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Taliban Warns Investors to Leave Pakistan as Army Hits Base

June 16 (Bloomberg) -- Pakistan’s military began a full- scale operation in the Taliban stronghold of North Waziristan, prompting insurgents to warn foreign investors, airlines and multinational companies to leave the country.

“We’re in a state of war,” Shahidullah Shahid, a spokesman for the Tehrik-e-Taliban Pakistan, or TTP, said in a statement today. “Foreign investors, airlines, and multinational companies should cut off business with Pakistan immediately and leave the country or else they will be responsible for their damage themselves.”

The army said yesterday it would target local and foreign terrorists in North Waziristan, a tribal region near the Afghan border the U.S. has called the “epicenter” of terrorism. The operation, long sought by the U.S., comes a week after militants attacked the country’s biggest international airport.

As Islamic militants capture cities in Iraq and the U.S. draws up plans to withdraw from Afghanistan, public opinion in Pakistan is shifting in favor of stronger action against fighters who were previously seen locally as more of a threat to America’s interests. The Taliban wants to impose its version of Islamic Shariah law in Pakistan, which includes a ban on music and stricter rules for women.

Pakistan’s Future

“At stake is the future of Pakistan,” Mahmud Ali Durrani, a former national security chief and ex-ambassador to the U.S., said by phone. “Do we want a Talibanized Pakistan or do we want to live according to the constitution, democracy? If we want to live according to our constitution and democracy then we have to fight for it, because they are the kind of people who don’t believe in these things.”

Prime Minister Nawaz Sharif’s party won an election last year after pledging peace talks with the TTP, the group at the forefront of an insurgency that has killed 50,000 people since 2001. Negotiations that began in March collapsed over the TTP’s demands for prisoner releases even before progressing on issues such as Shariah law.

“This is the final fight,” Defense Minister Khawaja Muhammad Asif said on Dunya TV, adding that the government is ready for blowback from the operation. “We used all means to resolve it peacefully through talks, but that was taken as our weakness. Now we have got to respond.”

Pakistan’s foreign direct investment fell 13 percent to $751 million in the ten months ended April from $862 million year ago, according to central bank data.

‘Under Pressure’

“Militants are under pressure now and trying to scare foreign investors,” M. Abdul Aleem, secretary general of the Karachi-based Overseas Investors Chamber of Commerce and Industry, said by phone. The chamber says it has about 200 members, including Barclays Plc and Akzonobel Pakistan Ltd., that pay 30 percent of the country’s total taxes.

After Taliban and Uzbek militants attacked Karachi’s international airport, killing 28 security officials and workers, U.S. drone strikes resumed in North Waziristan following a six-month pause.

Pakistani jets today destroyed six hideouts and killed 27 militants in the area, taking the toll to 167 in two days of air strikes, the military said in a statement. Another 10 insurgents were shot dead in a separate battle, it said. Six soldiers were killed and three were injured when an explosion hit the area, the military said.

Military Cordon

Troops have cordoned off all militant strongholds, including the two main towns of Mir Ali and Miranshah, and have been deployed along the border with Afghanistan to prevent combatants from fleeing the country, the military said. Pakistan has also sought help of the Afghan security forces to seal the border, according to the statement.

“These terrorists had waged a war against the state of Pakistan and had been disrupting our national life in all its dimensions, stunting our economic growth and causing enormous loss of life and property,” the military said in a statement yesterday. “These enemies of the state will be denied space anywhere across the country.”

Pakistan’s benchmark KSE-100 Index fell 0.3 percent at the close in Karachi, while the rupee declined 0.2 percent to 98.5 a dollar.

Any operation into North Waziristan now “would effectively be too little, too late,” according to Michael Kugelman, an Asia analyst at the Woodrow Wilson Center in Washington.

“Militancy is no longer confined to the tribal areas,” he said in an e-mail last week. “The Pakistani Taliban has thousands of fighters in Karachi alone.”

Residents Flee

North Waziristan residents such as Nur Rehman have fled over the past month in anticipation of a military offensive. The threat made life unbearable, and about a quarter of people in his village of Tappi have already left, he said on June 12 from the outskirts of Islamabad, Pakistan’s capital, where he was staying with his wife and three children.

“In the sky you have drones and on the ground there’s no safety,” Rehman said. “You don’t know when you’ll become a target.”

