NY Times excerpt:

PESHAWAR, Pakistan — In the last two months, Taliban militants have suddenly tightened the noose on this city of three million people, one of Pakistan’s biggest, establishing bases in surrounding towns and, in daylight, abducting residents for high ransoms.

The militants move unchallenged out of the lawless tribal region, just 10 miles away, in convoys of heavily armed, long haired and bearded men. They have turned up at courthouses in nearby towns, ordering judges to stay away. On Thursday they stormed a women’s voting station on the city outskirts, and they are now regularly kidnapping people from the city’s bazaars and homes. There is a feeling that the city gates could crumble at any moment.

The threat to Peshawar is a sign of the Taliban’s deepening penetration of Pakistan and of the expanding danger that the militants present to the entire region, including nearby supply lines for NATO and American forces in Afghanistan.

For the United States, the major supply route for weapons for NATO troops runs from the port of Karachi to the outskirts of Peshawar and through the Khyber Pass to the battlefields of Afghanistan. Maintaining that route would be extremely difficult if the city were significantly infiltrated by the very militants who want to defeat the NATO war effort across the border.

NATO and American commanders have complained for months that the government’s policy of negotiating with the militants has led to more cross-border attacks in Afghanistan by Taliban fighters based in Pakistan’s tribal areas.

But the brazen campaign of intimidation in Peshawar, just 90 minutes by highway from Islamabad, the capital, shows that the Taliban threat now cuts deeply on both sides of the border, not just with suicide bombings but also with the persistent presence of militants among the population.

In this hard-boiled provincial capital, the linchpin of the North-West Frontier Province, the fear is palpable. Many of the rich have fled their mansions and left for Dubai. Middle-class families are packing for other places in Pakistan, and the poor are vulnerable to the militants’ entreaties.

“If this trend continues, there will be complete peace because the city is under the Taliban, or civil war because of the fighting,” said Samullah Shinwari, 31, the father of four children, who is selling his lucrative shopping mall and two ancestral family homes and moving to Islamabad.

With the militants crowding in, the national government called a special meeting in Islamabad on Wednesday to address the rapidly deteriorating security situation.

The day before, a sympathizer of the Taliban, Maulana Fazlur Rehman, shocked the National Assembly when he said that the entire North-West Frontier Province, including Peshawar, was on the brink of being engulfed by extremism.

The government’s control, he warned, was “almost nonexistent” in the province, an integral part of Pakistan and one of just four in the country. The specter of the fall of Peshawar threatens the fabric of the country.

The government issued a statement after its meeting announcing that it was turning over security of the province directly to the army. In the tribal areas, the police and the paramilitary Frontier Corps would remain the first line of defense, and the policy of peace deals with the militants would continue, the statement said. The military would be a force of last resort.

On Friday extra police officers were patrolling the main roads of Peshawar and its entry points from the tribal region.

There were reports that the Frontier Corps planned an operation in the coming days in the Khyber agency, adjacent to the city, to clean out Islamic militants under the sway of Mangal Bagh, a former bus driver who has grown into one of the most feared extremist leaders, commanding thousands of men.

But whether there was sufficient resolve to push back the startling gains by the militants was a point of debate.

“The government is helpless,” said Arbab Hidayat Ullah, a former senior police officer here. “It has lost its wits. The police have lost so many men at the hands of the Taliban they are scared.” Mr. Ullah said that the police of Peshawar had a considerable budget, but that the money had little impact and that the void allowed the brute force of the Taliban to flourish.

Despite its proximity to the capital, Peshawar has always been a world unto itself, and the province and the tribal areas have been largely forgotten by successive Pakistani governments. They have reaped slim allocations from the federal budget and received minimal governance.