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05 March 2024

'Economic backlash from Bhutto killing will be brief'

By VM Sathish and Adrian Murphy


Business and the economy ground to a halt in Pakistan yesterday in the aftermath of the assassination of former premier Benazir Bhutto.

Representatives of the Pakistani business community in Dubai warned that the country was in a state of civil war. Shares worldwide fell in the wake of the killing.

Bhutto died on Thursday after a gunman opened fire on her and then blew himself up – killing a further 20 people – after an election rally in Rawalpindi.

“Forget about business, nobody wants to go about their daily life now,” said Tanvir Khawaja, outgoing president of the Pakistan Business Council. “In fact you cannot even get a bottle of milk for your children as everything is closed.”

But the new president of the Dubai group said the effects of the attack would be short-lived. Iskindar Khwaja Sultan said foreign investors had already taken into account the risks of channelling their money into Pakistan.

“The confidence level has been badly affected,” he said. “All businesses – including Pakistan’s stock exchanges, banks and other markets – are closed today.

“In the short term – up to six months – this will have a negative impact. But I don’t think in the long term it will have an economic effect if the government handles the situation properly.”

But Riyas Farooq, president of the Pakistani Association in Dubai and a leading businessman with interests in both the countries, said the assassination will harm the investment climate.

“A lot of Pakistani investors are doing business in the UAE. Similarly a number of investors from the UAE and elsewhere in the Gulf invest in Pakistan.

“This brutal political killing will create a very negative image about safety and security for investors in Pakistan. After two or three days, foreign investors are going to review the government’s explanation about the killing and decide what to do next.

“As of now my investment plans in Pakistan real estate and construction projects are facing a big risk.”

A gold industry expert in Dubai said the crisis could lead to a shift of wealth to the UAE. “Dubai is a safe tax haven for South Asian investors,” said KP Baiju, CEO of Buz Consulting, DMCC.

“The political turmoil in Pakistan could result in increased asset flow from that country to the UAE for investment in gold or other safe investments. During unstable political situations businesses make tactical investments in gold.”

A surgeon who treated Bhutto said she died from a shrapnel wound to the head. The killing was followed by riots in which four died – and there were more deaths yesterday. A roadside bomb in Swat in the North-West Frontier province killed three people, including a candidate for President Pervez Musharraf’s party, and a policeman was shot dead in Karachi. The army was called in as rioters set fire to banks, trains and stations.

The streets of Karachi were deserted with shops shuttered and paramilitary troops and police patrolling.