In Pakistan, the period under review (January–December 2015) was characterised by the overall stable rule of the Nawaz Sharif-headed government of the PML-N (Pakistan Muslim League-Nawaz) of the Prime Minister. The main challenge to the Nawaz Sharif government was the internal militancy. The cruelty of the 2013 attack on an army-run school in Peshawar that killed 149 people, including 132 children, had started what appeared to be a watershed moment in the savagery of domestic terrorism. In the period under review, a clear message was sent by the Pakistani institutions to the perpetrators of the deadly assault and to the militancy in the country at large: zero tolerance and no more safe havens allowed in Pakistan or Afghanistan. The special measures taken to fight the militants represented a change of direction after the initial tendency of the Nawaz Sharif government to engage in dialogue with the fighters operating in the North West areas of the country.

A similar iron-fist approach was taken by the military-led paramilitary forces in its effort to fight the violent crime affecting Karachi, the country’s most populous city. This policy, however, triggered political instability, as the strongest political party in town was the main target of the crackdown.

Developments in Pakistan-China bilateral relations led to the formalisation of an important economic agreement for the creation of a trade corridor linking China to the port of Gwadar in Balochistan. The strategic implications of the accord can be better understood in the context of the announced disengagement of the United States from Afghanistan. Moreover, the agreement contributes to explaining Islamabad’s decision not to support militarily its traditional ally Saudi Arabia in its campaign against Houthi rebel fighters in Yemen.

Overall stable bilateral relations between Pakistan and India at the highest diplomatic level did not prevent tensions from escalating on the international border in Jammu and Kashmir, where exchanges of fire and civilian casualties were reported, beginning in the summer of 2015.

1. The domestic challenge: the militancy

The long years of military rule in the country (34, more than half of its history), which can be divided into four periods, were characterised by the national governments’ opposition to ethno-national provincial administrations and by the attempt to ensure political stability and economic modernisation in Pakistan. Ethnic and provincial identities were considered as threats to the achievement of these aims, while Islam was promoted as a means of national integration, which was done in parallel with a centralization of powers in Islamabad. As a consequence, both the empowerment of Islamic parties and militant groups (which were allowed unprecedented power) and the weaponisation of the country became the overall legacy of the long years of military rule and the distinguishing features of contemporary Pakistan. The war on terrorism which followed 9/11 strengthened these features further. Since then, Pakistani forces have encountered difficulties in maintaining control over the restive tribal regions, from where Islamic anti-government militants are mostly operating.

On 15 June 2014, the Pakistani army launched a comprehensive operation called Zarb-e-Azb against local and foreign militants in North Waziristan. According to the army, the military operation succeeded in ridding that geographical area from anti-government militant forces. A few months later, the military also launched Khyber-1, a follow up intervention aimed at clearing out militant strongholds in the tribal region of Khyber.[1]

The Islamic fighters’ retaliation was particularly cruel. On 16 December 2014, the Pakistani Taliban attacked an army-run school in Peshawar, the capital of Khyber Pakhtunkhwa province, killing nearly 150 people, among whom many were children. The attack triggered widespread outrage both in the country and abroad and the political leadership was put under pressure to take effective measures against terrorism.[2] Military action against militant groups was strongly demanded by the civil society. The widespread indignation caused by the event gave rise to a unity of purpose on the part of the political class, the army, and civil society at large. This resulted in a more resolute and united national effort to address the country’s security problems and, ultimately, in a more determined approach to counter-terrorism.

In March 2015, Pakistan launched a fresh operation (Khyber-2) against terrorists in the Khyber tribal region near the Afghanistan border.[3] In the period under review, the army continued fighting militants belonging to TTP (Tehrik-i-Taliban Pakistan, an alliance of a dozen groups of insurgents). A 20-point action plan was launched by the government to counter the escalating terrorism in Pakistan. A specific measure waiving the existing moratorium on the death penalty was taken to allow the execution of convicted terrorists. Also, special military courts were established for two years in order to be able to rapidly prosecute and try suspected terrorists. This was criticised for its implications regarding civil-military relations and, later in the year, the Supreme Court suspended some of the executions of terrorists convicted by the military courts.

Other measures were taken to freeze the financial and communication networks of the terrorist groups. A regulation of the madrasas was also put on the anvil, as the government pledged to exercise strong control over the religious seminaries suspected of fostering extremism. References to the financial support provided by Saudi Arabia to the religious seminaries, seen as breeding grounds for religious extremism, had frequently appeared in the media after the 2013 mass murder in Peshawar. Saudi authorities answered these implicit and explicit accusations by clarifying that all their donations had been cleared by the government of Pakistan. Iron-fisted counter-measures aimed at implementing a zero tolerance policy for militancy were also announced in Punjab, where violence had rapidly escalated.

