, September 2008, 

2. For an excellent account of Pakistan' s civil military relations, 
see Hasan-Askari Rizvi, Military, State and Society in Pakistan, 
London, UK: Palgrave Macmillan, 2000. 


3. For a brief discussion of these years, see Maya Chadda, 
Building Democracy in South Asia, Boulder, CO: Lynne Rienner, 
2000, pp. 67-101. 

4. Harsh Pant, ISN Security Watch, Pakistan: Challenges After 
Musharraf, August 22, 2008, available from 
Current- Affairs/Security-Watch/Detail/? ots59I=CAB359A3-9328- 

5. A leading expert on Pakistan imagines scenarios ranging 
from secular democracy to an Islamic regime along the lines of Iran 
in Pakistan. See Stephen Cohen, The Idea of Pakistan, Washington, 
DC: Brookings, 2004, pp. 267-301. 

6. Daniel Markey, "Securing Pakistan's Tribal Belt," Council 
on Foreign Relations report No. 36, August 2008, available from 

7. Cohen, p. 205. 

8. The recent experiment at nation- and state-building in 
the newly created Bosnia-Herzogovina, itself a fragment of the 
previous Yugoslavia, underscores the error of dispersing power 
too widely at the outset. 

9. Katherine Adeney, Federalism and Ethnic Conflict Regulation 
in India and Pakistan, New York: Palgrave Macmillan, 2006, p. 141. 

10. For a brief discussion, see Chadda, Building Democracy in 
South Asia, pp. 24-30; also see Yogendra Malik, Charles Kennedy, 
Robert Oberst, Ashok Kapur, Mahendra Lawoti, Syedur Rahman, 
eds., Government and Politics in South Asia, Boulder, CO: Westview 
Press, 2009, p. 162. 

11. Mansoor Akbar Kundi and Arbab Jahangir, "Federalism in 
Pakistan: Issues and Adjustments," 
pdf; also see Mansoor Akbar Kundi, "Federalism/ Demarcation 
of Roles for Units in Pakistan," Asian and African Studies, 2002, 
available from 


12. International Crisis Group, Asia Report, No. 40, Pakistan: 
Transition to Democracy, October 3, 2002, p. 7. 

13. Ibid. 

14. Ibid., p.4-5 

15. For both quotations, see Ibid., 

16. Theodore P. Wright, Jr., "Center-Periphery Relations and 
Ethnic Conflict in Pakistan: Sindhis, Muhajirs, and punjabis," 
Comparative Politics, Vol. 23, No. 3, April 1991, pp. 301-302. 

17. Ibid., p. 302. 

18. Ibid. As Wright observed, "In the Ayub Khan era, as noted 
above, the government made considerable land grants to retired 
army officers and civil servants, both disproportionately Punjabi, 
which further exacerbated the conflict, especially if the new 
landholders were absentees. These settlers were among the first 
to be attacked in the riots which preceded Ayub's downfall." 

19. For both quotations, see Lawrence Ziring cited in Wright, 
"Center-Periphery Relations," p. 303. 

20. "The Exit of Chief Minister," Dawn Overseas Weekly, April 
14, 1988. 

21. Wright, p. 307. 

22. Vikhar Ahmed Sayeed, "Muhajirs of Pakistan," One World 
South Asia, August 13, 2008, available from 

23. Rajat Ganguly, Kin State Intervention in Ethnic Conflict: 
Lessons from South Asia, New Delhi, India: Sage Publications, 1998, 
pp. 135-136. 

24. Ibid., p. 137. 

25. Adeel Khan, Politics of Identity: Ethnic Nationalism and the 
State in Pakistan, "New Delhi, India: Sage Publications, 2005, pp. 


26. P. L. Bhola, "Afridi-Shinwari Revolt in Khyber: Nature, 
Form, and Intensity," cited in Ganguly, p. 177, note 32. 

27. Ganguly, p. 187. 

28. Khan, p. 101. 

29. There has been a steady stream of bomb and rocket 
attacks on gas pipelines, railway tracks, power transmission 
lines, bridges, and communications infrastructure, as well as on 
military establishments and governmental facilities. Even as the 
Musharraf government claimed relative success in Balochistan, 
the more insidious problem of Islamist extremism generated 
undeniable pressures to respond militarily in NWFP. 

30. Christine Fair, Steve Kull, and Clay Ramsey, "Pakistani 
Public Opinion on Democracy, Islamic Militancy and Relations 
with the US," A Joint Study by World Public Opinion and the 
United States Institute for Peace, Washington, DC, February 2008, 
available from 

31. The TNSM, one of the five outfits proscribed by Musharraf 
on January 12, 2002, was formed in 1992 with the objective of a 
militant enforcement of Sharia. Ideologically, it is committed 
to transforming Pakistan into a Taliban-style state. The TNSM 
operates primarily in the tribal belt, such as Swat and the adjoining 
districts of the NWFP. Although well established in the NWFP, 
the TNSM has had only limited success in expanding its activities 
beyond the tribal areas. It has substantial support in Malakand 
and Bajaur in the FATA, and includes activists who have fought 
in Afghanistan at some time during the past 25 years. 

