The Pakistan Dilemma
The perils of a precarious antiterror ally.

Saturday, July 28, 2007 12:01 a.m. EDT

When General Pervez Musharraf seized power in a 1999 military coup, Pakistan was nearly bankrupt, under international sanctions, at daggers drawn with India and--through the illicit dealings of A.Q. Khan, father of the Islamic bomb--the world's leading proliferator of nuclear technology. Islamabad was also the Taliban's best friend and enabler.

Today, Pakistan remains in a parlous state, and it's an open question how long Mr. Musharraf will remain in power. Yet it's also not clear whether or how Pakistan would be better off if its President-General were somehow deposed. For the Bush Administration, Pakistani succession is, after Iraq, its toughest foreign policy dilemma.

Amid rising protests against the government--some of it by secular democrats, some by militant jihadis--it's easy to forget that Pakistan has prospered under Mr. Musharraf and his prime minister, former Citibank executive Shaukat Aziz. Annual GDP growth averaged 7.2% in the past three years, according to World Bank data; the inflation rate, which hovered at 23.8% in 2000, has fallen to single digits. International confidence is reflected in foreign direct investment, which rose to $2.2 billion in 2005 from $308 million five years earlier.

Relations with India may be as good as they've been since 1947. The government responded well to the devastating October 2005 earthquake in Kashmir, preventing what many thought would be a far worse humanitarian crisis. Pakistan was instrumental in capturing key September 11 plotters Ramzi Binalshibh and Khalid Sheikh Mohammed, among others. A.Q. Khan was put under house arrest, and his network rolled up. For his troubles, Mr. Musharraf has repeatedly been the target of jihadist assassination attempts, the most recent earlier this month.

Yet the general has also had his failures. He refused to honor a previous pledge to resign as army chief of staff, angering the non-Islamist opposition. He inspired more anger this year by attempting to oust the chief justice of the Supreme Court; that his attempt ended in failure this month is a tribute to the resilience of the rule of law in Pakistan. But it also demonstrated a political tin ear by Mr. Musharraf, who has yet to earn the democratic legitimacy he needs to preside over a credible regime.

His antiterror policy has been equally as contradictory. While he remains an ally against al Qaeda, Pakistanis report that the madrassa schools continue to be unreformed as a refuge for Islamist indoctrination. More troubling, last year his government cut a deal with tribal chiefs in the province of Waziristan to stop pursuing Islamist militants. While that may have been forgivable given the heavy losses the Pakistan military suffered trying to secure its border with Afghanistan, it is now clear the truce has allowed a new sanctuary for the Taliban and al Qaeda. Mr. Musharraf also does not help his credibility by denying clear evidence that border towns such as Quetta have become terrorist bazaars.

This has become a new staging ground for attacks on Afghanistan, and left unchallenged it will become the same for attacks on America. Yet according to press reports, the U.S. has declined to attack al Qaeda targets in the border region for fear of undermining Mr. Musharraf's rule. This status quo can't continue, as American officials are increasingly making plain in more forceful public and private statements.

Allowing Pakistani territory to become a terrorist sanctuary has been even worse for Mr. Musharraf. Unpopular as he may be with secular opponents such as former Prime Minister Benazir Bhutto, he has less to fear from them than from the radical Islamists who want his head. The recent suicide bombings throughout Pakistan, along with this month's bloodletting at Islamabad's Red Mosque, are a warning about the dangers of declining to confront terrorists head on.

The coming months will present Mr. Musharraf with some fateful choices. If he agrees to resign his military commission, he could strike a power-sharing agreement with non-religious opponents (he has reportedly held secret meetings with Ms. Bhutto). This could allow him to remain in power past parliamentary elections later this year. The alternative is to curry favor with Islamic parties and factions, with all the risks that entails. Mr. Musharraf could also declare martial law--a guarantee of further long-term instability.

Though the Bush Administration is glibly mocked for making Mr. Musharraf an "exception" to the Bush Doctrine, the U.S. has no interest in destabilizing a nuclear-armed government already under a jihadist threat. Jimmy Carter made that mistake with the Shah of Iran, another imperfect Muslim ruler whose successors were infinitely worse. Pakistan is not the Philippines, a Catholic country with long ties to the U.S. whose political culture we well understood when Reagan pushed Marcos from power in 1986.

What the U.S. can do, however, is nudge Mr. Musharraf toward a compromise with his non-radical opposition that would restore genuine democracy while strengthening his ability to challenge the jihadists. It is the best option the general has.