MATTA, Pakistan (Reuters) - X-ray machines in hospitals in Pakistan's Swat Valley are 20 years old. The tourism industry is shattered. Frustrations over unemployment are spreading.
Nearly a year after a Pakistani army offensive cleared the Taliban from Swat, government efforts to stabilize the region through economic rehabilitation have yielded limited results.
While small businesses are recovering from two years of fighting, massive state funding is needed to create jobs and industries in the former tourist hub where militants blew up hotels, houses and girls' schools and beheaded tribal elders.
Only that, officials say, will prevent the Taliban from returning to recruit residents disillusioned with a government widely perceived as corrupt and inefficient.
"This is by far the most important drive to keep the Taliban away," chief regional minister Amir Haider Khan Hoti told Reuters recently.
The first phase will require $1 billion, he said. It's a daunting task for the government, which will be hard-pressed to extract money from a sluggish economy battered by the steep cost of fighting Taliban insurgents.
The drive to win over the population by providing better economic opportunities and basic services is moving at a slow pace, as evidenced by grim living conditions, joblessness and lack of industries.
Unemployment has eased a little after thousands joined a newly created community police force, which pays $112 a month.
Swat's most advanced medical facility, Saidu Sharif Teaching Hospital, lacks basic equipment. Cardiac arrest victims rushed to the emergency room have no access to defibrillators.
A young boy with a fractured skull lay disoriented in a bed waiting for results from a battered X-ray machine. A bloody bandage lay on the floor. Flies hovered nearby.
A poster of wanted would-be suicide bombers with code names remind patients of lingering security threats in Swat, 130 km (80 miles) northwest of the capital, Islamabad.
A suicide bomber recently killed 14 people and wounded 50 at a police checkpoint in Swat's main town, Mingora.
Progress has been made, aid groups say. Reconstruction has partially started. More than 200 school demolished by the Taliban were repaired. Tent schools have gone up and issues like supplies of electricity, furniture and latrines are being tackled.
Some small shops are back in business. During the Taliban's reign of terror, which began with rebel incursions in 2007, militants destroyed pop music cassettes sold in Akthar Muneer's store and forced him to sell music calling for holy war.
Despite thousands of dollars in losses, he now draws enough customers to make a decent living because there is less fear on the streets of Matta, once a major Taliban bastion in Swat.
"People are comfortable listening to music again," he said.
But major economic development is needed to ensure the region doesn't return to the bloodshed that kept tourists away from the stunning valley, officials and residents say.
Two men who said they were beaten and forced to join the Taliban sat near a house that was flattened by the group, comparing those chaotic days to a more stable life now. They are happier but the future is uncertain.
"We expect a lot from the government," said one of the men, who looked far older than his 47 years, perhaps from the stress of fighting and the ruins it left behind. "We have no jobs now."
Editing by Paul Tait