Pakistan’s military-industrial complex

Since 1954, the Pakistani military has used its political and administrative autonomy to establish its own commercial and welfare enterprises in the country. The military has become directly involved in various commercial ventures, from building roads to housing projects and from cement factories to private banks. Also, there has been both horizontal and vertical growth in its businesses. Over time, they extended their outreach to include private educational institutions, research think tanks, and hospitals, as well as internal policing in major cities, catching electricity thieves and fighting against corruption in the country (Siddiqa 2007). This led to the Pakistani military-industrial complex which provides the means and resources to the Pakistani military to act independently.

The military set up four welfare foundations in the beginning: the Fauji Foundation (FF) for inter-services personnel; the Army Welfare Trust (AWT) for army personnel; the Shaheen Foundation (SF) for air force personnel; and the Bahria Foundation (BF) for navy personnel (Blom 2011). Over a period, such foundations transformed into large business conglomerates. According to some estimates, they run more than 700 companies and hold at least a 10 percent share of the country’s private-sector assets. Moreover, these foundations have 96 enterprises, of which only 9 are publically listed for accountability. Thus, most of the enterprises ran under the foundations have avoided public accountability and have been exempted from tax under Pakistani law as they have been proclaimed to be welfare organizations (see detail in next sections). In addition to this, the military extended its business into public-sector organizations such as the

Table 2.2 Defence expenditure, 1947-1988 (PKR in million)

Year

Defence

Expenditure

Total Expenditure

Defence Expenditure as % of Total Expenditure

1947-48

153.8

236

65.16

1948-49

461.5

647

71.32

1949-50

625.4

856

73.06

1950-51

649.9

1,266.2

51.32

1951-52

779.1

1,442.3

54.01

1952-53

783.4

1,320.1

59.34

1953-54

653.2

1,108.7

58.91

1954-55

635.1

1,172.6

54.16

1955-56

917.7

1,433.4

64.02

1956-57

800.9

1,330.7

60.18

1957-58

854.2

1,521.8

56.13

1958-59

9,996.6

1,956.5

50.93

1959-60

601.043.5

1,846.5

56.51

1960-61

611,112.4

1,894.2

58.72

1961-62

621,108.6

1,986.8

55.79

1962-63

63,954.3

1,795.3

53.15

1963-64

641,156.5

2,337.2

49.48

1964-65

651,262.3

2,736.2

46.13

1965-66

662,855.0

4,498.1

63.47

1966-67

672,293.5

3,765.5

60.09

1967-68

682,186.5

4.077.1

53.62

1968-69

92,426.8

4,371.0

55.52

1969-70

702,749.1

5,109.4

53.80

1970-71

713.201.5

5,751.3

55.66

1971-72

3,725.5

6,303.8

59.09

1972-73

4,439.6

7,480.7

59.34

1973-74

4,948.6

11,724.6

42.02

1974-75

6,914.2

16,139.6

42.83

1975-76

8,103.4

17,613.5

46.00

1976-77

8,120.6

18,161.5

44.71

1977-78

9,674.5

22,781.9

42.46

1978-79

10,167.6

29,851.8

34.06

1979-80

12,654.8

34,845.1

36.31

1980-81

15,283.9

39,592.5

38.06

(revised)

1981-82

19,592.9

38,090.0

51.43

(revised)

1982-83

22,095.3

46,910.0

47.01

(revised)

1983-84

26,798

68,949

38.86

1984-85

31,866

90,074

35.37

1985-86

35,606

100.043

35.59

1986-87

41,335

111,856

36.95

1987-88

47,015

136,151

34.53

Average annual percentage of defence expenditure: 50.51

Source: Compiled from Pakistan Economic Survey, an annual publication of the Government of Pakistan; InRizvi, H. A. (1983) “Pakistan’s Defence Policy” Pakistan Horizon, 36:1, 55-56.

National Logistics Corporation (NLC), in charge of transportation; the Frontier Works Organisation (FWO), involved in construction businesses; and the Special Communications Organization (SCO), working in telecommunication networks.

The four subsidiaries FF, AWT, SF, and BF were registered as charitable organizations under the 1889 Charitable Endowments Act. The FF was founded in 1954 and is now one of the largest business conglomerates in Pakistan, with a declared net worth of US$1,304 million and net assets of US$4,211 million (Fauji Foundation, n.d.). The FF is largely involved in various business ventures, from cement to gas production and from cereals to sugar mills. Throughout Pakistan, the FF also runs 100 schools, 11 hospitals, 60 mobile clinics, an artificial limb centre, and a nursing school. The FF was exempted from tax until 1970 as it counted as a welfare organization. However, they claim that currently they are one of the country’s major taxpayers (Fauji Foundation, n.d.).

