Abstract
The Mumbai terrorist attacks of November 2008 rocked South Asia and have
sparked fears of regional
instability and a flare up of tensions between
India and Pakistan. The only terrorist captured alive,
Mohammad Ajmal
Amir, disclosed that the group of attackers belonged to Lashkar-e-Toiba, a
Pakistani
militant organisation. Pakistan has responded to a number of
India’s requests in the aftermath of the
attacks, and has arrested
some twenty members of the terrorist group residing within the country.
Islamabad faces a myriad of challenges as we enter 2009 but two stand out as
particularly acute: bringing
the presently dysfunctional economy back on
an even keel; and quelling the militancy emanating from the
country’s restive north-western border region. President Asif Ali
Zardari, under formidable external
pressure to deal with the latter, will
have to work hard to convince Pakistanis that he is his own man, and
not
at the beck and call of Washington, while also making sure that desperately
needed financial
assistance materialises.
On the international front,
Pakistan and China have held high level talks involving President Zardari
and
his Chinese counterpart Hu Jintao, as well as other dignitaries. The
meetings, held in China in October
2008, were characterised by warmth,
friendship and a feeling of mutual understanding, and fashioned a
broad
agreement on strengthening Pakistan-China strategic relations, first
established some 57 years ago.
The meeting reiterated the importance of
the 2005 Treaty of Friendship, Co-operation and Goodneighbourly
Relations
between the two countries and stressed the importance of intensifying
co-operation
with respect to areas of the economy, defence, science and
technology.
Pakistan’s defence industry contains over 20 major
public sector units (PSUs) and over 100 private-sector
firms. The majority
of major weapons systems production and assembly is undertaken by the
state-owned
PSUs, while the private-sector supplies parts, components,
bladed weapons and field equipment. Major
PSUs include the Pakistan
Ordnance Factory (POF), Heavy Industries Taxila (HIT), Karachi Shipyard
and Engineering Works (KSEW) and the Pakistan Machine Tool Factory.
Multinational presence in
Pakistan is limited, although joint production
or engineering support in the development of certain
armaments has
recently occurred with companies such as DCN International and the Chengdu
Aircraft
Industry Group.
In November 2008, Ministry of Defence
Production Secretary Shahid Siddiq Tirmizi announced that as
many as eight
countries have expressed interest in acquiring the newly launched JF-17
Thunder fighter, a
China-Pakistan joint venture. Tirmizi expects that 800
or more could be produced once sale agreements
have been reached. The
Pakistan Air Force has been putting the new jet through its paces with a
series of
trials and technical evaluations. Other defence products of
Pakistani extraction garnering interest in
international circles include
unmanned aerial vehicles (UAVs), air defence systems, tank simulators, and
anti-tank guided missiles. Tirmizi noted that between 2006 and 2008, Pakistan
had exported US$400mn
worth of defence products.
Meanwhile, the
Pakistani economy is likely to experience continued turbulence over the
remainder of
FY09, in view of lingering inflationary pressures, serious
security woes and unfavourable external
dynamics, and this will in all
likelihood manifest itself in slower growth. However, beyond the
short-tomedium
term, we expect to see a gradual stabilisation of the
economy and remain reasonably sanguine
about Pakistan’s longer-term
growth prospects.
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