About the CBI

February 2006
Background Note: Pakistan                                                           
                                                                                        
    Flag of Pakistan is green with a vertical white band (symbolizing the role of       
    religious minorities) on the hoist side; a large white crescent and star are        
    centered in the green field; the crescent, star, and color green are                
    traditional symbols of Islam.                                                       
                                                                                        
    PROFILE                                                                             
                                                                                        
    OFFICIAL NAME:                                                                      
    Islamic Republic of Pakistan                                                        
                                                                                        
    Geography                                                                           
    Area: 803,943 sq. km. (310,527 sq. mi.); almost twice the size of California.       
    Cities: Capital--The city of Islamabad (pop. 800,000) and adjacent Rawalpindi       
    (1,406, 214) comprise the national capital area with a combined population of       
    3.7 million. Other cities--Karachi (11,624,219) (2005 est.), Lahore                 
    (6,310,888) (2005 est.), Faisalabad (1,977,246) and Hyderabad (1,151,274).          
                                                                                        
    People                                                                              
    Nationality: Noun and adjective--Pakistan(i).                                       
    Population (2005 est.): 162,419.946.                                                
    Annual growth rate (2005 est.): 2.03%.                                              
    Ethnic groups: Punjabi, Sindhi, Pushtun, Baloch, Muhajir (i.e., Urdu-speaking       
    immigrants from India and their descendants), Saraiki, and Hazara.                  
    Religions: Muslim 97%; small minorities of Christians, Hindus, and others.          
    Languages: Urdu (national and official), English, Punjabi, Sindhi, Pushtu,          
    Baloch, Hindko, Brahui, Saraiki (Punjabi variant).                                  
    Education: Literacy (2003)--45.7%; male 59.8%; female 30.6%. Unofficial             
    estimates are as low as 35%.                                                        
    Health: Infant mortality rate (2005 est.)--72.44/1,000. Life expectancy (2005       
    est.)--men 62.04 yrs., women 64.01 yrs.                                             
    Work force (2004): Agriculture--42%; services--38%; industry--20%.                  
                                                                                        
    Government                                                                          
    Type: Parliamentary democracy.                                                      
    Independence: August 14, 1947.                                                      
    Branches: Executive--president (chief of state), prime minister (head of            
    government). Legislative--Bicameral Parliament or Majlis-e-Shoora (100-seat         
    Senate, 342-seat National Assembly). Judicial--Supreme Court, provincial high       
    courts, Federal Islamic (or Shari'a) Court.                                         
    Political parties: Pakistan Muslim League (PML), Pakistan People's Party            
    (PPP), Muttahid Majlis-e-Amal (umbrella group) (MMA), Muttahida Qaumi               
    Movement (MQM), and Pakistan Muslim League-Nawaz (PML-N).                           
    Suffrage: Universal at 18.                                                          
    Political subdivisions: 4 provinces; also the Federally Administered Tribal         
    Areas and the Pakistani-administered portion of the disputed Jammu and              
    Kashmir region (Azad Kashmir and the Northern Areas).                               
                                                                                        
    Economy                                                                             
    GDP (2004 est.): PPP $347.3 billion.                                                
    Real annual growth rate (2004): 6.1%.                                               
    Per capita GDP (2004): PPP $2,200.                                                  
    Natural resources: Arable land, natural gas, limited oil, substantial               
    hydropower potential, coal, iron ore, copper, salt, limestone.                      
    Agriculture: Products--wheat, cotton, rice, sugarcane, eggs, fruits,                
    vegetables, milk, beef, mutton.                                                     
    Industry: Types--textiles & apparel, food processing, pharmaceuticals,              
    construction materials, shrimp, fertilizer, and paper products.                     
    Trade (2004): Exports--$15.07 billion: textiles (garments, bed linen, cotton        
    cloth, and yarn), rice, leather goods, sports goods, carpets, rugs, chemicals       
    & manufactures. Major partners--U.S. 21.3%, United Arab Emirates 9.8%, U.K.         
    7.1%, Germany 5.2%, Hong Kong 4.2%, Saudi Arabia 4.1%. Imports--$14.01              
    billion: petroleum, petroleum products, machinery, plastics, paper and paper        
    board, transportation equipment, edible oils, pulses, iron and steel, tea.          
    Major partners--China 10.8%, U.S. 10.2%, United Arab Emirates 9.3%, Saudi           
    Arabia 9.0%, Japan 7.0%, Kuwait 5.3%, Germany 4.2%.                                 
                                                                                        
