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'Like a blessing from God'
Elsewhere in Pakistan, though, Islamic extremists are making headway in winning support.
In Muridke, 75 miles northeast of Faisalabad, a charity affiliated with the extremist group Lashkar-e-Taiba — which the Pakistani government says was responsible for the Mumbai terrorist attacks — is providing services the government doesn't. Jamat Ud Dawah, which the U.S. Congressional Research Service calls an "incarnation" of Lashkar, runs a hospital in Muridke for the poor.
"For us, they are like a blessing from God," shopkeeper Abdul Hameed says. "In this era of high inflation, poor people can't afford to seek medical treatment, even for kids."
Even in bad times, Pakistani militant groups draw donations from sympathizers across the country and in the oil-rich Middle East; some also make money from criminal enterprises. "Their economy doesn't go down — their narcotics, their smuggling, their kidnappings," Masood says.
"The militants have plenty of money and can simply offer either income to the unemployed or a better income" for those who have jobs, says Shaun Gregory, director of the Pakistan Security Research Unit at Britain's University of Bradford. And joining militant groups also "carries much great status and honor than most menial jobs."
In Pakistan's Swat Valley, just 100 miles from Islamabad, Taliban militants have grown so powerful that the government decided this month to stop military offensives there.
It's unclear whether Pakistan's government is capable of reversing the rot. Most other governments in the world — from New Delhi to Seoul to Washington — have reacted to the economic crisis by slashing interest rates, cutting taxes and pumping up spending on infrastructure. Pakistan is doing just the opposite, though: raising interest rates and cutting government spending.
Those are the terms of a $7.5 billion loan it secured in November from the International Monetary Fund, which demanded Pakistan's government control its budget deficit and bring inflation down from its 20% pace. The IMF acknowledged that the "measures could further intensify existing social tensions."
One solution would be to collect more taxes, but that's not easy in a country that, in a recent ranking of perceived corruption levels by the Berlin-based organization Transparency International, came in 134th among 180 countries, with 180th being the most corrupt. Meanwhile, cutting defense spending is next to impossible for Zardari, who took office last year after nine years of military rule — especially at a time when the Taliban is on the rise and tensions are running high with rival India.
So the government is reportedly tightening social spending — on just the kind of projects that could help ease poverty in the short and longer term. According to the newspaper Dawn, the government spent less than $900 million of the $2.5 billion it had expected to spend on development in the second half of 2008.
"We're creating a problem for ourselves," says Fasih Uddin, retired chief economist for the Pakistani government and author of a book criticizing IMF policies toward Pakistan. "Raising interest rates when everyone else is cutting? The world economy is in recession right now. … Defense spending cannot be cut. What is left is development expenditure — health, education, power, sanitation. They are being gutted."
Some miss military rule
Meanwhile, Zardari's hold on power is weakening. The widower of opposition leader Benazir Bhutto won elections a year ago in a wave of sympathy after she was assassinated. But the IRI poll last fall showed that 63% of Pakistanis disapproved of his performance. Only 19% said they'd support his Peoples Party if there was another election, down from 50% in January 2008.
That's bad news in a country where democracy has a tenuous grip. For more than half its 61-year existence, Pakistan has been governed by the army, including the nine-year regime of former president Pervez Musharraf, who seized power in a 1999 coup.
Some Pakistanis even miss military rule, fewer than six months after the unpopular Musharraf was forced out. "A military government at least is organized," says Mian Muhammad Shabbir, who owns a textile spinning mill outside the Punjbai city Lahore.
Gregory, author of the forthcoming book Pakistan: Securing the Insecure State, believes the crisis could deteriorate quickly: "If the demonstrations grow in number and frequency and the government can't address food and fuel issues in particular, then a momentum against the government might build."
If that happens, Gregory says the military — which proved largely ineffective at combating militants under Musharraf — could try to seize power. He says the key will be whether there are more incidents such as the one at the Treats bakery. He says Punjab region's recent volatility is a "test" for what might be to come.
In Faisalabad, Gulzar Ahmed, a 70-year-old worker at a cotton recycling plant, sees only dark days ahead. His monthly income has plunged by half. "I'm fed up," he says, his face covered with the white lint that floats around the factory. "Everyone is angry."
