Beyond’s the Bombing: The True Cost of Terrorism…

By Dr. Shahzad Ali Gill There are two numbers Pakistan’s policymakers should learn to say in the same breath. The first is USD 100 billion, which the Ministry of Maritime Affairs (MoMA) believes the blue economy could be worth every year if the country’s coastline, fisheries, shipping lanes and offshore basins were properly developed. The second is USD 5.8 bn, what a single badly handled investment agreement, in a mining project nowhere near the sea, once cost the national exchequer in an international arbitration award. Until we learn to think about these two numbers together, the first will remain a slogan and the second will remain a warning we keep failing to heed. Pakistan’s maritime endowment is not in question. The country has a coastline of 1,001 kilometres along Sindh and Balochistan, and an Exclusive Economic Zone (EEZ) of 240,000 square kilometres, expanded by a further 50,000 square kilometres continental shelf claim that the United Nations approved back in 2015. And yet, by the MoMA’s own reckoning, the blue economy, shipping, fisheries, offshore energy, coastal tourism and the activity that clusters around them contribute barely 0.4 per cent to Gross Domestic Product (GDP), or about USD 1bn a year. The same ministry has set its sights on USD 100 bn annually through “Maritime@100”, a roadmap to reach that target by 2047, at a time when the United Nations Development Programme (UNDP) projects the global ocean economy will exceed USD 3 trillion by 2030. According to the 2026 report of UN Trade and Development (UNCTAD), the ocean trade has already reached USD 2.5 tn in 2025. The gap between what Pakistan has and what it is leaving on the table is, by any measure, enormous. Closing that gap will not happen through speeches. It will happen, almost entirely, through two unglamorous legal instruments that include concession agreements and implementation agreements. A concession agreement grants a private party the right to finance, build, and operate a public asset – a port, most often – for a fixed term in exchange for tariffs or a share of revenue, with the asset reverting to the state once the term ends, a model commonly called build-operate-transfer or build-own-operate-transfer (BOT/BOOT). An implementation agreement works differently. It is a direct undertaking between the government and a project company, sitting alongside a commercial contract such as a power purchase agreement (PPA), through which the state offers sovereign guarantees, regulatory consents and tax assurances without handing over rights to any public asset. Every deep-sea port, LNG terminal, and offshore drilling concession Pakistan signs over the next two decades will be built on one or the other. That is precisely why getting their terms right matters the most. What Gwadar already taught us We do not need to imagine how this plays out; we have Gwadar. The original Gwadar Port Concession Agreement, signed in 2007 between the Gwadar Port Authority (GPA) and a foreign operator, Singapore Port Authority (SPA), and later transferred to the China Overseas Ports Holding Company (COPHC) in 2013, carried a 20-year corporate tax exemption and a government revenue share of 9% of port income plus 15% from the adjoining Special Economic Zone (SEZ). That should have been the ceiling. Instead, between 2015 and 2020, the Economic Coordination Committee (ECC) of the cabinet extended the income tax holiday to 23 years, widened it to cover contractors and sub-contractors as well, and granted the 923-hectare Gwadar Free Zone a land lease running up to 99 years. Each renegotiation made the deal more generous to the investor, never less. That is the pattern to watch for since the concessions in Pakistan rarely tighten once signed. They only ever loosen. This should trouble us more than it does, because Article 77 of the Constitution reserves the power to levy federal taxes exclusively for Parliament. Yet most of these concession-era tax holidays and customs exemptions are not legislated at all; they arrive through Statutory Regulatory Orders (SROs) and amendments to existing tax schedules, executive instruments that nonetheless bind the state for 20 to 40 years at a stretch. And Gwadar is not the exception; it is the template. The number of special economic zones (SEZs) has surged from seven to 44, under the second phase of the China-Pakistan Economic Corridor (CPEC), carrying broadly similar concession packages. Every one of them represents a slice of fiscal sovereignty quietly signed away by the executive, on terms that no future Parliament will find easy to unwind. The warning we already received If Gwadar shows how concessions deepen, Reko Diq shows what happens when they collapse, and although it is a mining dispute, not a maritime one, the lesson is structural, not sectoral. After Balochistan denied a mining lease to the Tethyan Copper Company (TCC) in 2011 and the