Is the US military overfunded? - the information portal on South Asia

In addition to central connections with illegal activities of the military, such as systematic smuggling with Afghanistan and Iran, money laundering and drug trafficking, the implications of the milbus for jiahdi groups must also be taken into account.

Look into Pakistan's military dominated economy. Ayesha Siddiqa's book title Military Inc. Photo: Thomas K. Gugler

Generals in Pakistan often end their military careers as multi-millionaires. The shocking electoral defeat of Musharraf and the assassination of Benazir Bhutto, staged in an impressive media, which is interpreted by numerous observers as a demonstration of power by military-intelligence forces, challenge the TINA thesis (There Is No Alternative), which European and American analysts have been using since September 11th Musharraf inexorably supported. The ISI and the Pakistani military owe their supremacy not only to the political and constitutional reforms of Musharraf or the financial over-support by the USA, but also to the economic activities of the industrial companies initiated by the military foundations, which are central to the power position of the military in Pakistan. Can Western decision-makers make a contribution to the democratization of Pakistan by banning trade for the companies affiliated with the military foundations?


The military occupies a dominant position in Pakistan's political and economic landscapes. Siddiqa's Analysis of the Military Economy "Military Inc." coined the term "Milbus", military capital that is generated relatively independently of the capital listed in the defense budget. Milbus is therefore the capital of the military from economic activities that are developed by individual military rulers without central control and without accounting, mostly with the aim of personal enrichment. Milbus forms the central motivating force of the military decision-makers to further expand the political supremacy in the country - i.e. to prevent the democratization process according to European understanding as far as possible. The redistribution of national resources from the public to the private sector, which officers also use for gratification purposes, v. a. self-service and the loyalty assurance of dependents, evades government control in a militaristic-totalitarian system like Pakistan. The pre-capitalist socio-economic structures of the country are strengthened by the greed of powerful officers, so that the tender plants of capitalism will not be able to blossom in the foreseeable future either. The main actors in this permanent redistribution from the public sector to the private are the four armed forces charities: Fauji Foundation (Army), Army Welfare Trust (Army), Shaheen Foundation (Air Force) and Bahria Foundation (Marine).

These four umbrella organizations together operate around 96 official companies, i.e. sub-organizations that operate as companies. In the military's economic ventures, a distinction is usually made between the privatization of the security business (arms industry, training, consulting firms) on the one hand and military involvement in traditionally non-military economic sectors such as agriculture, banking, insurance, hotels, airlines and real estate business on the other. While the military initially concentrated only on traditionally military-related industrial sectors such as logistics, telecommunications and information technology, in the last 30 years they have increasingly expanded into small craft businesses, medium-sized trading companies and even bakeries, shoe factories and decoration companies. For Western observers, these latter activities are particularly surprising, e.g. how lands are overwritten or assigned to predominantly retired officers or to military-run commercial enterprises. sold well below market value, as privileges are secured for retired military employees (membership in exclusive clubs, travel discounts on state transport and free overnight stays in "state" hotels), where business opportunities arise everywhere due to political pressure and competition from the private sector from the market is displaced. It is also surprising that military decision-makers were apparently involved in both the opium trade and the systematic smuggling of food, for example of flour, into Afghanistan.

Demilitarization as a way to democratization

In the history of Pakistan one can differentiate between two or three modes of relations between the military and civil society: (1) civil-military partnership (such as India or Germany), (2) military-as-arbitrator (Pakistan before 1977) and (3 ) Military-as-paternalistic protector (Pakistan after 1977).

Based on Private Military Enterprises and the private security businessesthat emerged in the US in the 1990s (e.g. Halliburton, MPRI, Kellogg, Brown & Root and DynCorps), one can trace how military-related career opportunities for former soldiers in the private sector are created in the mode of a civil-military partnership. This example also shows how defense ministries systematically bypasses public tenders. In the referee function mode, the military intervenes when a conflict breaks out between various actors in civil society who are perceived as corrupt. After its suppression, it returns to the barracks. Other examples of this mode are Indonesia before 1966, Turkey before 1961, South Korea, Thailand, Vietnam, and Bangladesh. The military as paternalistic protector means that the economic interests of the military are institutionalized, the army is no longer an instrument of politics, but rather actively participates in political events as an independent government power. Since 1985, the Pakistani President has had the power to dissolve parliament in the event of suspicion or concerns about corruption. In April 2004, Musharraf created with the National Security Council an institution that cemented the military's position of power and established the army as a political entity independent of parliament.

