10 November 2008
Foreign Affairs, Defence and Security Section
On 18 August 2008, General (Retd) Pervez Musharraf resigned as President of Pakistan. This was the first time in the history of the country that an incumbent president with close ties to the military had opted to resign rather than face the threat of impeachment.
Musharraf, who had come to power after a bloodless coup in October 1999 was forced to resign after the ruling Pakistan People’s Party (PPP), led by Asif Ali Zardari (widower of assassinated former prime minister Benazir Bhutto) and the Pakistan Muslim League-Nawaz (PML-N) set aside their differences and decided to join forces on the issue of impeachment. The second factor that would have influenced his decision was the reported decision by Pakistan’s army (of which he was chief until November 2007) to stay neutral. Finally, he lost support of the Pakistan Muslim League-Qaid-i-Azam (PML-Q) soon after he retired and General Ashfaq Parvez Kayani took over as army chief.
National Assembly elections
At the elections held in February 2008, the PPP and PML-N emerged as the biggest winners (winning 87 and 66 National Assembly seats respectively) and formed a coalition government with the PPP’s Yousuf Raza Gilani becoming prime minister. It was a tenuous coalition and fell apart soon after Musharraf’s resignation.
The two main reasons for the PML-N walking out of the coalition were the issue of the reinstatement of some 60 supreme court and high court judges who had been deposed by Musharraf in November 2007, and the decision by the PPP to nominate Asif Ali Zardari without consulting the PML-N leader Nawaz Sharif. Underlying factors included:
- a perception that certain deposed judges (particularly Chief Justice Iftikhar Chaudhry) favoured the PML-N. Zardari preferred the current Chief Justice Abdul Hameed Dogar who had been appointed by Musharraf. Dogar had recently declared that the National Reconciliation Ordinance (NRO), passed by Musharraf and which suspended corruption charges against several politicians, including Zardari, was valid in law. Chaudhury had suspended the NRO before he was deposed.
- Nawaz Sharif’s apprehension that if Zardari won the presidential election he might lose his enthusiasm for reducing the powers of the president and restoring a prime ministerial system with the former being a titular head of state.
On 6 September 2008, Asif Ali Zardari won a convincing victory in the presidential elections receiving 481 of 678 (71 per cent) votes cast in federal and provincial legislatures. He won in all provinces except Punjab where the PML-N has a strong base. Zardari’s victory was viewed by the PPP as having national significance:
For supporters of the Pakistan People’s Party (PPP), the election of Asif Zardari as president of Pakistan, signals the final nail in the coffin for the Musharraf era and the ultimate revenge of democracy. For some, a Zardari presidency is seen as a “triumph of representative politics”, with the belief that this move will lead to a “decades-long democratic journey” …
The biggest problem seems to be that Zardari and the PPP are moving into a set of stables without cleaning up the mess created by the previous incumbent … The biggest fear is that that the civilian authoritarianism of one man and his party may cause a political crisis that may result in yet another intervention by the army. 
As leader of the PPP, Zardari heads a party which is in power federally and has a strong presence in the provinces. As president he has inherited all the powers that Musharraf had accumulated:
- he is the titular commander of the armed forces with the power to appoint the army and other service chiefs
- he chairs the committee which oversees Pakistan’s nuclear arsenal
- he appoints provincial governors
- under Section 58.2 (b) of the constitution he has the power to dissolve the National Assembly. While any dissolution must be confirmed by the Supreme Court, as president he also appoints the chief justice. These powers have often been abused in the past, and
- he is also the leader of the PPP.
Most importantly, he appears to be in no hurry to revisit the issue of presidential powers or the issue of the restoration of the 60 deposed judges, only 20 of whom have been reinstated. On 3 November, ‘tens of thousands of anti-government lawyers and journalists took to the streets to mark the first anniversary of former president Pervez Musharraf’s illegal declaration of a state of emergency last year’ and the country’s chief justice, Iftikhar Chaudhry was dismissed.