Supreme Court of Pakistan voided the underlying exploration agreement in 2013, the International Centre for Settlement of Investment Disputes (ICSID) ruled against Pakistan in 2019 under the Pakistan-Australia Bilateral Investment Treaty (BIT), awarding damages of roughly USD 5.8 bn, one of the largest sums in the history of ICSID. A separate dispute brought by the Turkish power producer Karkey under the Pakistan-Turkey BIT had already cost the country USD 760 million the year before. Both were eventually settled out of court. Reko Diq in 2022, with Barrick Gold taking a 50 per cent stake alongside federal state-owned enterprises (SOEs) and the Balochistan government, each holding 25%, but the exposure that produced those numbers in the first place has not gone away. Every offshore exploration block, port concession, and LNG agreement Pakistan signs carries almost the same treaty protections and the same risk of ending up before the same arbitration tribunals. The other half of the bargain There is a second risk that rarely gets discussed alongside the first. The Foreign Exchange Manual issued by the State Bank of Pakistan (SBP) under the Foreign Exchange Regulation Act (FERA), 1947, governs how the profits, dividends, and disinvestment proceeds promised under these agreements can actually leave the country.

The fifth part of this series examined how Pakistan’s strategic location, domestic privileges and recurring external assistance have produced a rent-based political economy. The state has repeatedly obtained temporary relief without undertaking the constitutional and productive transformation required for genuine economic independence. Professor Ehtisham Ahmad’s proposed monograph, Can Pakistan evolve from a dependent “buffer state”? (shared with many including me), raises the right question at the right time. Unlike conventional reports that treat Pakistan merely as an under-taxed developing economy, he recognises the historical relationship between strategic rents, external dependency, fiscal weakness and recurring recourse to the International Monetary Fund (IMF) and other lenders. His central concern deserves serious engagement rather than routine approval or dismissal. This part is humble attempt to analyse his proposed monograph. Ehtisham Ahmad argues that Pakistan’s geographic position has periodically enabled it to obtain external assistance as a frontline or buffer state. During the Cold War, the Afghan conflict and the post-9/11 period, strategic usefulness generated substantial inflows. When geopolitical support receded, the IMF and multilateral institutions frequently stepped in to fill the breach. His published study, ‘Political Economy of Tax and Digital Transformations in Pakistan’, similarly connects Pakistan’s stop-go aid experience with its failure to undertake sustainable domestic resource mobilisation.  This is an important advance over revenue-only analysis. Pakistan’s persistent dependence cannot be explained simply by weak tax administration, low compliance or insufficient technical capacity. External rents have reduced the immediate pressure to negotiate a durable fiscal settlement with citizens. They have also strengthened institutions positioned to manage Pakistan’s strategic relationship with external powers. Ehtisham Ahmad is equally persuasive in identifying serious defects in Pakistan’s tax structure. He correctly criticises the conversion of value added tax (VAT) into a production excise, the proliferation of exemptions, the destruction of the invoice chain, cascading, excessive withholding taxation, nuisance levies and the absence of an arms-length administration. His insistence that taxation must be linked with growth, investment, distribution and political economy is entirely justified. His criticism of digitalisation without comprehensive change management is also timely. Computerising defective procedures cannot cure the institutional incentives that produced them. Linking identity numbers, tax registrations, invoices and financial information may improve enforcement, but technology cannot decide whether the law will be applied equally. These insights substantially overlap with the argument developed in this series. The difficulty arises at the next stage. Ehtisham begins with a powerful political-economy diagnosis but gradually returns to a largely public-finance remedy. Pakistan is first presented as a security-dependent buffer state; its continuing weakness is then explained mainly through the Government of India Act 1935, fragmented tax assignments, a split VAT, inadequate provincial own-source revenue and incomplete digital transformation. The analytical journey moves from geopolitics to tax architecture too quickly. Pakistan is not dependent merely because it has a badly designed VAT or an inefficient division of taxing powers. Its tax system has itself been shaped by the distribution of political, institutional and strategic