    PEOPLE                                                                              
    The majority of Pakistan's population lives in the Indus River valley and in        
    an arc formed by the cities of Faisalabad, Lahore, Rawalpindi/Islamabad, and        
    Peshawar. Although Urdu is an official language of Pakistan, it is spoken as        
    a first language by only 8% of the population; 48% speak Punjabi, 12% Sindhi,       
    10% Saraiki, 8% Pushtu, 3% Baloch, and 3% other. Urdu, Punjabi, Pushtu, and         
    Baloch are Indo-European languages. English is the other official language,         
    and is widely used in government, the officer ranks of the military, and in         
    many institutions of higher learning.                                               
                                                                                        
    HISTORY                                                                             
    Pakistan, along with parts of western India, contains the archeological             
    remains of an urban civilization dating back 4,500 years. Alexander the Great       
    included the Indus Valley in his empire in 326 B.C., and his successors             
    founded the Indo-Greek kingdom of Bactria based in what is today Afghanistan        
    and extending to Peshawar. Following the rise of the Central Asian Kushan           
    Empire in later centuries, the Buddhist culture of Afghanistan and Pakistan,        
    centered on the city of Taxila just west of Islamabad, experienced a cultural       
    renaissance known as the Gandhara period.                                           
                                                                                        
    Pakistan's Islamic history began with the arrival of Muslim traders in the          
    8th century in Sindh. The collapse of the Mughal Empire in the 18th century         
    provided an opportunity to the English East India Company to extend its             
    control over much of the subcontinent. The Sikh adventurer Ranjit Singh             
    carved out a dominion that extended from Kabul to Srinagar and Lahore,              
    encompassing much of the northern area of modern Pakistan. British rule             
    replaced the Sikhs in the first half of the 19th century. In a decision that        
    had far-reaching consequences, the British permitted the Hindu Maharaja of          
    Kashmir, a Sikh appointee, to continue in power.                                    
                                                                                        
    Pakistan emerged from an extended period of agitation by Muslims in the             
    subcontinent to express their national identity free from British colonial          
    domination as well as domination by what they perceived as a Hindu-controlled       
    Indian National Congress. Muslim anti-colonial leaders formed the All-India         
    Muslim League in 1906. Initially, the League adopted the same objective as          
    the Congress--self-government for India within the British Empire--but              
    Congress and the League were unable to agree on a formula that would ensure         
    the protection of Muslim religious, economic, and political rights.                 
                                                                                        
    Pakistan and Partition                                                              
    The idea of a separate Muslim state emerged in the 1930s. On March 23, 1940,        
    Muhammad Ali Jinnah, leader of the Muslim League, formally endorsed the             
    "Lahore Resolution," calling for the creation of an independent state in            
    regions where Muslims constituted a majority. At the end of World War II, the       
    United Kingdom moved with increasing urgency to grant India independence. The       
    Congress Party and the Muslim League, however, could not agree on the terms         
    for a Constitution or establishing an interim government. In June 1947, the         
    British Government declared that it would bestow full dominion status upon          
    two successor states--India and Pakistan, formed from areas in the                  
    subcontinent in which Muslims were the majority population. Under this              
    arrangement, the various princely states could freely join either India or          
    Pakistan. Accordingly, on August 14, 1947 Pakistan, comprising West Pakistan        
    with the provinces of Punjab, Sindh, Balochistan, and the Northwest Frontier        
    Province (NWFP), and East Pakistan with the province of Bengal, became              
    independent. East Pakistan later became the independent nation of Bangladesh.       
                                                                                        
    The Maharaja of Kashmir was reluctant to make a decision on accession to            
    either Pakistan or India. However, armed incursions into the state by               
    tribesman from the NWFP led him to seek military assistance from India. The         
    Maharaja signed accession papers in October 1947 and allowed Indian troops          
    into much of the state. The Government of Pakistan, however, refused to             
    recognize the accession and campaigned to reverse the decision. The status of       
    Kashmir has remained in dispute.                                                    
                                                                                        
