NEW YORK (Reuters) - Pakistani merchants and job seekers in the United States, still reeling from economic hardship since the September 11 attacks of 2001, are posing as Indians to avoid discrimination in the wake of the Times Square bomb attempt.

A police car is seen in Times Square, New York May 3, 2010. REUTERS/Shannon Stapleton

Once again, a man of Pakistani descent is at the center of a security story, leading to backlash against the Pakistani-American community.

Faisal Shahzad, 30, a naturalized American born in Pakistan, was arrested on Monday, two days after authorities say he parked a crude car bomb in New York’s busy Times Square.

Suspected September 11 mastermind Khalid Sheikh Mohammed and convicted 1993 World Trade Center bomber Ramzi Yousef are also of Pakistani decent, and anti-American militants fighting U.S. forces in Afghanistan take refuge in Pakistan.

In Brooklyn, home to one of the largest Pakistani populations in the United States, business is scant at the various grocery, halal meat and sweet cake shops since a Pakistani-American was suspected in the Times Square plot. More than 100 businesses along Coney Island Avenue have closed due to a 30 percent drop in business since 2001, a merchants’ association said.

In Washington, an American man of Pakistani descent told of coming under suspicion this week when he tried to buy garden fertilizer. The Times Square car bomb contained a non-explosive type of fertilizer.

While there have been no reported incidents since the failed car bomb attack last Saturday, some Pakistanis are bracing for reprisals. Police have increased foot patrols.

“A lot of Pakistanis can’t get jobs after 9/11 and now it’s even worse,” said Asghar Choudhri, an accountant and chairman of Brooklyn’s Pakistani American Merchant Association. “They are now pretending they are Indian so they can get a job.”

India and Pakistan have fought three wars since independence from Britain in 1947, creating hostilities that ordinarily would lead a Pakistani to resent being mistaken for an Indian.

According to the latest U.S. census data, some 210,410 people of Pakistani origin reside in the United States. Nearly 15,000 Pakistanis received U.S. immigrant visas last year.

“I want to make clear that we will not tolerate any bias or backlash against Pakistani or Muslim New Yorkers,” Mayor Michael Bloomberg said this week, noting there are always “a few bad apples.”

New York is “the city where you can practice your religion and say what you want to say and be in charge of your own destiny and we’re going to keep it that way,” Bloomberg said.

SUSPICION OF GARDENING

In Washington, an American of Pakistani heritage who would only be identified as Farhan, said a manager of a suburban home-improvement store prevented him from buying two bags of fertilizer for his family’s lawn on Tuesday.

Farhan, who was born in northern Virginia, said police arrived soon after, investigated and allowed him to buy the fertilizer.

“What kind of a country are we living in when a 22-year-old male can’t buy fertilizer?” Farhan asked. “I’m American. I’m not Pakistani.”

Farhan said the store had subsequently apologized and the case appeared to be one of an overzealous manager rather than store policy.

Merchants in New York, many of whom declined to be named, still remember reprisals after September 11. Soon after the attacks, there was a drive-by shooting in Brooklyn at a Pakistani restaurant, which is now closed.

The local merchants association has shrunk to 150 members, from about 250 merchants almost a decade ago.

The FBI also arrested many undocumented workers in the neighborhood, leading to a wave of deportations, and residents would call law enforcement to make claims against their neighbors, including many false claims, Choudhri said.

“After 9/11, we took much pain,” he said. “After that, a small beating is nothing. Now the Pakistanis are not so much scared but we are ashamed. We are embarrassed that the name of Pakistan came up.”