The Post September 2001 World Pakistani Asset Manager's Perspective

The article was originally written on 18th September 2001

I have been asked to comment of the likely impact on Pakistan, the Middle East in particular and the Asset Management Industry on the whole.

I do not have enough insight of the Middle East and shall restrict my comment to the likely impact on Pakistan, the capital markets and the asset management industry here.

The magnitude of the tragedy has for the first time brought world focus and consensus on eliminating terrorism. But in addition to the terrorist act we have witnessed on 11th September 2001, there is a much bigger potential terror lurking in the region, which is the risk of a nuclear conflict between India and Pakistan. Pakistan seems to be a front line state that will need to act against terrorism and confront Afghanistan with regard to Osama bin Laden I shall first try and deal with why Pakistan is in focus.

Geo-political situation

Geographically Pakistan is located in the northwestern part of the Indian sub-continent, with the Arabian Sea to its south, India to its east, Iran to its west, Afghanistan to its northwest and China to its north. Sandwiched between Pakistan and China is the territory of the former princely state of Kashmir, the source of a bitter dispute between Pakistan and India.

Historically Afghanistan has had deep links with the area that comprises Pakistan. Throughout recorded history invading armies have entered India through Afghanistan. Most invaders ended up settling down in northern India. During a major portion of the last one thousand years, rulers of Kabul have ruled northern India or vice versa. There is a common cultural and religious heritage between Pakistan and Afghanistan. In the more recent history, the relationship between the two started on a bitter note when Pakistan came into political existence fifty-four years ago, with Afghanistan claiming a large part of Pakistan's territory. Relations remained strained till the Soviets invaded Afghanistan and Pakistan became the key country supporting the Afghan mujahideen (freedom fighters), with the US providing military aid and Saudi Arabia providing financial support.

The present day Afghan government consists of second-generation mujahideen who, in many cases were raised in orphanages-cum-religious schools. The word "Taliban" means "students", unfortunately these orphaned children were, with the connivance of Pakistan, Saudi Arabia and the US, brainwashed into becoming zealots willing to...