    After Independence                                                                  
    With the death in 1948 of its first head of state, Muhammad Ali Jinnah, and         
    the assassination in 1951 of its first prime minister, Liaqat Ali Khan,             
    political instability and economic difficulty became prominent features of          
    post-independence Pakistan. On October 7, 1958, President Iskander Mirza,           
    with the support of the army, suspended the 1956 Constitution, imposed              
    martial law, and canceled the elections scheduled for January 1959. Twenty          
    days later the military sent Mirza into exile in Britain, and Gen. Mohammad         
    Ayub Khan assumed control of a military dictatorship. After Pakistan's loss         
    in the 1965 war against India, Ayub Khan's power declined. Subsequent               
    political and economic grievances inspired agitation movements that compelled       
    his resignation in March 1969. He handed over responsibility for governing to       
    the commander in chief of the army, General Agha Mohammed Yahya Khan, who           
    became President and Chief Martial Law Administrator.                               
                                                                                        
    General elections held in December 1970 polarized relations between the             
    eastern and western sections of Pakistan. The Awami League, which advocated         
    autonomy for the more populous East Pakistan, swept the East Pakistan seats         
    to gain a majority in Pakistan as a whole. The Pakistan Peoples Party (PPP),        
    founded and led by Ayub Khan's former Foreign Minister Zulfikar Ali Bhutto,         
    won a majority of the seats in West Pakistan, but the country was completely        
    split with neither major party having any support in the other area.                
    Negotiations to form a coalition government broke down, and a civil war             
    ensued. India attacked East Pakistan and captured Dhaka in December 1971,           
    when the eastern section declared itself the independent nation of                  
    Bangladesh. Yahya Khan then resigned the presidency and handed over                 
    leadership of the western part of Pakistan to Bhutto, who became President          
    and the first civilian Chief Martial Law Administrator.                             
                                                                                        
    Bhutto moved decisively to restore national confidence and pursued an active        
    foreign policy, taking a leading role in Islamic and Third World forums.            
    Although Pakistan did not formally join the Non-Aligned Movement until 1979,        
    the position of the Bhutto government coincided largely with that of the            
    non-aligned nations. Domestically, Bhutto pursued a populist agenda and             
    nationalized major industries and the banking system. In 1973, he promulgated       
    a new Constitution accepted by most political elements and relinquished the         
    presidency to become prime minister. Although Bhutto continued his populist         
    and socialist rhetoric, he increasingly relied on Pakistan's urban                  
    industrialists and rural landlords. Over time the economy stagnated, largely        
    as a result of the dislocation and uncertainty produced by Bhutto's                 
    frequently changing economic policies. When Bhutto proclaimed his own victory       
    in the March 1977 national elections, the opposition Pakistan National              
    Alliance (PNA) denounced the results as fraudulent and demanded new                 
    elections. Bhutto resisted and later arrested the PNA leadership.                   
                                                                                        
    1977-1985 Martial Law                                                               
    With increasing anti-government unrest, the army grew restive. On July 5,           
    1977, the military removed Bhutto from power and arrested him, declared             
    martial law, and suspended portions of the 1973 Constitution. Chief of Army         
    Staff Gen. Muhammad Zia ul-Haq became Chief Martial Law Administrator and           
    promised to hold new elections within 3 months.                                     
                                                                                        
    Zia released Bhutto and asserted that he could contest new elections                
    scheduled for October 1977. However, after it became clear that Bhutto's            
    popularity had survived his government, Zia postponed the elections and began       
    criminal investigations of the senior PPP leadership. Subsequently, Bhutto          
    was convicted and sentenced to death for alleged conspiracy to murder a             
    political opponent. Despite international appeals on his behalf, Bhutto was         
    hanged on April 6, 1979.                                                            
                                                                                        
    Zia assumed the presidency and called for elections in November. However,           
    fearful of a PPP victory, Zia banned political activity in October 1979, and        
    postponed national elections.                                                       
                                                                                        
    In 1980, most center and left parties, led by the PPP, formed the Movement          
    for the Restoration of Democracy (MRD). The MRD demanded Zia's resignation,         
    an end to martial law, new elections, and restoration of the Constitution, as       
    it existed before Zia's takeover. In early December 1984, President Zia             
    proclaimed a national referendum for December 19 on his "Islamization"              
    program. After non-party based polls were held for the National and                 
    Provincial Assemblies in 1985, President Zia appointed Muhammad Khan Junejo         
    as the Prime Minister. He implicitly linked approval of "Islamization" with a       
    mandate for his continued presidency. Zia's opponents, led by the MRD,              
    boycotted the elections. When the government claimed a 63% turnout, with more       
    than 90% approving the referendum, many observers questioned these figures.         
                                                                                        