Contributing: Zafar M. Sheikh
Elsewhere in Pakistan, though, Islamic extremists are making headway in winning support.
In Muridke, 75 miles northeast of Faisalabad, a charity affiliated with the extremist group Lashkar-e-Taiba — which the Pakistani government says was responsible for the Mumbai terrorist attacks — is providing services the government doesn't. Jamat Ud Dawah, which the U.S. Congressional Research Service calls an "incarnation" of Lashkar, runs a hospital in Muridke for the poor.
"For us, they are like a blessing from God," shopkeeper Abdul Hameed says. "In this era of high inflation, poor people can't afford to seek medical treatment, even for kids."
Even in bad times, Pakistani militant groups draw donations from sympathizers across the country and in the oil-rich Middle East; some also make money from criminal enterprises. "Their economy doesn't go down — their narcotics, their smuggling, their kidnappings," Masood says.
"The militants have plenty of money and can simply offer either income to the unemployed or a better income" for those who have jobs, says Shaun Gregory, director of the Pakistan Security Research Unit at Britain's University of Bradford. And joining militant groups also "carries much great status and honor than most menial jobs."
In Pakistan's Swat Valley, just 100 miles from Islamabad, Taliban militants have grown so powerful that the government decided this month to stop military offensives there.
It's unclear whether Pakistan's government is capable of reversing the rot. Most other governments in the world — from New Delhi to Seoul to Washington — have reacted to the economic crisis by slashing interest rates, cutting taxes and pumping up spending on infrastructure. Pakistan is doing just the opposite, though: raising interest rates and cutting government spending.
Those are the terms of a $7.5 billion loan it secured in November from the International Monetary Fund, which demanded Pakistan's government control its budget deficit and bring inflation down from its 20% pace. The IMF acknowledged that the "measures could further intensify existing social tensions."
One solution would be to collect more taxes, but that's not easy in a country that, in a recent ranking of perceived corruption levels by the Berlin-based organization Transparency International, came in 134th among 180 countries, with 180th being the most corrupt. Meanwhile, cutting defense spending is next to impossible for Zardari, who took office last year after nine years of military rule — especially at a time when the Taliban is on the rise and tensions are running high with rival India.
So the government is reportedly tightening social spending — on just the kind of projects that could help ease poverty in the short and longer term. According to the newspaper Dawn, the government spent less than $900 million of the $2.5 billion it had expected to spend on development in the second half of 2008.
"We're creating a problem for ourselves," says Fasih Uddin, retired chief economist for the Pakistani government and author of a book criticizing IMF policies toward Pakistan. "Raising interest rates when everyone else is cutting? The world economy is in recession right now. … Defense spending cannot be cut. What is left is development expenditure — health, education, power, sanitation. They are being gutted."
Some miss military rule
Meanwhile, Zardari's hold on power is weakening. The widower of opposition leader Benazir Bhutto won elections a year ago in a wave of sympathy after she was assassinated. But the IRI poll last fall showed that 63% of Pakistanis disapproved of his performance. Only 19% said they'd support his Peoples Party if there was another election, down from 50% in January 2008.
That's bad news in a country where democracy has a tenuous grip. For more than half its 61-year existence, Pakistan has been governed by the army, including the nine-year regime of former president Pervez Musharraf, who seized power in a 1999 coup.
Some Pakistanis even miss military rule, fewer than six months after the unpopular Musharraf was forced out. "A military government at least is organized," says Mian Muhammad Shabbir, who owns a textile spinning mill outside the Punjbai city Lahore.
Gregory, author of the forthcoming book Pakistan: Securing the Insecure State, believes the crisis could deteriorate quickly: "If the demonstrations grow in number and frequency and the government can't address food and fuel issues in particular, then a momentum against the government might build."
If that happens, Gregory says the military — which proved largely ineffective at combating militants under Musharraf — could try to seize power. He says the key will be whether there are more incidents such as the one at the Treats bakery. He says Punjab region's recent volatility is a "test" for what might be to come.
In Faisalabad, Gulzar Ahmed, a 70-year-old worker at a cotton recycling plant, sees only dark days ahead. His monthly income has plunged by half. "I'm fed up," he says, his face covered with the white lint that floats around the factory. "Everyone is angry."
Contributing: Zafar M. Sheikh