power. Exemptions, withholding taxes, petroleum levies, blocked refunds and arbitrary concessions are not accidental departures from an otherwise neutral system. They reflect bargains through which burdens and benefits are distributed. Fiscal design matters greatly. It cannot by itself explain why successive governments have preserved arrangements that are demonstrably damaging to growth, documentation and equity. Ehtisham assigns considerable importance to the Government of India Act 1935. The Act undoubtedly institutionalised a colonial distribution of legislative and fiscal authority. It divided functions between the centre and provinces while reserving decisive powers for the Governor-General and provincial governors. Its legislative lists influenced the constitutional development of both India and Pakistan.  Colonial inheritance, however, cannot become a substitute for analysing postcolonial responsibility. Pakistan adopted constitutions in 1956, 1962 and 1973. It experienced repeated military interventions, the dismemberment of the country in 1971, presidential centralisation, uneven National Finance Commission Awards, extensive constitutional amendments and decades of external security alliances. Each period involved decisions made by domestic actors possessing agency, interests and power. The present Constitution of 1973 is not pari materia to “1972 Constitution”. The Interim Constitution operated in 1972, whereas the permanent constitutional settlement reached on April 10, 1973. The 1973 became operative from August 14, 1973. This is more than a matter of nomenclature. Pakistan’s fiscal federalism must be examined through the constitutional bargain consciously adopted after the catastrophe of 1971. The Constitution (Eighteenth Amendment) Act, 2010 also cannot be treated simply as Pakistan “doubling down” on the colonial arrangements of 1935. It was a democratic response to prolonged centralisation and an attempt to restore parliamentary federalism, provincial autonomy and the original character of the 1973 Constitution. Problems created by the division of sales tax on goods and services are real. Businesses should not be subjected to multiple registrations, conflicting interpretations, fragmented audits and unnecessary compliance costs.  A common base, harmonised definitions, integrated information, a clearing mechanism and coordinated administration are all necessary. Coordination need not mean re-centralisation. Pakistan’s federation cannot be redesigned solely for the convenience of tax administrators. Fiscal arrangements must also preserve provincial autonomy, democratic accountability and the lessons of constitutional history. A technically elegant centralised system may produce serious political and constitutional costs if imposed without consent. Ehtisham’s historical thesis requires similar caution. He suggests that the British deliberately sought to create a weak and dependent buffer state along the Indus to preserve strategic influence in the continuing “Great Game”. This is a significant hypothesis, deserving investigation through archival evidence. It should not be presented as settled history without fuller documentation. The official Cabinet Mission statement of May 16, 1946 expressly declined to recommend the transfer of power to two completely separate sovereign states. It proposed a Union dealing with foreign affairs, defence and communications, while residuary powers would remain with the provinces and provinces could form groups.  The document may be interpreted in different ways, but its stated scheme was for a united, highly decentralised India rather than the immediate creation of a separate buffer state.  Claims that the NWFP (now Khyber Pakhtunkhwa) referendum was secured through ballot stuffing, that

When the highest echelons of a state pronounce that the apparatus of governance has completely collapsed, it ceases to be merely the remark of a federal minister. Instead, it becomes a stark, involuntary confession of the internal decay inherent in a post-colonial state structure—a testament that indelibly seals the collective and systemic failure of the ruling class. To any conscious citizen, political worker, or student of history, this acknowledgment contains little novelty; the populace has long been ground to dust by the gears of this obsolete machinery, experiencing its failure as an everyday reality. The true astonishment lies in hearing this unvarnished truth uttered from the very center of power. One is compelled to ask: what intellectual evolution prompts the masters of the state to confess to their own institutional bankruptcy? Is this an enlightened realization paving the way for genuine reform, or is it merely the prelude to a new political experiment—a fresh authoritarian corset designed to tighten the controls of a shifting state arrangement? History stands as a grim witness that whenever the crisis of the state is magnified by its custodians, the