Event

Political pressure from the opposition is mounting on PM Nawaz Sharif despite the Parliament’s support. Tens of thousands of activists supporting ex-cricket champion Imran Khan's Pakistan Tehreek-e-Insaf (PTI) and cleric Qadri's Pakistan Awami Tehreek have rallied in Islamabad to demand Mr Sharif’s resignation.
Both party leaders accuse him of having rigged the May 2013 elections. Protests in Islamabad have become more violent over the weekend. Unless a compromise is found, clashes with security forces and between supporters from each side are to fear as Mr Sharif refuses to step down and both opposition parties are determined to protest until their demands are met, which might further affect the security situation. Meanwhile, the external climate has also deteriorated since Delhi cancelled bilateral peace talks
after Islamabad’s prior meeting with Kashmir separatists. This could mean the end of the slow normalisation process and again pave the way for more strained Indo-Pakistani relations in future.

Impact on country risk

The key question in the current political crisis is whether Pakistan, like Thailand recently, will return to a military rule after six years of civilian government and in spite of a government having won a large majority. The powerful and influent army is reluctant to take power while it is fighting the Talibans in North Waziristan’s tribal areas and is under attack in restive Baluchistan. At the same time, the military is closer to the opposition due to disagreements with PM Sharif about the strategy against the Talibans and also his insistence to judge ex-president and -general Musharraf. Therefore, the army is mediating between both sides as it prefers so far to pursue the democratic process with a weakened PM rather than holding snap elections or even making a coup. If elections were held, as a result of prolonged and more violent protests spreading over the country, the PTI’s position – currently the third political force - and the army would emerge stronger given the poor socio-economic track record under the current government. In the short term, political instability and unrest risk will depend on the army’s successful mediation to calm the opposition and their activists.
Analyst: Raphaël Cecchi, r.cecchi@credendogroup.com