Some Facts about the Economic cost of Terrorism and of Economic Terrorism that Pakistan is facing today

DND Thought CenterSome Facts about the Economic cost of Terrorism and of Economic Terrorism...

DND Report

The economic cost that Pakistan has paid since the Afghan Jihad is undocumented for several reasons. Two of the core reasons were that Pakistan had no expertise to conduct researches that could cover the period between 1979-1988 and the second fundamental reason was the state’s decision to put the issue under the carpet because Pakistan did not want to share with its citizens the horrific economic and social impact of Afghan Jihad over Pakistan.

In 2016, the Finance Division of the Government of Pakistan shared the economic impact of the conflict and instability in Afghanistan in the aftermath of the 9/11 terrorist attacks and their regional implications.

This report documented the financial impact of the US-led War on Terror over Pakistan which was over 9,860 billion Pak rupees. Since 2016, no credible document has been released about what immense negative consequences the War on Terror has for Pakistan. After the U.S. invasion of Afghanistan, Pakistan again saw a huge influx of Afghan refugees and a sudden rise in the number and scale of terrorist attacks in the country. The cumulative impact of these developments adversely compressed the overall growth rate in all major sectors of Pakistan’s economy.

Economic Terrorism against Pakistan

The official document of the Finance Division confirmed that normal economic and trading activities were disrupted, resulting in higher costs of doing business and significant delays in meeting export orders around the globe. As a result, Pakistani products gradually lost their market share to their competitors.

Since 1979, economic growth has not picked up and Pakistan continues to be a serious victim of terrorism, including foreign-sponsored terrorism from the immediate neighborhoods. Like many economic sectors, the tourism industry never gained what it lost after the Afghan Jihad because Jihad changed the social fabric of Pakistani society and brought a radical mindset and it is a proven fact that international tourism cannot survive in a radicalized country. Therefore, the Afghan factor since 1979 has changed Pakistan altogether and for all times to come. However, our security forces fought back and reclaimed the writ of the state in troubled areas bordering Afghanistan through several military operations against terrorists from 2003 to 2018 but almost everything went down to drain when the PTI government through a negotiation with terrorists resettled TTP terrorists inside the country after Afghan Taliban reclaimed government in Kabul in August 2021. After this historic development, the relationship between Pakistan, terrorism, and the economy altogether changed and a full-fledged “Economic Terrorism” was launched against Pakistan from Afghan soil.

Since 1979, a considerable portion of valuable national resources, both men and material, have been diverted to address the security challenges, and in addition to economic losses, cross-border terrorism in Pakistan has also been responsible for untold human sufferings due to indiscriminate, brutal terrorist attacks against the civilian population and against men in uniform. Since 2021, Economic Terrorism has been an innovative attempt to destabilize Pakistan by hoarding US currency, massive smuggling of edible to Afghanistan, and creating a food security situation within Pakistan.

Pakistan is facing a “Twin Crisis” because it has been going through the dangerous convergence of a collapsing economy and economic terrorism since 2021

Several International researches indicate that Financial Terrorism (also known as Economic Terrorism) is actually a secret manipulation of a nation’s economy by state or non-state actors. Terroristic attacks against ports and land borders (attacks in and around Gwadar Port, and Karachi Port,) cause extra measures to be implemented to ensure the safe arrival and departure of the products and these measures force the cost of exporting and importing goods to increase. Pakistan is the most affected by this kind of terrorism because the slowing of exports and imports has affected the country’s ability to combat poverty. An increase in poverty can cause revolts among the population and possible political destabilization, forcing an even greater increase in poverty.

One can say that Pakistan is facing a “Twin Crisis” because it has been going through the dangerous convergence of a collapsing economy and economic terrorism since 2021.

In 2005 the Geneva Centre for Security Policy defined economic terrorism in the following terms:

Contrary to “economic warfare” which is undertaken by states against other states, “economic terrorism” would be undertaken by transnational or non-state actors. This could entail varied, coordinated, and sophisticated or massive destabilizing actions in order to disrupt the economic and financial stability of a state, a group of states, or a society for ideological or religious motives. These actions, if undertaken, may be violent or not. They could have either immediate effects or psychological effects which in turn have economic consequences.

The Economic Terrorism impacts as:

  • Immediate Loss of Human and Nonhuman Capital.
  • Effects of Uncertainty on Consumer and Investor Behavior.
  • Effects of Retrenchment on Specific Industries or Localities.
  • Increased costs of security analogous to a “security” or “terrorist tax”.
  • Impact on supply chains.
  • Smuggling of currency for bleeding the country economically.
  • Smuggling of edible products to create serious food security in the target country.
  • Encouraging undocumented economy.
  • Controlling routes for disrupting supply chains.
  • Attacking and harassing local and foreign investors (reference attacks on Chinese experts and ransom threats to industrialists, businessmen, and traders in Pakistan).

