DND Thought Centre Report:
When reflecting upon the contemporary trajectory of Pakistan’s economic and security challenges, one cannot overlook the complex entanglement of Afghan influence, terrorism, and economic destabilization. On October 14, 2023, the Dispatch News Desk released a special report asserting that Afghanistan had launched what may rightly be termed “Economic Terrorism” against Pakistan.
At that time, the gravity of this claim went largely unacknowledged by Pakistan’s leadership, which remained invested in the idealized narrative of brotherhood with Afghanistan, particularly with the Afghan Taliban. Today, however, that report appears disturbingly prescient.
Important points of report titled “Some Facts about the Economic cost of Terrorism and of Economic Terrorism that Pakistan is facing today” publication date: October 14, 2023, is reproduced hereunder:
To understand the present crisis, one must revisit the year 1979—a turning point not only in Afghanistan’s history but in Pakistan’s social and economic evolution. The Soviet invasion of Afghanistan and the ensuing jihad fundamentally altered Pakistan’s social fabric, injecting a radicalized mindset that continues to shape its national trajectory. The Afghan factor disrupted Pakistan’s economic stability, particularly in sectors such as tourism, which has never recovered from the instability and militancy that ensued.
Pakistan’s armed forces, through successive military operations between 2003 and 2018, fought tirelessly to reclaim the state’s writ in territories bordering Afghanistan. Yet, much of this progress was undone when, following the Taliban’s return to power in Kabul in August 2021, the Pakistan Tehreek-e-Insaf (PTI) government initiated negotiations with Tehreek-e-Taliban Pakistan (TTP, officially called as Fitna e Khawaraj) and allowed their resettlement within the country. This political miscalculation reactivated the cycle of terrorism and economic vulnerability. What followed was not merely conventional terrorism but an orchestrated campaign of “Economic Terrorism” originating from Afghan soil—an innovative, non-kinetic form of aggression aimed at weakening Pakistan from within.
Since 1979, Pakistan has diverted vast national resources—both human and material—toward combating security threats emanating from across its western border. The cost has not only been economic but deeply humanitarian. Post-2021, Pakistan’s predicament has intensified: its economy is now besieged by deliberate financial manipulations, including the hoarding of U.S. currency, smuggling of essential food commodities to Afghanistan, and disruption of domestic markets—all mechanisms of economic sabotage designed to precipitate food insecurity and currency devaluation.
This convergence of economic collapse and external economic subversion has created what may be termed a Twin Crisis. International scholarship on economic or financial terrorism—defined by the Geneva Centre for Security Policy in 2005—offers a conceptual lens to interpret this crisis. Economic terrorism, distinct from economic warfare between states, refers to destabilizing actions by non-state or transnational actors undertaken to disrupt the financial stability of a nation for ideological, political, or religious ends. Such actions, whether violent or non-violent, exert both immediate and psychological effects, leading to far-reaching economic consequences.
The impacts of economic terrorism are multifaceted: loss of human and non-human capital; uncertainty in consumer and investor behavior; industrial contraction; increased security costs, often described as a “terrorist tax”; and the deterioration of supply chains. In Pakistan’s case, additional dimensions include the smuggling of foreign currency, hoarding of essential goods, the promotion of undocumented economic networks, and the deliberate targeting of local and foreign investors.
Recent media reports reinforce these patterns, revealing the extent to which Afghan citizens have been transferring Pakistan’s economic resources to Afghanistan, thereby stabilizing the latter’s economy while weakening Pakistan’s currency. Informal networks such as hawala and hundi—often controlled by Afghan operators abroad—undermine Pakistan’s formal banking sector and erode remittance inflows. Moreover, dollar smuggling from Pakistan to Afghanistan has intensified, leading to acute foreign reserve depletion and a sharp depreciation of the Pakistani rupee. This illegal outflow of capital has effectively turned Pakistan’s financial arteries into conduits for Afghanistan’s economic survival.
Simultaneously, Afghanistan has once again emerged as a sanctuary for terrorist groups such as TTP and Daesh Khorasan, which continue to operate against Pakistan and Central Asian states. The re-entrenchment of these groups under Taliban patronage further compounds Pakistan’s internal insecurity and deters foreign investment.
In this context, Pakistan’s recent decision to repatriate illegal foreign residents, particularly Afghan nationals, represents both an economic and security imperative. Since 1979, millions of Afghan refugees—initially invited during the Soviet-Afghan conflict—have settled in Pakistan, with their numbers now estimated to exceed twelve million. Efforts to regulate or repatriate this population have repeatedly faced resistance from international bodies, notably the UNHCR, which has pressured Pakistan to continue hosting Afghan refugees despite the mounting socio-economic strain.
Sociologically, Afghan communities in Pakistan have remained largely unintegrated. They adhere to their tribal and nomadic cultural systems, resisting assimilation into Pakistan’s agrarian and civic structure. Their cultural insularity, combined with economic opportunism, has fostered parallel societies or “Afghan ghettos,” which operate by their own norms and customs. This lack of integration has obstructed the emergence of shared national consciousness—a prerequisite for nationhood based on common language, history, and emotional attachment to the motherland.
The notion of “Pak-Afghan brotherhood,” once promoted on the basis of religious solidarity, has proven untenable in the absence of socio-cultural integration. As sociologists and anthropologists remind us, religion alone does not constitute the foundation of nationhood. The concept of a motherland is inherently tied to ancestry, shared history, and emotional belonging—elements that Afghanistan and Pakistan do not share at any meaningful level.
It is therefore imperative that Pakistan proceeds decisively with its policy of repatriating illegal foreigners and reasserting border control. This is not merely a matter of immigration management; it is a question of national survival. The ongoing campaign of economic terrorism will persist so long as Pakistan’s economic sovereignty remains vulnerable to external manipulation. The moment is indeed a now or never juncture for Pakistan—a moment to fortify its borders, restore its economic integrity, and reclaim its right to national self-determination in the face of hybrid aggression.