ultimate objective is invariably to sabotage constitutional continuity and clear the path for elite capture or adventurous political engineering. Time and again, this tragedy has been inflicted upon the nation’s destiny. The nation has repeatedly witnessed the rise of self-proclaimed saviors who concentrated all fountainheads of power within their own persons, only to leave behind a hollow illusion of stability that dissolved like a house of sand upon their departure, plunging the country into irreparable geographic, economic, and political trauma. Today, ominous signals point toward the resurrection of this very same discredited formula. The echoes of a renewed stranglehold and a controlled democracy emanating from the rhetoric of the interior ministry betray an elite class fundamentally terrified of true popular sovereignty and constitutional supremacy. For the past seventy years, this nation has been systematically denied a genuine democratic evolution because dominant power centers have persistently sought to subordinate all state organs to their exclusive writ. To dismiss this systemic trauma merely as a functional glitch in administration is to indulge in a deliberate evasion of reality. The truth is that this is not the collapse of a mere administrative mechanism, but rather the manifestation of Hamza Alavi’s classic thesis of the over-developed state—a persistent structural crisis dominated by entrenched elite capture. Within this post-colonial framework, the coercive control mechanisms of the British Raj have been preserved intact, where the primary objective of the state remains the extraction of resources and the concentration of power rather than public welfare. When political expression is stifled, electoral outcomes are systematically engineered, and parliament is reduced to a rubber stamp, the resulting paralysis is entirely inevitable. The crisis of governance is, at its core, a profound crisis of legitimacy. No administrative superstructure can endure without the genuine, uncoerced mandate of the people. When state policy-makers declare that the system has collapsed, they are essentially confessing to their own fiscal insolvency and administrative bankruptcy. Yet, the tragedy of this confession lies in its utility: rather than diagnosing the foundational causes, they weaponize this failure as a pretext to tighten their grip on power. History teaches us that whenever economic or administrative pressures mount, the centers of power invariably bypass the spirit of the constitution to erode it further. The dangerous concentration of authority in a few hands, the freefall of economic indicators, and the formulation of policies under the duress of international financial institutions—all while excluding the citizenry from meaningful participation—constitute the real malignancy eating away at the state. Democracy is far more than casting a ballot once every few years; it is an active architecture built on inclusive policymaking, freedom of expression, the rule of law, and the uncompromising protection of fundamental human rights. When these values are systematically strangled, the collapse of governance is not an accident, but a natural law. The priorities of the ruling elite have never accommodated the welfare of the common citizen. State resources are routinely sacrificed at the altar of corporate privileges, elite exemptions, and inflated administrative expenditures, while foundational human rights—education, health, and justice—are systematically withheld from the masses. History offers a relentless warning: states are not experimental laboratories where arbitrary political models can be tested on a whim. From Ayub Khan’s Basic Democracies to Zia-ul-Haq’s Majlis-e-Shoora, and Pervez Musharraf’s devolution experiments, every single top-down engineering project ended exclusively in national fragmentation and internal turmoil. Each time, a new savior arrives claiming to smash the system, only to leave the country deeper in the mire before exiting the stage. Should the interior minister’s declaration be used this time to midwife yet another hybrid experiment or authoritarian arrangement, it will prove fatal to the nation’s remaining political existence. Escaping this vicious cycle of institutional decay demands moving beyond raw emotion and tired conspiracy theories to embrace a rigorous, actionable roadmap for structural reform that must unfold with absolute urgency. First and foremost, political will must be harnessed to draft a comprehensive framework of constitutional and legal reforms that restores parliament to its rightful position of supremacy, ensuring that executive interference in legislation is thoroughly eliminated and parliamentary committees are empowered to reflect genuine public representation. In tandem with this, a revolutionary structural overhaul of the civil and military bureaucracies remains non-negotiable, requiring the archaic and paternalistic