With the assassination of former prime minister Benazir Bhutto, the political and economic landscape of Pakistan has changed dramatically.

Benazir Bhutto was killed today at an election rally in the garrison city of Rawalpindi when a gunman shot her and set off a bomb. The BBC reports that at least 16 others were killed in what appeared to be a suicide attack. While no one immediately claimed responsibility, it is widely believed that Islamic militants staged the assault. She was 54.

News of her death—and fears of a nuclear power possibly sliding into anarchy as a result—dragged down global stock markets and sparked a wave of buying of United States Treasury securities, a traditionally safe haven. In afternoon trading, the Dow Jones industrial average was down more than 150 points, or 1 percent. Crude oil futures rose above $97 a barrel, and gold prices also gained. (The attack took place after stock markets in Pakistan and elsewhere in Asia were closed.)

Despite the increasing violence and political unrest in the country, Pakistan's economy has so far thrived, growing at an average annual rate of 7 percent for nearly a decade. The stock markets in Karachi and Lahore have risen 1,000 percent since 1999.

But the economy is also in need of additional investments from the United States and Europe that had appeared to depend largely on the outcome of the election on January 8. Pakistan receives some $7 billion a year in foreign investment.

Foreign investors have been cautious since President Pervez Musharraf declared a state of emergency in November. Soon afterward, Shaukat Aziz, a former Citigroup executive who was the architect of Pakistan's economic recovery, resigned as prime minister, in an apparent private protest.

The United States—which buys nearly 25 percent of Pakistan's exports of textiles and agricultural products—has been particularly eager to see signs that Pakistan is moving toward a more democratic and more transparent system. The assassination today throws that outlook into doubt.

"Pakistan's economy has performed remarkably better than would be expected in a political crisis," said Anwer Sher, a Pakistani banker and real estate consultant based in Dubai, where Bhutto maintained a home and where her three children still live with their father, businessman Asif Zardari, as does her mother, Nusrat. "This can partially be explained on grounds that the civil disturbances have not been crippling and, largely, that the economic sector does see that, either way, an election in January and the settling of tensions domestically and with India will eventually happen.

"But now everything has been thrown off balance," he added. "Until the situation settles down, investors are going to be skittish, if not downright reluctant to pour more money into an economy that suddenly plunged into a political crisis of this dimension."

Martin Hutchinson writes on Breakingviews.com that Bhutto "represented the best opportunity for Pakistan to avoid authoritarian rule or chaos after the election."