The AWT is another subsidiary of the Pakistani military, established in 1971. The primaiy objective was to give employment and provide a profit-making opportunity to ex-servicemen as they were facing resources crunch due to the 1960s US arms embargo and the subsequent 1965 and 1971 wars. Like the FF, the AWF was exempted from tax, this time until 1993 (Siddiqa 2007). It has also developed leading business ventures in various areas such as agriculture, manufacturing, sugar, lubricants, real estate, insurance, aviation, gas stations, and private security solutions (AWF, n.d.).

The SF was established in 1977. Like AWT and FF, its objective was the welfare of ex-servicemen of the air force through industrial and commercial enterprises. The SF provides services in various sectors, including education, engineering, health, construction works, housing, advertising, and many other-relevant services. The foundation has more than 3,000 employees, of which 700 are ex-Pakistan Air Force personnel (see Appendix 4).

The BF was created in 1982. It has excelled in a diverse range of roles in the commercial, developmental, and industrial sectors, such as maritime works organization, education, commercial businesses, and real estate. The foundation runs about 80 schools and colleges throughout Pakistan. It owns four prestigious residential complexes, having an area of about 486,000 square feet of office space at Karachi and one complex in Gwadar, a newly established coastal area in Balochistan province. Moreover, it has over 7,500 employees working in different parts of the country (Bahria Foundation, n.d.).

The primary objective of these foundations was ostensibly the welfare of the ex-servicemen. However, the evolution of the subsidiaries showed that the core motive was to create economic opportunity for the military to gain economic self-sufficiency as it developed large business conglomerates. In the beginning, they penetrated into the “captive market” in which consumers and customers were from their own military institutions. For example, they sold their plots to military personnel in the real estate sector. In the second stage, they targeted private consumers and clients through their own firms and societies. Moreover, they developed their own independent chains of businesses under the umbrella of the four foundations. For example, military agricultural products are processed and

Pakistan’s national security state 47 marketed by military-run subsidiaries, while the military-run Askari Bank handled their transactions (Blom 2011).

In addition to this, the setting up of commercial industries has not only provided employment opportunities for ex-servicemen but it has also largely extended the military’s influence beyond welfare into the political sphere of the country. For instance, the Pakistani military has presented itself in such a way that not only does it protect national borders but it also engages in the development of the country. According to David R. Mares (2010, 386-387), “the military institution itself is intimately involved in leading the political system and its goals are to transform the country’s political and economic institutions.” The commercial and business ventures of the Pakistani military flourished during 1954-1969, especially under General Ayub Khan’s military regime. According to Ejaz Husain (interview by author, Islamabad, 14 November 2017), “the main rationality behind intervention in politics was to capture political power and advance its institutional power which allowed the military to protect its economic interests.” This meant the military was creating an image as a saviour of the country in order to extend its economic empire in the country. Ayesha Saddiqa (2007) noted that “Pakistani’s] military business case often reflects an overlapping of institutional self-interests and [an] anarchic paradigm, where senior generals used their institutional authority and military mechanism for personal predatory appropriation.” Thus, the military established its own business empire to protect its institutional and individual interests.

In addition to these subsidiaries. General Zia entrenched the military’s role in the economic sphere of the country. The military initiated large infrastructure, transportation, and communication projects by establishing various institutions such as NLC, FWO, and the SCO. General Zia started new industrial projects under the above welfare foundation so there was sectoral growth as well (Siddiqa 2007). The NLC engaged in infrastructure projects such as the construction of roads, bridges, and wheat storage facilities. The NLC had 1,689 vehicles, making it one of the largest public-sector transport fleets in Asia. The company is attached to the department of the Ministry of Planning and Development, but basic control of the organization lies with the army. The operational control of the organization is under the army’s Quartermaster General, and it is staffed by 7,279 people, of whom 2,549 are serving military personnel. The rest are retired officers and civilians who are mainly involved in clerical positions (Siddiqa 2007, 134-135). In 2013, the NLC’s freight service financial turnover was PKR 3,554.00 million, and it generated PKR 5 billion on average in 2003-2013 (NLC, n.d.). The NLC also charged US$235 per the North Atlantic Treaty Organization (NATO) container for handling, scanning, and toll charges on its Afghan supply route in Pakistan after the US invasion in Afghanistan in 2001 (Rana 2012). Such business ventures allowed the military to maintain its financial autonomy, further entrenching the national security state.

The FWO is the second major commercial venture of the Pakistani military, established in 1966. It has remained the major contractor for constructing roads and collecting tolls in the country. It comes under the Ministry of Defence (MoD) and is largely controlled by the Pakistani military. Since the mid-1990s, the FWO has grown as one of the primary contractors for public-sector road construction in the country. The SCO was originally established in 1976 to handle a telecommunication network project in Pakistani-administered Kashmir and Gilgit Baltistan. Working under the Ministry of Information Technology, the SCO is a public-sector organization headed by a serving military officer. The organization was revitalized towards the end of the 1990s and given the task of expanding the telecommunication network in the abovementioned administered areas (Siddiqa 2007). Media reports said that the SCO demanded full autonomy to operate as a commercial entity and expand its services across the country, something the government feared would undermine the private telecommunications sector, risking millions of dollars of foreign investment by cellular companies (Shahid 2017).

