July 2 (Bloomberg) -- Pakistan’s assault on the country’s biggest Taliban stronghold may end in disappointment for the Obama administration, which has pushed the army to escalate the fight and restore a measure of government control in the region.

U.S. officials “worry Pakistan may be biting off too much” by attacking Taliban chief Baitullah Mehsud in the mountains of South Waziristan before defeating militants in the less-remote Swat Valley, said Daniel Markey, South Asia specialist at the Council on Foreign Relations in Washington.

Pakistan’s ability to fight on a second front before gains in Swat are consolidated is a cause for concern, said a State Department official dealing with South Asia, who spoke on condition of anonymity. The U.S. wants to see Pakistan restore sufficient control in Waziristan to counter Islamic extremism, the official said.

That goal is unlikely to be met, according to analysts. If Mehsud can be captured or killed, he would likely be replaced by Taliban leaders even more eager to fight U.S. forces in neighboring Afghanistan, Markey said in a telephone interview.

President Barack Obama says the Taliban’s influence in a nuclear-armed state, and their hosting of al-Qaeda forces in Pakistan’s northwest, form the greatest security threat to Americans. “Waziristan is at the center of the fight” to reverse that influence, said Talat Masood, a political consultant and retired army lieutenant general in Islamabad.

Sheltering Al-Qaeda

Waziristan’s rugged terrain and the historical resistance to outside rule by its Pashtun tribes keep it the most autonomous stretch of Pakistan’s border with Afghanistan. The army moved into Swat in April after the Taliban advanced to within 100 kilometers (62 miles) of Islamabad.

The Taliban chief in Swat, Maulana Fazlullah, was wounded in military operations in the district, the government said yesterday. “It has been confirmed that he has been hit and seriously injured,” Interior Minister Rehman Malik said.

Mehsud and other commanders in Waziristan are sheltering the largest groups of al-Qaeda guerrillas in Pakistan, said Mahmood Shah, a former security chief of Pakistan’s semi- autonomous tribal area, which includes Waziristan.

While offensives in Swat and the border district of Bajaur have pushed back the Taliban, Pakistan has not restored the security and public services that might entice uprooted residents to return.

Budget Constraints

“The government has not created the conditions to consolidate” its military gains, Masood said. Television pictures show thousands among about 2 million people who have fled Swat camped without adequate shelter or water. Left unresolved, their plight may erode support for the anti-Taliban fight, he said.

The military offensives have so deepened Pakistan’s budget deficit that the government may seek a $4 billion loan from the International Monetary Fund, following its $7.6 billion bailout in November.

The army failed to defeat militants in South Waziristan with offensives in 2004 and 2007. “Now, the army has better political conditions” for fighting the Taliban, said Syed Adnan Ali Shah Bukhari, a Pakistani researcher at the Rajaratnam School of International Studies in Singapore.

After months of bombings, “both public opinion and the military are much more determined to fight the Taliban” than in past years, Bukhari said. Mehsud claimed responsibility in March for attacks that killed police and bystanders in three cities, and rivals from his Mehsud tribe held a tribal conference or “jirga” this month to oppose him for killing bystanders.

Predator Attacks

The army is trying to isolate Mehsud from other Taliban commanders in Waziristan, said Shah. “But the Americans’ drone attacks are muddying the waters; they risk inciting Mehsud’s rivals to unite with him.”

The U.S. has increased strikes by its missile-firing Predator drones in western Pakistan, conducting 24 attacks in the first half of this year, compared with 36 in 2008, according to Bahukutumbi Raman, an intelligence analyst at India’s Institute for Topical Studies. Pakistan has asked the U.S. to stop the attacks and provide its military with drones instead.

One strike on June 23 came close to hitting Mehsud and killed at least one aide, the newspaper Dawn and other Pakistani media said. A Taliban leader in North Waziristan, Gul Bahadur, broke off a truce June 29, complaining of the air strikes, and now may ally with Mehsud, Shah said.

The army aims to defeat Mehsud first and then other Taliban leaders sheltering al-Qaeda, Shah said. “Most of al-Qaeda now are in” Bahadur’s territory, he said.

Tribal Jirgas

Bahadur and another top commander, Maulavi Nazir, are from the Wazir tribe, a rival of the Mehsuds, and they have avoided hostilities with Pakistan’s government by targeting U.S. forces in Afghanistan, said Sailab Mehsud, publisher of a newsletter on Pashtun affairs.

The military wants jirgas to select non-Taliban leaders who will cooperate with the government, said Shah. Marvin Weinbaum, a former State Department official and South Asia specialist at Washington’s Middle East Institute, doubts a non-Taliban leadership can be built soon as scores of pro-government tribal chiefs were killed in almost a decade of Taliban attacks.

Even as the army targets Mehsud, there are no signs that it is ready to take on other guerrilla chiefs -- including Jalaluddin and Sirajuddin Haqqani -- whose fighters battle in Afghanistan. The U.S. and Pakistan “seem to be marching together for the moment, but there are signs that our paths may diverge in the future,” Markey said.

To contact the reporter on this story: James Rupert in New Delhi at jrupert3@bloomberg.net

Last Updated: July 1, 2009 23:37 EDT