    1988-2005                                                                           
    On August 17, 1988, a plane carrying President Zia, American Ambassador             
    Arnold Raphael, U.S. Brig. General Herbert Wassom, and 28 Pakistani military        
    officers crashed on a return flight from a military equipment trial near            
    Bahawalpur, killing all on board. In accordance with the Constitution,              
    Chairman of the Senate Ghulam Ishaq Khan became Acting President and                
    announced that elections scheduled for November 1988 would take place.              
    Elections were held on a party basis. On one side was an eight-party alliance       
    and on the other, the PPP. The PPP won 94 seats out of 207 and the Islamic          
    Democratic Alliance (IJI) won 54. Muhammad Khan Junejo lost from his home           
    constituency. The president was bound to invite the PPP to from the                 
    government, but he delayed doing so for two weeks in order to give the IJI          
    time to muster the support of other groups. Ultimately, the president asked         
    PPP Co-chairperson Benazir Bhutto to form a government.                             
                                                                                        
    The PPP, under Benazir Bhutto's leadership, succeeded in forming a coalition        
    government with several smaller parties, including the Muttahida Qaumi              
    Movement (MQM).                                                                     
                                                                                        
    Differing interpretations of constitutional authority, debates over the             
    powers of the central government relative to those of the provinces, and the        
    antagonistic relationship between the Bhutto administration and opposition          
    governments in Punjab and Balochistan seriously impeded social and economic         
    reform programs. Ethnic conflict, primarily in Sindh province, exacerbated          
    these problems. A fragmentation in the governing coalition and the military's       
    reluctance to support an apparently ineffectual and corrupt government were         
    accompanied by a significant deterioration in law and order.                        
                                                                                        
    In August 1990, President Khan, citing his powers under the eighth amendment        
    to the Constitution, dismissed the Bhutto government and dissolved the              
    national and provincial assemblies. New elections, held in October 1990,            
    confirmed the political ascendancy of the IJI. In addition to a two-thirds          
    majority in the National Assembly, the alliance won control of all four             
    provincial parliaments and enjoyed the support of the military and of               
    President Khan. Muhammad Nawaz Sharif, as leader of the PML, the most               
    prominent party in the IJI, was elected prime minister by the National              
    Assembly.                                                                           
                                                                                        
    Sharif emerged as the most secure and powerful Pakistani prime minister since       
    the mid-1970s. Under his rule, the IJI achieved several important political         
    victories. The implementation of Sharif's economic reform program, involving        
    privatization, deregulation, and encouragement of private sector economic           
    growth, greatly improved Pakistan's economic performance and business               
    climate. The passage into law in May 1991 of a Shari'a bill, providing for          
    widespread Islamization, legitimized the IJI government among much of               
    Pakistani society.                                                                  
                                                                                        
    However, Nawaz Sharif was not able to reconcile the different objectives of         
    the IJI's constituent parties. The largest religious party, Jamaat-i-Islami         
    (JI), abandoned the alliance because of its antagonism to what it regarded as       
    PML hegemony. The regime was weakened further by the military's suppression         
    of the MQM, which had entered into coalition with the IJI to contain PPP            
    influence, and allegations of corruption directed at Nawaz Sharif. In April         
    1993, President Khan, citing "maladministration, corruption, and nepotism"          
    and espousal of political violence, dismissed the Sharif government, but the        
    following month the Pakistan Supreme Court reinstated the National Assembly         
    and the Nawaz Sharif government. Continued tensions between Sharif and Khan         
    resulted in governmental gridlock and the Chief of Army Staff brokered an           
    arrangement under which both the President and the Prime Minister resigned          
    their offices in July 1993.                                                         
                                                                                        
    An interim government, headed by Moeen Qureshi, a former World Bank Vice            
    President, took office with a mandate to hold national and provincial               
    assembly elections in October. Despite its brief term, the Qureshi government       
    adopted political, economic, and social reforms that generated considerable         
    domestic support and foreign admiration.                                            
                                                                                        
