As World's 'Terrorist Capital,' Karachi Verges on Political Meltdown Suspect in Nairobi Bombing Caught Here. Americans Flee Pakistan

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A week ago the guns were quiet in Pakistan's financial hub, a seaside metropolis of 12 million. Brightly colored lights draped buildings for Independence Day, Aug. 14. Diners outside a popular restaurant, Barbeque Tonight, relaxed under palm trees. Bankers and the head of the Karachi stock market spoke of containing the killing sprees and gangland terror that have made the city a war zone for 10 years. Optimists felt the violence-prone ruling party, the Muttahida Quami Movement, was contained.

But now the optimists are quiet. Violence between MQM factions has left 30 people killed, 100 cars burned, the financial district ransacked, strikes across the city, and seven children wounded when a gunman sprayed bullets into a school celebration.

To add to the city's misery, the lead suspect in the two East African US Embassy bombings was arrested here Aug. 7. Mohammed Sadiq Howaida was allegedly traveling to Afghanistan via Karachi under a false Yemen passport when Pakistani authorities detained him at the airport. But his traveling partners got away - something that won't escape the notice of US State Department officials, who called Karachi the terrorist capital of the world, after two US officials were killed here in 1995 as a possible payback for the deportation of suspected terrorists hiding in Karachi.

{Yesterday US ambassador Thomas Simons Jr. ordered an evacuation of half the embassy staff in Islamabad and strongly urged US nationals to leave Pakistan. US missions in Mongolia, Eritrea, and Albania are similarly affected, based on a "range of threats" since Nairobi.}

That Pakistan's financial center is again immobilized is described as a metaphor for the economic woes of the state, and the problems of Prime Minister Nawaz Sharif's government.

Karachi generates 40 to 50 percent of the country's wealth. With its stock market and endless sandy beaches, it seems a South Asian cross between New York and Los Angeles. Yet with no real government, no mayor, no municipal services, costs rising 25 percent since January, with armed guards in front of houses and shops - investment is scant and confidence is at a "low ebb," says a leading market analyst.

"Karachi brings together all the problematic issues of our times in one place," says Maleeha Lodhi, former Pakistani ambassador to the US. "You have drug running, gun running, ethnic partition, straightforward crime, and armed militias - all in a city that is the economic lifeline of Pakistan. It is our only port. We can't survive without it, and right now it is undergoing a Lebanonization."

Natives who remember Karachi's cachet in the 1920s as a cultural mecca describe the present in tragic terms. …