32. Kanchan Laxman, "Afflicted Power," South Asia Intelligence 
Review, Weekly Review, Vol. 7, No. 49, June 15, 2009. 

33. Seth G. Jones, "Counterinsurgency in Afghanistan," Rand 
Counterinsurgency Study, Vol. 4, available from 
pubs/monographs/2008/RAND _MG595.pdf. 


34. It is also important to recognize that provision of individual 
rights is not the only path to a democracy; group rights are equally 
important, although there is admittedly a tension between the 
two notions of rights. 

35. P.N Khera, "Pakistan Atomised," Hindustan Times, 
December 1, 2006, available from 

36. Bruce Riedel, "Pakistan: The Critical Battleground," 
Current History, Vol. 107, No. 712, November 2008, p. 355. 

37. Christine Fair, et ah, "Pakistan Public Opinion," cited in 
United States Institute for Peace, "The Next Chapter: U.S. and 
Pakistan," available from 

38. Farzana Shaikh, "Pakistan's Perilous Voyage," Current 
History, Vol. 107, No. 712, November 2008, p. 364. 

39. Ibid. 

40. For both quotations, see American Chronicle, "Senate 
Unanimously Passes Kerry-Lugar Pakistan Aid Package," 
Congressional Desk, June 25, 2009, published July 20, 2009, 3:30:29 



SHAHID JAVED BURKL former finance minister 
of Pakistan, is the chairman of the Institute of Public 
Policy, a think-tank based in Lahore, Pakistan. He 
previously served as chief executive officer of EMP 
Financial Advisors, LLC. He served at the World Bank 
for 25 years (1974-99), as division chief and senior 
economist, Policy Planning and Program Review 
Department; senior economist and policy adviser, 
the Office of the Vice President of External Relations; 
director, International Relations Department of that 
vice-presidency; director of the China and Mongolia 
region; and vice president of the Latin American and 
Caribbean region. Mr. Burki is coauthor of Sustaining 
Reform with a US-Pakistan Free Trade Agreement (2006). 
His other publications include Pakistan: Development 
Choices for the Future (Oxford University Press, 1986); 
Pakistan: Continuing Search for Nationhood (Westview 
Press, 1991); Pakistan: Fifty Years of Nationhood 
(Westview Press, 1999); and Pakistan: A Historical 
Dictionary (Scarecrow Press, 1999). 

MAYA CHADDA is professor of political science at 
William Paterson University of New Jersey, and was 
appointed director of the South Asia Program at the 
university in 2004. She has worked for the United 
Nations Development Program (UNDP) and the 
United Nations Family Planning Agency (UNFPA) as 
a consultant. In 1998, she was appointed the Director 
of Undergraduate Research for William Paterson 
University and is currently a Fulbright coordinator 
at the University. Professor Chadda has served on 
the review board of the Woodrow Wilson Center 
and the United States Institute of Peace, Washington, 


DC, and as a consultant to the John D. and Katherine 
T. MacArthur Foundation, Minorities Rights Group 
International (UK), Initiative on Conflict Prevention 
and Quiet Diplomacy (Canada). She is a member of 
the Council on Foreign Relations, where she served on 
the Joint Task Force of the CFR and Asia Society on 
South Asia and is currently a member of the American 
Political Science Association Task Force on "America's 
Standing in the World." Professor Chadda is the author 
of Indo-Soviet Relations (Bombay, India, Vora & Co.); 
Paradox of Power: The United States Policy in Southwest 
Asia (Santa Barbara, CA, Clio Press); Ethnicity Security 
and Separatism in South Asia (New York, Columbia 
University Press/Oxford University Press); and 
Building Democracy in South Asia: India, Pakistan and 
Nepal (Lynne Rienner/Sage Publishers). Professor 
Chadda is finishing a contracted manuscript entitled, 
Why India Matters. 

CRAIG COHEN is vice president for research and 
programs at the Center for Strategic and International 
Studies (CSIS). He serves as principal liaison between 
the president's office and research staff, helping the 
president to connect the growing program agenda with 
institutional priorities. Previously, he has served as 
deputy chief of staff and as a fellow in the Post-Conflict 
Reconstruction Project of the CSIS International 
Security Program. Mr. Cohen was codirector of the CSIS 
Commission on Smart Power and directed research on 
Pakistan, authoring A Perilous Course: U.S. Strategy and 
Assistance to Pakistan (CSIS, August 2007). He is also 
the author of Measuring Progress in Reconstruction and 
Stabilization Operations (United States Institute of Peace, 
April 2006) and served in 2006 as an adjunct professor at 
Syracuse University's Maxwell School. Prior to joining 


CSIS, Mr. Cohen worked with the United Nations 
and nongovernmental organizations in Rwanda, 
Azerbaijan, Malawi, and the former Yugoslavia. He 
received a master's degree from the Fletcher School 
of Law and Diplomacy at Tufts University and an 
undergraduate degree from Duke University. 

