Bombs kill 33 in Lahore

Reuters

BOMB SITE: Men run as angry protesters burn a vehicle during reaction over after bomb attack during a Shi'ite Muslim procession in Lahore September 1, 2010.

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Pakistan tightened security in the eastern city of Lahore after three bomb attacks killed 33 people and wounded 171 and pressured the US-backed government already overwhelmed by floods.

The blasts which hit a Shi'ite procession on Tuesday bore all the hallmarks of pro-Taliban insurgents, who have carried out sectarian violence designed to destabilise the government.

"Security has been tightened in the city to prevent any such incident. We had called the (paramilitary) rangers after the blasts last night, and they are on high alert and can be called again any time if needed," Sajjad Bhutta, Lahore's top administration official, told Reuters.

Pakistan's government may face renewed militant violence as it tries to manage the country's worst floods and dull what is likely to be long-term economic pain caused by them, security analysts say.

The floods struck a month ago just as the army said it had made progress in the war against the al Qaeda-linked Sunni Taliban in the northwest region.

Reflecting the growing reach of the Pakistani Taliban, US prosecutors overnight charged its leader Hakimullah Mehsud in the plot that killed seven CIA employees at an American base in Afghanistan last December.

The United States also added the Pakistani Taliban to its list of foreign terrorist organisations and set rewards of up to $5 million for information leading to the capture of two of its leaders, Mehsud and Wali-ur-Rehman.

Even before the floods struck, Pakistan was struggling with a failing economy. Those concerns have increased following the widespread devastation to crops and infrastructure which Prime Minister Yusuf Raza Gilani estimated could eventually hit $43 billion.

"The gloomy picture for the economy has already affected investor confidence, and the latest bombings have shattered that confidence further," said Mohammed Sohail, chief executive officer of Topline Securities.

"Investors were assuming that because of the devastation caused by the floods, terrorism will slow down."

Islamabad hopes the International Monetary Fund will soften terms of an US$11 billion (NZ$15.64 billion) loan that has kept its economy afloat.

The IMF and Pakistan will release a statement later today on ongoing discussions of the south Asian country's loan.

The statement follows a week of Washington talks against the backdrop of the floods which destroyed cropland and livestock and displaced millions.

US textile groups and cotton farmers have strongly objected to proposed new trade benefits for Pakistan, saying the United States should send aid here, not US jobs.

The textile industry, which will be hit hard by the crop damage, accounts for more than 50 percent of Pakistan's exports and is a major employer in the manufacturing sector.

There was some good news from the World Bank, which has increased funding to help Pakistan cope with the floods by US$100 million, to a total of US$1 billion.

- Reuters