2013 will be a pivotal year in Pakistani history. National elections, turnover at the top military position and the denouement in the war in Afghanistan; all promise to make it a critical year for a country that is both, under siege by terrorism and the center of the global jihadist movement. The changes in Pakistan are unlikely to come peacefully and will have major implications for India and America. The stakes are huge in the most dangerous country in the world.

Pakistan is a country in the midst of a long and painful crisis. According to the government, since 2001 45,000 Pakistanis have died in terrorism related violence, including 7,000 security personnel. Suicide bombings were unheard of before 9/11; there have been 300 since then. The country’s biggest city, Karachi, is a battlefield.

One measure of Pakistan’s instability is that the country now has between 300 and 500 private security firms, employing 3,00,000 armed guards, most run by ex-generals. The American intelligence community’s new global estimate rates Pakistan among the most likely states in the world to fail by 2030.

Pakistan also remains a state sponsor of terror. Three of the five most-wanted on America’s counter-terrorism list live in Pakistan. The mastermind of the Mumbai massacre and head of Lashkar-e-Taiba, Hafeez Saeed, makes no effort to hide. He is feted by the army and the political elite, appears on television and calls for the destruction of India frequently and jihad against America and Israel.

The head of the Afghan Taliban Mullah Omar, shuttles between ISI safe houses in Quetta and Karachi. The Amir of Al Qaeda, Ayman Zawahiri, is probably hiding in a villa not much different than the one his predecessor was living in, with his wives and children, in Abbottabad until May 2011.

Pakistan also has the fastest growing nuclear arsenal in the world, bigger than Great Britain’s. The nukes are in the hands of the generals, the civilian government only has nominal control. President Asif Ali Zardari has only nominal influence over the ISI as well; indeed it has conspired for five years to get rid of him.

Against the odds, Zardari has survived.

By next fall, he will have served five years, becoming the first elected civilian leader to complete a full term in office and pass power to another elected government. It will be a major milestone for Pakistani democracy. He has served years in prison and lost his wife to the terrorists who besiege the nation. He has often been called a criminal by many, including his own family, and the national symbol of corruption. 

Yet, as president, he presided over a major transfer of power from the Presidency to the Prime Minister’s Office, even the titular national command authority over the nukes, to ensure the country is more democratic and stable.

The parliamentary election in the spring will be a replay of every Pakistani election since 1988, pitting Nawaz Sharif’s PML against the late Benazir Bhutto’s PPP. Needless to say, many Pakistanis are sick of the same stale choices. But the odds favour the old parties. Both Sharif and Zardari are committed to cautiously improving relations with India, keeping open ties with America and trying to reform the Pakistani economy. Both will have troubled relations with the Army.

The Economist has tagged Sharif as likely to do best. If he returns to the Prime Minister’s job for a third time, it will be a remarkable turn in his own odyssey.

Sharif was removed from the office in 1999 in an illegal coup and barely escaped alive, to go into exile in Saudi Arabia. His decision to withdraw Pakistan’s troops behind the LOC, during the Kargil war, prompted his fall from power; it also may have saved the world from nuclear destruction. It was a brave move. I remember talking to him and his family in the White House the day after he made the decision to pull back, you could see in his eyes that he knew Musharraf would defame him; but he knew he was in the right.

But many Pakistanis want a new face to lead their country. Out of desperation some are turning to Imran Khan to save Pakistan. The ISI is probably helping his campaign behind the scenes to stir up trouble for the others. He is a long shot at best. He is much more anti-American, anti-drone and ready to make deals with the Taliban, to stop the terror at home. Yet, he understands well that Pakistan is a country urgently in need of new thinking.

Whoever wins will inherit an economy and government that is in deep trouble. Two-thirds of 185 million Pakistanis are under 30, and 40 million of the 70 million 5 to 19 years old are not in school. The youth bulge has yet to spike. Less than one million Pakistanis paid taxes last year. Most politicians don’t pay any taxes. Power blackouts are endemic. Clean water is increasingly scarce even as catastrophic floods are more common. Growth is 3%, too little to keep up with population demand.

So, it is no wonder that the generals prefer to have the civilians responsible for managing the unmanageable, while they guard their prerogatives and decide national security issues. As important as the coming elections will be, the far more important issue is who will be the next Chief of Army Staff.

The incumbent General Ashfaq Parvez Kayani was given an unprecedented three-year extension in 2010. He is the epitome of the Pakistani officer corps and the so-called ‘deep state’. Pervez Musharraf made him Director General of the ISI in 2004. It was on his watch that the Afghan Taliban recovered and regrouped in Quetta, Osama bin Laden built his hideout 800 yards outside Kayani’s alma mater the Kakul Military Academy in Abbottabad in 2005, and planning began for the Lashkar-e-Taiba attack on Mumbai. He was DG/ISI when David Headley, the American serving life for his role in the 2008 attack, began his reconnaissance trips to Mumbai to prepare the way for 26/11. Kayani probably authorized the funds for Headley’s cover and travel. He is the first DG/ISI to become COAS. His term expires in September, 2013.

