Taliban fleeing a Pakistani offensive are regrouping in the country’s northwest, threatening to spread and prolong a conflict that has strained the nation’s economy and may hamper efforts to attract foreign investment.
While Pakistan says its month-old offensive in South Waziristan has destroyed the largest Taliban sanctuary, some militants are falling back to Orakzai, a mountain region less than 16 kilometers (10 miles) south of Peshawar, the capital of North West Frontier Province, said Talat Masood, an independent military analyst in Islamabad.
Rising violence in the region last year prompted London- based Tullow Oil Plc to give up operational control of drilling operations near Orakzai. A wider conflict may make it harder to attract companies like Mol Nyrt., Hungary’s largest oil refiner, which this month started natural gas production in the province.
“Naturally, this violence is not good for the investment climate, but the government’s decision this year to tackle the Taliban is a good one for the long term,” said Habib-ur-Rehman, who manages $48 million of stocks and bonds at Karachi-based Atlas Asset Management Ltd.
Peshawar, Pakistan’s eighth-largest city, suffered 11 major terrorist attacks this year, including a Nov. 19 suicide bombing at the main courthouse that killed 18 people. The city has a U.S. consulate and straddles the truck route for supplies from the port of Karachi to U.S. troops in landlocked Afghanistan.
Mountainous Trails
South of Peshawar, guerrillas are escaping over trails that snake through the mountains, military spokesman Major General Athar Abbas said in a Nov. 13 interview. While “sealing off the footpaths is not realistic,” the army is “preventing the militants from moving vehicles or heavy weapons,” he said.
Some escaped militants will abandon the Taliban movement and others will continue, making Orakzai the army’s possible next target, Abbas said. Pakistani air force jets have bombed Taliban positions there this month, killing as many as 20.
The fighting is hurting what the International Monetary Fund has called an “anemic” economy. Foreign aid and loans financed 40 percent of Pakistan’s $10 billion current account deficit in the year ended June 30, said Asad Farid, an economist at AKD Securities in Karachi. This year such assistance will entirely cover a deficit of $6 billion, he said.
Rising Cost
The war against the Taliban has been costing the government $8.5 billion a year, Finance Minister Shaukat Tarin said July 15. This year’s figure is higher, Tarin told reporters Nov. 16, declining to give details.
Successes in South Waziristan, where the army has captured militant strongholds and main roads, may revive an argument with the Obama administration over which Taliban factions Pakistan’s forces should strike next payday loans guaranteed no fax. U.S. National Security Adviser James Jones has renewed pressure for Pakistan to hit the groups that attack U.S.-led forces in Afghanistan, the New York Times reported Nov. 15, citing unnamed U.S. officials.
“The Pakistani response to any new U.S. demand will be the same as before: that they have no resources to open a new front,” said Shuja Nawaz, director of the South Asia Center of the Atlantic Council in Washington.
The army’s current offensive targets a Taliban faction in South Waziristan that opposes Pakistan’s government, which blames it for 80 percent of Islamic attacks in the country. While Taliban groups that fight in Afghanistan are based nearby in North Waziristan, Abbas said the army has no plans to expand its assault there.
Shifting Focus
“Cost and security reasons” led oil developer Tullow to hand over control of a drilling project at Kohat, near Orakzai, to its local partner, spokesman George Cazenove said in an e- mail. “Because they are no longer the operator, the number of Tullow employees in Pakistan has been reduced significantly,” although Tullow retains a 40 percent stake in the project, Cazenove said.
Budapest-based Mol, Hungary’s largest oil refiner, began production at its Manzalai field last week after an initial investment of $500 million. Initial output of 250 million cubic feet of gas a day will be increased 40 percent to 350 million cubic feet by 2013, Mol Chief Executive Officer Gyorgy Mosonyi told a press conference in Islamabad on Nov 11.
“We are reducing risk to the possible minimum,” the company said in a statement in response to questions about security. “Operations at both the office in Islamabad and at the countryside facilities are continuous and uninterrupted.”
The Karachi Stock Exchange 100 Index fell 2.1 percent last month, the most since January, as bombings and assaults in major cities eroded confidence.
Sanctuary Disrupted
The South Waziristan campaign will improve Pakistan’s security because it has disrupted the country’s largest Taliban sanctuary, said Mahmood Shah, an analyst who once served as security chief for the border zone.
“We should see a reduction in the attacks within as little as two weeks,” Shah said.
On Oct. 17, the army sent 28,000 troops into the lands of the ethnic Pashtun Mehsud tribe, which has about 5,000 to 8,000 Taliban fighters, Abbas said. The battlefield is a forested, mountainous zone of 2,200 square kilometers, about half the size of the U.S. state of Rhode Island.
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