    In the October 1993 elections, the PPP won a plurality of seats in the              
    National Assembly, and Benazir Bhutto was asked to form a government.               
    However, because it did not acquire a majority in the National Assembly, the        
    PPP's control of the government depended upon the continued support of              
    numerous independent parties, particularly the PML/J (Pakistan Muslim               
    League-Junejo). The unfavorable circumstances surrounding PPP rule--the             
    imperative of preserving a coalition government, the formidable opposition of       
    Nawaz Sharif's PML/N (Pakistani Muslim League-Nawaz) movement, and the              
    insecure provincial administrations--presented significant difficulties for         
    the government of Prime Minister Bhutto. However, the election of Prime             
    Minister Bhutto's close associate, Farooq Leghari, as President in November         
    1993 gave her a stronger power base.                                                
                                                                                        
    In November 1996, President Leghari dismissed the Bhutto government, charging       
    it with corruption, mismanagement of the economy, and implication in                
    extrajudicial killings in Karachi. Elections in February 1997, resulted in an       
    overwhelming victory for the PML/N, and President Leghari called upon Nawaz         
    Sharif to form a government. In March 1997, with the unanimous support of the       
    National Assembly, Sharif amended the Constitution, stripping the President         
    of the power to dismiss the government and making his power to appoint              
    military service chiefs and provincial governors contingent on the "advice"         
    of the Prime Minister. Another amendment prohibited elected members from            
    "floor crossing" or voting against party positions. The Sharif government           
    engaged in a protracted dispute with the judiciary, culminating in the              
    storming of the Supreme Court by ruling party loyalists and the engineered          
    dismissal of the Chief Justice and the resignation of President Leghari in          
    December 1997.                                                                      
                                                                                        
    The new President elected by Parliament, Rafiq Tarar, was a close associate         
    of the Prime Minister. A one-sided, anti-corruption campaign was used to            
    target opposition politicians and critics of the regime. Similarly, the             
    government moved to restrict press criticism and ordered the arrest and             
    beating of prominent journalists. As domestic criticism of Sharif's                 
    administration intensified, Sharif attempted to replace Chief of Army Staff         
    General Pervez Musharraf on October 12, 1999, with a family loyalist,               
    Director General of the Interservice Intelligence Directorate, Lt. Gen.             
    Ziauddin. Although General Musharraf was out of the country at the time, the        
    army moved quickly to depose Sharif.                                                
                                                                                        
    Following the October 12 ouster of the government of Prime Minister Sharif,         
    the military-led government stated its intention to restructure the political       
    and electoral systems. On October 14, 1999, General Musharraf declared a            
    state of emergency and issued the Provisional Constitutional Order (PCO),           
    which suspended the federal and provincial Parliaments, held the Constitution       
    in abeyance, and designated Musharraf as Chief Executive. Musharraf appointed       
    an eight-member National Security Council to function as Pakistan's supreme         
    governing body, with mixed military/civilian appointees; a civilian Cabinet;        
    and a National Reconstruction Bureau to formulate structural reforms. On May        
    12, 2000, Pakistan's Supreme Court unanimously validated the October 1999           
    coup and granted Musharraf executive and legislative authority for 3 years          
    from the coup date. On June 20, 2001, Musharraf named himself as president          
    and was sworn in.                                                                   
                                                                                        
    After the World Trade Center and the Pentagon were attacked on September 11,        
    2001, Musharraf pledged complete cooperation with the United States in its          
    war on terror, which included locating and shutting down terrorist training         
    camps within its borders, cracking down on extremist groups and withdrawing         
    support for the Taliban regime in Afghanistan. In a referendum held on April        
    30, 2002, Musharraf's presidency was extended by five more years. The               
    handover from military to civilian rule came with parliamentary elections in        
    November 2002, and the appointment of a civilian prime minister, Mir                
    Zafarullah Khan Jamali. Having previously promised to give up his army post         
    and become a civilian president, General Musharraf announced in late 2004           
    that he would retain his military role. In August 2004, Shaukat Aziz was            
    sworn in as prime minister, having won a parliamentary vote of confidence,          
    191 of 342 votes, in which the opposition abstained.                                
                                                                                        