Attacks by the TTP, their splinter groups, and other militant organisations continued in the period under review and were expanded in January and February 2015 to target minority groups, in particular Shia Muslims and Christians, in other areas of Pakistan.[4] A first attack on a Shia mosque involved Rawalpindi’s imambargah (a Shia congregation hall for commemoration ceremonies) Aun Mohammad Rizvi in the city’s Chatian Hatian area. Later, about 40 people were killed and over 50 injured as a blast hit a Shia mosque during the Friday prayers in Pakistan’s southern province of Sindh at the end of January 2015. According to the local English newspaper Express Tribune, a militant group named Jundallah – a Balochistan-based TTP splinter group which has pledged support to the Islamic State, claimed responsibility for the attack.

Christian churches were targeted too by the militants. On 15 March 2015, at least 15 people were killed and 70 wounded by bombs which were detonated near the gates of St. John’s Catholic Church and Christ Church in Lahore.[5] Similarly, on 13 May 2015, about 50 people were killed in Karachi when an armed commando opened fire inside a bus carrying members of the Shia minority Ismaili community. Again, Jundallah was reported to have claimed responsibility for the attack.

Another high-profile attack occurred in Attock in August 2015, when a suicide bomber killed the Home Minister of the Punjab province, Shuja Khanzada.

2. The paramilitary operations in Karachi

Karachi, the country’s most populous city, which is afflicted by a violent criminal racket, has been repeatedly targeted by the paramilitary forces’ interventions since the 1990s.[6]

The current Rangers operation which started in 2013[7] has led to a significant fall in criminal activity, yet it has increased the political instability. In the period under review, the paramilitary forces predominantly targeted the members of the MQM (Muttahida Qaumi Movement), the strongest political party in town. Bearing responsibility for violent and intimidating acts, the MQM saw the Karachi party’s premises raided and many of the party members arrested. Disappearances and killings of MQM-affiliated individuals were reported throughout 2015. Altaf Hussain, who rules the MQM from his self-imposed exile in London, was investigated by the British police over allegations of money-laundering. Hussain, claiming that his party had been unfairly targeted in the crackdown organised by the Rangers, launched a campaign against the Chief of Army Staff Raheel Sharif and Prime Minister Nawaz Sharif. In August 2015, the MQM announced the resignations of all the party’s members from the National Assembly, the Senate, and the Provincial Assembly.

The security forces paid similar attention to the PPP (Pakistan People’s Party), triggering the reaction of Asif Ali Zardari, PPP president and former President of the Islamic Republic of Pakistan. As a reaction, Zardari threatened to abrogate the PPP’s informal non-aggression pact with the PML-N, which had been in place since the two parties decided to jointly oppose the former military ruler General Pervez Musharraf a decade ago.

3. Pakistan and Saudi Arabia

Saudi Arabia’s campaign against Houthi rebel fighters in Yemen, which began in late March 2015, was coordinated with other Sunni countries. At the end of March 2015, the Saudi-led coalition fighting Yemen’s Shia Houthi rebels asked Pakistan to contribute soldiers.

Islamabad and Riyadh’s ties are rooted in a partnership which has been forged over the years and has led to a strong bilateral relationship. This partnership started to become important when the two countries jointly supported the Afghan mujahedeen fighting against the Red Army’s occupation in the 1980s. Later, both countries – and the United Arab Emirates – recognised the legitimacy of the Taliban regime in Kabul (1996–2001). Also, the Saudis gave oil to Pakistan in 1998, when the government of Islamabad was hit by international sanctions for conducting a nuclear test.[8] The following year, in 1999, the Saudis offered shelter to Nawaz Sharif after the then Prime Minister was overthrown by the military coup led by Pervez Musharraf.[9]

For its part, Pakistan has provided military aid to Saudi Arabia since the 1960s – including deploying Pakistani combat forces in Saudi Arabia in the 1970s and 1980s, and providing continual military technical aid.[10]

After his official visit to Saudi Arabia in March 2015, followed by Nawaz Sharif’s visit a few weeks later, Pakistani Defence Minister Khawaja Asif confirmed Islamabad’s commitment to defending Saudi Arabia’s national territorial integrity.[11]

