Benazir Bhutto Assassination Analysis

[Executive Security]

Benazir Bhutto Assassination Analysis

AFTER BHUTTO
By Bill O’Grady

Chief Global Investment Strategist

On Dec. 27, 2007, former Pakistani Prime Minister Benazir Bhutto was assassinated. In this report, we detail events surrounding the assassination, discuss the potential geopolitical problems that could develop from an unstable Pakistan, examine the growing jihadist insurgency in the tribal regions of the country and consider the market ramifications from this event.

The assassination

Former Prime Minister Bhutto had returned to Pakistan on Oct. 18, 2007, after the Bush administration cajoled her into a power-sharing arrangement with President Musharraf. The Musharraf government had seen its legitimacy disintegrate; secular moderates opposed the president for his persistent reliance on the military to manipulate the political process, and traditionalists disapproved of his support for the Global War on Terror. On Bhutto’s first evening in Pakistan, during a rally in Karachi, a massive bombing attempt on her life left 140 dead and hundreds wounded. Bhutto escaped without injury.

The Musharraf government denied Bhutto’s request for an international inquiry into the incident, raising suspicions the government was complicit in the assassination attempt. Events of Dec. 27 were clouded by the fear that elements within the government, or Musharraf himself, wanted Bhutto dead.

On Nov. 3, President Musharraf, concerned that he would receive an adverse ruling from the Supreme Court on his joint role as president and head of the military, declared a state of emergency. Bhutto and her supporters opposed the rule, and she led protests against it. Under pressure from Bhutto and the Bush administration, Musharraf agreed to give up his military post on Nov. 28, ended the state of emergency on Dec. 15, and decided to allow elections on Jan. 8, 2008.

On the day of Bhutto’s assassination, she had attended a public rally in the military city of Rawalpindi. The area of the rally was cordoned off, and all those inside the enclosure had been searched. Once the rally ended, Bhutto made her way to two armored SUVs. A crowd had gathered around the vehicles; this gathering, however, had not been searched.

Bhutto’s political party had secured its own security detail, fearful the government would not provide adequate protection. In addition, it had purchased two armored SUVs. One would carry the candidate and top advisors; the other would be manned by private security. The thought was that if one vehicle was disabled, the other could be utilized to protect and transport Bhutto.

After the rally, Bhutto entered one vehicle and security entered the other. However, the security detail, contrary to usual custom, moved on to a meeting house in Islamabad, leaving two bodyguards with the Bhutto vehicle. Thus, as Bhutto began to leave, the bulk of her security detail was absent.

To address the crowd, Bhutto stood up from the sunroof of her SUV. At this point, shots were fired and a bomb exploded. Video shows a Western-attired man holding a pistol and a more traditionally dressed man immediately behind him. Soon after the gunman fired, the man behind him apparently detonated a suicide bomb belt. The gunman was killed by the bomb.

Bhutto collapsed and died shortly thereafter. From this point, however, there are more questions than answers. The government claims Bhutto was not shot, but that she struck her head on the sunroof’s lever as she fell due to the shock of the explosion. Bhutto’s supporters claim she was shot. Bhutto’s husband, Asif Ali Zadari, would not let the government perform an autopsy, indicating he did not trust the government.

In the explosion, the armored SUV protected the other occupants, but its tires were destroyed, leaving it unable to travel. Bhutto could not be transferred to the other SUV because it was on its way to Islamabad. Although we will never know whether rapid medical attention would have made any difference, being unable to get Bhutto to a hospital likely ensured her death.

A number of issues likely will remain unanswered: Using a handgun from that distance would have required a very good shot; a rifle from greater distance is usually the weapon of choice. Were the suicide bomber and the handgun-carrying assassin working together? How did they know Bhutto would appear in the sunroof? Most likely, this was a crime of opportunity.

The government and the Bush administration have both claimed the assassination came from jihadist elements, most likely Baitullah Mehsud, the head of a Taliban-related group that controls wide swaths of the tribal regions. Pakistani intelligence offered a tape of a purported cell phone call of what seems to be Mehsud congratulating unknown plotters. Of course, having intercepted this call suggests that Pakistani intelligence could also pinpoint where the call was coming from, begging the question as to why Mehsud is still alive.

It appears the jihadists have the most to gain from Bhutto’s demise. She was a secular woman, religiously affiliated with Shiites. Bhutto likely would have tried to undermine the cozy relationship the jihadists have with the Pakistani military and intelligence services. And, as the civil unrest that followed her assassination showed, upsetting the political process tends to result in chaos. History shows that jihadist movements tend to flourish in such environments.

