Terrorism is the cruellest of crimes, kills less criminals but more innocent people. It is a great hurdle in socio-economic prosperity, political stability, geo-strategic sustainability and energy security of nations. Without conceited any moral equivalence the economic costs of terrorism are similar or equal to the economic costs of crime.
The equivalent, direct economic damage, done by terrorist such as suicidal attacks and bomb blasts, destroyed the buildings and infrastructure and ended the lives of several productive human beings. These losses are the result of an act of man and have similar costs like natural disaster such as an earthquake, flood or hurricane etc.
In fact, the direct damages done on 9/11 were roughly of the same order of magnitude as these natural events. The anti-terrorist campaign followed the 9/11 event in the United States, over-strained Pakistan's budget as allocations for law-enforcement agencies have to be increased significantly. The participation of Pakistan in war against terror has caused uncertainty in the country, as it has been facing major challenges to social, political and economic stability and increased law and order concerns amongst other reasons.
The cost of terrorism in term of human lives in the war against terror is very high. From 2003 to 2005, the total fatalities in terrorism-related violence increased from189 to 863 in 2004, to 648 by 2005. The number rose dramatically to 11,704 in 2009 and 5,907 in 2010.
According to SATP Database, during 2003 to 2010, around 9,000 civilians with 3,210 security forces personnel and 18,885 terrorists have lost their lives in war against terrorism. Other than human lives and property, the human casualties, infrastructure damages, factories and standing crops losses and interruption of economic activities have increased significantly, resulting in unemployment, poverty and crimes rise. The anti-terror campaign gave another reward to Pakistan in terms of suicidal attacks. This originated in the name of religion and created embarrassment for the Pakistanis in the world. According to the Finance Division, our economy suffered losses of Rs 3.05 trillion during the last five years - direct cost of Rs 712 billion and indirect cost of Rs 2.34 trillion. The effects of indirect cost are severe as compared to those of direct cost, as the development projects have been significantly affected while investment output ratio declined due to capital flight.
Pakistan has sacrificed its development budget. This war has increased our dependence on international agencies, resultantly our external debt rose to US $55 billion. Currently, every Pakistani is under the debt of US $400. This war has posed several threats to our external sectors and increased the threat perception and cancellation of orders, which impeded the exports of Pakistan. Most of the countries of the world are not ready to trade with us due to terrorism.
This is the time, when we need trade and investment rather than aid. Moreover, this war has increased the cost of doing business significantly. Most of the business meetings and investment conferences are held in a third country instead of Pakistan. The existing enterprises also need security. Investors, therefore, take other alternate measures to solve their problems. War on terror significantly affects the consumer and business confidence.
The anti-terror campaign severely affected our backbone sector (agriculture) in KP, Fata and Balochistan, creating unemployment and poverty and the production of various other products such as peach has affected by 60 percent, pear by 34 percent, tomato by 18 percent, apple by 15 percent, plum by 14 percent, tobacco by 11 percent, maize 8 percent, onion 8 percent, vegetables 5 percent, apricot 5 percent, wheat one percent and rice one percent. The production in these agriculture commodities has also affected the industries of other provinces due to a lack of provision of raw materials. Beside agriculture, the industries of these areas have also been affected. In KP 3,500 industrial units were functioning in 1995, their number had shrunk to 600 in 2009 due to terror attacks and bad law and order conditions.
Several development projects, started earlier in the affected areas such as Reko Diq and Saindak gold mines and Gwadar port, highways in Balochistan are afflicted with delays, which would ultimately result in large cost overruns. The prevailing economic situation is not positive as the tax collection has fallen, while imports have increased significantly. Further increase in the defence budget instead of development budget, raises the economic uncertainty and volatility in Pakistan.
The tourism industry contributed significantly 500-600 million in revenue before 2000. At present, this industry suffered a loss of worth $400 million as 70% of tourist sites are located in KP since the beginning of war on terror. Better law and order conditions can improve this industry.
Not only economic, the social sector is also affected due to a lot of threats to education. Sixty-five percent of schools in Swat and 35 percent in Buner, Upper and Lower Dir, Shangla and Malakand districts have been destroyed due to suicide bombing and drone attacks. With the war on terror, the soft image of Pakistan has badly ruined in international market, which can be considered as cashable commodity in economy of various countries. The military operation in Pakistan against the extremists and terrorism not only created loss to human lives, but also economy.
The war has increased the size of our informal economy due the smuggling of various foods items/ an industrial product from Pakistan. Pakistan also signed an agreement with the United States, have promised to give all support in logistics. In this respect, more than 75% US and Nato supplies pass through Pakistan, which includes gas, food, military equipment etc. This led to acute food-grain scarcity within Pakistan and further created distortion to sustainable economy and economic policies.
The war put several challenges to Pakistan in term of managing internally displaced peoples and migration of population of Afghanistan and other provinces of Pakistan. Due to the expectation of the US that the terrorist are present in various areas of Pakistan and the drone attacks by the Americans for removing the terrorist seriously hampered the law and order situation in KP and Balochistan.
The attacks not only affected the surface resources also affected the underground resources, such as declining in the safe drinking water because of pollutant of underground water. The bomb and rocket pollute the water by incurring cyclonite and a toxic substance, which may cause cancer in Pakistan. Further, the rocket fires intensely damaged the thyroid gland. Pakistan fights this war on the cost of human capital, which declines their productivity day by day. During the war, illegal trading of timber in Pakistan increased, which destroyed much of the forest cover, which is currently stands 3.2% of the total area.
As a frontline allay, Pakistan has given great sacrifices in terms of collateral damage and economic losses. Now, every Pakistani wants to see a prosperous Pakistan, but it is impossible without taking any harsh step by government. The steps should be for the safety of the country rather than to appease the international agents. The campaign should have to educate the people and create awareness and employment opportunities. Without provision of employment, the terrorism can not be eliminated.
The troubled areas of Pakistan should be stabilised with the support of the local people without wasting time. The development of infrastructure and industrialisation in the country can help in utilising the untapped potential of these areas. The nature has given unlimited resources to these areas, which need to exploit through investment. Resultantly, people would not only get employment, but would participate directly in the development of the country.
The establishment of economic zones in these areas can increase trade to the Middle East and Central Asian countries. The opening up of technical education centres can also improves the human capital. If we ignore today these areas then the war may spread to other areas.