* Pakistan is "regional center of gravity of the problem" * Pakistan may need $40-$50 bln to avoid economic collapse * Ease tensions with India, end use of militants (Recasts with details on economy) By Claudia Parsons NEW YORK, April 2 (Reuters) - Pakistan must be central to U.S. policy on Afghanistan and needs up to $50 billion over the next five years to avoid an economic meltdown that risks turning the country over to Islamic extremists, said a report released on Thursday. The report by a think tank with close ties to the Obama administration said Washington must also act to strengthen civilian government in Pakistan and persuade Islamabad to stop using militant groups as an instrument of foreign policy. The Asia Society, whose chairman was Richard Holbrooke until he was appointed U.S. special envoy on Afghanistan and Pakistan in January, convened a task force to compile the report: "Back from the Brink? A Strategy for Stabilizing Afghanistan-Pakistan." The report, made public on Thursday, was provided to President Barack Obama's administration before he unveiled his strategy on Afghanistan last week. It closely mirrors Obama's policy, while focusing more on politics than military issues. The report said the global economic crisis risked further weakening Pakistan's civilian government, which has little control over tribal areas that have become safe havens for al Qaeda, and which struggles to match the sway of the military. "Perhaps the most urgent priority is to prevent economic collapse which could undermine state authority even in major urban areas in the next few months," the report said. It cited estimates that halting the economic decline in Pakistan might require a five-year package of $40 billion to $50 billion, a sum that dwarfs Pakistan's existing $7.6 billion International Monetary Fund bailout. It said 1 million workers joined the ranks of the urban unemployed in the past six months -- a volatile source of tension in a country where 40 percent of the population live on an income of under $1.25 a day. The report urged Washington to work with a "Friends of Pakistan" group at the United Nations to mobilize donors to provide an urgent rescue package that could involve direct budget support and or a World Bank-administered trust fund. CENTER OF GRAVITY IS PAKISTAN Task force co-chair Barnett Rubin said the United States and its allies had for too long focused on Afghanistan while allowing problems to fester in Pakistan. "The regional center of gravity of the problem is not in Afghanistan," Rubin said. The report argues that there are no al Qaeda bases in Afghanistan, but many in Pakistan, where a variety of other militant groups have long thrived on covert backing from the military and intelligence apparatus. "Because it faces India, which it sees as an enemy ... Pakistan has adopted formally the use of Jihadi groups as instruments of their foreign policy," Rubin said at a panel discussion in New York on the report. "One of the aims of our regional diplomacy should be to use all the resources we can to encourage, cajole, force, persuade Pakistan to change its policy away from using those Jihadis." Essential to that would be meeting Pakistan's legitimate security concerns, the report said, and easing tensions with India. Relations between the nuclear-armed rivals were strained further by November's attacks in Mumbai, which India says were conducted with the involvement of Pakistani state agencies. (The full report can be seen at http://www.asiasociety.org/taskforces/afpak/ ) (Editing by Peter Cooney)
A Sikh protestor argues with a policeman during a protest against Jagdish Tytler and Sajjan Kumar, who were accused of leading anti-Sikh riots in 1984, outside India's ruling Congress party headquarters ...
