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FACTBOX-Key political risks to watch in Pakistan

Source: Thomson Reuters Foundation - Mon, 18 Mar 2013 07:43 AM
Author: Reuters
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ISLAMABAD, March 18 (Reuters) - Pakistan's current government is the country's first civilian administration since independence to complete its full term, and elections are due to be held in the next few months.

Despite that landmark, signs since the start of 2013 have not been universally positive.

In January, mass street protests in Islamabad led by a cleric with a history of ties to the army came just before the Supreme Court ordered the arrest of the Prime Minister on corruption charges, giving rise to fears that the military was working with the judiciary to force out a civilian leader - claims denied by the cleric and the military.

The crisis has eased since mid-January and the government is still in place, but power struggles have long distanced it from voters, and distracted it from tackling an array of problems - a Taliban insurgency, economic stagnation and growing sectarian tensions triggered by bomb attacks and tit-for-tat shootings.

Relations between the United States and Pakistan - whose status as an ally has long been questioned by some in Washington - are being rebuilt after a NATO air attack killed 24 Pakistani soldiers in late 2011. In response, Pakistan shut the land routes that supply NATO troops across its border in Afghanistan.

The U.S. later apologised for the November 2011 incident and Pakistan reopened the supply routes, a move that brought Islamabad some diplomatic relief, but protests from thousands of Pakistanis.

The U.S. wants Pakistan to chase the militant groups on its soil which take advantage of the porous border with Afghanistan to attack NATO and Afghan troops there. Pakistan's cooperation is critical to U.S.-led efforts to stabilise Afghanistan as NATO combat troops prepare to leave the country by the end of 2014.

RATINGS (Unchanged unless stated):

MOODY's: Caa1

S&P: B-

Here is a summary of key risks to watch in Pakistan:

GOVERNMENT WEAKNESS AS ELECTION LOOMS

Some politicians believe January's protest, combined with the arrest order for the Prime Minister, was evidence of a joint effort between the military and the judiciary to destabilise the government.

The military, which sees itself as the guarantor of Pakistan's tenuous stability, regards the PPP-led government as corrupt, incompetent and unable to prevent the nuclear-armed country from falling apart.

Pakistan's army has a long history of coups and intervening in politics, though at the moment the generals seem to have little appetite for a coup. Army chief General Ashfaq Kayani has vowed to keep the military out of politics.

A long-running standoff between the judiciary and the U.S.-backed government has further eroded public trust of politicians, which was already extremely low.

While changes in personnel at the top raise questions about government stability, for most Pakistanis such moves only deepen frustrations with their everyday hardships.

President Asif Ali Zardari's government is weak, dependent on unreliable coalition partners, and has limited control over the military. It has failed to tackle corruption or implement economic reforms. Serious problems in formulating and implementing policy will continue to deter investment.

It also faces growing political opposition. Last October, authorities stopped a protest against U.S. drone strikes, led by cricketer turned politician Imran Khan, from entering the region of South Waziristan. Though the government publicly condemns drone attacks, many Pakistanis believe it has done nowhere near enough to stop them.

Government finances may also be approaching crisis point. In March, the Asian Development Bank said Pakistan has reached a critical balance of payments situation and will need another package from the International Monetary Fund, this time of up to ${esc.dollar}9 billion, before the end of the year.

What to watch:

- Declarations of candidacy for the elections, whose date has not yet been set.

- Any moves by the military to openly influence political developments, and how the judiciary responds.

- Tussles between the government and the court are likely to drag on, and could paralyse government decisionmaking.

RELATIONS WITH AFGHANISTAN AND INDIA

Pakistan plans to release all Afghan Taliban prisoners still in its detention, including the group's former second-in-command, a Pakistani official said in January, the clearest signal yet that it backs Afghanistan's reconciliation efforts.

Afghanistan wants its neighbour to free the Taliban members it thinks could help promote its tentative reconciliation between insurgents and the population at large, many of whom fear a renewed Taliban offensive when the U.S.-led combat mission ends next year.

Relations between Pakistan and Afghanistan have been strained for years. Some Afghan lawmakers have repeatedly claimed that Pakistan's spy agency, the Inter-services Intelligence (ISI), is behind assassinations and suicide bombings in Afghanistan, something Pakistan vehemently denies.

Trouble flared with another of Pakistan's neighbours at the start of the year when three Pakistani and two Indian soldiers were killed in Kashmir, the worst outbreak of violence there since India and Pakistan agreed a ceasefire nearly a decade ago. Both countries claim Kashmir as their own.

Despite high-level protests, Pakistani and Indian government spokesmen insist the deaths will not stop talks meant to improve relations, and experts say more violence is unlikely.

What to watch:

- Moves to release the Afghan Taliban prisoners.

- Shelling across the Afghan border or insurgent attacks, and escalation of accusations by either side.

- More trouble in Kashmir.

INTERNAL SECURITY

The shooting last October by the Pakistan Taliban of 15-year-old Malala Yousufzai, a schoolgirl who won international plaudits for speaking out against the insurgency, was a reminder of the lawlessness of some regions of the country, and the impunity with which the Taliban conducts attacks.

Violence, some of it politically motivated, continues to blight the southern port city of Karachi, Pakistan's financial hub.

Ten people were killed and more than 100 wounded there in September's protests in response to an anti-Islamic video made in the United States, and in November a Taliban suicide bomber rammed his vehicle into the gates of a military base there, killing at least one person.

More than 1,600 people were killed in the city in 2011, over half of them in political and sectarian violence, and Pakistan's paramilitary forces are often deployed there to stabilise violent districts. Altogether, the violence and instability are a huge deterrent to foreign investment.

Nationwide, Sunni-Shi'ite sectarian violence is emerging as a serious menace. Hundreds of Shi'ites were killed in sectarian conflict last year, human rights groups say, and Sunni Muslim extremist groups such as Lashkar-e-Jhangvi are growing in strength and ambition.

In late November, a bomb killed at least five people and wounded 90 near a Shi'ite procession. The government is struggling to stop attacks by sectarian Sunni militant groups determined to wipe out the minority sect and seize power.

What to watch:

- Further attacks by militants. The assaults on high-profile military facilities have shown the continued ability of Taliban fighters to attack even protected targets.

- Whether talks with the Taliban materialise officially. (Editing by Daniel Magnowski)

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