    On October 8, 2005 a magnitude 7.6 earthquake struck Pakistan, India, and           
    Afghanistan. The epicenter of the earthquake was near Muzaffarabad, the             
    capital of Pakistani-administered Kashmir, and approximately 60 miles               
    north-northeast of Islamabad. An estimated 75,000 people were killed and 2.5        
    million people were left homeless. The disaster of such a huge magnitude            
    galvanized an international rescue and reconstruction effort in support of          
    the affected region.                                                                
                                                                                        
    GOVERNMENT AND POLITICAL CONDITIONS                                                 
    Pervez Musharraf has been chief of state since June 20, 2001. A prolonged           
    confrontation over authority between Parliament and the President ended in          
    December 2002 with a compromise which permitted passage of the Legal                
    Framework Order (LFO) of 2002, under the terms of which President Musharraf         
    made his pledge to resign his military position as Commander-in-Chief in late       
    2004. In 2004 General Musharraf announced that he would retain his military         
    role.                                                                               
                                                                                        
    The Pakistan Constitution of 1973, amended substantially in 1985 under Zia          
    ul-Haq, was suspended by the military government in October 1999. It was            
    restored on December 31, 2002. Selected provisions of the Constitution              
    pertaining to changes that President Musharraf made while the Constitution          
    was suspended remain contested by political opponents.                              
                                                                                        
    The president is chosen for a five-year term by an electoral college                
    consisting of the Senate, National Assembly, and the provincial assemblies.         
    The prime minister is selected by the National Assembly for a four-year term.       
    The bicameral parliament--or Majlis-e-Shoora--consists of the Senate (100           
    seats; members are indirectly elected by provincial assemblies to serve             
    four-year terms) and the National Assembly (342 seats; 60 seats reserved for        
    women, 10 seats reserved for minorities; members elected by popular vote            
    serve four-year terms). Each of the four provinces--Punjab, Sindh, Northwest        
    Frontier, and Balochistan--has a Chief Minister and provincial assembly. The        
    Northern Areas, Azad Kashmir and the Federally Administered Tribal Areas            
    (FATA) are administered by the federal government but enjoy considerable            
    autonomy. The cabinet, National Security Council, and governors serve at the        
    president's discretion.                                                             
                                                                                        
    The judicial system comprises a Supreme Court, provincial high courts, and          
    Federal Islamic (or Shari'a) Court. The Supreme Court is Pakistan's highest         
    court. The president appoints the chief justice and they together determine         
    the other judicial appointments. Each province has a high court, the justices       
    of which are appointed by the president after conferring with the chief             
    justice of the Supreme Court and the provincial chief justice. The judiciary        
    is proscribed from issuing any order contrary to the decisions of the               
    President. Federal Sharia Court hears cases that primarily involve Sharia, or       
    Islamic law. Legislation enacted in 1991 gave legal status to Sharia.               
    Although Sharia was declared the law of the land, it did not replace the            
    existing legal code.                                                                
                                                                                        
    The Pakistan Muslim League (PML) and the Pakistan People's Party (PPP) are          
    national political parties, while the Muttahid Majlis-e-Amal (MMA)--an              
    umbrella group of six religious parties, including the                              
    Jamaat-il-Islami--gained significant influence during the 2002 election.            
    After those elections, the Pakistani political system remained highly               
    fragmented, with no group winning a substantial majority of seats in the            
    national assembly, and religious groups banding together in the MMA to earn a       
    significant portion of seats for the first time.                                    
                                                                                        
    According to the constitution, Pakistan is a federation of four provinces:          
    Baluchistan, the North-West Frontier Province (NWFP), Punjab, and Sindh.            
    Governors appointed by the president head the provinces. There is also the          
    Federally Administered Tribal Areas (FATA), and the Islamabad Capital               
    Territory, which consists of the capital city of Islamabad. These areas and         
    territory are under the jurisdiction of the federal government. The Northern        
    Areas are administered as a de facto "Union Territory" and are treated as an        
    integral part of Pakistan. The Pakistani-administered portion of the disputed       
    Jammu and Kashmir region includes Azad Kashmir, a separate and autonomous           
    government that maintains strong ties to Pakistan.                                  
                                                                                        
    Principal Government Officials                                                      
    President--Pervez Musharraf                                                         
    Prime Minister (head of government)--Shaukat Aziz                                   
    Minister of Foreign Affairs--Khurshid Kasuri                                        
    Ambassador to the U.S.--Jehangir Karamat                                            
    Ambassador to the UN--Munir Akram                                                   
                                                                                        