NEIL JOECK is the National Intelligence Officer for 
South Asia at the National Intelligence Council (NIC). 
He previously served in the U.S. Government at the 
National Security Council in the Office of Proliferation 
Strategy (2004-05) and at the Department of State as a 
member of the Policy Planning Staff (2001-03). Prior to 
joining the NIC, he was a senior fellow at the Center for 
Global Security Research at the Lawrence Livermore 
National Laboratory (LLNL) and an adjunct professor 
of political science at the University of California, 
Berkeley (2005-09). Dr. Joeck worked on India and 
Pakistan as a political analyst and group leader in 
Z Division at LLNL (1987-2001) and was a research 
fellow at the International Institute for Strategic 
Studies in London (1996-97). Dr. Joeck is the author 
of Maintaining Nuclear Stability in South Asia, Adelphi 
Paper #312 (1997) and two edited books: Arms Control 
and International Security (with Roman Kolkowicz, 
1984) and Strategic Consequences of Nuclear Proliferation 
in South Asia (1986). He has also published numerous 
journal articles and book chapters. Dr. Joeck holds a 
BA from the University of California, Santa Cruz; an 
MA from the Paterson School of International Affairs 
at Carleton University in Canada; and a Ph.D. and MA 
in political science from UCLA. 

FEROZ HASSAN KHAN is currently on the faculty 
of the Department of National Security Affairs of 


the U.S. Naval Postgraduate School, Monterey, CA. 
He retired as a brigadier general from the Pakistani 
Army, where he served for 32 years. His previous 
appointments included the post of Director, Arms 
Control and Disarmament Affairs within the Strategic 
Plans Division, Joint Services Headquarters, which 
is the secretariat of Pakistan's Nuclear Command 
Authority. His military career blended numerous 
diplomatic and scholarly assignments. He has 
experienced combat action and command on active 
fronts on the line of control in Siachin Glacier and 
Kashmir. He served domestically and abroad in the 
United States, Europe, and South Asia, in particular 
assisting Pakistan's nuclear diplomacy. General Khan 
has held a series of visiting fellowships at Stanford 
University; the Woodrow Wilson International Center 
for Scholars; the Brookings Institution; the Center for 
Non-Proliferation Studies at the Monterey Institute of 
International Studies; and the Cooperative Monitoring 
Center, Sandia National Laboratory. Since the mid 
1990s, General Khan has been making key contributions 
in formulating and advocating Pakistan's security 
policy on nuclear and conventional arms control and 
strategic stability in South Asia. He has produced 
recommendations for the Ministry of Foreign Affairs 
and represented Pakistan in several multilateral and 
bilateral arms control negotiations. He has published 
and participated in several security related national 
and international conferences and seminars. He has 
also been teaching as a visiting faculty member at 
the Department of the Defense and Strategic Studies, 
Quaid-e-Azam University, Islamabad. General Khan 
is currently writing a book on the history of Pakistan's 
nuclear weapons and U.S. policy; expected publication 
is in 2010. General Khan holds an MA. from the Paul 


Nitze School of Advanced International Studies, The 
Johns Hopkins University. 

HENRY SOKOLSKI is the Executive Director of the 
Nonproliferation Policy Education Center (NPEC), 
a Washington, DC-based nonprofit organization 
founded in 1994 to promote a better understanding 
of strategic weapons proliferation issues among 
policymakers, scholars, and the media. He currently 
serves as an adjunct professor at the Institute of 
World Politics in Washington, DC, and as a member 
of the Congressional Commission on the Prevention 
of Weapons of Mass Destruction Proliferation and 
Terrorism. Mr. Sokolski previously served as Deputy 
for Nonproliferation Policy in the Department of 
Defense, for which he received a medal for outstanding 
public service from Secretary of Defense Dick Cheney. 
He also worked in the Office of the Secretary of 
Defense's Office of Net Assessment, as a consultant 
to the National Intelligence Council, and as a member 
of the Central Intelligence Agency's Senior Advisory 
Group. In the U.S. Senate, he served as a special 
assistant on nuclear energy matters to Senator Gordon 
Humphrey (R-NH), and as a legislative military aide 
to Dan Quayle (R-IN). Mr. Sokolski has authored and 
edited a number of works on proliferation, including 
Best of Intentions: America's Campaign Against Strategic 
Weapons Proliferation (Westport, CT: Praeger, 2001); 
Nuclear Heuristics: Selected Writings of Albert and Roberta 
Wohlstetter (Strategic Studies Institute, 2009); Falling 
Behind: International Scrutiny of the Peaceful Atom 
(Strategic Studies Institute, 2008); Pakistan's Nuclear 
Future: Worries Beyond War (Strategic Studies Institute, 
2008); Gauging U.S.-Indian Strategic Cooperation 
(Strategic Studies Institute, 2007); Getting Ready for a 