colonial-era administrative model to be dismantled and replaced with a modern public service framework rooted entirely in direct public accountability. Furthermore, fiscal autonomy and equitable resource distribution must be granted to the federal units as an imperative measure, systematically redirecting national wealth away from elite extravagance toward foundational public infrastructure, education, and healthcare for the marginalized segments of society. Finally, the judicial system must be thoroughly reformed to guarantee the common citizen swift and affordable access to justice, effectively resolving systemic contradictions through transparent legal recourse rather than arbitrary administrative fiat. The federal interior minister’s warning that the system has collapsed must therefore serve as an

I will tell you exactly how it felt for Pakistanis all over the world the day the Makkah Defence Pact was signed. I am in London, and I can tell you that, for British Pakistanis, it felt like a wedding. I went to a café in central London and found a sort of celebration among Pakistanis. Phones were buzzing, television anchors were beaming, and for one evening, it seemed like every household in Lahore, Islamabad and Karachi was talking about the same thing: Pakistan, Saudi Arabia and Turkiye standing together, promising to defend one another. In Riyadh and Ankara, the mood was no different. Flags, statements, warm handshakes. A celebration, plain and simple. I miss Pakistan right now. Right now, Pakistan is illuminated. It is a sort of festivity. Celebration is in the air. Prime Minister Shehbaz Sharif and Field Marshal Asim Munir have made it possible to put Muslim countries on a single platform. But I am a curious man by nature, and celebrations make me curious in a particular way. When everyone in the room is smiling, I always want to know who is standing outside, looking in through the window. So I went looking. I wanted to know what India was saying, what Iran was saying, and what the UAE was saying. And what I found was a much more complicated story than the one being told at the wedding. Let me start with India, because that is where the unease runs deepest. Turkish journalist Aslı Aydıntaşbaş, who studies the region closely, said it would be too early to call this a “Muslim NATO” or “Sunni NATO.” But she also said something important: this pact shows a real desire among regional countries to build their own security system, owned by themselves. Strategic affairs expert Brahma Chellaney went further. He warned that this agreement could make it much harder to control tensions if India and Pakistan ever clash again. He pointed out that during Operation Sindoor, Pakistan received far more military help from China than from Turkiye, but Turkiye’s direct support made one thing clear: if a conflict with India happens, Turkiye is ready to stand by Pakistan. Former Indian ambassador to the UN, T S Tirumurti, was even more direct. He said the pact uses language similar to NATO’s Article 5, and that its effects will not stay confined to the Middle East. Given the long, tense history between Pakistan and India, he said, this has to be read with that relationship in mind. So, my friends in India must learn one thing: their government should think 10 times, or even more, before going into a military confrontation with Pakistan. Then there is Iran, and here the tone was different again. Ali Akbar Velayati, adviser to Iran’s Supreme Leader Ayatollah Ali Khamenei, did not criticise the new pact. Instead, in posts written in Persian, Arabic, English and Turkish, he spoke of the resilience of Iran’s armed forces and what he called the defeat of the United States and Israel. He said this defeat proved that foreign forces, which he called the main cause of insecurity, must leave the region. And in the same breath, he said that growing cooperation among regional states can secure the region’s own security. In other words, Iran is not against regional countries banding together. It simply wants outside powers to step back. The UAE, as I have written before, took the most careful line of all. No rejection, no celebration, just pointed questions about who exactly this alliance is meant to deter. For his part, Turkish President Erdoğan tried to calm every nerve in the room. He wrote that the pact follows Article 51 of the UN Charter, the right to self-defence, and is not directed against any country. It is open, he said, to any friendly nation that wants peace and stability in the region. So here is what I take from all this, writing as a Pakistani watching his own country’s celebration from the inside. Pride is natural, and this pact matters. But a wedding always looks different from outside the window. India sees risk. Iran sees an opening to push out foreign powers. The UAE sees questions still unanswered. As Pakistanis, we should enjoy this moment, but we should also read the room beyond our own hall.

