Leading article: A nation on the verge of democratic collapse

Pakistan: A state that cannot, or will not, protect vulnerable minorities cannot be called a democracy

The world's nightmare has long been that Pakistan will become a nuclear-armed failed state. We might, or might not, be on our way to such a scenario. But what is painfully clear is that Pakistan is now very close to being a failed democracy.

Yesterday, Pakistan's minorities affairs minister, Shahbaz Bhatti, was murdered in Islamabad. This follows the assassination of the Punjab governor, Salman Taseer, in January by his own bodyguard. What links the two assassinations is that both Bhatti and Taseer had called for reform of Pakistan's blasphemy laws, which they claimed were being used to persecute religious minorities in the country.

An atmosphere of fierce intolerance and religious extremism now pervades Pakistan. Even to question the application of the laws is considered by large sections of the population to be as bad as blasphemy itself. Some Muslim leaders responded to yesterday's assassination not with condemnation of his killers but by suggesting that the murder was part of some American-led conspiracy to destabilise Pakistan. This mixture of bigotry and paranoia is poisonous.

But what is most worrying is that the government of which Mr Bhatti was a part seems to be pandering to this intolerant mood rather than challenging it. President Asif Ali Zardari responded to the Taseer assassination by announcing that he had no intention of reviewing the blasphemy laws. There are also disturbing question marks over how seriously the Government is taking the death threats made against those brave figures who are standing up for religious tolerance. Bhatti did not have the same level of security as other ministers (although as the Taseer case shows, police protection alone is, sadly, no guarantee of safety). A state that cannot, or perhaps will not, protect vulnerable minorities, free speech, or even its own elected officials cannot be considered to be a democracy.

Pakistan seems trapped in a vicious circle. The country should be experiencing rapid economic growth like its neighbour India. But it is chained down by corruption and religious extremism. While the economy is weak, poverty grows and religious fanaticism increases. The country also seems cursed by nature. The devastation inflicted by last year's floods has pushed more of the rural population towards desperation and extremism. The outside world has not helped Pakistan. For many years, Western governments backed the military dictatorship of Pervez Musharraf in the belief that the general was a bulwark against terrorism. But religious fundamentalism ended up increasing under Musharraf's repressive rule.

The general has now departed the scene, replaced by an elected government. But the Western interference continues. The Obama administration has stepped up the number of drone strikes on the Afghanistan border, despite the deep anger that these attacks (which often kill innocent civilians) inspire among Pakistanis.

Rather than funding generals and drones, Western resources should go to building up the institutions of civil society in Pakistan. They have the best chance of establishing the stability that the country needs to prosper. We still have some influence. Plans from the Development Secretary, Andrew Mitchell, yesterday showed that Pakistan could become the biggest recipient of bilateral aid from Britain by 2015. And Washington channels $2bn a year to Islamabad in aid.

But we should not be under any illusions about the ability of the outside world to affect what happens in this struggle for the soul of Pakistan. Nor should we be in any doubt that it is a battle that, at the moment, the wrong side is winning.