Karachi violence takes economic toll

A bloody wave of violence sweeping Karachi has claimed hundreds of lives this year, and experts say it is also taking a punishing financial toll on the city that is Pakistan’s economic heartbeat.
Pakistan’s biggest city has escaped the worst of the four-year Islamist bombing campaign that has plagued other parts of the country, but it is wracked with crime and political and ethnic bloodshed.
Last year nearly 1,800 lives were lost as drug, land, gun and extortion mafias linked to ethnically-based political parties threatened to plunge the city of 17 million people into urban anarchy.
More than 300 people have been killed in violence in Karachi in the last three months, according to the Human Rights Commission of Pakistan.
With each political or sectarian killing, parts of the city go into lockdown as armed men take to the streets seeking reprisals, prompting residents to flee to safety and shops, markets and schools to close.
Ateeq Mir, the chairman of the Karachi Markets Alliance, said the city was closed for “six full days” last week — when at least 24 people were killed in violence and the Muttahida Qaumi Movement (MQM), the city’s main political party, called a day of mourning for a slain activist.
“Our traders have lost the business of more than 20 billion rupees ($220 million) while our industrialists lost at least 45 billion ($495 million),” he told AFP.
Karachi is vital to Pakistan’s economy, contributing 42 percent of GDP, 70 percent of income tax revenue and 62 percent of sales tax revenue, but Mir compared the situation to the country’s insurgency-wracked northwest.
“Karachi has become an urban Waziristan where the government has lost its writ,” he said.
“The city is divided among several areas, each is governed by the dominant militant mafia.”
Economist A.B. Shahid said Karachi’s contribution to GDP amounted to around 16 billion rupees a day, and its daily tax revenues to two billion.
“Karachi is Pakistan’s economic engine, whenever it shuts, it affects the whole economy. Its taxes and industrial and services sectors feed the exchequer and its port being the gateway gives life to the rest of the country,” he told AFP.
“If one wants to cripple Pakistan’s economy, one should do nothing but to get Karachi paralysed.”
Market analysts say disturbances in Karachi are affecting foreign investment as well.
“Most multinationals are based in Karachi, and it has a negative impact when their bosses watch pitched battles on their TV screens in the streets of Karachi,” said Mohammad Sohail, the head of Topline Securities brokerage.
He said foreign investment in Pakistan stood at $5.4 billion four years ago, which shrank to $1.6 billion last year and is expected to further reduce to a maximum of $1 billion in the financial year ending on June 30.
Officials admit growing security concerns and targeted killings tarnish Karachi’s attraction for foreign investors and risk driving business away.
The American raid that killed Osama bin Laden in the town of Abbottabad last May was another punishing blow to Pakistan’s depleted image, raising renewed questions about whether anyone in authority had colluded with Al-Qaeda.
“Local industrialists, mainly textile businessmen, are shifting their investments to Bangladesh, Sri Lanka and Malaysia because of law and order and energy shortages,” said a government minister on condition of anonymity.
The authorities say they are doing their best to tackle the rampant unrest, but admit they have limited means at their disposal.
Sharfuddin Memon, spokesman for the home department of Sindh province, of which Karachi is capital, admitted there were not enough policemen in the city but said they punch above their weight in terms of foiling crime and attacks.
The decades since independence in 1947 have seen Karachi transformed into a patchwork of Pakistan’s different ethnic groups — Mohajirs, Sindhis, Pashtuns, Punjabis and Baloch — as migrants from all over the country have come in search of a better life.
Millions in the city rely on daily piece work to make a living, and every day lost to violence or shutdowns is a day without income.
Fruit seller Mohammad Haleem, 34, said the unrest was making it hard to make ends meet.
“I could not earn livelihood for my five kids for most of the last week as it was dangerous to go outside,” said Mohammad Haleem, 34, a fruit vendor.
“It is getting too difficult for me to take a loan to feed my kids as the lenders are themselves in distress.”