Wither Pakistan's Economy?

Side Effect of Moving Back to Democracy of The Old

Two things led to the boom in the Land of Pure's economy, which has grown at 6-7% plus with decent FX reserves, in recent years - monetary support from US (along with funds skimmed off, ostensibly, given to fight terrorists) and the vibrancy of Pakistan's most important trade city, Karachi.

Currently, there are increasing calls in US about the lack of effectiveness of US funded Pakistan's anti-terror operations and calls for more accountability on how the money is used by the Pakistanis. I think the gentle Pakistanis, post-Musharraf's dictatorship, will talk US out of the accountability hurdles and the country will continue to receive monetary support with few strings attached, even under a new US president.

But, with Gen. Musharraf's regime coming to an end, peace in Karachi may also be sunsetting - along with it, the prime source of recent LoP's economic dynamism. Wall Street Journal had an interesting article about one source of support for Gen. Musharraf's dictatorship over the past eight years, or at least since Sept 11 above turn of the General, under US pressure. While the article gives historic background on MQM party that control politics and trade in urban areas in the state of Sindh, especially Karachi, it also talks about the peace and pro-business years in Karachi during the past five to six years. Gen. Musharraf, himself being a Muhajir, did not continue the virtual civil war of the country against the Muhajirs, migrants from pre-partitioned Bharat, which started under former PM Zulfikar Bhutto's anti-Muhajirs discriminatory policies and pursued with gusto under Benazir's and Nawaz Sharif's regimes using the police and army against Muhajirs at various times.

Source: Economist

The lull in fight against Muhajirs, and their party, MQM, helped MQM come above ground and allow Karachi, a historically important trade and port city, to take off. While the rest of LoP was increasing coming under Islamic and Sharia influence, economically and socially, the booming Karachi remained secular and prospered, along with the country itself - the city accounts for 68% of the economy.

All that may be about to change, with the chief patron going away from the scene, and the old players and ways, including civil war in Karachi streets, probably making a come back. One of last paragraphs in the WSJ article gives a quote:

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MQM is "a terrorist group that has a political wing, and then a military wing, which it uses to win elections," scoffs Taj Haider, a senior offical in Karachi with Ms. Bhutto's Pakistan People's Party and a former senator.[WSJ]

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Democracy in Land of Pure may be a good thing for most secular people in the country, except for the Muhajirs and their Karachi, and may be for Pakistan's economy.