South Asia Forecast 2008

Pakistan ended 2007 with the assassination of opposition leader Benazir Bhutto on Dec. 27. Though it is not clear who ultimately ordered the assassination or what they hoped to achieve, the result injected a huge amount of passion and uncertainty into a situation that already stretched the definition of “chaotic.”

In 2008 Strategic Forecasting Inc. (Stratfor) expects the Pakistani army — which is to say, the Pakistani state — to hold together, but just. Political power within the army and governing institutions has become more diffuse as President Pervez Musharraf’s grip has slackened, and Bhutto’s assassination has upended many agreements to share power. With those deals up in the air, Pakistan’s many factions — within and beyond the military — are now competing with each other with few established points of reference.

Yet most of this is simply the sound and fury of internal maneuvering; ultimately, military commanders know that they are the true rulers of Pakistan no matter what elections produce and realize that, should they fall too deeply into infighting, they are only hurting themselves. It will likely take months for this realization to sink in — although general elections currently scheduled for Feb. 18 will serve as an excellent splash of cold water — and the political chaos of 2008 will make 2007 seem orderly in comparison. The United States, of course, stands ready to back nearly whatever actions the military deems necessary to ensure order — if for no other reason than to ensure that the Pakistani military continues to act against the jihadists.

Pakistan’s problems will really only manifest geopolitically where they intersect those anti-jihadist efforts. Though al Qaeda and its allies no longer constitute a strategic threat to the United States, they are a very real and present danger in Pakistan and Afghanistan. Confusion and distractions in Islamabad will greatly reduce the Pakistani government’s ability (and willingness) to rein in those jihadists — especially in concert with American forces. We expect the situation to degrade particularly quickly and deeply in Pakistan’s northwest. Increasing political unrest and instability in Islamabad could lead to the Pashtun regions becoming ungovernable in this coming year.

Beyond Pakistan, the rest of South Asia is obsessed with domestic issues. An upsurge in Sri Lanka’s Tamil insurgency will generate paralysis while Nepal’s Maoist movement — still limping toward the murky world of coalition government — will provide enough ebb and flow to utterly consume any spare bandwidth in Kathmandu. Hotly contested elections in Bangladesh will simply mark the newest chapter in a generation-old power struggle between equally corrupt forces. There will be few changes on the ground in Afghanistan where a resurgent Taliban and a reinforced NATO — while fighting harder than ever — appear positioned to continue the stalemate of the last few years. While there will certainly be successes and failures on both sides, the Taliban is not in a position to drive NATO from the country this year — or likely in 2009. But neither is NATO in a position to impose a military solution of its own.

India will face more international complications than the other South Asian states. New Delhi already faces major problems in its failure to stem insurgent traffic coming in from its border with Bangladesh. With Pakistan in spasms, militants operating along the Indian-Pakistani border will more firmly coalesce under the jihadist umbrella, making the Indian-Pakistani border in the Kashmir region more volatile and thus increasing the ability of Islamist militants to carry out attacks in major Indian cities. The bulk of these attacks are likely to remain focused on triggering and exacerbating communal riots between Hindus and Muslims.

Yet India’s foreign agenda will be held hostage by preparations for another round of elections. The Indian government (currently led by the Congress Party) wants to approve a nuclear agreement with the United States in order to strengthen long-term economic and strategic opportunities.

This is being sabotaged not only by the opposition (currently the Bharatiya Janata Party, whose Hindu nationalist efforts are likely to foment many riots in 2008), but also by leftist elements within the governing coalition. Russia will attempt to capitalize on the government’s failed realignment and reinsert itself into Indian politics, but while the government’s unity is weak enough to not orient toward Washington, it also is strong enough to resist the Russian lure. India, strategically, will stall.

And it may well stall economically as well. In 2007 India experienced myriad economic problems as everything from domestic politics to militants to power outages seemingly took aim at foreign investments. Investors have begun to realize that the miracle of Bangalore is not being repeated elsewhere in the country, even as rising corruption and insufficient infrastructure began to take the shine off of Bangalore.

Despite much talk of “Shining India,” the national, regional and local governments have yet to even begin basic work on battling corruption, coordinating regulations, containing militancy and building infrastructure. In an election year, the ruling government will be even more gridlocked between populist and business interests as the issue of land appropriation for special economic zones continues to flare. The result is that the swarm of investors that has approached India in years past with the hope of using a toehold in one region to launch into others will see its optimism die. The realization is sinking in that doing business in India could be more trouble than it is worth, and 2008 will be the year that foreign direct investment — and with it, India’s hopes of advancing economically — gets a rude reality check.

Source: Strategic Forecasting Inc.

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