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OTHER STORIES RELATED TO COVER Guest Column: Mushahid Hussain Case Study: Darul Uloom Islamia Guest Column: Talat Masood Guest Column: B. Raman

The past week, Musharraf has been working on his promise to deal with terrorist organisations with an iron fist. For several days now, the police in Pakistan have mounted huge operations across the country arresting at least 2,000 militants belonging to several terrorist groups. Bank accounts have been frozen, offices raided and sealed. For now, the action appears to have effectively silenced the leading players.

FACE OF TERROR: Musharraf's real test will come in trying to prevent the banned militant groups from regrouping

First on Musharraf's list of outlawed organisations were the SIS and the TEJ, the violent Sunni and Shia sectarian groups that have torn Karachi apart in the past decade. The ban was widely expected after Musharraf outlawed their smaller, armed wings last year. Many of those arrested in the past week are thought to have been members of the two groups.

Next on his list was the TNSM, a small but powerful group based in Malakand. Led by the short, bespectacled Maulana Sufi Mohammad, the group had long campaigned for Shariah law to be imposed in Malakand. The cleric's links with the Taliban were strong and soon after the US bombing began he sent thousands of Pakistani youth across the border to fight.

The two principal organisations outlawed by Musharraf were the most feared Pakistani militant groups leading the guerrilla war in Kashmir: LeT and JeM. Favoured by the Pakistani intelligence agencies, these two groups are responsible for initiating suicide bombings in Kashmir.

Many of the key militant and religious leaders are already under arrest. Those who remain at large have gone underground but continue to be defiant. LeT's jailed leader Hafiz Mohammad Saeed insisted the guerrilla war would go on. "I cannot change my course in the wake of trials and tribulations. I shall continue my struggle until the Muslim ummah is liberated and Allah's word is established in the world," he said from his jail.

In the weeks after the Delhi Parliament attack, militants began to move their operations to PoK to pre-empt a crackdown. Last week, even the offices of Harkat-ul-Mujahideen, a Pakistani group whose name was not on Musharraf's list, were closed in Muzaffarabad in Pakistan-controlled Kashmir. Most groups are also threatening to move their operations across the Line of Control, out of the sight of the Pakistanis. Musharraf's real test will come in the weeks ahead as he orders the military and intelligence agencies to prevent the groups from reorganising secretly.

Conspicuous by its absence from the list of banned organisations was Hizb-ul-Mujahideen, the largest group operating in Kashmir and one that has traditionally had close links with the JeI party. The group has more Kashmiri members than either LeT or JeM and its exclusion from the ban may indicate an attempt by Islamabad to focus the campaign on Kashmiri groups. That has India truly worried. Delhi is also concerned that there are forces within the Establishment that may be beyond Musharraf's control and secretly backing these terrorists organisations. The added worry is Al Quaeda and Taliban elements that have fled to Pakistan will regroup and strike. The general still has a lot to do to make India feel reassured.

CAN A JEHAD BE LAUNCHED AGAINST BACKWARDNESS?

"Look at the damage it (religious extremism) has caused. Our economy has suffered. In Islam, jehad is not confined to armed struggle. Have we ever thought of waging jehad against illiteracy, poverty and backwardness?"

DIRE STRAITS: The government's worry is that foreign aid is not squandered away as in the past

One third of the population lives below the poverty line. The adult literacy rate for men is 52 per cent and 26 per cent for women.

The setback to the economy in the aftermath of the US strikes in Afghanistan was almost a personal affront to Musharraf who had made economic revival one of the main planks of his vision of Pakistan's reconstruction when he took over power in 1999. Since then, his Government has given top priority to economic restructuring and financial discipline, reflecting a realisation in the defence establishment that even the country's military was becoming unsustainable amidst the economic downslide of the past decade.

But Musharraf's gloomy picture notwithstanding, he has ample cause to be satisfied with the performance of his economic managers. Especially given the negative effects of the war in Afghanistan on the economy-Finance Minister Shaukat Aziz estimates a loss of US$ 2 billion (Rs 9,600 crore) in export orders alone-Pakistan is in a much better shape economically than in the past 10 years or so. As a direct result of the "reprofiling" of Pakistan's US$12 billion (Rs 57,600 crore) bilateral debt by the Paris Club of donors-a reward for the support to the international coalition-its debt servicing liabilities have been reduced by about US$1 billion per year for the next three years.

Debt servicing ate up more than half of the total federal budget. "This reduction on expenditure will allow the Government to enjoy a much lamented 'fiscal breathing space' for the first time in years," points out Asad Sayeed, an economist affiliated with the Social Policy and Development Centre in Karachi. Some loss to revenue has also been made up by direct governmental grants by the US, Japan and European countries.

In addition, Pakistan's foreign-exchange reserves are up to $ 4.5 billion (Rs 21,600 crore), almost three times higher than 1999, bolstered by the inflow of IMF tranches and, particularly, repatriation of money by expatriate communities. Inflation is a low 5.5 per cent and the country will probably meet its target of achieving food self-sufficiency. "The only fear, as always, is that this manna can be squandered as it was during the 1980s," says Sayeed.

That is a real worry. For years, international donors, UN agencies, non-governmental organisations and western governments have poured billions of dollars into Pakistan to bring change. Little has been achieved over the past decade and with a rapidly growing population it would take a sustained effort over many years to bring about the modern, dynamic state of Musharraf's vision.

The adult literacy rate for men is 52 per cent. For women, it drops to a startling 26 per cent. One-third of the population lives below the poverty line. More than a third of the children under the age of five are malnourished and infant mortality runs far higher than the rest of South Asia at 90 deaths per 1,000 births. Everyone knows there is no quick fix to Pakistan's dire problems. For now the single biggest reform ahead is devolution, an attempt to deliver power to the district level, to transfer investment to district governments, schools and hospitals. Only this way, many believe, can Pakistan avoid the corruption and mismanagement it has suffered in the past decades. It requires grit and determination, something Musharraf will have to demonstrate.