Following the bombings in London and Egypt, Islamabad faces increased international pressure to address militant activities within Pakistan. While government officials have confirmed reports that the July 7 bombing suspects spent time in Pakistan, there are fresh accusations of Pakistani links to the Sharm el-Sheikh attacks. In response, President Musharraf has launched a crackdown on militant groups in Pakistan, which includes proceeding against funding mechanisms, "hate speech," and undertaking madrassa reforms - many of these actions were expected after his "ground-breaking" renunciation of terrorism in 2002.

The 9/11 attacks ushered a new era in US-Pakistani cooperation, but US pressure on Islamabad to abandon its support of militants, including those in Kashmir, has been decidedly muted. Notwithstanding Indian protests, US policy-makers publicly appreciate Pakistan's role in the war on terrorism, while privately advising Islamabad to balance US cooperation to erode the growing influence of Islamic political parties.

Some analysts have distinguished between Pakistani counter-terrorism efforts against non-Pakistani groups, Pakistani militants fighting in Afghanistan, and Pakistani-supported militants in Kashmir. They argue that Pakistani national interests have allowed significant success against the first group-engendering engagement with the United States, but limited success regarding the second, as a Karzai government collapse would be welcomed by many in Pakistan. Given the Kashmir-centric focus of traditional Pakistani policy, efforts to control the third set of anti-Indian groups in Kashmir, have remained symbolic.

While the impact of international pressure on Islamabad to address its "home-grown" militant groups is hotly debated, Islamabad's approach to a different set of militants will be revealing. Since Partition, Islamabad has faced a Baluchi nationalist movement in Baluchistan. Initially a mountain-based guerrilla war, conflict between Baluchi forces and the Pakistan Army reached its apex in the 1970s, when full-scale warfare resulted in thousands of casualties, mostly in the civilian population.

Despite an abundance of natural resources, Baluchistan is the poorest and least developed province of Pakistan. Though defeated in the 1970s, a resilient Baluchi nationalist movement lingers on, garnering recruits and support from a population disaffected with establishment policies that emphasize resource transfer, but offer little in terms of investment, autonomy, or resource sharing.

In January, a series of rocket attacks left dozens dead in the Sui gas fields, prompting Islamabad to dispatch more troops and establish a new military base in the region. Nevertheless, attacks have continued, claiming over 100 lives this year. Apart from clashes between tribesmen and troops, the insurgents have blockaded major roads and destroyed a number of rail lines, power supply towers, and pipelines. At the end of June, militants had fired rockets at the Quetta home of the provincial Chief Minister.

In the past, such developments would be disturbing, but unremarkable, chapters in the long-standing dispute. However, two major economic projects underline Islamabad's need to maintain stability in the province. The $1.16 billion deep-sea port at Gwadar is expected to become a regional commercial hub, and a major source of revenue, given its location near the Straits of Hormuz, through which 40 per cent of the world's oil passes. With the first phase of construction completed, Islamabad hopes to secure the benefits of increased trade with the Gulf States, Central Asia, South Asia, and China.

Similarly, the proposed $4 billion pipeline would transport natural gas from southern Iran, across Pakistan, into western India. This arrangement will provide revenues to Iran, gas and transit fees to Pakistan, and much-needed energy to the growing Indian economy. Notwithstanding US pressure to abandon this project to isolate Iran, policy-makers in Tehran, New Delhi, and Islamabad appear determined to proceed.

Facing a small but determined number of militants, Islamabad has attempted to defuse the Baluchi insurgency by announcing plans to alter - or consider altering - polices related to royalties, jobs, and even centre-state relations. However, the Baluchi leaders have heard such promises before, particularly from the Zia regime, with little follow through. For a community fearful of further marginalization, increased infrastructure investment simply translates to better roads for the army. Gwadar Port offers little satisfaction, as very few locals have been included in the construction and the port revenues remain unavailable to the provincial government.

As policy makers in Colombia and Iraq have discovered, pipelines are exceptionally vulnerable to attack. While easier to defend, Gwadar Port could become a continuing symbol of Punjabi "colonization." Rather than undertaking a major crackdown, stability in Baluchistan requires an equitable approach to governance being pursued, which is yet to be demonstrated by Islamabad. For analysts considering the interplay of domestic and international pressure on the Musharraf regime, and the prospects for democracy in Pakistan, Baluchistan provides a meaningful litmus test.