As World's 'Terrorist Capital,' Karachi Verges on Political Meltdown

A week ago the guns were quiet in Pakistan's financial hub, a seaside metropolis of 12 million. Brightly colored lights draped buildings for Independence Day, Aug. 14. Diners outside a popular restaurant, Barbeque Tonight, relaxed under palm trees. Bankers and the head of the Karachi stock market spoke of containing the killing sprees and gangland terror that have made the city a war zone for 10 years. Optimists felt the violence-prone ruling party, the Muttahida Quami Movement, was contained.

But now the optimists are quiet. Violence between MQM factions has left 30 people killed, 100 cars burned, the financial district ransacked, strikes across the city, and seven children wounded when a gunman sprayed bullets into a school celebration.

To add to the city's misery, the lead suspect in the two East African US Embassy bombings was arrested here Aug. 7. Mohammed Sadiq Howaida was allegedly traveling to Afghanistan via Karachi under a false Yemen passport when Pakistani authorities detained him at the airport. But his traveling partners got away - something that won't escape the notice of US State Department officials, who called Karachi the terrorist capital of the world, after two US officials were killed here in 1995 as a possible payback for the deportation of suspected terrorists hiding in Karachi.

[Yesterday US ambassador Thomas Simons Jr. ordered an evacuation of half the embassy staff in Islamabad and strongly urged US nationals to leave Pakistan. US missions in Mongolia, Eritrea, and Albania are similarly affected, based on a "range of threats" since Nairobi.]

That Pakistan's financial center is again immobilized is described as a metaphor for the economic woes of the state, and the problems of Prime Minister Nawaz Sharif's government.

Karachi generates 40 to 50 percent of the country's wealth. With its stock market and endless sandy beaches, it seems a South Asian cross between New York and Los Angeles. Yet with no real government, no mayor, no municipal services, costs rising 25 percent since January, with armed guards in front of houses and shops - investment is scant and confidence is at a "low ebb," says a leading market analyst.

"Karachi brings together all the problematic issues of our times in one place," says Maleeha Lodhi, former Pakistani ambassador to the US. "You have drug running, gun running, ethnic partition, straightforward crime, and armed militias - all in a city that is the economic lifeline of Pakistan. It is our only port. We can't survive without it, and right now it is undergoing a Lebanonization."

Natives who remember Karachi's cachet in the 1920s as a cultural mecca describe the present in tragic terms.

"This city could have been a Dubai," a leading banker says wistfully, thinking of the cosmopolitan pearl of the nearby United Arab Emirates. He remembers the 1960s, when the Karachi stock market boomed and Pakistan's economy outperformed the Philippines, Turkey, and Malaysia combined. Now Pakistan can't outperform a single one of these states.

Yet despite the fact that it now costs exactly twice as much to power an air conditioner as it did last summer, Karachi's root problems are not economic. They are political, and, in Pakistani parlance, border on the indecipherably complex, the current mantra among leading citizens.

Yet much complexity stems from the contortions of MQM, a party whose base is in Karachi. It is led by the charismatic Altaf Hussain, who lives in London under a death threat by former colleagues. MQM grew out of grievances among migr Muslims from India who came after the partition of 1947.

For a decade, MQM has controlled Karachi. Its 13 members in the Pakistan Assembly are essential coalition partners of the prime minister, giving Mr. Hussain enormous influence on both Karachi and Pakistan from London.

As of just last week, that grip is in question. Following mysterious execution-style slayings of MQM militia in north Karachi, and with violence rising, three leading members of MQM resigned - along with the MQM member of the federal cabinet. They were becoming a liability that the embattled leader of Pakistan couldn't ignore.

That makes coming months in Karachi a kind of showdown showtime: Will Mr. Sharif use federal troops to crack down and "occupy" the MQM-ruled city - thus risking his ruling coalition in Islamabad? How will Sharif face constant headlines of violence in Karachi that increasingly bother Pakistanis?

One answer that is bandied about in knowledgeable circles is a more radical solution - a new third-force "government of technocrats" with the tacit backing of the military. On Aug. 14 in Lahore, Pakistan's second-largest city, a party was launched by former President Farooq Leghari, a "clean hands" politician. The new Millat (People's) Party appears remarkably similar to gossip and hints on a solution that is swirling among Pakistani sources.

Mr. Leghari made clear the new party would employ the two dynamics in current politics: It would hold corrupt politicians accountable. And its embrace of ethnic and religious minorities would outflank a growing hard-line Islamic fundamentalism that could become a potent political force.