Military as a nation-builder?

From 1947 to 1977 the political power and the supremacy of the military in Pakistan developed gradually. The military is currently the most politically influential institution in Pakistan. Of the approximately 630,000 employees, around 550,000 are in the army, around 45,000 in the air force and around 25,000 in the navy. The military still follows the British ethos in believing in a mythical warrior race, i.e. it is ethnically homogeneous and 75% recruited from three "Salt Range"mentioned districts in Punjab and 20% from four districts of the North West Frontier Province. Control and practical agency over the secret services, alongside the three Military Intelligences especially the Inter-Services Intelligence, make the army chief the most powerful man in Pakistan, but theoretically after the president. With high elite pride and profession-specific arrogance, the soldiers disrespectfully look down on civilians who are considered incompetent, insincere, corrupt and greedy within the military. National security has been an absolute priority since the first war against India in 1947-48. Military rearmament was given maximum support, so that the defense budget at that time made up 70% of the total budget. In order to wage war effectively, the military also took on other tasks such as road building, commercial projects, prosecuting electricity theft and corruption. Some (Moore, Cheema, Cloughly) therefore see the military as the central actor of the nation-building. In fact, it is the most modern and efficient institution in a society that is highly fragmented, both religiously and ethnically. The military is gaining its strong position not least because since the Wars of Separation it has acted as the primary protective institution against the repeatedly perpetual dominance of the much more successful Indian republic, the all-important reference society. However, it can also be observed that many diplomats and decision-makers from abroad permanently ignore these crucial characteristics of the Pakistani military. The Americans, for example, are now disappointed after six years of financing the Pakistani army that a large part of the official ten billion dollars (breakdown by Cohen 2007) apparently not only seeped away into channels of corruption, but was also invested in weapons technology against India (Rohde et. Al . 2007). And the German armaments industries also seem to be selling technologies (e.g. submarines), without hesitation of the military dictatorship, which additionally fire up the nuclear trouble spot and merely promote the arming against India.

"survival of the fattest" - The military as a social class

Pakistan is ruled by a coalition between the feudal class and the officer corps. The military class emerged predominantly in the years after 1977, over a period of thirty years, which can be divided into three phases. The massive human rights violations, mistreatment and coercion of the years 1977-88 endangered the legitimacy of the social role of the military as arbitrator. Therefore, the military changed its strategy and began a policy of partnership with selected members of the social elite through slight coercion on the one hand and attempts at bribery on the other. After the 1977 election, which was still dominated by the demand of the opposition movement PNA, Pakistan National Alliance, after the introduction of the shari'a, the system of Muhammad, Nizam-e Mustafa, the military cemented its new policy, which society saw as zero tolerance, with the assassination of Prime Minister-elect Bhutto. The military introduced harsh censorship of all media, repealed fundamental rights under the 1973 constitution, banned trade unions and student associations, crushed all public protests, and put Prime Minister Bhutto to death in 1978 in a politically motivated process that scorned all rule of law condemn. The murder of his daughter Benazir Bhutto on December 27, 2007 is also attributed by many analysts, including the former ISI director Gul, to forces from the ISI. From 1978 onwards, there were meetings between the politicians of the PNA and the Movement for Restoration of Democracy (MRD) monitored by the secret service (Hussain 1990, Rizvi 2003). The introduction of the shari'a, Islamic banking and government nazim-e salaat (Prayer control) should give the military dictatorship a symbolic legitimacy. In the 80s in particular the ISI, Inter-Services Intelligence, strengthened thanks to the substantial financial transfers mainly from the Americans in the wake of the war in Afghanistan. The military manipulated the political parties decisively with the help of the ISI, for example in the formation of the Islami Jamhoori Ittihad (IJI) and the Muhajir Qaumi Movement (MQM) versus Bhutto's Pakistan's People Party (PPP). The rise of the Sharif industrial group Ittefaq is an instructive example of the army working with specific trader groups and business bosses. Nawaz Sharif became Pakistan's Prime Minister twice in the 1990s. Military regimes evidently generate civil grimaces for their dictatorship, which are intended to serve as a source of democratic legitimacy. From a foreign policy perspective, the military's gain in power was largely brought about by American aid. The Reagan administration officially approved two aid packages of $ 3.2 billion and $ 4.2 billion. As a result, Moscow's invasion of Afghanistan decisively stabilized the Pakistani military dictatorship.

