Mar 7 - 13, 2011

The security crisis driven mainly by war on terror is creating socioeconomic and political disorder besides adding to the poverty number, which has exceeded 34 percent in Pakistan.

This was elaborated by Dr. Khalida Ghaus, managing director SPDC, and Javed Jabbar, former federal minister for information and media development last week, in the Social Policy and Development Center annual review of social development in Pakistan 2009-10 with the topic "Social Impact of the Security Crisis".

In the wake of violence driven by war on terror, the economy in Pakistan is confronted with severe challenges such as slowdown of economic growth, decline in investment, high inflation and higher levels of fiscal and current account deficits.

Unless the economy was given a solid and shared support by the West and the US, the human sufferings would continue to mount on the back of deteriorating good governance and lack of policy implementation.

The analysis pinpointed various causes behind the present state of the economy. Political developments in the region have caused a change in the internal political and security dynamics of Pakistan with implications for its social and economic developments.

The report has explored various facets of the existing security crisis confronted by the government and society and its implication for socioeconomic development in Pakistan. Systematic failure of both institutions and social development policies initiated by respective governments and its role in breeding violence and extremism are equally responsible for the crisis.

The costs of participation in the war on terror have risen exponentially with the dislocation of economic activity, high losses of life and property, and impact on the investment climate.

In 2009-10, cost to the economy due to fall in investment and stock market capitalization was Rs367 billion. Overall, the total costs of participation in the war on terror have increased from Rs380 billion in 2007-08 to Rs840 billion in 2009-10. The costs of war are over three times greater than the bilateral assistance forthcoming, especially from the United States.

The security crisis also has fiscal implications in terms of budgetary priorities of both federal and provincial governments. Analysis of the trends in federal and provincial expenditures showed an extraordinary growth in expenditures on public order and safety during the 2000s. Security related expenditures have increased from Rs177 billion in 2000-01 to Rs800 billion in 2009-10.

The sector wise analysis of government expenditures showed that resources have been shifted away from economic sectors such as water and power and social sectors such as education and health.

The analysis presented in the report showed that the pace of social development has slowed down. Incidence of poverty has increased from 30 percent in 2004-5 to 38 percent in 2007-08. There also appears stagnation in the indicators of education and health sectors and Pakistan is unlikely to meet most of the targets of millennium development goals (MDG) by 2015.

The impact of security crisis has been great on the provincial economy of Khyber Pakhtunkhwa where escalation of the armed conflicts have had repercussions on the lives and livelihoods of local population. Agricultural sector in KP which suffered because of the 2005 earthquake, showed major decline, which can be partially attributed to the increase in militancy and the military operations carried out in the province. Similarly, manufacturing production has either declined or slowed down. As a result, the growth and pattern of employment have also been adversely affected. In 2008-09, youth unemployment in KP was estimated to be 11.6 percent as compared to the national average of 7.5 percent. Similarly, unemployment rates for female graduates have substantially increased from 24 percent in 2005-06 to 36 percent in 2008-09.

The impact of conflict on socioeconomic status of households has been analyzed in a report through a survey conducted in selected districts of KP (Peshawar, Hangu, Bannu, Tank, and Swat). A comparative analysis of poverty incidence in these areas before and after security crises shows an increase in the poverty incidence to 55.8 percent.

The economic difficulties and insecurity are the two main reasons for not sending children to schools. Psychological distress and anxiety about the current economic and security situation is also widely prevalent. The survey reveals that 67 percent of the heads of households may be considered as having significant psychological distress and potential psychiatric cases as per the definition of World Health Organization (WHO).

While the state has relied on short-term offensive against militants, civil society is more involved with providing social development services and supporting peace and harmony. Though there is no single and collective strategy, the civil society by and large, has demonstrated a commitment to continuing its work even in severely affected areas. However, the need for state and society is to come together, recognize the issues, accept each other's role and come to a shared vision of what needs to be done to get out of the quagmire of terror.


There is a need for consensus based national strategy that aims at both preventing terrorism and minimizing its effects on social development. The report recommends that the national goal of poverty reduction should be considered as an essential element of the anti-terror strategy. The use of force through army operations only cannot provide long lasting peace in the country.