The killing of Benazir Bhutto, twice prime minister of Pakistan and leading candidate in the 8 January election, is bad news for Pakistan and the world. Although Bhutto herself was an economically unsuccessful moderate socialist, she represented the best opportunity for Pakistan to avoid authoritarian rule or chaos after the election. Neither outcome would be good for Pakistan’s economy. But chaos and impoverishment of a nuclear-armed nation of 165 million increasingly radicalized Muslims poses severe dangers for the world.

Ever since it went nuclear in 1998, Pakistan has endangered the world’s security. The risks, however, had been mitigated by the success of Pervez Musharraf’s authoritarian government in achieving respectable growth, spreading wealth through Pakistani society, providing employment and offering the long-term prospect of reducing Islamic extremism to a manageable minority. The markets have noticed Pakistan’s economic success more than its political instability: before Bhutto’s assassination the Karachi, 100 share index had closed up 47% on the year.

The economic competence of Pakistan’s government is as important as its political legitimacy. Economic failure in such an environment quickly produces political failure and feeds terrorism. There are few good options. Nawaz Sharif, the other ex-prime minister contesting January’s election, is economically sounder than Bhutto but comes with a tinge of corruption; he is also disliked by Musharraf, who ousted and exiled him in 1999. Musharraf, questionably re-elected President in October, is unlikely to win a parliamentary majority. But a re-imposition of authoritarian rule, however, successful economically in the short term, would lack even the limited legitimacy of Musharraf’s 1999-2007 government, thus running the risk of storing up greater unrest and extremism for a later date. Chaos in Pakistan would produce innumerable recruits for Al-Qaeda, and risk nuclear proliferation to Islamic terrorists. The world thus has a huge stake in preventing it. The question is, how?