ISLAMABAD, Pakistan — A longtime New York resident and former Citibank executive, Pakistani Finance Minister Shaukat Aziz felt last month's attacks on the U.S. as a personal blow.
"My wife watched the two buildings fall from the bedroom window of our Manhattan apartment," he said in an interview here. "It was a terrible tragedy."
Now Aziz, who's ending his second year as chief of this nation's economy, faces the challenge of repairing the collateral damage stemming from Pakistan's front-line position in the international campaign against terrorism.
Since Sept. 11, economists here estimate, exports have dropped by more than 50% as most international airlines that serve Pakistan have canceled their flights. Freight and insurance charges are up sharply. The stock market in Karachi, the commercial capital, fell 13% in just one week.
In addition, the government faces extra costs from increased security along the country's 1,500-mile border with Afghanistan and around foreign diplomatic missions and aid agencies.
But even as Pakistan's fragile economy teeters, other governments are scrambling to prop it up. President Pervez Musharraf's decision last month to join the U.S.-led anti-terrorism coalition put him on a political tightrope at home but won him many new friends internationally.
"Since President Musharraf's decision, many countries, including the United States, have worked very hard to find ways of shoring up the Pakistan economy," said U.S. Ambassador Wendy Chamberlin.
Days after the Sept. 11 attacks, the Bush administration lifted economic sanctions that had been imposed on Pakistan because of its nuclear weapons program.
Then, bypassing further sanctions placed on the country after the 1999 military coup that put Musharraf in power, the Bush administration awarded Pakistan $50 million in direct foreign aid. Another $50 million is expected soon. Meanwhile, Congress is considering legislation that would waive the later sanctions entirely, clearing the way for as much as $600 million in direct aid.
The United States, Japan and other creditor nations have opened discussions on rescheduling or forgiving some of Pakistan's $12.5-billion government debt. This marks one of the first times Tokyo has used the word "forgive" in addressing bilateral debt.
Washington is also considering policies that would increase Pakistan's access to U.S. markets. As it is, the United States accounts for about 85% of Pakistan's important textile and manufactured garment sales.