Additionally, the military established small- and medium-sized cooperatives and businesses such as cinemas, bakeries, poultry farms, and other related commercial enterprises. The military often justified their business ventures by claiming that they were better organized and their staff better trained as compared with those administered by civilians. Consequently, the military-run commercial institutions performed efficiently. Nonetheless, it is important to note that the military often used security concerns to win the bidding for government contracts. In case the government gives the project to the best bidder, the military often raises the issue of the security threat to such projects. The military argues that civilian contractors cannot guarantee the security of such projects. Subsequently, they exploit security concerns and gain most of the contracts at very low costs (Siddiqa 2007). In this process, the Pakistani military established a parallel economy through their military-run business ventures.

In many countries such as China, Indonesia, Turkey, Algeria, and Myanmar, the military has been deeply involved in different commercial businesses. The Pakistani case is unique in the sense that it has flourished over a long period, both in terms of setting up new commercial organizations as well as in the sectoral expansion of the Pakistani military foundations which allow it to move into lucrative sectors such as agro-based industries, fertilizer production, and the oil and gas sectors (Blom 2011). As a result, the Pakistani military-industrial complex has gone beyond the welfare of ex-servicemen into the economic sphere of the country. Thus, the military-industrial complex became another feature of Pakistan’s national security state.

In addition to this, the military provides compensation to its personnel in order to meet its manning goals such as force size, composition, and wartime capability (Asch and Warner 1994). After its inception in 1947, the military developed a mechanism in which the armed forces enjoy perks and privileges. For example, the govenunent allotted agricultural land as a reward to members of the armed forces on the basis of their ranks and performances in the military as well as different other schemes (Express Tribune, Pakistan, 26 January 2017). Pakistan is an agricultural country where land is the most valuable resource. Land was transferred to the military for operational purposes such as containment, borderareas, and training grounds. Some land was allocated to the foundations for farms

Pakistan ’s national security state 49 and real estate businesses. Moreover, the government distributes land as rewards to retired military personnel (Blom 2011). In June 1982, the military launched a housing scheme to provide low-cost houses for retired officers, paid for in easy instalments. The first housing project was completed in early 1984 (Rizvi 2003). Subsequently, the military extended its services in different housing schemes and developed its own real estate empire in the country. Under the housing schemes, the military occupied a massive proportion of land in key locations in major cities in Pakistan. For example, the cantonment board holds about 35 percent of prime land in Karachi. There is hardly any debate over the land allocated to military cantonments and housing schemes in the country. The legal status of the lands occupied by the military is hotly contested by the provincial bureaucracies, however (Blom 2011).

The military gives various military awards such as Hilal-e-Juraat, Sitira-e-Juraat, and Tamgha-e-Juraat, and their recipients received 50 acres, 25 acres, and 12.5 acres of land respectively. According to Professor Hasan Askari, around 300,000 acres of agricultural land were allotted to military personnel in the Sindh province during the Ayub regime, while they received about 450,000 acres of land in the Punjab province between 1977 and 1985 (Express Tribune, Pakistan, 26 January 2017). Moreover, General Zia exempted senior military officials from paying customs duty on luxury cars. During 1977-1997, 27 army officers, 10 navy officers, and 6 air force officers took advantage of this facility (Rizvi 2003). In this process, the military established itself as an elite class in the country.

The Pakistani military adopted a strategy of incorporating its military officers into various civilian institutions during General Ayub Khan’s regime. Many retired military officers were appointed to key positions in government and semigovernment corporations or autonomous bodies. Military officers were also inducted into the civilian elite civil services. Since then, military men have held prominent positions in the civilian institutions. General Zia institutionalized the induction of military officers into civilian organizations. For instance, General Zia allocated a 10 percent minimum quota for the military in civilian jobs, in all government and semi-government services, and appointed military officers as governors of the four provinces (Blom 2011; Rizvi 2003). Since then, this military induction has continued in civilian institutions under both civilian and military regimes. Additionally, many retired military personnel of the rank of captain or colonel were appointed to the police, the civilian-run Federal Investigation Agency (FIA), and the Intelligence Bureau (IB) after retirement (Rizvi 2003). Interestingly, 18 out of the 42 ambassadors posted overseas were from the military in 1982. Moreover, the military attaché, who is usually a serving military officer in the embassy, is more powerful than the ambassador. The induction of military personnel into civilian administration guaranteed the military’s autonomy from the civilian bureaucracy and ensured that they were not aligned with political parties. More specifically, the retired persomiel remained loyal to their mother institutions. Above all, they protect their commercial and institutional interests in the civilian organizations, as we will see in Chapter 6.

 
Source
< Prev   CONTENTS   Source   Next >