In April 2015, Pakistan, which had backed the Saudi mission against the Houthis without offering military assistance, debated formally in parliament whether or not to contribute militarily to the campaign against the rebels. Opposition politicians expressed their concerns and called for the country to be neutral. They stressed that internal terrorism and other pressing domestic and regional issues would make Islamabad’s involvement in a proxy war between Iran and Saudi Arabia and in a Shia-Sunni conflict in the Middle East extremely risky.[12]

The joint session of parliament called by Prime Minister Nawaz Sharif at the beginning of April 2015, to discuss Saudi Arabia’s request for Pakistani military aid, went on for five days and ended with a unanimous decision to make use of diplomatic instruments – and diplomatic instruments only – to bring about an end to the crisis in Yemen. An ensuing parliamentary resolution on the Yemen crisis urged Pakistan to stay neutral and play a mediatory role to resolve the issue. The reference to «neutrality» in the parliamentary resolution generated tensions in the Pakistan-Saudi relationship, as Riyadh reacted badly to it.[13] Yet, as admitted by the Minister for Climate Change and PML-N’s Information Secretary Senator Mushahid Ullah Khan, Pakistani troops were already deployed in Saudi Arabia to protect the holy places.[14]

4. Pakistan-China

In the past few years, the Islamabad-Beijing axis has been progressively growing in strategic importance in view of the announced disengagement of the USA from Afghanistan.[15] According to some sources, the strategic links developed by Pakistan with China were also one of the reasons why the former could afford to decline Saudi Arabia’s requests for support, as described in the previous section.[16]

On April 21, the President of the Republic of China, Xi Jinping, visited Pakistan and pledged 46 billion dollars of support for energy and infrastructure projects. While the current trade value between Pakistan and China is relatively low – US$ 9 billion per year – the future economic relations between the two countries are bound to grow by leaps and bounds. The plans agreed upon during Xi Jinping’s visit to Islamabad represented a remarkable boost in bilateral relations, particularly in light of the rights won by a state-run Chinese company to operate the expansion of Gwadar Port as an economic hub, which was obtained for a period of 40 years.

Gwadar is strategically located in Balochistan, on the shores of the Arabian Sea, opposite the Gulf of Oman, and in close proximity to the oil and gas resources of the Gulf countries. For China, Gwadar Port is of both economic and military strategic interest. It will grant China access to the Gulf countries, by providing it with the possibility of having a naval base on the Arabian Sea. According to a plan, formalised during Xi Jinping’s visit to Pakistan, the port – originally financed and constructed by the Chinese – will become the head of a km 3,000 long economic corridor – the China-Pakistan Economic Corridor – connecting Gwadar to Kashgar, in the Muslim majority Xinjiang region of China, via land routes and pipelines.[17] The idea of the economic corridor began being shaped in 2013, when Pakistan passed the task to expand Gwadar Port from Singapore Port Authority to China Overseas Port Holding. It has actually embraced other existing projects and, due to the economic potential of the port’s development, Chinese banks were interested in funding it and pledged more than US$ 46 billion.[18]

The port will play a critical economic role for Pakistan too, allowing the outflow of goods from Western China and Central Asia, and enriching the Pakistani exchequer thanks to the port, cargo handling, and freight charges related to the economic traffic between China and Pakistan.

The development of Gwadar Port has been controversial over the years. Balochistan is the poorest province of Pakistan, where basic necessities are not taken care of; yet it is rich in natural resources and Balochi nationalists have been accusing the federal government of the exploitation and violation of the province’s rights.[19] The port’s development has occurred in parallel with an upsurge in religious extremism in Gwadar and in the province at large, while Baloch political parties were opposing the deal with China and Baloch militant organisations were trying to sabotage the construction work.[20] This has worried China, which has alerted the government of Pakistan; in turn, the government of Pakistan has tried to implement extra security military measures to protect the increasing number of Chinese personnel involved in the project.[21] According to current plans, the corridor would also cross the Khyber Pakhtunkhwa province and, in case it is decided that the route should be changed to avoid turbulent areas, the Baloch and Pashtun areas would be avoided by making the corridor run through Sindh and Punjab.

5. Pakistan-India

In December 2014 and January 2015, tensions between Pakistan and India rose over the disputed region of Kashmir. Clashes between security forces occurred on the border, followed by a meeting of the two countries’ foreign secretaries in March.[22] Harsh statements from senior officials on both sides referring to the alleged involvement of the other country in sponsoring terrorism escalated the tensions, yet without permanently undermining the high level bilateral relations.