Nonetheless, it is possible that the issues of presidential powers and the reinstatement of the judges are the least of the concerns facing post-Musharraf Pakistan. As discussed below, the government, and the country itself, face serious problems on various fronts which have pushed domestic political issues into the background.
Internal security issues
The Marriott Hotel bombing in the capital, Islamabad, on 20 September 2008 in which a suicide vehicle bomber killed 53 people and injured more than 260 was a vivid reminder of the fragile internal security situation in the country.
As noted analyst, Ahmed Rashid has observed:
The Pakistani Taliban now control all seven tribal agencies that make up the autonomous region bordering Afghanistan called the Federal Administered Tribal Areas (FATA). They have spread across the North West Frontier Province (NWFP) through brutal terror tactics and threaten large towns. Poised on the borders of Punjab, the largest province, they’re joined by Punjabi and Kashmiri extremist groups.
US forces in Afghanistan launch almost daily attacks against suspected Al Qaeda hideouts in FATA and also target Afghan Taliban leaders such as Jalaluddin Haqqani. Pakistan’s military first denied the strikes, then virulently protested them. However on 3 September US Navy Seals put boots on the ground in FATA to demonstrate US seriousness and perhaps to also blackmail Pakistan to own up to US missile strikes and gain greater cooperation from the army. As a result, the army now says it allows US missile strikes despite public anger over Pakistan losing its sovereignty.
The army’s policies over the past fateful seven years led to Pakistan losing much of its territorial sovereignty. Heavily armed militant groups run wild, crime is rampant, paramilitary and police morale has plummeted with a stream of desertions. The country is in the throes of an economic meltdown. Foreign exchange reserves have halved in the past three months to less than US$8 billion, inflation runs at 25 percent, power shortages cripple industry and agriculture, and massive unemployment fuels a resentful populace.
The main Pakistani Taliban grouping, the Tehrik-i-Taliban Pakistan (TTP) is reported to have threatened the very survival of the NWFP government. Suicide bombers allegedly belonging to the TTP struck at the Wah ammunition factories near Pakistan’s capital, Rawalpindi, in August. This is a highly secure area and also houses Pakistan’s nuclear warheads and its missile development program. Subsequently, ‘the TTP issued a threat on a nationwide basis, stating the continuation of military operations would be met with suicide bombings against major population centres.’ More than 800 people were killed in some 330 bomb blasts (including an estimated 28 suicide bombings) between January and August 2008.
Relations with the US have also been tense as the Pakistani Government tries to balance increasing US pressure to crack down on militants with increasing domestic resentment against what is perceived to be ‘America’s war.’ In July, President George W. Bush reportedly authorised US Special Operations Forces to cross the border into Pakistan in ‘hot pursuit’.
On 3 September 2008, US ground troops carried out a cross-border raid into the Federally Administered Tribal Areas (FATA) for the first time. While President Zardari and his government struggled to come up with the suitable response, the Army Chief of Staff, General Ashfaq Parvez Kayani announced that the country’s borders would be defended ‘at all costs’ and no external force would be allowed to operate inside Pakistani territory. Prime Minister Yousaf Raza Gilani later backed the statement, stating that the government would take all measures to ‘safeguard the country’s borders’.
On 17 September, General Kayani met US Joint Chiefs of Staff Admiral Mike Mullen. Among matters that were discussed, General Kayani reportedly protested against US incursions.
General Kayani’s strong response was obviously noticed in Washington and there has not been another cross-border operation since. Instead, the US has intensified a campaign of airstrikes by the Central Intelligence Agency, using remotely piloted Predator aircraft firing Hellfire missiles. There have been at least 18 Predator strikes in the three months between August and October compared with five strikes in the first seven months of 2008.
On 29 October, Pakistan’s Foreign Ministry summoned the US ambassador to demand an immediate halt to missile strikes on its territory.
On 2 November, the newly appointed chief of the US Central Command (CENTCOM), General David Petraeus, visited Islamabad. Despite strong protests from the Pakistani Government, he did not ‘guarantee an end’ to cross-border attacks.
