The Marhaba restaurant in Peshawar gives an interesting vantage point on the challenges facing Pakistan. It is freshly-painted, one wall has been rebuilt and the floor has been scrubbed clean of the pints of blood that drenched it when a suicide bomber killed 25 people there in May. It is back in business, but barely. Staff are still in shock. Over cups of green tea they show visitors cuttings of press coverage of the attack, roll up trouser legs to display the scars from shrapnel wounds and stumble for explanations of why they were bombed. “We read in the newspaper that we were targeted because we were said to be anti-Taliban,” said one of the chefs, who gave his name only as Hassan. “But we just don’t know.”

One part of my job is visiting our network of bureaux to see the problems they face and to better understand the background to the stories they are reporting. I have come to Pakistan because it has been front page news for much of the year. On the political front the story has been President Pervez Musharraf’s desire to hold onto power by overriding legal obstacles to his transition from military leadership to civilian control. In March he sacked the country’s chief justice, tipping the country into political turmoil that culminated in him imposing a state of emergency. His popularity has slumped but in the face of protests, international pressure and the return from exile of bitter political rivals he has managed to get himself re-elected as president for five years and has given up leadership of Pakistan’s all-powerful military. He also looks to have given the January general election some credibility by enticing enough politicians to contest the vote. There are plenty of bear traps out there for him, though. If a hostile parliament is elected by a population heartily sick of the ex-general he faces at least a rocky cohabitation or at worst impeachment.

But that is not the worst of it. Pakistan has always had lawless frontier areas where tribal laws held sway. British colonial rule failed to quell them and Pakistan historically took a hands-off approach. But Pakistan is caught in the back-draught from the U.S.-led war on the Taliban in neighbouring Afghanistan. Jihadist militancy, which many argue sprung from the religious schools of Pakistan that provided cannon fodder for the fight against Soviet rule in Kabul, has put down deep roots in border areas. Musharraf, under U.S. pressure to stop Afghan Taliban retreating into his country, has set his own military on militant groups, turning a localised law and order problem into a blossoming insurgency.

Musharraf has been criticised inside and outside Pakistan for being either reluctant or unable to stem militant infiltration. A jihadist revolt in the Red Mosque in central Islamabad, a city of tree-lined avenues and plush villas for the elite, shook the country’s establishment. Commandos quelled the uprising in June at the cost of over 100 lives. Since then a wave of suicide bombings against the army, police, politicians and high-value targets across the country has killed 800 people, according to Pakistani officials. The army is now using helicopter gunships and artillery to combat a radical Islamist cleric who has launched a ‘holy war’ in the favourite tourist spot of Swat, a scenic valley that is a four hour drive from the capital. No skiing then this year for Islamabad’s monied classes.

In Peshawar the vortex of forces tearing Pakistan in different directions is visible in the fear of the journalists whose freedom to report has been battered by Musharraf’s press clampdown, in the new barricades set up to foil suicide attacks on the military’s elegant barracks buildings and in the metal detectors and armed guards set up in recent months to prevent bombers entering restaurants. Marhaba is too poor to afford such protection and its empty benches betray the nervousness of guests. “This was a very peaceful place before,” says the landlord’s agent, Namir Ahmad Safi. He professed himself nonplussed at the stories that surfaced in the wake of the attack that the former owner Haji Sadruddin had been so close to the authorities that he drew accusations of spying for them. Militants amplify their reach via intimidation, enforcing their strict interpretation of Islam that frowns on education for women, enforces a strict separation of the sexes and condemns frivolity. “The main issue here now is militancy,” explained Zulfiquar Ali, a local journalist for Dawn, a national newspaper. “It affects health, education, business, security - everything.”

Peshawar has always been the gateway to the badlands, the last stop before armed guards were needed for the trip up the Khyber pass and its gun culture was legendary. British troops would set off from its magnificent fort in the 19th century for bloody misadventures in Afghanistan. Now a modern motorway puts it just two hours from Islamabad and the challenges to central control that Peshawar held at bay are sweeping past the town towards the capital.

Why should we care? We should care for the sake of Pakistan’s 160 million people, of course, since the vast majority are focused on earning a living and bringing up their families. We should also care because at the extreme Pakistan risks becoming a failed state, one which has become so consumed by fighting insurgency that the economy slumps, any semblance of democracy is abandoned and the military, the centre of real power in Pakistan for much of its history, is trapped in a war against its own people. International angst would focus then on the security of the nuclear arsenal. Possessing the bomb gives Pakistan more geopolitical attention than it might otherwise deserve. It underpins the nightmare scenario, which is currently outlandish but has enough logic to it to merit the attention of all of us.