In July 2015, the two premiers, Nawaz Sharif and Narendra Modi, met at the Shanghai Cooperation Organisation summit held in Ufa, Russia.[23] The discussions focused on agreeing to expedite the Mumbai terror attack trial, and statements aimed at promoting peace and development in the region and condemning terrorism were issued. An agreement to organise a meeting of top security advisers to discuss terrorism was achieved, while no specific reference to the disputed Kashmir region was made, over which India and Pakistan have conflicting territorial claims. Sharif invited Modi to attend the annual[24] SAARC (South Asian Association for Regional Cooperation) summit in Pakistan in 2016 and the Indian Prime Minister accepted the invitation.[25]

As a follow up to the Ufa agreement, a meeting of the National Security Advisers (NSA) of India and Pakistan, Sartaj Aziz and Ajit Doval, respectively, was scheduled for 23 and 24 August 2015.

However, a few days after the Ufa meeting tensions escalated again when Pakistan accused India of unprovoked ceasefire violations in Kashmir. According to the Pakistani Foreign Ministry, on July 18, Indian troops opened fire in the Poonch area. This was not an isolated event, as skirmishes had occurred in the previous days and the exchanged gunfire had killed Pakistani civilians. The civilian casualties on both sides led the United Nations Secretary General Ban Ki-Moon to urge India and Pakistan to resolve their issues through diplomatic dialogue.

A rise in tensions between the two countries as a result of frequent violations of the Line of Control (LoC), which continued for the following months, increased further when the NSA peace talks were cancelled one day before they were set to begin in August 2015.[26] While Pakistan had reiterated its intention to discuss the disputed Kashmir territory, India had insisted that the talks focus on terrorism issues only. Eventually, on the eve of the scheduled NSA meeting, India advised Pakistan against his high commissioner in New Delhi meeting with Kashmiri separatist leaders belonging to the Hurriyat Conference.[27] Indian authorities pointed out that India had never sought dialogue with groups and regions demanding separation from Pakistan. For their part, the Pakistani authorities answered by highlighting that the habit of the Pakistan high commissioner in New Delhi to consult with Hurriyat leaders on the eve of official visits by Pakistani political leaders to India was by then a well-established practice, which had never caused problems with previous Indian governments. Islamabad also reiterated that India’s intention to restrict the discussion agenda was evidence of a lack of any serious intent on the part of New Delhi to engage in meaningful talks with Islamabad.[28]

As had happened in 2014[29] – this time due to the lack of agreement with respect to the agenda – the meeting of the top security advisers was cancelled with the two countries blaming each other. This event seemed to illustrate the gulf between the civil government and the Pakistani military establishment. Specifically, Sharif seemed to have overestimated his capacity to influence Pakistan’s India policy in line with the desiderata of the Pakistani business community. The latter would welcome increased engagement with India, which would be beneficial to the Pakistani economy. Pakistan’s India policy, however, remains strictly controlled by the army, which appears suspicious of any thaw in the relations with India.

In September 2015, following talks between the Director Generals of the Pakistani Punjab Rangers and India’s Border Security Force held in New Delhi, the two parties agreed to observe the ceasefire along the LoC and to de-escalate tensions through a set of confidence building measures.[30] Yet, just a few days later, skirmishes erupted again across the de facto border and casualties were again reported.[31]

6. Economy

Pakistani average growth rate for the last five years has been 2.9%. During the same period, inflation has remained steady at 7.9%.[32] Pakistan’s economic growth for the financial year 2015, which ended on 30 June 2015, was mainly driven by services. Manufacturing and industrial growth slowed down due to reduced external demand. Power shortages also contributed to the setback, debilitating the industrial sector.[33]

The federal budget for the fiscal year 2015–16 was presented on 31 June 2015. Its total outlay was 4,451.3 billion rupees (about US$ 42 million), 3.5% higher than the 2014-15 budget.[34] The main internal source of income was the provinces’ revenues and taxes. The budget introduced measures focused mostly on fighting tax evasion, increasing tax revenues and, nominally, trying to save the poorest segments of society from new taxes. The long awaited increase in the government employees’ salaries was not significant, being 7.5%.[35] External sources of income, mainly loans, increased by 12.1% compared to the 2014–15 budget.

The government announced incentives for the agricultural sector to boost agricultural production in the country. A health insurance scheme (9 billion rupees, about US$ 85 million) was launched to provide insurance for patients suffering from serious diseases. The targeted growth rate was fixed at 5.5%, more than a 1 percentage point increase over the previous financial year.[36]

Last but not least, 781 billion rupees (about US$ 7.5 billion) were allocated for expenditures on defence, representing an increase of 11.16% over the previous fiscal year.[37]