Pakistan was achieved on the fourteenth of August in the year nineteen hundred and forty-seven, after sacrifices of a magnitude that still stir the soul and a struggle whose tirelessness remains an enduring lesson. Millions crossed borders in those turbulent months, leaving behind ancestral homes, familial graves, and the familiar soil of generations, so that a new homeland might rise where Muslims could live according to their faith and their free will. We stand now upon the threshold of the eighth decade of that hard-won independence. I, a Pakistani by birth and by conviction, have myself lived nearly fifty-eight years within the borders of this free land. This country conferred upon me an identity that no foreign power could erase, furnished me with the means of an independent existence—schools in which to learn, roads upon which to travel, markets in which to earn my bread—bestowed a measure of respect in the eyes of the world, and, in some degree, granted me a name among my fellows. Yet the question returns, quietly and persistently, like a debt long deferred; what have I given in return? Have I ever paused long enough, in the press of daily concerns, to weigh that debt with honesty? The same inquiry must be put, with equal seriousness and without partiality, to the institutions that were meant to serve as the pillars of the state, and to the rulers and authorities who have held power through these eighty years. What account can they render of their stewardship? Parliament was intended as the voice of the people; the courts as the guardians of justice; the civil service as the steady hand of administration; the universities as the nurseries of thought and character. Have these bodies discharged their duties with fidelity, or have they at times become arenas of personal ambition, partisan calculation, and the slow corrosion of public trust? The rulers who succeeded one another, whether civilian or military, received the same inheritance of soil, of people, and of hope. What have they added to the national store of justice, of prosperity, of self-respect, and of unity? The record is mixed, and the gaps are painful to contemplate. Have we, as a people, ever undertaken a true reckoning of our collective performance—not the ritual of speeches on national days, but a sober examination of conscience? And if such an accounting was made, did it lead to any genuine reformation of our ways, or did we merely resume the old habits once the anniversary had passed? Where, in truth, does Pakistan stand as a state at this present hour? We possess a land rich in rivers and fertile plains, a people endowed with resilience and talent, a strategic position that nature itself seems to have marked for consequence. Yet we continue to wrestle with the burdens of poverty that still touch too many homes, with the lingering shadows of disorder in parts of the country, with the uneasy balance between institutions that ought to complement one another, and with the persistent temptation to place private gain above the common good. Have we preserved, or have we frittered away, the sacred trust that our ancestors placed in our hands when they bequeathed us this country? That trust was not lightly given. It demanded vigilance against tyranny, honesty in public dealing, a willingness to educate the young in both knowledge and character, and a readiness to place the welfare of the whole above the advantage of the few. Looking back across the decades, one is compelled to ask whether that demand has been met in full measure. I do not exempt myself from this examination. For nearly six decades I have drawn from the well of national life—the protection of law, the opportunity to work and to speak, the simple privilege of calling myself a citizen of a free land. Have my contributions matched the gifts received? Have I laboured, in whatever sphere was allotted me, to strengthen rather than weaken the fabric of the republic? Have I spoken truth when silence was easier, practised fairness when partiality promised profit, and taught the rising generation that freedom is not a birthright to be consumed but a responsibility to be renewed? Honesty requires that each of us answer such questions in the solitude of his own heart, without the convenient shield of collective excuses or the comfortable habit of blaming those who came before. Enough, then, of evasion. The hour has come for every citizen, high or low, including the writer of these lines, to conduct a personal audit. Let each examine what he has taken and what he has returned. Let the institutions examine their fidelity to the purposes for which they were created. Let those who hold authority examine whether their decisions have served the enduring interests of the state or the fleeting interests of the moment. Only through such unsparing self-examination, followed by the hard work of reform, can the trust of the founders be renewed and the promise of Pakistan still be fulfilled for those who will inherit what we leave behind.