More than 61,000 people have fled North Waziristan through the town of Bannu since a military air strike that killed more than 60 militants on May 21, according to the local government in Bannu. Another 6,500 people from the area, including 1,500 children, fled to Afghanistan, Mobarez Mohammad Zadran, a spokesman for the border province of Khost, said by phone.

No Mobile Phones

North Waziristan is an area roughly the size of Connecticut that sits near the Afghan border in a semi-autonomous tribal region. Michael Mullen, the U.S.’s former top military official, in 2010 called it the “epicenter of terrorism” and “where al- Qaeda lives.”

No mobile phone coverage is available, and residents make a living through farming or trading goods with Afghanistan. About half of the world’s polio cases this year have been reported in North Waziristan as militants target vaccination drives, part of the fallout from the U.S. spying operation that led to Osama bin Laden’s death in 2011.

The roughly 700,000 people living in North Waziristan are exempted from paying taxes and are governed by their own set of criminal laws. While traditions entrust village elders to solve disputes, feuds are often settled with guns.

After the U.S. invaded Afghanistan in 2001, North Waziristan became a safe haven for foreign militants like Uzbeks and Turks who fought alongside the fallen Taliban regime. Local tribes welcomed them in line with a culture of hospitality, according to Khalid Aziz, chairman of the Regional Institute of Policy Research and Training.

Haqqani Support

“They were outsiders and needed the support of tribal elders to exist in that hostile terrain,” Aziz, who was formerly the government’s top bureaucrat in North Waziristan in the 1970s, said by phone from Peshawar.

In 2007, militant groups in the area united to form the TTP, which went on an offensive toward Islamabad. After Pakistan’s army flushed them out of the Swat valley and most tribal regions, it resisted U.S. pressure to follow through with a push into North Waziristan, which was also home to the Haqqani network and Gul Bahadur, who were fighting American troops in Afghanistan.

Pakistani leaders have let the Taliban-affiliated Haqqanis operate from its soil “due to their concerns that Pakistan will be left alone to confront an unstable, an unfriendly or an Indian-influenced Afghanistan on its border” after U.S. troops withdraw, the Defense Department said in a 2012 report.

Drone Strikes

Unable to convince Pakistan to take action, the Obama administration intensified its campaign of drone attacks that President George W. Bush started in 2004. More than 3,200 people died in drone strikes from June 2004 to December 2013, according to California-based Pitch Interactive, Inc., which cited data from The Bureau of Investigative Journalism.

About 70 percent of all drone strikes have been in the North Waziristan region, according to Washington-based The New America Foundation. Only 58 known militant leaders have been killed in drone strikes in Pakistan, representing 2 percent of the total deaths, it said.

Pakistan’s fight against Taliban insurgents comes as Iraq battles a breakaway al-Qaeda group in a fight that threatens to split the country three years after the U.S. withdrew forces. Iraq’s military over the weekend pummeled positions of Sunni Muslim insurgents who captured territory north of Baghdad.

Khan Opposition

Imran Khan, a vocal opponent of drone strikes who leads Pakistan’s third-biggest political party, last week said an operation into North Waziristan would be “suicidal” because it would unite militant groups, according to Dawn newspaper. Shireen Mazari, a member of Khan’s Tehreek-e-Insaf party, said in a Twitter post yesterday that Sharif didn’t tell other political leaders about the operation.

Rehman Malik, a former interior minister with the main opposition Pakistan Peoples Party, said in a Twitter posting this morning that talks were bound to fail and a military operation was the only option. Muttahida Qaumi Movement, Karachi’s biggest party, also welcomed the operation.

Distinguishing Taliban militants from locals in North Waziristan is difficult because they both have long hair and carry guns, according to Habibullah, a farmer in the region who also works as a journalist for local media outlets.

Shops are mostly deserted as families fled within Pakistan or crossed the border into Afghanistan in anticipation of the military offensive, Habibullah, who goes by one name, said from a landline. His family was one of the few remaining in Mir Ali, which is now surrounded by Pakistani troops, and planned to stay until the end.

“The affluent have enough money to buy or rent houses elsewhere,” he said last week. “Those who cannot afford it try their luck, but return once they know they have no place to go.”

(A previous version of this story incorrectly stated the name of the company compiling data on drone strikes.)

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