The Merged Tribal Districts (MTDs) of Khyber Pakhtunkhwa (KP)—formerly known as the Federally Administered Tribal Areas (FATA)—have seen little meaningful development since their merger into the province in 2018. Despite the promises made at the time, genuine progress in uplifting the region has yet to begin. This delay largely stems from the federal government’s failure—and more broadly, the state’s inability—to acknowledge and fulfill its responsibility toward the region’s development.

When the merger was announced, it was hailed as the beginning of a new era of growth and prosperity for the tribal areas. However, several factors have contributed to the state’s failure to launch a comprehensive development agenda. While many of these have been discussed previously, one critical factor that demands attention is the government’s lack of interest in promoting economic development in these areas.

One of the most impactful steps could have been the promotion of industrialization in the MTDs. Such a move could have triggered broader socioeconomic development. Specifically, the government should have initiated the establishment of Economic Opportunity Zones (EOZs) in the region.

Economic development is the cornerstone of overall progress. Other dimensions of development—such as social services, infrastructure, and governance—largely depend on a robust economic foundation. For the former FATA to see real advancement, economic growth must originate from within the region, although external support is essential to enable this internal transformation. In this context, industrial development is vital.

Historically, the tribal regions along the Pakistan-Afghanistan border have been unable to develop a viable industrial base due to a variety of challenges. Despite sporadic efforts from the government and local investors, no substantial industrial infrastructure has materialized.

During the previous Pakistan Tehreek-e-Insaf (PTI) government, there were efforts to urge the United States to revive the idea of Reconstruction Opportunity Zones (ROZs)—a concept introduced around 2008. These zones held great promise for transforming the socioeconomic landscape of these remote and underdeveloped regions. However, due to gross mismanagement by Pakistani policymakers and bureaucrats, the project was eventually shelved by Washington. The people of the tribal areas—and Pakistan as a whole—have been the ultimate losers.

The ongoing instability in the border regions has consistently spilled over into the rest of KP and the broader country. The original intent behind the US-backed ROZs was to provide employment opportunities to deter local populations from joining militant groups. Unfortunately, the initiative was derailed when Pakistani economic managers began lobbying to have these zones built in peaceful regions such as Punjab, undermining the entire premise.

As a result, the United States ultimately abandoned the ROZs (Reconstruction Opportunity Zones) initiative, recognizing that establishing these zones in mainland Pakistan would defeat the core purpose of the project. This decision came only after repeated attempts to convince Pakistani authorities to implement ROZs specifically in the former FATA region.

The idea of ROZs was first introduced during the Musharraf era, inspired by the success of similar models in border regions of countries such as Egypt, Vietnam, Jordan, and Israel, where such industrial zones had already yielded significant socioeconomic benefits for local populations.

A fundamental reason behind the chronic underdevelopment and instability of Pakistan’s Pakhtun tribal areas is the near-total absence of economic opportunities—especially employment. This, in turn, stems from the lack of any meaningful economic infrastructure in the region. The geography of the area—rugged, mountainous, and largely arid—makes large-scale agriculture unfeasible. The only viable economic avenues are mineral exploration and the establishment of manufacturing units.

During General Musharraf’s tenure, the US proposed the creation of ROZs primarily for its own strategic interests in the region. American policymakers correctly recognized that the rise of extremism and terrorism could be curtailed by offering economic alternatives to the impoverished, marginalized, and disenfranchised population of Pakistan’s tribal belt. Building an economic infrastructure like ROZs was seen as a critical step in countering radicalization and militancy in the region.

However, the response from Pakistani authorities was marred by an indifferent and self-serving logic. Negotiations were repeatedly stalled due to unrealistic demands from Pakistani negotiators, who sought to include areas like the 2005 earthquake-affected Hazara Division, Azad Kashmir, and even textile-producing regions of Punjab under the ROZs umbrella—regions that were not the intended focus of the US initiative.

Industrialists and business elites from urban centers, working in collusion with bureaucrats, attempted to hijack the ROZs concept for their own benefit. Because ROZs would have granted zero-tariff access to US markets for products manufactured in these zones, this plan held immense potential for fostering a self-sustaining industrial base in the tribal areas. Unfortunately, the greed of vested interests derailed a transformative opportunity. The entire country, particularly the tribal belt, has paid a heavy price for this shortsightedness.

To their credit, US officials, recognizing both their strategic goals and the genuine needs of the tribal region’s population, resisted these unwarranted demands and stuck to the original plan of implementing ROZs in the border areas.

The proposal to establish ROZs—or similarly structured initiatives—was, and remains, critical for the comprehensive development of the Pakhtun tribal regions. The long-term potential of such projects may have even exceeded the initial vision of the American architects of the policy. This underscores the need for greater seriousness and commitment from both the US and Pakistani leaderships at the time.

Today, with the ROZs proposal no longer on the table—especially under the Donald Trump administration, which showed little interest in reviving the plan—Pakistan must take the initiative itself. The country should move forward with establishing Economic Opportunity Zones (EOZs), modeled after the original ROZs concept.

If Pakistan leads the way, it might become possible to finance these zones at least partially, if not entirely. Should the United States remain disengaged, Pakistan must seek alternative partners. In this context, China stands out as a potential investor, especially under the framework of the China-Pakistan Economic Corridor (CPEC). It is imperative that Pakistan not miss this second chance to economically transform its long-neglected tribal regions.