Global Facilitation Network for Security Sector Reform (GFN-SSR)

Military Inc. - Inside Pakistan's Military Economy

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This book examines the case of Pakistan's military economy and the consequences of merging the military and corporate sectors. It argues that: (1) military capital used for the personal gain of military personnel perpetuates the military's predatory political style; (2) predatory economic military behaviour increases in totalitarian systems; and (3) such behaviour is both a cause and effect of a feudal authoritarian political system. Strengthening democracy in Pakistan will require a strong mass-based domestic political movement aiming to end authoritarianism, and such a movement will need external support. It is also important to investigate potential links between increased in religious conservatism and military predation.

Milbus, or the military's 'internal economy', is military capital that is used for the personal benefit of military personnnel, especially officers, but is neither recorded nor a part of the defence budget. Its most significant component is entrepreneurial activities that are not subject to state accountability procedures. In Pakistan, the military is the sole driver of Milbus - and is an example of the type of Milbus that intensifies military interest in remaining in power or in direct/indirect control of governance.

Pakistan's military runs a huge commercial empire with an estimated value of billions of dollars. Milbus in Pakistan involves: (1) the varied business ventures of four welfare foundations (small businesses such as farms, schools and private security firms, and corporate enterprises such as commercial banks and insurance companies, radio and television channels and manufacturing plants); (2) direct institutional military involvement in enterprises such as toll collecting, shopping centres and petrol stations; and (3) benefits given to retired personnel such as state land or business openings.

The value of public resources transferred to the military increases with increased military involvement in the economy and influence over state and society, incentivising the military to continue strengthening its power. The armed forces encourage policies and policymaking environments that increase their economic returns, and the accumulation of wealth also buys additional power, further contributing to feudal authoritarianism.

The economic interests and financial autonomy of the military elite played a vital role in persuading them to push for an independent status, strengthening the military politically, organisationally and pyschologically. The military thus developed into a dominant class exerting considerable social, political and economic influence, entry to which is strictly controlled.

• After 1954 the new indigenous commanders of the armed forces sought to consolidate political power by increasing their influence in decision making and establishing financial autonomy.
• Although the 1970s was a decade of populist politics under Zulfiqar Ali Bhutto, Bhutto failed to strengthen democratic institutions and instead rebuilt the armed forces.
• General Zia ul Haq introduced constitutional provisions to institutionalise military power. These included Article 58(2)(b) which empowered the president to dismiss an elected government.
• In 2004, General Pervez Musharraf established the National Security Council, which elevated the armed forces' position form being a tool of policy to a powerful organisation that could protect its own interests.
• When not directly in power, the military learned to negotiate authority, and when in power, each successive military leader rewarded senior followers with greater benefits, strengthening the military's position.
• No civilian institution has ever forcefully challenged the military or its role in governance because the military and other elite groups depend on each other. Dissenting voices in civil society are often coerced into submission.
• Data on Milbus is highly protected, which hinders the gathering of evidence for effective challenge.
• The military sees its economic advantages as 'welfare' that makes military service attractive to citizens.

Milbus is economically, politically and socially costly to Pakistan.

• It nurtures the military's political ambitions, creating deep-rooted vested interests in military dominance. The military has nourished the religious right to consolidate military control over state and society. The religious parties, militant groups and the armed forces are bound in a process of reinforcing each other's strength, bringing most benefit to the religious right.
• Socially, it increases inter-ethnic tensions (due to skewed military recruitment policies), reduces the acceptability of the military as an arbiter among political interests and increases the alienation of the underprivileged. This alienation may encourage the adoption of extreme ideologies.
• There is also a high financial and opportunity cost in building and sustaining the military's influence in power politics. Evidence shows that military businesses are not run more efficiently than others. Some of the military's larger businesses and subsidiaries have required financial bailout from the government. Further, the companies use government resources, which distorts the market.

Milbus and the military's financial autonomy hampers the growth of democracy in Pakistan. Therefore, internal democratic forces need to overcome their divisions. The structure of political parties needs to democratised and political actors need to be strengthened. Moral and political external assistance might help political actors to push the army out of politics.

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