Terror war cost $17.8b in 2010-11

The Economic Survey 2010-11 estimates that the war on terror cost Pakistan $17.8 billion in the current fiscal year, which is nearly 70 percent of the country’s total exports. It underlines that the country is continuing to pay a heavy price in both economic and security terms.
The survey says that it was estimated at the onset of the war in 2001-02 that it will cost Pakistan $2.669 billion, but the calculation was based on the assumptions that: (i) The War in Afghanistan that begun on October 7, 2001 will end swiftly by December 2001; (ii) normalcy will resume from January 2002; (iii) the Taliban government will be ousted and some low intensity fight will continue, but life in Pakistan will remain normal; and (iv) the additional increase in freight cargo and war risk premium will be removed.
However, the Economic Survey underlines that not even a single assumption materialised and instead the war on terror continued to gain momentum and became more precarious for the entire region in general and Pakistan in particular.
It said the economy was subjected to enormous direct and indirect costs that continued to rise from $2.669 billion in 2001-02 to $13.6 billion by 2009-10, and are projected to rise to $17.8 billion in the current fiscal year, adding that the direct and indirect costs were likely to rise in the years to come.
The survey says Pakistan’s economy is under pressure by the intensification of the war in the last four years.
Since 2006, the war has spread into the settled areas of Pakistan and has so far cost the country over 35,000 citizens, 3,500 security personnel, razed infrastructure, internal migration of millions of people from the northwest, flight of investment, a nose-diving production and rising unemployment.
It points out that Pakistan has never witnessed such devastating social and economic upheaval in its industry, even after dismemberment of the country by direct war. It underscores that the war has disrupted the country’s normal trading activities, as the cost of trading has increased substantially because of higher insurance cover.
Consequently, economic growth slowed, demand for imports reduced with consequential decline in tax collection and inflow of foreign investment was adversely affected, accentuated by the travel bans issued by western governments for its entrepreneurs.