The amendment to Article 58 (2) (b) of the 1973 Constitution, which states that the President can now dissolve the National Assembly, ensured the military rulers independence from democratically elected parliaments. The independent role of the military was given by the movement Revival of the Constitution Order (RCO) de facto institutionalized. The establishment of the comparable with the Turkish model National Security Council (NSC) by Musharraf 2004 marks the preliminary end point of this development.

In the decade following the November 1988 election, Pakistan had eight prime ministers. Each government thought it was wiser and yet failed in its attempt to regain the political loyalty of the military apparatus through economic incentives for the generals.

The period of Musharraf's military dictatorship from 1999 to the present is characterized by one-sided enmity and the Kargil-War against India that began in May 1999 and pushed Musharraf forward at a time when the peace efforts of the Lahore Declaration from February 1999 were in the foreground. Not only was the freedom of the press massively restricted again, but several journalists were also deliberately murdered by secret service agents (Siddiqa 2007: 98).

Bhutto and Sharif distributed more than $ 165 million worth of land to friends and supporters. The various privatizations always benefited only a few families or individual clans (Rehman 1998).

Military business enterprises

Despite the apparent invisibility of some of the military's economic ventures, one can see their influence on the primary sector (agriculture, forestry, fishing, etc.), the manufacturing sector (manufacturing, industry, craft, energy, construction, etc.) and the service sector (trade, transport , Logistics, credit institutes, insurance companies, apartment rentals, etc.). The complex networks of linking military and supposedly purely civil activities can only be sketched out vaguely. It is clear, however, that this Ministry of Defense is at the center of all these activities. The Ministry of Defense are the Service Headquarters, Department of Military Land and Cantonment, Fauji Foundation and the Rangers assumed, where the Ministry of Defense does not coordinate the economic activities of the sub-companies, but rather serves as a forum for negotiating business relationships.

Army General Headquarters

At the institutional level, three companies in particular are directly controlled by the army. The three main public sector firms directly related to the Army General Headquarters are subject to are those National Logistic Cell (NLC), Frontier Works Organization (FWO) and Special Communication Organization (SCO). With around 1,700 vehicles and around 7,300 employees, the NLC is the largest logistics company in the country. In addition to transporting goods, this company also builds roads, bridges and grain silos. In 1978 the NLC was founded as a parallel company subordinate to the army, which over time replaced private providers. The NLC experienced dramatic growth rates in the 1980s as it provided logistical support for various military and non-military operations in Afghanistan.

The FWO, Frontier Works Organization, was founded in 1966 around the 805 km long Karakoram Highway to build as a link with China. It became the largest road construction company in Pakistan. Since 1999, the FWO has also had a majority stake in the LAFCO subsidiary, which works with private providers.

The SCO, Special Communication Organization, was founded in 1976 to in Azad Jammu Kashmir and the Northern areas to introduce telecommunications across the board.

On the next level, the level of the subsidiary, a distinction is made between the four already mentioned welfare companies with their respective commercial enterprises.

Fauji Foundation

The one belonging to the army Fauji Foundation exists since 1954 and is currently probably the largest economic conglomerate in Pakistan. The 25 independent subcontractors employ around 7,000 retired soldiers and currently handle around USD 170 million. Of the 25 companies, only the fertilizer and cement factories are listed on the stock exchange. The central commercial enterprises are: Foundation Gas, Fauji Corn Complex, Fauji Security Services, Fauji Sugar Mills, Overseas Employment Services, Fauji Cement Company Ltd, Fauji Fertilizer Company Ltd, Foundation Securities Ltd and Fauji Kabirwala Power Company Ltd.

