Heart of the problem

Washington has made its demands to Pakistan loud and clear: stop harboring terrorists, or else. Terrorism, the Haqqani Network and ties with Pakistan have been top of the agenda for the US government of late.

It has also discussed the possibility of cutting aid to Pakistan should Islamabad not "sever all ties" with Haqqani, as the US' most senior military commander Admiral Mike Mullen put it. One Republican senator even advocated expanding US military efforts in Pakistan, beyond drone strikes. Now the Pakistani government has held a meeting of its own to formulate its response and has refused to take military action against the Haqqani Network.

Dr. Maleeha Lodhi, former Pakistani Ambassador to the US, believes the outcome of the conference was very reasonable. "And because it came against the backdrop of diplomatic efforts to deescalate the tensions between Pakistan and the US, it helped to moderate its tone."

She believes the meeting was meant to achieve two goals: "One, to show that there was a unified response to US pressure and rejection of baseless allegations and second, to indicate that Pakistan wants good relations - though it did not say the United States, it said good relations with everyone - and that those relations must be on the basis of mutual respect and mutual recognition of each other’s interests."

It also focused on Pakistan's strategy in the "War on Terror" which, according to the statement, should include more diplomacy, possibly through the use of peace talks. Islamabad sees the desperate need for a change of tactics when it comes to insurgents, as the current strategy does not seem to be working. "We do not want to see more war in our region but to see serious efforts for peace because we have seen ten years of war," Lodhi emphasizes.

Differences on tactics

She believes the differences of opinion with regard to the approach to Afghanistan is "at the heart of differences between Pakistan and the United States; Pakistan wants to see efforts toward a diplomatic political settlement that can bring the Afghan conflict to an end. Whereas Washington does not seem to have made up its mind whether it wants to pursue a political settlement and therefore put an end to kinetic operations or that it wants to continue with military pressure to force the Taliban onto the negotiating table."

She points to the importance of Washington's latest efforts, which, while differing from Pakistani tactics, has recently engaged in damage in the form of statements distancing itself from Admiral Mike Mullen's allegation that Pakistan is harboring the Haqqani Network. Lodhi is certain that relations will now stabilize as "neither side wants to see an open rupture in the relationship because both sides have common objectives they would like to secure."

Money trouble

Nonetheless, the fear of an escalation was - or is - very real, especially since the US' raid on Pakistani territory which killed al Qaeda chief Osama bin Laden in May. Against the background of the continuing financial crisis in Pakistan some experts worry that the spat could put a strain on Pakistan's budget, as it has received millions of dollars in US military aid annually over the past 10 years. Furthermore, it has been reported that Pakistan will not seek to extend its three-year loan with the IMF.

But Dr. Ashafaq Hassan, Dean and Professor of the National University of Science and Technology in Islamabad and former economic advisor and special secretary to the Pakistani Ministry of Finance, refers to the recent tension between Islamabad and Washington as a "battle of nerves." He adds that he "is not sure Islamabad will manage without the money, unless the government becomes more "fiscally responsible."

Some experts are worried that damaged ties with Washington may complicate any future attempts by Pakistan to seek loans from the IMF. "The International Monetary Fund and the World Bank are often seen as economic arms of the State Department," Hassan explains. While that may be the general perception, Hassan does not subscribe to that view. "That is not in the interest of the institution itself…I believe the IMF supports countries on the basis of merit."

He is optimistic about Islamabad's support for the US on the "War on Terror," and he does not believe this backing will diminish because "the War on Terror has become a Pakistani war…we have a 9/11 here every day."

Regardless of the current mutual distrust, Pakistan and the US will, he says, find a way to work together as they are dependent on each other in the fight against terrorism.

Author: Sarah Berning
Editor: Grahame Lucas