Change at the Directorate of Inter-Services Intelligence (ISI)
On 29 September, in what was seen as a widely anticipated but significant move, General Kayani made sweeping changes to key positions in the army’s high command. The most significant appointment was the promotion of Lieutenant General Ahmed Shuja Pasha to Director General of the all-powerful ISI, Pakistan’s intelligence agency. He is said to be closely associated with General Kayani and was previously the Director General Military Operations (DGMO), responsible for operations against the insurgents in the tribal areas for the past two years. He was a regular participant in the meetings between the Pakistan army and CENTCOM and is well-known to commanders of NATO forces in Afghanistan.
He replaced Lieutenant General Nadeem Taj who was a confidante of General Musharraf and whose tenure was marked by growing US suspicions about the ISI’s willingness to cooperate in fighting the insurgents:
This was the most wide-ranging reshuffle in the army since General Ashfaq Parvez Kayani took over as COAS when General Parvez Musharraf stepped down in December 2007. The reshuffle is also significant as it is the first major set of personnel changes in the high command since Musharraf’s resignation as president in August 2008. As such, the new appointments are indicative of the consolidation of Gen Kayani’s position at the army’s helm. They also reflect his attempt to strengthen his control over army operations while he charts an independent course and resists what the army sees as civilian authorities and foreign governments’ unreasonable demands.
Currently, the most intense operations against the militants have been taking place in the Bajaur Agency in the FATA. Current operations began in August and by the end of September the security forces had lost 69 men and suffered 230 injured. Military officials insist that ‘no timeframe could be given about the ongoing operations’. Up to 300 000 people have had to flee the fighting.
Besides unsettled political conditions and the growing security crisis, the Pakistan economy has run into serious economic difficulties, as a result of a rapid rise in the cost of foodgrains, inflation, regular power cuts, recent high crude oil prices and growing fiscal and current account deficits. Foreign investment in the first ten months of 2007–08 was US$3.6 billion dollars, down from US$5.9 billion for the same period a year earlier. By early October:
- the rupee had fallen to an all-time low against the US dollar, a drop of more than 24 per cent since the beginning of 2008
- central bank reserves fell to US$4.68 billion, only enough for about two months of imports, and
- Standard and Poor’s had downgraded the country’s sovereign debt rating to CCC-plus, a few points above default level. 
Pakistan is now in informal discussions with the International Monetary Fund (IMF) and others for a US$10–15 billion international support package to stabilise its economy and avoid a balance of payments crisis. It has also approached the World Bank, the Asian Development Bank and numerous bilateral donors, including Saudi Arabia and China.
It has also been reported that Pakistan hopes to receive financial support from the recently formed Friends of Pakistan group, of which Australia is a member. However, a spokesman for Foreign Minister Stephen Smith denied any consideration was being given to financial support:
At its inaugural meeting on September 26, the Friends of Pakistan group agreed to enhance co-operation with Pakistan in five areas including stability, development, border security, energy and institution building. No consideration was given to a financial rescue package,’ the ministerial spokesman said. ‘We encourage Pakistan to continue discussions with the IMF.
To make matters worse, this economic crisis has come in the middle of the global financial turmoil.
On 28 October, the visiting German foreign minister, Frank-Walker Steinmeier warned that the IMF had less than a week to prevent a financial crisis and Pakistani officials said negotiations were in their ‘final stages’. It was also reported that foreign currency reserves stood at $4 billion and were likely to run out by the end of November 2008.
Currently, Pakistan faces an uncertain future. Inherent political instability has been overshadowed by popular resentment against the government due to an increase in the cost of food, inflation and the deterioration in the security situation as it also contends with an economic crisis. Tensions between Zardari and Nawaz Sharif have particularly affected foreign investment. Although it is inevitable that the international community will help Pakistan overcome the economic crisis, major challenges lie ahead for the nation.
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. ‘IMF has six days to save Pakistan’, Financial Times, 28 October 2008.
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