A Quarter Century of Bleeding: The True Cost of Terrorism to Pakistan

Every year on August 21, the world observes the International Day of Remembrance of and Tribute to the Victims of Terrorism. The day was established by the UN General Assembly in 2017, growing out of a recognition that victims and survivors of terrorism are too often forgotten once the initial shock of an attack fades from the headlines, left to cope with trauma, disability, and loss with little institutional support. The United Nations has since tried to build out a framework around that recognition: a 2020 Secretary General’s report calling for deeper international cooperation to assist victims, a Group of Friends of Victims of Terrorism formed in 2019, and the first UN Global Congress of Victims of Terrorism convened in 2022, all resting on the basic premise that recovery from terrorism is rarely just physical. It is psychological, social and financial, and it takes years, not weeks, to complete. For most nations, the day is one of solemn reflection. For Pakistan, it is closer to an annual audit of an open wound.

When the United States invaded Afghanistan in October 2001 in response to the 9/11 attacks, Pakistan was pulled into the “war on terror” as a frontline state, hosting US logistics, launching military operations in its own tribal belt, and absorbing the fallout as militants fled across the Durand Line. What followed was a slow motion catastrophe: as Pakistan’s army pushed into Waziristan and the tribal areas from the mid 2000s onward, groups such as the Tehreek e Taliban Pakistan (TTP) emerged in 2007, turning their guns on the Pakistani state itself. A wave of suicide bombings, sectarian massacres, and attacks on markets, mosques, churches, schools and security convoys followed for over a decade. It took massive military campaigns, among them Rah e Rast, Rah e Nijat, Zarb e Azb, and Radd ul Fasaad, to beat that first wave back by the late 2010s.

That relief proved temporary. The Afghan Taliban’s return to power in Kabul in August 2021 gave the TTP renewed sanctuary, freedom of movement, and access to abandoned NATO grade weaponry across a porous border. Since then, Pakistan has been fighting a second, resurgent insurgency, one compounded by a simultaneous separatist campaign by the Balochistan Liberation Army (BLA) and the emergence of ISIS Khorasan as a third violent actor.

It is worth being honest about how much of this second wave was self inflicted rather than simply imported across the border. Islamabad’s own security establishment spent decades drawing a distinction between militant groups it considered threats and those it viewed as useful instruments of regional policy in Afghanistan and Kashmir, a distinction critics have long called the “good Taliban, bad Taliban” framework. That same establishment, hoping the Afghan Taliban’s 2021 victory would finally pacify the TTP, pursued negotiations and a shaky ceasefire with the group through 2021 and into 2022, releasing detained militants and allowing fighters to resettle in the former tribal districts as a goodwill gesture. The talks collapsed by late 2022, and many of the fighters who had been allowed back in simply picked up arms again, this time with a stronger foothold than before. The lesson of that failed experiment is that the resurgence was not purely a function of what happened in Kabul; it was also a function of a strategic bet in Islamabad that treating an avowed enemy of the state as a negotiating partner would buy security rather than cost it.

Between 2001 and 2022, terrorism claimed at least 83,000 Pakistani lives, a figure that includes soldiers, police officers, and ordinary civilians caught in bazaars, processions, and places of worship. Far from tapering off, that toll has accelerated sharply since 2021. Deaths rose from 748 in 2023 to over 1,080 in 2024, a jump of roughly 45 to 66 percent that made 2024 the deadliest year in a decade, and climbed again to around 1,139 in 2025, the highest annual toll since 2013. According to the Global Terrorism Index 2026, Pakistan has now been ranked the country worst affected by terrorism in the world, a grim first. The TTP alone was responsible for well over half of these deaths, having carried out its highest number of attacks on record.

Khyber Pakhtunkhwa and Balochistan bear the overwhelming brunt: together they accounted for roughly three quarters of attacks and two thirds of deaths in 2025. Security forces, including police, the Frontier Corps, and the military, have absorbed a disproportionate share of the casualties, alongside a disturbing rise in mass hostage incidents such as the Jaffar Express train hijacking, which alone involved hundreds of hostages. Behind every one of these numbers is a family that will never be whole again: a widow, an orphaned child, a mother waiting for a coffin. This is precisely where the UN’s framing of victimhood matters. A death toll is a headline, but the widow, the orphan and the disabled survivor left behind are the ones who actually have to rebuild a life, often without the psychological, social and financial support that recovery demands.

The financial cost has been just as staggering, if harder to feel in the moment than a funeral. Pakistan’s own Economic Survey put the direct and indirect cost of the war on terror at roughly $68 billion for the decade from 2001 to 2011 alone, driven by collapsed foreign investment, a battered tourism industry, capital flight, destroyed infrastructure, and ballooning security expenditure. By 2018, when Prime Minister Imran Khan publicly pushed back against Washington’s criticism of Pakistan’s counterterrorism record, the cumulative figure being cited by the state had climbed past $120 billion, a sum dwarfing the roughly $20 billion in US assistance Pakistan received over the same period. That gap between sacrifice and support has long been a sore point in Islamabad’s dealings with Washington.

The bleeding has not stopped. Every resurgence of violence forces new defence spending that crowds out development budgets, and every major attack rattles the Pakistan Stock Exchange and spooks the foreign investors the country desperately needs to escape its recurring balance of payments crises. An economy already contending with IMF programmes, a depreciating rupee and chronic energy shortfalls simply cannot afford a permanent war footing, yet that is precisely what it has been forced to sustain for 25 years.