The history of civilians choosing Chiefs of Army Staff in Pakistan is not encouraging.

Ayub Khan used the post to become Pakistan’s first military dictator in 1958. Zulfikar Bhutto chose Zia ul Haq, who he called his ‘monkey general’ because he thought he was apolitical. Zia staged his own coup and then hung Zulfi. Nawaz Sharif picked Musharraf, quarrelled over Kargil and fired Pervez, who then staged his coup. No wonder Zardari just rolled over Kayani for another three years in 2010. It was the easy way out.

The next COAS will come from the shadowy group of a dozen corps commanders who run the army. They do not advertise their political views as a rule. By next summer, a consensus will probably emerge in the inner circle on who should replace Kayani and the whole world will try to decipher the implications of the choice.

The White House, CIA and Pentagon will be especially alert.

America’s relationship with Pakistan has deteriorated dramatically during President Obama’s first term. Despite Obama and Zardari’s efforts to find common ground, the relationship has foundered over Pakistan’s proxy support to the Afghan Taliban, its collusion with LeT and other terrorists and the drone war against Al Qaeda in the tribal bad lands. Obama has ordered over 300 lethal drone attacks on Pakistani soil in his first four years in office.  There is no reason to believe the drone war will end, even as the NATO mission in Afghanistan transitions to Afghan leadership in 2014.

Of course, Obama also sent the SEALs into Abbottabad in May 2011 without telling any Pakistani that we even suspected that the high-value target number one was hiding in the front yard of the army’s top academy. Officially, the United States says there is no evidence, no smoking gun, that Kayani or any other senior official knew bin Laden was in a villa the locals called ‘the Waziristan House.’ But despite providing over $25 billion in military and economic aid to Pakistan to fight Al Qaeda between September 2001 and May 2011, the President wisely decided he could not trust the Pakistanis.

It is safe to say the trust deficit has not gone away. Senior American officials, like Secretary of Defense and former CIA Director Leon Panetta, shun dealing with Pakistan. Still US aid to Pakistan goes on. The military has received 18 F16 jet fighters, 20 Cobra attack helicopters, 6 C 130 transport aircraft and a Perry class frigate and much more in the last decade alone. Washington tries to encourage partnership, while trying to contain the worst excesses of the ISI and the army.

It is in Afghanistan that the relationship will be tested the most in 2013.

In September 2012, the Taliban attacked a UK base, called Camp Bastion, destroying eight US Marine jet aircraft and killing two Marines. They claimed they wanted to kill Prince Harry who was serving there with the British army. The interrogation of the surviving Taliban fighter indicated the attack was planned at an ISI safe haven in Pakistan, with Pakistani army expertise. Then in December 2012, the head of

Afghan intelligence Asadullah Khalid was almost assassinated by a terrorist, who President Karzai says, came from Pakistan and was sent by an intelligence service, implying it was the ISI.  Neither attack shocked the Americans who follow the war.

If Pakistan clearly and unequivocally put its weight behind pushing the Taliban to negotiate, renounce Al Qaeda and enter into a political process with Kabul, the chances are the war might end. After 35 years the guns could fall silent in the Hindukush. Again, the civilians seem to be open to this and Foreign Minister

Hina Khar says all the right things. But it is far from clear that the ISI is on-board for any outcome in Afghanistan, short of a Taliban victory.

Another shock to the relationship could come at any time in the next year and is more likely than not.

The CIA could find Zawahiri’s hideout and Obama could send in another SEAL team. A skirmish along the Durand line could get out of hand and create a crisis. Much could and probably will go wrong, and there is little prospect of a positive breakthrough.

Pakistan and America are locked in a deadly embrace for the foreseeable future.

Today, India’s economy is eight times larger than Pakistan and by 2030 it will be 16 times larger. But an increasingly prosperous Indian middle class needs a healthy neighbour. A failing state, or worse a jihadist state, makes for a very dangerous neighbourhood. So, New Delhi will also be keenly following the political machinations in Islamabad and Rawalpindi in 2013.

The worst case would be that the dark forces – the jihadist camp and its military allies – launch another mass-casualty attack like Mumbai. They have tried in the last four years. A plot to disrupt the Commonwealth Games in 2010 in New Delhi was disrupted and this year, a senior LeT operative was deported from Saudi Arabia where he was reportedly planning a major terror outrage. The charged atmosphere, of a political year with leadership changes at the top, could encourage extremists to act.

So, Washington and New Delhi need to be vigilant. But they should also be supportive. Pakistan is trying to become a normal state where power is passed, without violence, from one elected leader to another. For decades Pakistan has been plagued by coups and assassinations. The people of Pakistan have been the victims, now more than ever.

2013 could be a transformative year for the country, indeed it will be the battle for the soul of Pakistan.