The Pakistani economy and equities may be in jeopardy after the death of Osama Bin Laden.
Most global assets enjoyed at least a short rally after Bin Laden’s death. Pakistani stocks, however, fell both on Monday and on Tuesday.
The worry is over the potential complicity of the Pakistani government in harboring Bin Laden in a mansion thirty miles away from its capital. If the US finds Pakistan guilty in anyway, it may cut off billions of dollars in financial aid. The US is also the largest export destination for Pakistani goods, so it can also hurt Pakistan by restricting purchases of its goods.
So far, US President Barack Obama has praised Pakistani officials for their cooperation on the US war on terror, although he admitted they were kept in the dark regarding the May 1st Bin Laden kill operation.
Moreover, US lawmakers are already crying foul.
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Senator Frank Lautenberg of New Jersey, for example, suggested the immediate suspension of all aid to Pakistan.
He said: “The United States provides billions of dollars in aid to Pakistan. Before we send another dime, we need to know whether Pakistan truly stands with us in the fight against terrorism. Until Congress and the American public are assured that the Pakistani government is not shielding terrorists, financial aid to Pakistan should be suspended.”
Even before the killing of Bin Laden, the US was growing increasingly frustrated at Pakistan’s lack of cooperation in apprehending terrorists. The US is also cementing its economic ties with India, Pakistan archrival.
After May 1, US-Pakistani relations may further deteriorate and Pakistan’s economy is expected to suffer as a result.