    Pakistan maintains an embassy in the United States at 3517 International            
    Court NW, Washington, DC 20008 (tel. 202-243-6500). It has consulates in Los        
    Angeles, New York, Chicago and Houston.                                             
                                                                                        
    NATIONAL SECURITY                                                                   
    Pakistan has the world's eighth-largest armed forces, which is generally well       
    trained and disciplined. However, budget constraints and nation-building            
    duties have reduced Pakistan's training tempo, which if not reversed, could         
    affect the operational readiness of the armed forces. Likewise, Pakistan has        
    had an increasingly difficult time maintaining their aging fleet of U.S.,           
    Chinese, U.K., and French equipment. While industrial capabilities have             
    expanded significantly, limited budget resources and sanctions have                 
    significantly constrained the government's efforts to modernize its armed           
    forces.                                                                             
                                                                                        
    Until 1990, the United States provided military aid to Pakistan to modernize        
    its conventional defensive capability. The United States allocated about 40%        
    of its assistance package to non-reimbursable credits for military purchases,       
    the third-largest program behind Israel and Egypt. The remainder of the aid         
    program was devoted to economic assistance. Sanctions put in place in 1990          
    denied Pakistan further military assistance due to the discovery of its             
    program to develop nuclear weapons. Sanctions were tightened following              
    Pakistan's nuclear tests in response to India's May 1998 tests and the              
    military coup of 1999. Pakistan has remained a non-signatory of the Nuclear         
    non-Proliferation Treaty. The events of September 11, 2001, and Pakistan's          
    agreement to support the United States led to a waiving of the sanctions, and       
    military assistance resumed to provide spare parts and equipment to enhance         
    Pakistan's capacity to police its western border and address its legitimate         
    security concerns. In 2003, President Bush announced that the United States         
    would provide Pakistan with $3 billion in economic and military aid over 5          
    years. This assistance package commenced during FY 2005.                            
                                                                                        
    ECONOMY                                                                             
    With a per capita GDP of about PPP $2,200, the World Bank considers Pakistan        
    a low-income country. No more than 45.7% of adults are literate, and life           
    expectancy is about 63 years. The population, currently about 162.4 million,        
    is growing at 2.0% annually.                                                        
                                                                                        
    In 2000, the government made significant macroeconomic reforms. Privatizing         
    Pakistan's state-subsidized utilities, instituting a world-class anti-money         
    laundering law, cracking down on piracy of intellectual property, and quickly       
    resolving investor disputes would aid Pakistan's efforts to improve its             
    investment climate. After September 11, 2001, and Pakistan's proclaimed             
    commitment to fighting terror, many international sanctions, particularly           
    those imposed by the United States, were lifted. Pakistan's economic                
    prospects began to increase significantly due to unprecedented inflows of           
    foreign assistance at the end of 2001. This trend is expected to continue           
    through 2009. Foreign exchange reserves and exports grew to record levels           
    after a sharp decline. The International Monetary Fund recently lauded              
    Pakistan for its commitment in meeting lender requirements for a $1.3 billion       
    IMF Poverty Reduction and Growth Facility loan, which it completed in 2004,         
    forgoing the final permitted tranche. The Government of Pakistan has been           
    successful in issuing sovereign bonds, and has issued $600 million in Islamic       
    bonds, putting Pakistan back on the investment map. Pakistan's search for           
    additional foreign direct investment has been hampered by concerns about the        
    security situation, domestic and regional political uncertainties, and              
    questions about judicial transparency.                                              
                                                                                        
    U.S. assistance has played a key role in moving Pakistan's economy from the         
    brink of collapse to setting record high levels of foreign reserves and             
    exports, dramatically lowering levels of solid debt. This encouraged a 6.1%         
    GDP growth in fiscal year 2003-2004 and a reported GDP increase of over 8% in       
    fiscal year 2004-2005. In 2002, the United States led Paris Club efforts to         
    reschedule Pakistan's debt on generous terms, and in April 2003 the United          
    States reduced Pakistan's bilateral official debt by $1 billion. In 2004,           
    approximately $500 million more in bilateral debt was granted. In the second        
    half of 2004 and first half of 2005 inflation has been a concern, rising            
    above the historic lows for inflation in 2004.                                      
                                                                                        
