ECONOMIC

COST OF “WAR
ON TERROR”
A CASE STUDY OF
PAKISTAN

By: SAFIULLAH TARIQ ( NS

B-37)
 Contents to follow

01 02 03
Quantitative
Introduction Economic crisis Analysis
Background of Effect on Tables and Charts
War on terror Economic sector
 WAR ON TERROR AND PAKISTAN
BACKGROUND
1. The foundation of war on terror is traced back to the cold war when Soviet Union intervened in
Afghanistan and Pakistan supported the Mujahidin with the support of USA..

2. The term war on terror emerged after 9/11 attacks when USA deployed its troops in Afghanistan
in order to topple the government of Mujahidin regime.

3. Musharraf, the President of Pakistan at that time, provided full assistance to NATO forces which
lead to the formation of Tehreek-e-Taliban Pakistan who caused a lot of insurgence in Pakistan.

4. The province of KPK suffered a lot from it. Pakistan not only lost the lives of its people but also
suffered from the economic loss which was huge.

5. In response of Taliban attacks, army launched several operations in the North West region of
Pakistan.
 PAKISTAN IN ECONOMIC QUAGMIRE
1. Besides human cost, it negatively affected the economic growth and lead to the budget deficit.
2. The contribution of the sectors like agriculture, industry, services and manufacturing in GDP
declined in that era.
3. Terrorism has both direct and indirect costs for the economy.
4. The direct costs include human casualties, “collateral damage‟ to the infrastructure, factories and
standing crops; and interruption of economic activities.
5. The indirect costs include the decline in investment, inability to proceed with development work,
loss of production time, increase in unemployment and the high cost of supporting and
rehabilitating the displaced persons.
6. Foreign Direct Investment decreased immensely.
7. Due to dangerous image of Pakistan, tourism declined which further worsened the economy.
Sectoral contribution to GDP growth (% points)
2004-5 2005-6 2006-7

0.9 1.6
2.3 5

1.6
1.4 1.3
3.3

3.1 2.9
1.5 4.4

Ag r ic u lt u r e I n d u st r y Se r v ic e s M a n u f a ct u r i n g
 Cost of conflict to Pakistan (Rs. billion)

2004-5 2005-6 2006-7

Direct Cost 67.103 78.060 82.499

Indirect Cost 192.000 222.720 278.400

Total Cost 259.103 300.780 360.899

Human Cost of war on
terror
According to a report by Brown University's
Watson Institute for International and Public
Affairs, 23,372 Pakistani civilians and 8,832
Pakistani security personnel were killed in the
War on Terrorism.
Annual Fatalities in Terrorist Violence in Pakistan, 2003-2010
Years Civilians Security Terrorists/ TOTAL
Force Insurgents
Personnel
2003 140 24 25 189

2004 435 184 244 863

2005 430 81 137 648

2006 608 325 538 1471

2007 1523 597 1479 3599

2008 2155 654 3906 6715

2009 2307 1011 8267 11585

2010 119 14 126 259

TOTAL 7170 2890 14722 25329

 Real GDP growth rate, FDI, domestic investment, government
spending, Human capital index, income level, trade revenue, trade
openness, exchange rate, foreign debt, foreign aid and domestic credit
to private sector, all are affected due to terrorism. Following table
depicts the quantitative details.

Indicators 2003-4 2004-5 2005-6 2006-7

Exports 12.31 14.39 16.47 17.01

(Billion $)
Imports 15.59 20.6 28.58 30.54
(Billion $)
Trade 3.28 6.21 12.11 -13.58
Balance
( Billion $)
Foreign 922 16677 3872 8417
Investment
GDP growth 6.4% 8.4% 6.6% 7.0%

Inflation 3.9% 9.3% 8% 7.9%

Exchange 61 57.7 59.66 60.16

Rate (Rs./
Pakistan is still facing
an economic crisis even
years after war on
terror.

Hopefully Pakistan’s
economy will flourish in
near future. InshaAllah