Although various militant groups, including the Islamic State, continue to operate in Pakistan, overall attacks declined for a third consecutive year in 2017.

• Militant attacks in Pakistan continued to decline for a third consecutive year in 2017. Attacks remained concentrated against security forces and religious minorities, while assets with enhanced security measures, such as airports and construction projects, were not targeted at all.
• Although attacks are likely to remain at the current lower intensity in 2018, election rallies in Punjab and Chinese expatriates in Balochistan and urban areas are likely to be increasingly targeted in the one-year outlook.
• Islamic State-claimed attacks increased in 2017, and are likely to continue in 2018, although an official split in the group's Afghanistan-based faction would indicate a declining threat level.

According to Jane's Terrorism and Insurgency Centre, total militant attacks in Pakistan fell to 367 in 2017 from 414 in 2016, marking a year-on-year decrease of 12% and the third consecutive year of declining attacks in the country, although militant operations have arguably stabilised following significantly larger decreases of 42% and 38% in 2015 and 2016 respectively. Nevertheless, the data confirm that Pakistan's security environment has markedly improved since the military began Operation Zarb-e-Azb against the Tehreek-e-Taliban Pakistan (TTP) in the Federally Administered Tribal Areas (FATA) in 2014. Overall, attacks have subsequently decreased by 68%.

Attacks have predominantly targeted security forces and religious minorities, while assets with enhanced security measures – such as airports, government installations, and hotels – have not been subjected to any attacks since 2015. This is probably because of the militants' reduced capability to carry out sophisticated attacks, with most mass-casualty attacks relying on suicide bombers or targeted shootings.

However, deaths from militant attacks during 2017 remained largely stable on an annual basis, totalling 935 compared to 985 in 2016 (following 1,445 in 2015 and 2,355 in 2014). Balochistan – where nationalist groups and, increasingly, Islamist militant groups operate – remained the most unstable area of the country: the province recorded 122 attacks resulting in 274 deaths in 2017. Attacks in Khyber Pakhtunkhwa fell from 109 in 2016 to 73 last year, a notable decrease for a province that his historically been one of Pakistan's most unstable regions. Conversely, attacks in Punjab – normally a comparably stable province – almost doubled to 42, killing 96 people.

TTP and its factions remain a threat

As IHS Markit previously outlined, the TTP's operational capacity has significantly diminished since 2014, which is a significant factor in the reduced intensity and sophistication of Pakistan's Islamist militancy. Nevertheless, the TTP and its factions, primarily Jamaat-ul-Ahrar (JuA), continued to target security forces and religious minorities in Pakistan during 2017. The TTP's leadership has operated in Afghanistan since the 2014 operations forced them to flee FATA, and Pakistani security officials have repeatedly alleged that TTP attacks in Pakistan are co-ordinated from across the border. The issue of militant movement across the border and mutually suspicious relations between Pakistan and Afghanistan remains a major obstacle to Pakistan's efforts to entirely eradicate militancy. In October 2017, the Pakistani military announced that more than 90% of the 2,600-kilometre border would be fenced by the end of 2018 at a cost of USD550 million.

The Islamic State has become a potent threat

The Islamic State emerged as a potent threat in Pakistan during 2016. The group claimed 10 attacks in 2017, killing 186 people: this was an escalation of the group's operations from the previous year, when it claimed eight attacks that killed 123 people. Although the attacks were claimed by the Islamic State core's centralised news agency, Amaq, the attacks were probably carried out by local groups in co-ordination with the Islamic State's Afghanistan-based faction, Wilayat Khorasan. The attacks were largely concentrated in Sindh and Balochistan.

Outlook and implications

Although the TTP's leadership made attempts in March 2017 to revive co-operation between its increasingly fragmented factions, our data suggest that this approach has failed to trigger any notable increase in attacks across the country. The military's formulation of an amnesty agreement for TTP fighters in September 2017 indicates that the group continues to lose recruits and capacity. Given the military's continued focus on counter-terrorism operations, it is unlikely that the TTP will be able to substantially revive its operations in the one-year outlook, and risks to hotels, airports, ports, and Chinese projects in the energy sector are likely to remain moderate. However, Chinese expatriates are likely to face an increasing risk of targeted attacks and kidnappings over the next year, particularly in Balochistan but also in urban areas of Punjab and Sindh.

Nevertheless, the prospects for security co-operation with Afghanistan remain slim in the same period, particularly as a result of the US administration's increasingly confrontational policy towards Pakistan. The current intensity of TTP attacks is therefore largely likely to continue over the next year. Attacks in Punjab are also likely to increase, with elections due in mid-2018. Election rallies in the province are particularly likely to be targeted in suicide improvised explosive device attacks. Any indication of improving security co-ordination with Afghanistan – for example through a fatwa banning insurgency against the Afghan government by Pakistani clergy – would indicate a further reduction of risks in country.

Given Wilayat Khorasan's endurance in Afghanistan despite counter-terrorism pressure from US and Afghan security forces, we assess that Islamic State-claimed attacks in Pakistan are likely to continue over the next year. However, according to IHS Markit sources with access to militant groups in Afghanistan, the Pakistani military is seeking to exploit an emerging split in Wilayat Khorasan by supporting the largest faction of the group, which is also based around the Pakistani border. An official split over the next year would indicate a reduced risk of Islamic State attacks, as the Pakistani military would probably curtail the group's targeting of Pakistan. In any case, attacks that do occur are likely to target religious minorities and security forces.