    Low levels of spending in the social services and high population growth have       
    contributed to persistent poverty and unequal income distribution. The trends       
    of resources being devoted to socioeconomic development and infrastructure          
    projects have been improving since 2002, although expenditures remain below         
    global averages. Pakistan's extreme poverty and underdevelopment are key            
    concerns. The government has reined in the fiscal mismanagement that produced       
    massive foreign debt, and officials have committed to using international           
    assistance--including a major part of the $3 billion five-year U.S.                 
    assistance package--to address Pakistan's long-term needs in the health and         
    education sectors.                                                                  
                                                                                        
    The government started pursuing market-based economic reform policies in the        
    early 1980s. These reforms began to take hold in 1988, when the government          
    launched an ambitious IMF-assisted structural adjustment program in response        
    to chronic and unsustainable fiscal and external account deficits. The              
    government began to remove barriers to foreign trade and investment, reform         
    the financial system, ease foreign exchange controls, and privatize dozens of       
    state-owned enterprises.                                                            
                                                                                        
    Although the economy became more structurally sound, it remained vulnerable         
    to external and internal shocks, such as in 1992-93, when devastating floods        
    and political uncertainty combined to depress economic growth sharply. The          
    Asian financial crisis seriously affected Pakistan's major markets for its          
    textile exports. During the 1980s and early 1990s, the economy averaged a           
    growth rate of 6% per year, but afterwards growth dwindled until 2002. For          
    example, average real GDP growth from 1992 to 1998 dipped to 4.1% annually.         
    Economic reform also was set back by Pakistan's nuclear tests in May 1998,          
    and the subsequent economic sanctions imposed by the G-7. International             
    default was narrowly averted by the partial waiver of sanctions and the             
    subsequent reinstatement of Pakistan's IMF enhanced structural adjustment           
    facility/extended fund facility in early 1999, followed by Paris Club and           
    London Club re-scheduling. After taking power in late 1999, President               
    Musharraf instituted policies to stabilize Pakistan's macroeconomic                 
    situation. Pakistan continues to struggle with these reforms, having mixed          
    success, especially in reducing its budget and current account deficits.            
                                                                                        
    The Karachi Stock Exchange (KSE) enjoyed strong growth from 2003 to early           
    2005, before undergoing a market correction of close to 20% of market               
    capitalization in early 2005. KSE's market capitalization rebounded to all          
    time highs in mid-2005. Regulations have been implemented targeted at the           
    speculative margins-purchasing that was blamed for volatility in early 2005.        
                                                                                        
    Agriculture and Natural Resources                                                   
    Pakistan's principal natural resources are arable land, water, hydroelectric        
    potential, and natural gas reserves. About 28% of Pakistan's total land area        
    is under cultivation and is watered by one of the largest irrigation systems        
    in the world. Agriculture accounts for about 23% of GDP and employs about 42%       
    of the labor force. The most important crops are cotton, wheat, rice,               
    sugarcane, fruits, and vegetables, which together account for more than 75%         
    of the value of total crop output. Despite intensive farming practices,             
    Pakistan remains a net food importer. Pakistan exports rice, fish, fruits,          
    and vegetables and imports vegetable oil, wheat, cotton (net importer),             
    pulses, and consumer foods.                                                         
                                                                                        
    The economic importance of agriculture has declined since independence, when        
    its share of GDP was around 53%. Following the poor harvest of 1993, the            
    government introduced agriculture assistance policies, including increased          
    support prices for many agricultural commodities and expanded availability of       
    agricultural credit. From 1993 to 1997, real growth in the agricultural             
    sector averaged 5.7% but has since declined to less than 3%. Agricultural           
    reforms, including increased wheat and oilseed production, play a central           
    role in the government's economic reform package. Heavy rains in 2005               
    provided the benefit of larger than average cotton, wheat, and rice crops,          
    but also caused damage due to flooding and avalanches.                              
                                                                                        
    Pakistan has extensive energy resources, including fairly sizable natural gas       
    reserves, some proven oil reserves, coal, and large hydropower potential.           
    However, exploitation of energy resources has been slow due to a shortage of        
    capital and domestic and international political constraints. For instance,         
    domestic gas and petroleum production totals only about half the country's          
    energy needs, and dependence on imported oil contributes to Pakistan's          &n