Although Bhutto’s party blames Musharraf and the military, the president had nothing to gain from her death. He was desperate for legitimacy and had probably co-opted Bhutto to the point where a partnership with her would have given him what he craved. However, to say that Musharraf didn’t want Bhutto’s assassination is not to say that elements of the military would not have supported her death. The military leans Islamist and might have offered logistical support for jihadists wanting to kill Bhutto.

The complicated geopolitics

The U.S. goal in South Asia after Sept. 11 was to oust the Taliban from Afghanistan, kill or capture the leadership of al-Qaida who resided there, and establish a democracy in Afghanistan to prevent the re-emergence of jihadist elements in the region. Because Afghanistan is landlocked and other supply routes into the country were either insecure of hostile, Pakistan’s cooperation was critical.

The United States wants the jihadists to be trapped between the NATO military force in Afghanistan and the Pakistani military. Unfortunately, only one side of the pincer has worked. The tribal regions, where the Taliban and a-Qaida reside, have really never been controlled by outsiders. During the colonial period, the British generally let the areas govern themselves, and after the formation of Pakistan, successive governments have exerted little control.

During the Soviet/Afghan war in the late 1970s, the Pakistani military and intelligence services, supported by the United States and Saudi Arabia, funded the mujahideen who eventually defeated the Red Army. The military considers these groups friendly, and so Musharraf’s U.S.-backed policy of denying the Taliban and al-Qaida sanctuary in the tribal regions was very unpopular. Over the past nine months, the Pakistani military has been ceding control to jihadist elements.

In effect, Musharraf has been walking a fine line. On the one hand, he has offered up high-ranking al-Qaida figures to the West or conducted half-hearted military operations in these regions to placate the United States. On the other, he has made it clear that he isn’t going to fiercely oppose the jihadists in the tribal regions. The Bush administration has been remarkably forgiving of Musharraf; however, we doubt this is because administration officials don’t see the complicity. Instead, it is accepting that Musharraf is the best alternative in a set of bad ones.

There are two other ways to support and supply Afghanistan. The first is Russia and the nations of the former Soviet Union. In the early stages of the military operations that overthrew the Taliban, Russian President Putin permitted the use of several military bases in the states near Afghanistan. From Putin’s point of view, he received little in return. He believes the United States was behind the expansion of NATO and the “color” revolutions in Ukraine and Georgia. Thus, he has retaliated. He opposes the U.S. missile defense shield in Eastern Europe. He has undermined support for the use of military bases surrounding Afghanistan and has supported Iran, weakening the Bush administration’s sanctions policy against the mullahs. Russia would demand a high price to support NATO efforts in Afghanistan.

The other land route into Afghanistan is Iran. Although, at first blush, it seems unlikely the Ahmadinejad administration would support NATO efforts in Afghanistan, the Iranian government would have an interest in preventing the return of the Taliban. Iran generally opposed the radical Sunni Taliban, which tends to treat Shiites as apostates. And no government welcomes chaos on its borders. It often leads to refugees and other problems. However, we would expect Iran to extract a high price for assistance -- most likely, the end of economic sanctions and the permission to enrich uranium and expand its nuclear development. At a minimum, even without Iranian cooperation, problems in Pakistan will narrow the Bush administration’s “bandwidth” and further lessen the odds of a military conflict between the United States and Iran.

Losing Afghanistan would be a major blow to the United States and the West. Seeing Pakistan fall into the hands of the jihadists would raise the possibility of nuclear weapons, with a delivery system, into the hands of terrorists. Although Musharraf is not a great option, he may be the best available.

The insurgency

Meanwhile, there is growing evidence of a Taliban resurgence. The Pakistani military has been abandoning forts in the tribal regions, and Mehsud’s reach seems to extend into urban areas. The Bush administration has reacted by announcing the deployment of 3,500 Marines to Afghanistan, and there are reports the United States is considering Special Operations and CIA intrusions into the tribal regions of Pakistan to attack high-value targets.

Ramifications

The financial markets remain focused on the potential of a global economic slowdown. However, conflict across South Asia could be a major bearish wildcard over the next year. We expect the United States to support Musharraf and whatever government emerges after the Feb. 18 elections. However, given the Pakistani military’s lack of progress in the tribal regions, we would not be surprised if the Bush administration tries to undermine these jihadist movements by covert actions.

In the short term, we don’t expect the Pakistan issue to have much impact on the financial markets. Investors are focused on the problems in the Western financial system and global growth. However, this issue could have a major negative impact on equities and a bullish impact on gold, commodities and Treasuries, if it were to deteriorate into a major conflict.

[mally]

Very interesting, thanks!

Fox news footage

YouTube - Benazir Bhutto Is Killed in Pakistan

[hippy]

Interesting...

I have already had to supply a report on this to my Chairman as one of our suppliers is in Pakistan..
The above does agree with my report on most important facts... Although we as an Importer do still have a couple of concerns...