The first frontline bargain armed a jihad against the Soviet Union. The second enlisted a military ruler in America’s “War on Terror”. The enemy had changed; the method had not. Washington again required territorial access, intelligence cooperation and operational freedom. Islamabad again offered geography in return for strategic patronage, military assistance and economic relief. Pakistan escaped immediate isolation but entered a war whose costs would remain after its rents declined.

The bargain was made at extraordinary speed. The 9/11 Commission recorded seven American demands, including overflight and landing rights, access for military and intelligence operations, intelligence sharing, an end to logistical support for Osama bin Laden and, if necessary, a break with the Taliban. General Pervez Musharraf accepted all seven. He also told American officials that he would pay a domestic price and needed to show that Pakistan benefited from his decision.1

Benefits followed. Sanctions imposed after Pakistan’s nuclear tests and the 1999 coup were eased. On December 13, 2001, Paris Club creditors restructured $12.5 billion of Pakistan’s public external debt over extended maturities. Congress later authorised the cancellation of about $1.5 billion owed to the United States. Aid, military supplies and reimbursements resumed. A near-pariah state became a “major non-NATO ally”.2

Debt relief was valuable. Pakistan’s economy was under severe pressure before 9/11, and rescheduling created fiscal and external space. The problem was what the rulers did with that space. Relief postponed the day of reckoning without changing the structure that had produced the crisis: narrow taxation, low savings, import dependence, unproductive expenditure and rule without accountability. Borrowing remained a substitute for reform.

This is where the expression “debt-trap” requires precision. A country is not trapped merely because it owes money. Debt becomes a trap when fresh inflows finance old liabilities, protect existing privilege and allow rulers to avoid the political work of raising revenue fairly and spending it productively. The dollar arrives for the emergency; the liability survives the emergency.

The expression “War on Terror” also allowed the mission to escape a defined enemy. The 9/11 Commission records that Iraq entered high-level planning immediately, although the case that Saddam Hussein was behind the attacks could not be justified. 

A campaign against al-Qaeda became a global doctrine of force against terrorists and states accused of harbouring them. An open-ended war required bases, compliant allies, intelligence access and recurring funds. It also created permanent rents around an emergency without a measurable end.3

Afghanistan displayed the other side of the bargain. The United States wanted a rapid overthrow of the Taliban without deploying a large conventional army. Central Intelligence Agency (CIA) teams and Special Forces worked with regional warlords and militia commanders. The tactic helped produce a swift military victory. It also restored armed actors whose authority came from private forces, illicit commerce and control over territory.4

The timing was fateful. The Taliban’s ban had reduced Afghan opium output from 3,276 tonnes in 2000 to about 185 tonnes in 2001. The ban did not dismantle stockpiles or trafficking, and it did not redeem the Taliban’s brutal rule. It nevertheless demonstrated that cultivation could be suppressed through coercive authority. After the invasion, output rebounded to about 3,400 tonnes in 2002.5

The United States Senate later described what followed without euphemism. Warlords and militia commanders, some allied with the opium trade, were placed on American payrolls to fight the Taliban and hunt al-Qaeda. Several converted their standing as American allies into senior positions in the new Afghan order. Their weapons and authority enabled them to tax or protect traffickers. The narcotics economy acquired powerful new protectors inside the State.6

This was not an unforeseen accusation made years later by outsiders. The 9/11 Commission acknowledged in 2004 that warlords controlled much of Afghanistan, weapons were abundant and narcotics were booming. It also found that the United States had largely avoided confronting dissident warlords and the related problem of narcotrafficking. Counterterrorism had priority; the political economy sustaining disorder did not.7

Washington later spent heavily to correct the failure. The Special Inspector General for Afghanistan Reconstruction calculated that the United States allocated $8.62 billion to counternarcotics between 2002 and 2017. Some Afghan units improved and some farmers changed crops. The overall verdict remained devastating: no programme produced a lasting reduction in poppy cultivation or opium production.8

The Taliban profited from taxation and protection of the trade as the insurgency revived. Government-linked officials, local strongmen and traffickers also benefited. Narcotics did not belong to one side. They flourished wherever armed power, corruption and impunity met. A policy that targeted only “enemy” traffickers while tolerating useful ones could disrupt competitors, but could not establish the rule of law.