Nuclear-Ready Iran (Strategic Studies Institute, 2005); 
and Getting MAD: Nuclear Mutual Assured Destruction, 
Its Origins and Practice (Strategic Studies Institute, 

JOHN STEPHENSON is a Project Manager at Dalberg 
Global Development Advisors, a strategy consulting 
firm focused on international development. He has 
consulted to the senior management teams of leading 
international financial institutions, multilateral devel- 
opment organizations, foundations, and multinational 
corporations on strategy, organizational effectiveness, 
stakeholder and change management, and development 
policy. He has experience in several development 
sectors, including energy and the environment, access 
to finance, health, private sector development, post- 
conflict reconstruction, and governance & public 
sector reform. Some of Mr. Stephenson's most recent 
engagements include: (1) evaluating fund manager 
proposals and conducting due diligence as part of a 
$500 million global call for renewable energy funds in 
emerging markets, (2) serving as a strategic advisor 
on an innovative $50 million fund for post-conflict 
countries, (3) working with the United Nations 
Foundation and Vodafone Group Foundation on 
their public-private partnership in mobile health and 
emergency response, and (4) assisting the East African 
Community to formulate an energy access scale-up 
strategy to support attainment of the Millennium 
Development goals with a focus on alternative energy 
sources. Prior to joining Dalberg, Mr. Stephenson 
worked at the World Bank where he participated in the 
formulation of the Bank's Country Assistance Strategy 
for the Democratic Republic of Congo. He holds a 
Bachelor's degree magna cum laude in Government 


and East Asian Studies from Harvard University and a 
Master's degree from Georgetown University's School 
of Foreign Service. 

PETER TYNAN is a Manager in Dalberg's Washington, 
DC, office. Mr. Tynan has advised international 
corporations, governments, and development insti- 
tutions in strategy, policy, organizational change, 
supply chain, and performance management. He has 
experience in several development sectors, including 
energy, private sector development, public sector 
reform, and emerging markets investment. Prior to 
joining Dalberg, Mr. Tynan advised the Minister of 
Finance of the Democratic Republic of the Congo, 
where he wrote the private sector revitalization plan 
and analyzed the competitiveness of major Congolese 
industries; and worked for the Minister of Finance in 
Egypt reorganizing the Egyptian Customs Authority. 
For the U.S. Government, Mr. Tynan advised the 
CFO of the General Services Administration (GSA) in 
strategy, strategic planning, and organizational reform. 
He helped lead the reorganization of the GSA, merging 
the Supply Service and the Technology Service; and 
designed and managed the strategic planning process 
used across the Agency. Mr. Tynan has also worked 
in private equity, where he sourced and evaluated 
middle market private equity investments. He is the 
co-author of Imagining Australia: Ideas For Our Future 
(Allen & Unwin, 2004). Mr. Tynan holds a Bachelor in 
Business with First Class Honours and the University 
Medal from the University of Technology in Sydney, 
Australia; a Masters in Public Policy from the Kennedy 
School of Government at Harvard University; and an 
MBA from Harvard Business School. 


S. AKBAR ZAIDI is one of Pakistan's best known 
and most prolific political economists. Apart from his 
interest in political economy, he also has great interest 
in development, the social sciences more generally, 
and increasingly, in history. Mr. Zaidi has written 
over 60 academic articles in international journals 
and as chapters in books, as well as 11 books and four 
monographs. His 12th book, The Political Economy of 
Democratization in Pakistan, is forthcoming and the third 
to be published by Oxford University Press. His other 
books include The New Development Paradigm: Papers 
on Institutions, NGOs, Gender and Local Government 
(1999), and Issues in Pakistan's Economy (2005), both 
published by Oxford University Press and both of 
which are now standard text books for students on 
Pakistan's economy; and Pakistan's Economic and Social 
Development: The Domestic, Regional and Global Context, 
(New Delhi, India, Rupa and Co., 2004). He taught at 
Karachi University for 13 years, and at Johns Hopkins 
University, where he was a visiting professor in 2004- 
05. Mr. Zaidi holds a Ph.D. from the University of 



Major General Robert M. Williams 


Professor Douglas C. Lovelace, Jr. 

Director of Research 
Dr. Antulio J. Echevarria II 

Mr. Henry Sokolski 

Director of Publications 
Dr. James G. Pierce 

Publications Assistant 
Ms. Rita A. Rummel 

Mrs. Jennifer E. Nevil