Hot Spots: Pakistan. (International Insight).

Pakistan will get all the financial help needs to bridge its external-accounts gaps and make the foreign debt load bearable. This means that the greatest risk to be considered by companies with exposure to Pakistanis, at this point, socio-political. In the pledge to support military operations against the sources of international terror in neighboring Afghanistan. Pakistan yielded to intense U.S. pressure. In doing so, President Pervez Musharraf took considerable risks. With a population of between 140 million and 150 million, Pakistan is the world's seventh most populous nation. It is also one of only eight on the globe known to have nuclear weapons. And it has a dismal history of fragile, corruption-ridden governments and military coups.

Pakistan has a well-educated, urban, westernized elite that is eager to see the Taliban regime in Afghanistan overthrown, hoping that such a turn of events will put an end to the resurgence of Islamic fundamentalism at home. But around 75 percent of the people live in rural areas, most of them eking out subsistence as sharecroppers or working for feudal families. Many of the poor have no access to even elementary education, and the national literacy rate is under 40 percent. In recent history, the educational void has been increasingly filled by thousands of madrassahs--religious schools that feed and house their pupils while teaching them a twisted version of the Koran, focused on the moral obligation to fight holy wars against "infidels."

These schools have been sending their "students" to do battle at the Taliban's side since long before the Soviet withdrawal from Afghanistan. Volunteers of this sort used to be encouraged by the Pakistani government and, indeed, by the U.S. while they were still called mujaheddiin or freedom fighters. No one knows exactly how many Islamic militants form this part of the population. While the official estimate of 10 to 15 percent may be an understatement, it is clear that the vast majority of Pakistanis are people whose fealty is to an Islamic religion that is essentially peaceful and non-violent. But there is also no denying that radical Islamic beliefs have been gaining ground among the destitute.

Protest demonstrations against Pakistan's siding with the U.S. in the war against terrorism have gained considerably in numbers and violence since the bombing campaign against Afghanistan began. Moreover, within Pakistan's armed forces, radical Islamic beliefs have spread through the ranks and even into the officer corps, particularly since the late 1970s, when the then incumbent populist government of Zulfikar ali Bhutto recruited officers from the lower and middle classes.

The anti-U.S. and anti-European sentiment will probably lessen once a viable new transition government has been set up in Afghanistan, a multiethnic administration capable of taking over after the Taliban's fall. Islamabad's main goal is that the post-Taliban regime be based on some kind of unity among Afghanistan's various Pashtun groups. The Pakistani leadership wants, thereby, to create a counter-weight against the members of the Northern Alliance, which is dominated by Turkmen, Tajiks, Uzbeks and other ethnic groups. These are the people preferred by Russia, Iran and India. To fashion out of all these groups (most of them internally divided along tribal lines and by the writ of local war lords), a coalition that can provide effective leadership after the collapse of the Taliban regime is proving to be a task to behold.

The return of some degree of socio-political stability in Pakistan may, thus, ultimately depend on the financial assistance that the country receives and on how quickly this aid filters down to the people. The economy was in bad shape before September 11. This was underscored by a 13.5 percent ...