Pakistan’s record was equally divided. Its authorities arrested hundreds of al-Qaeda and Taliban figures and its soldiers later fought costly campaigns in the border regions. Parts of the same State sought to preserve influence over selected Afghan Taliban networks and anti-India groups. The distinction between the militant to be eliminated and the militant to be retained became increasingly impossible to police. Violence refused to respect the categories created for it.9

Money concealed this contradiction for a time. By 2015, the United States Congress had appropriated more than $18 billion in economic and security assistance for Pakistan since fiscal year 2002. Pakistan had also received about $13 billion in Coalition Support Fund reimbursements. These reimbursements accounted for roughly half of overt American transfers and, in some years, equalled a substantial share of Pakistan’s military expenditure.10

The assistance was not valueless. It supported energy, education, health, humanitarian relief and military operations against organisations that murdered Pakistanis. Coalition Support Funds also reimbursed real logistical and operational costs. 

The structural question concerns incentives. When strategic usefulness yields easier finance than democratic reform, rulers learn to market insecurity rather than remove its causes.

General Musharraf gained international legitimacy without first restoring constitutional rule. The security establishment gained resources and renewed access to American weapons. Civilian institutions inherited displacement, policing burdens, damaged infrastructure and the social consequences of radicalisation. Private actors accumulated profits from transport, contracting, smuggling and property. The public balance sheet absorbed the enduring costs.

Our 2003 book, written before 2001 but delayed in printing due to editorial reviews etc, described Pakistan as moving from drug-trap to debt-trap and then towards a “war-on-terrorism-trap”. That thesis now needs correction as well as confirmation. The available evidence does not prove that the United States invaded Afghanistan to revive opium or designed the entire war to enslave Pakistan through debt. Temporal succession is not proof of causation.

The documented conclusion is harder to dismiss. Washington knowingly placed immediate military utility above counternarcotics, accountable government and durable institution-building. Islamabad knowingly exchanged strategic cooperation for external relief while preserving a rent-seeking political order. Neither side created every trafficker or militant. Their choices protected the conditions in which both could survive.

The drug-trap enriched networks operating through illegality. The debt-trap transferred the costs of failed governance to the public. The War on Terror joined the two: security rents rewarded the institutions managing the crisis, while borrowing financed the State weakened by it. 

Part V will examine how this bargain moved the Afghan war inside Pakistan through sanctuaries, military operations, drones, displacement and the militant franchises that escaped every announced victory.11

Endnotes

1. National Commission on Terrorist Attacks Upon the United States, The 9/11 Commission Report (Washington, DC: United States Government Printing Office, 2004), pp. 330–331, 
2. Paris Club, “Debt Stock Restructuring Agreement between the Paris Club and Pakistan”, December 13, 2001; Congressional Research Service, Direct Overt U.S. Aid Appropriations for and Military Reimbursements to Pakistan, FY2002–FY2015, March 6, 2014; K. Alan Kronstadt, Pakistan–U.S. Relations: Issues for the 114th Congress, May 14, 2015.
3. National Commission, The 9/11 Commission Report, pp. 334–336.
4. Ibid., pp. 331–332.
5. United Nations Office on Drugs and Crime, Afghanistan Opium Survey 2002, pp. 5–7; United States Senate Committee on Foreign Relations, Afghanistan’s Narco War: Breaking the Link Between Drug Traffickers and Insurgents, staff report, 111th Congress, 1st session (Washington, DC: United States Government Printing Office, 2009), pp. 3–5.
6. United States Senate Committee on Foreign Relations, Afghanistan’s Narco War, pp. 4–5.
7. National Commission, The 9/11 Commission Report, pp. 369–371.
8. Special Inspector General for Afghanistan Reconstruction, Counternarcotics: Lessons from the U.S. Experience in Afghanistan, SIGAR 18-52-LL, June 2018, pp. vii–xiii.
9. National Commission, The 9/11 Commission Report, pp. 367–369; K. Alan Kronstadt, Pakistan–U.S. Relations: Issues for the 114th Congress, Congressional Research Service, May 14, 2015.
10. Kronstadt, Pakistan–U.S. Relations, pp. 29–33.
11. Ikramul Haq, Pakistan: From Drug-trap to Debt-trap, edited by Huzaima Bukhari (Lahore: Lahore Law Publications, 2003), Preface, pp. xiii–xiv.

[To be continued]

Dr. Ikramul Haq, Advocate Supreme Court, writer, literary critic, Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE), holds an LLD in tax laws. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He also served Civil Services of Pakistan from 1984 to 1996.