This is where the economic story becomes genuinely circular rather than merely expensive. Security spending crowds out exactly the kind of investment, in education, in job creation in Khyber Pakhtunkhwa and Balochistan, in basic services for districts that have spent two decades as battlegrounds, that would do the most to shrink the pool of recruits terrorist groups draw on in the first place. Pakistan ends up funding the military response to an insurgency at the expense of the development spending that would address some of the underlying grievances feeding it, particularly in Balochistan, where a sense of economic marginalisation is one of the drivers cited for the BLA’s staying power. A counterterrorism budget that keeps growing while a human development budget keeps shrinking is not a sign of a state winning a war of attrition; it is a sign of a state treating the symptom because treating the cause is politically and administratively harder.

Perhaps the least quantifiable but most corrosive cost has been to Pakistan’s standing in the world. Being placed on the Financial Action Task Force’s grey list for years, associated internationally with groups like Lashkar e Taiba and Jaish e Mohammed, and repeatedly accused of harbouring or tolerating militant sanctuaries has made it harder for Pakistan to attract investment, negotiate favourable trade terms, or shed the “frontline state” label that has defined its foreign policy since 2001. Soft power, the ability to be seen as a normal, stable trading and tourism destination rather than a security risk, has been one of the quiet casualties of this long war. Every travel advisory issued by a foreign ministry, every insurance premium loaded for operating in Pakistan, every foreign airline that suspends a route, is a small tax levied by terrorism on the country’s global image.

This already grim ledger acquired a new and dangerous chapter in the spring of 2025. On April 22, gunmen killed 26 tourists, most of them Hindu men singled out and shot, near Pahalgam in Indian administered Kashmir. India blamed Pakistan based militant infrastructure for the attack, a charge Islamabad denied. On the night of May 6 into May 7, India launched “Operation Sindoor,” striking nine sites in Pakistan and Pakistan administered Kashmir with missiles and drones, in what it called its most extensive military action against Pakistan since 1971. Pakistan called the strikes an act of war and retaliated; four days of missile, drone and artillery exchanges followed, the most serious India Pakistan military confrontation since 2019, before a US brokered ceasefire took hold on May 10.

The costs of those four days, and of the diplomatic freeze that followed, were immediate and are still being tallied. India suspended the Indus Waters Treaty and closed its airspace to Pakistani aircraft; Pakistan reciprocated, and by its own government’s admission to the National Assembly, lost well over a billion rupees in the following weeks from the airspace closure alone. The Pakistan Stock Exchange shed hundreds of billions of rupees in market value in the days of peak tension. In its budget for 2025 to 2026, announced weeks after the conflict, Islamabad hiked defence spending by 20 percent to roughly $9 billion even as it cut overall government expenditure by 7 percent, a stark illustration of how conflict with India, layered on top of the internal terrorism crisis, forces Pakistan to choose guns over development yet again. Beyond the balance sheet, the episode reopened old wounds: the suspension of the Indus Waters Treaty threatens Pakistan’s water security for decades to come, regardless of how the immediate military crisis was resolved.

What makes this episode more analytically significant than a fourth round of the familiar India Pakistan crisis cycle is the doctrine India explicitly attached to it afterward. Officials in New Delhi described Operation Sindoor as establishing a new normal in which any attack traced to groups based in Pakistan will be treated as an act attributable to the Pakistani state itself, not to a deniable non state actor, and in which talks and terrorism will not be allowed to run on separate tracks. For Pakistan, that collapses a distinction its diplomacy has relied on for decades, the argument that militant violence originating from its soil is a governance failure rather than a policy choice, and it lowers the threshold at which a future attack in India, whatever its actual origin, could trigger cross border strikes rather than a diplomatic protest. Layered on top of an internal insurgency that is already the deadliest in the country’s history, that shift leaves Pakistan managing two escalatory risks at once with a shrinking economic and diplomatic buffer between them.

Taken together, the numbers tell an unambiguous story. Since 2001, Pakistan has lost tens of thousands of its citizens and soldiers, well over a hundred billion dollars of economic output, and a measure of international goodwill it has struggled for a generation to rebuild, all while fighting a war whose front lines keep shifting, from the mountains of Waziristan to the streets of Peshawar to, most recently, the skies over Kashmir and Punjab.

On this Day of Remembrance, tributes and Shuhada packages for the families of the fallen are necessary, but they are not sufficient. The UN’s own framework is instructive here: it calls on states to build comprehensive, long term assistance plans for victims and their families, addressing not just immediate compensation but the medium and long term psychological, social and financial support that genuine recovery requires, with particular attention to women and children. Pakistan should measure itself against that standard rather than against the bare minimum.

But the deeper pattern this quarter century reveals is one of repeated substitution: military operations substituting for political settlements in Khyber Pakhtunkhwa and Balochistan, negotiated ceasefires with militant groups substituting for their actual dismantlement, and defence spending substituting for the development spending that might address why these regions keep producing recruits and sympathy for armed groups in the first place. Each substitution buys a period of relative calm and defers the underlying problem at a compounding cost, in lives, in billions of dollars, and now in a more dangerous relationship with a nuclear armed neighbour that has signalled it will no longer distinguish between militant violence and state responsibility. Twenty five years of remembrance ceremonies have not interrupted that cycle. Pakistan’s victims, the soldier at a checkpoint, the child in a school van, the tourist on a train, the worshipper at Friday prayers, deserve more than remembrance. They deserve a state willing to treat the substitution itself, not just its casualties, as the problem to be solved.