Via The Economist, a detailed look at Pakistan:

EARLY LAST YEAR the Pakistan Business Council, a lobby group of local conglomerates and multinationals, drew up a “national economic agenda”, setting out some desperately needed reforms. It took out newspaper advertisements to press its case and made presentations to the four biggest parties in parliament. Rather to everyone’s surprise it achieved a consensus, which was to be announced on a television chat show on May 2nd. But that morning it was revealed that American commandos had killed Osama bin Laden in a town not far from Pakistan’s capital, Islamabad. Television had other priorities, and the moment passed.

For many in Pakistan, this anecdote is typical of the way geopolitics gets in the way of sensible policymaking. Their country, they say, has so much going for it, yet all the foreign press writes about is the dark side: warfare, terrorism, corruption and natural disasters. Asad Umar, the Pakistan Business Council’s chairman, compares his country’s condition to that of the passengers in a cable car over a fire. They can see the lush greenery of their destination, but it is getting hot, and they cannot be sure that the cables will hold.

This report on Pakistan will, like so much foreign reporting on the country, be looking at the flames. Pakistan is at risk of utter disaster, though probably not immediately. But, preoccupied with dousing fires, its leaders are neglecting Pakistan’s longer-term needs, or, as optimists would have it, failing to exploit the country’s tremendous potential. Before looking at Pakistan’s manifold problems, it is worth putting these optimists’ case. They normally cite five reasons for hope: demography, geography, geology, culture and democracy.

The bright side

Pakistan has a very young and rapidly urbanising population. Its workforce is growing by about 3% a year and its share of the total population, currently about 60%, is rising steadily, thanks to a falling birth rate. Similar demographic bulges have been accompanied by prolonged booms in East Asia and elsewhere.

Moreover, Pakistan borders the world’s two fastest-growing big economies, China and India. Its new port at Gwadar on the Arabian Sea offers another route into China. It is also the nearest seaport for much of Central Asia. The hydrocarbon riches of Turkmenistan could flow through a pipeline across Pakistan to India. And Pakistan itself is blessed with natural resources, including gas, coal and copper. It is already a cotton producer and a big exporter of textiles. Its farmers have proved remarkably resilient to successive natural disasters, but they have the potential for big increases in productivity.

Pakistanis justly point to their traditions of tolerance and hospitality. An extremist Islamist fringe should not colour views of the vast moderate majority. Nor is there any shortage of highly intelligent, articulate, cosmopolitan and enlightened leaders in business, government and the army. Ties of kinship—of loyalty to a large extended family—give Pakistani society a solidity that makes forecasts of its imminent collapse seem fanciful. As Anatol Lieven concludes in his splendid recent book, “A Hard Country”, Pakistan, “though a deeply troubled state, is also a tough one”.

Its elected civilian government, now in office for four years, might yet become the first in Pakistan’s history to serve a full five-year term. And it has some notable achievements to its credit: the 18th amendment to the constitution restored a civilian structure and introduced a welcome devolution of power from central government. The most recent “award”, in 2010, by the National Finance Commission, which allots Pakistan’s resources to its individual provinces, managed the politically difficult feat of giving Punjab, the biggest and richest, a smaller share than its proportion of the population. Pakistan’s army, meanwhile, has driven an insurgency out of part of one province, Khyber Pakhtunkhwa, and is containing it in most of the often lawless Federally Administered Tribal Areas (FATA).

The downside

But even Pakistan’s biggest boosters find it hard not to be distracted by the fires. The growing population is mostly poor and badly educated. Pakistan borders not only China, India and Iran but also Afghanistan, and is infused by the venom of the war being fought there. Much of the mineral wealth is in areas where Pakistan itself suffers from poor security, and the planned pipeline from Turkmenistan would actually cross Afghanistan. Traditional tolerance is fraying and violence spreading.

The president, Asif Ali Zardari, and his civilian government are far from certain to see out their terms. They have lasted this long only by backing away from every confrontation with the body that sees itself as the true representative of Pakistan’s sovereignty and, in many ways, the country’s rightful ruler: the army. Fiercely protective of their budget and big business interests, and with a veto over foreign and security policy, the generals make Pakistani “democracy” seem a stunted, sickly infant.

Territorial claims: Current boundaries

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  Disputed borders are both a cause and a symptom of tensions between big neighbours in South Asia. When the colonial power, Britain, withdrew from India it left a dangerous legacy of carelessly or arbitrarily drawn borders. Tensions between India and China flare on occasion, especially along India’s far north-eastern border, along the state of Arunachal Pradesh.

Even one of this democracy’s most impressive trappings, a free and vibrant press, has limits. Elements of the armed forces are believed to be behind death threats to senior journalists, which, to put it mildly, act as a dampener on the freedom of expression. Indeed, so successfully has the army merged its image with that of the nation that many commentators trumpet its views without coercion. A BBC television documentary made late last year, accusing the army of links with terrorist groups at home and in Afghanistan, led the cable companies themselves to block the BBC World television channel.

But those accusations will not go away. They have played a big part in bringing relations with America, Pakistan’s traditional ally, to a new low. And they raise serious questions about the army’s influence in domestic politics, too. It is not, as it portrays itself, the neutral arbiter of the national interest, keeping venal civilian politicians in check; rather, it pursues what it perceives as its own institutional interest.

This report will begin by considering Pakistan’s policy in Afghanistan. That will be a burning international concern as America and its NATO allies prepare to withdraw most of their 130,000 combat troops by the end of 2014 or, as American officials are now suggesting, even 18 months earlier. But it also highlights the way in which a misguided military strategy trumps policymaking, at times seeming to threaten Pakistan’s future.

Leaders of the American-dominated International Security Assistance Force (ISAF) in Afghanistan no longer dream of a definitive defeat of the Taliban insurgency by 2015. Nor does there seem much prospect as yet of an overarching peace settlement. The “victory” now hoped for is to leave behind an Afghan government that has security forces equipped to carry on the fight, and the legitimacy to get them to do so. Compared with the hopes held for Afghanistan’s future after the swift toppling of the Taliban regime in November 2001, this looks like failure. And for that, ISAF’s commanders and their political masters have been ever more vocally blaming the malign role played by Pakistan.

Not only has it provided sanctuary from which terrorists have mounted attacks in Afghanistan. Not only is the Taliban’s most senior leadership—the Quetta shura—believed to be based in Pakistan. Worse, elements of the Pakistani state are accused of complicity in all this. And worse still, partly because of that complicity, Pakistan itself is prey to a fierce xenophobic Islamist insurgency. Rather than being able to declare victory in Afghanistan, a wild country of some 30m people, the West fears a nightmare: defeat in Pakistan, a country of nearly 200m that was once seen as a firm ally and a bastion of moderation.