The emergence of Pakistan - the first secessionist state at the very beginning of decolonisation - coincided with the onset of the cold war. Only due to massive American aid and political patronage could the new and artificial state survive. The article retraces the transformation of this state into a military dictatorship and, presently, a state of crisis. This twofold transition can only be understood through an analysis of the fundamental importance of the army apparatus not only politically, but also socially and economically: The army is one of the largest landowners; it runs its own industries and banks; it constitutes an economic empire of its own. At the same time it has evolved as and into a parallel society that reaches into the most remote corners of Pakistan's highly stratified, tribal as well as feudal society. Yet, this expansion has its price: Profound involvement in the anti-Soviet Jihad and in the establishment of the Taliban regime combined with the unchecked growth of the Inter Service Intelligence (ISI) has led to a state of crisis. It has become increasingly unclear where the general's authority ends, and where the ISI's power and the fundamentalist's involvement or resistance begin.