After having an understanding of the issue of economic/Financial terrorism, one can now look into the reality Pakistan is going through.

A recently published media report indicates that citizens of Afghanistan are transferring the economic resources of Pakistan to Afghanistan, wreaking havoc on the latter’s economy and weakening its currency to somehow consolidate their own economy in isolated Afghanistan.

Another report claims that an illegal parallel economy like Hawala and Hundi is solely operated by citizens of Afghanistan sitting abroad from where they send money to Pakistan through Hawala and Hundi and they encourage Pakistanis living abroad not to use banking channels for the transfer of money thereby Pakistani remittances are nosediving.

Forex market sources claim that US dollar smuggling is 100 percent in the hands of Citizens of Afghanistan who are transferring US$ from Pakistan to Afghanistan and this factor is stabilizing the economy of Afghanistan and destabilizing Pakistan’s economy.

Afghans buy coal and other commodities in Afghani currency and sell them in Pakistani currency with some profit, later they convert Pakistani rupees into US dollars and send them to Afghanistan. This illegal outflow of US dollars from Pakistan has reduced foreign reserves in Pakistan and increased pressure on the rupee, with the domestic currency falling to record lows and the economy teetering on the brink of collapse.

Afghanistan has again become a hub of terrorism and terrorist outfits like Tehreek-i-Taliban Pakistan (TTP), Daesh Khorasan, and other extremist groups are living there and operating against Pakistan and Central Asian countries from Afghanistan.

Now Pakistan has decided to fix the situation and send illegal foreigners back to their countries because millions of legal and illegal Afghan refugees residing in Pakistan since 1979 Afghan Jihad and Pakistan invited three million refugees which now have multiplied in the figure. Another grave issue is a constant increase in illegal/unregistered Afghanis. Some official reports claim that the number of legal/illegal Afghanis has crossed to over 12 million plus.  Whenever Pakistan tried to send Afghan refugees back to Afghanistan, UNHCR started putting pressure on Pakistan to keep hosting Afghan refugees.

Unfortunately, Afghanis have not integrated themselves with Pakistani society, culture, and even laws because they consider their customs more important than Pakistani laws and Pakistani customs. However, some circles in Pakistan believe that Afghanis have become an integral part of Pakistan because they have been living in Pakistan for the last 40-plus years. While selling this viewpoint they forget the reality that no foreigner can become a citizen of any country without going through an official integration process because integration with culture, history, norms, society, and customs is a prerequisite for converting any foreigner into a responsible citizen of any country because all such elements create a sense of nationalism and the concept of nationalism primary force behind nationhood. Nation, a complex structure of societies situated within a specific geographical location is based on more profound linkages such as language, oral history, and collective consciousness. These three fundamentals bind individuals into social groups and groups into nations which then transform into the concept of motherland. has had enough of Afghani’s exploitation and has decided to take some logical steps, already being practiced in the world such as border control, visas, and passports. Anywhere in the world foreigners are allowed to enter on the basis of their utility, like how much money they can bring, how much expertise they have, and above all are they even required for the country and so on.

This is also a reality that Afghanis are not interested in integrating into the culture of Pakistan and they have their reasons for not adopting Pakistani norms and culture. They share a nomadic/tribal culture with different sets of rules based on their own shared history and cultural values. The innate dislikeness towards the agrarian culture doesn’t let them assimilate with Pakistan.

This is also an important factor to understand that Afghanis are deeply connected to their social belief system that any kind of social and cultural integration with Pakistan means leaving their own ways of life. The unwillingness to adapt and opt for the agrarian culture created Afghan ghettos across Pakistan, where Afghani in sub-societies are living by their own norms and traditions resulting in Pakistan being just a land of opportunity to exploit. It is also understood that Afghanis do not consider Pakistan as their motherland, so just use Pakistan for their economic gains. The entire façade of Pak-Afghan brotherhood was standing on religion, but sociologists and anthropologists believe that religion is never a pre-requisite for a motherland and nationhood. The concept of motherland is based on emotional and symbolic significance which can have spiritual dimensions. The term is used for ancestral land and goes beyond mere physical and political boundaries. The ancestral roots of Pakistani culture and oral history are not aligned at any layer with Afghanis. The idea of them integrating into urban Pakistan was utopian, bringing negative results.

Since Pakistan has decided to send all foreigners back to their homes, it is high time that the drive against illegal foreigners must not stop due to expected international, domestic, and political pressures. This is a “Now or Never” call for Pakistan as Pakistan cannot afford to fight a tiresome Economic Terrorism and this kind of terrorism will not stop unless Pakistan pack all illegal foreigners back to their countries.

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