Nov. 13 (Bloomberg) -- Tribal elders fleeing a monthlong battle between Pakistan’s military and Taliban guerrillas have described bombed out towns and trapped civilians.

Helicopter gunships and fighter jets pounded guerrilla positions in the mountains outside the former Taliban stronghold of Makeen, said Abdullah Shah Yousuf Mehsud, 34, who helped rescue five families from the area this week. He was appointed to speak by a group of six Mehsud clan leaders who have taken refuge in the northwestern town of Dera Ismail Khan.

“All the houses had been emptied there,” Mehsud said. “When troops encountered firing from the area, they surrounded the area and killed three men, thinking they are Taliban,” When the troops found out they were civilians, they took them to Razmak in North Waziristan “and buried them there,” he said.

In an offensive beginning Oct. 17, the army sent 28,000 soldiers in three columns into South Waziristan, near the country’s border with Afghanistan, to target the 10,000 fighters of the Taliban faction led by Hakimullah Mehsud. The campaign is taking a further toll on the economy, straining a budget deficit the government estimated in July will widen to 4.9 percent of gross domestic product in the year to June 2010.

The International Monetary Fund is in talks to allow the fourth disbursement of an $11.3 billion loan to Pakistan to bolster what it has called an “anemic” economy. The IMF agreed in August to increase support by $3.2 billion to buttress an economy and budget damaged by the war.

Taliban Hideouts

Aircraft targeted Taliban hideouts in the mountains, while the militants fought back in battles lasting all night, Abdullah Shah Yousuf Mehsud said in a Nov. 11 interview. The corpses of 200 donkeys, the main means of transport in much of the remote region, littered Makeen, he said. The army said on Nov. 10 troops were consolidating positions in and around the town where it had razed a house owned by slain Taliban commander Baitullah Mehsud, killed in an August missile strike by a U.S. drone aircraft.

Baitullah Mehsud’s ethnic Pashtun tribe supplies the core of the largest Taliban force.

A spate of suicide bombings and commando-style gun attacks in major cities before and after the assault began have killed nearly 350 people. A bomb today outside an office of Pakistan’s spy agency in the city of Peshawar killed 18 people and injured 100. The early morning blast destroyed much of the three-story building, Associated Press reported.

The government says 80 percent of terrorist attacks against security, civilian and Western targets are plotted by militants in South Waziristan, one of the largely autonomous agencies that make up the Federally Administered Tribal Area.

Scant Information

While army statements daily give casualties among soldiers and militants, independent reports on the operation are rare as journalists have been forced out of the region by the government and the Taliban. The capture of Taliban-controlled towns may have limited strategic value unless soldiers pursue militants into their mountain hideouts, ex-army brigadier Javed Hussain, a former Special Forces commander, said last week in a telephone interview from Islamabad.

More than 350,000 of South Waziristan’s population of 600,000 have been registered as refugees by the United Nations and are mostly living in Tank and Dera Ismail Khan, said Qaiser Khan Afridi, a spokesman for the UN High Commission for Refugees in Islamabad, Pakistan’s capital.

Refugee Families

The government is providing refugee families 5,000 rupees a month and free medical care at army camps in the towns of Dera Ismail Khan and Tank, Lieutenant General Nadeem Ahmed, chairman of the Special Support Group in charge of refugees, told reporters today.

The Mehsud elders interviewed said they were in favor of the army’s assault and they wanted foreign militants from Tajikistan and Uzbekistan allied to al-Qaeda and Taliban forces in the region to be forced out of their lands. “We don’t need them to come and tell us what Islam means,” said Abdullah Shah Yousuf Mehsud.

Recalling the scenes of devastation in his hometown, he said at least 60 houses were bombed and demolished in the Umer Khel area of Makeen.

Jet Fighters

“Jet fighters were hovering above us and tanks patrolled as we tried to get the families out. We walked to Miram Shah in North Waziristan,” a journey of 43 miles (70 kilometers), he said. “Eleven Uzbek and Tajik Taliban were trying to escape Makeen into the mountains to hide.”

About 1,000 Mehsud families fled to Wana, the homeland of the Wazir tribe and an area whose economy is based on fruit orchards, said a second man, Niaz Mohammad Wazir, 40. Officials had warned locals not take them to Tank in case militants traveling with them slip away, he said.

A 29-year-old cook from Wana, Ismail Khan, said he had no future back home. “In between the army and militants, we are trapped,” he said. “A few years ago, the Taliban caught me three or four times and beat me up for smoking a cigarette. I feel there’s no hope for us unless we leave Wana.”

To contact the reporters on this story: Anwar Shakir in Karachi at ashakir1@bloomberg.net.

Last Updated: November 13, 2009 07:17 EST