Army Welfare Trust

The one also assigned to the army Army Welfare Trust was created in 1971 shortly before the outbreak of war and primarily aims to create more jobs for retired military personnel. Between the lost wars against India in 1965 and 1971, the military suffered from sometimes massive budget cuts. The Army Welfare Trust is the Army General Headquarters (GHQ) currently reports and coordinates 41 sub-projects. Only five subcontractors are named in the Stock Exchange, all of which operate in the financial sector. The approximately 5,000 employed retired soldiers generate balance sheet assets of over US $ 860 million. The central commercial enterprises can almost all be recognized by the name Askari: Askari Stud Farms, Askari Welfare Rice Mills, Askari Welfare Sugar Mills, Askari Fish Farm, Askari Cement, Askari Welfare Pharmaceutical Project, Magnesite Refineries Ltd, Army Welfare Shoe Project, Army Welfare Woolen Mill, AWT Commerical Plazas (3), Askari Commercial Bank , Askari Leasing Ltd, Askari Welfare Saving Scheme, Askari Information Service, Askari Power Ltd, Askari Aviation and Askari Housing Scheme.

Since 1993 the Army Welfare Trust - as well as that Fauji Foundation - 20% of the profit as taxes. The two charities Shaheen Foundation and Bahria Foundation give - since they have less political influence than the army - 30% of their profits to the state.

Shaheen Foundation

"Check in" at Shaheen Air. Check-in counter of the subsidiary of the Air Force Welfare Organization. Photo: Thomas K. Gugler

Established in 1977 Shaheen Foundation is the Air Force charity. With 14 sub-companies and an annual profit of approximately USD 10 million, the Shaheen Foundation relatively small. The best-known company is its own airline (picture below). The central commercial enterprises are: Shaheen Air International, Shaheen Air Cargo, Shaheen Airotraders, Shaheen Insurance, Shaheen Travel, Shaheen Pay TV, FM-100 (Radio channel), Shaheen Systems (IT) and Shaheen Knitwear.

Bahria Foundation

The youngest of the four military welfare organizations is the one that has existed since 1982 Bahria Foundationwhich is subordinate to the Navy. The Bahria Foundation coordinated 19 sub-companies are valued at approximately USD 70 million. The most famous company is their real estate company. The central commercial enterprises are: Falah Trading Agency, Bahria Construction, Bahria Paints, BahriaDeepSea Fishing, Bahria Complexes, BahriaTown & Housing Schemes, Bharia Dredging, Bahria Bakery, BahriaUniversity, Bahria Shipping, Bahria Coastal Services, BahriaHarbor Services, Bahria Diving & Salvage International and Bahria Catering & Decoration Services.

Milbus between military capital and reconstruction aid

The formative phase of Milbus are the years 1954 to 1977. The various governments influenced the internal economy of the military in different ways. The first charity (Fauji Foundation) was established in 1954 with British money from 1942 Post War Services Reconstruction Funds founded. If the money was divided among the war veterans of the Second World War in India, it was invested in large-scale industrial projects in Pakistan. Milbus grew particularly in the years 1954 to 1969 in parallel with the influence of the military in politics under Ayub Khan. Milbus stagnated in the times of crisis between 1969 and 1972 and remained unchanged under the civilian government of Zulfiqar Ali Bhutto (until 1977), as the military had not yet developed its own social class and did not yet assume the position of a paternalistic protector vis-à-vis the government.

Special allowances, special allowances and special concessions

After 1977, the military in Pakistan assumed the position of paternalistic protector of the government. The military dictator Zia ul-Haq (1977-88) helped the military to achieve new worlds of power. The new supremacy made that possible General Headquarters Exploiting new resources, registering possible monopoly claims (e.g. fishing licenses) and securing the financial autonomy of the military. The twice-elected governments of Benazir Bhutto (1988-90 and 1993-96) and Nawaz Sharif (1990-93 and 1997-99) tried to get the generals to vote with special bonuses. The attempt by the two prime ministers to gain reigns with special rights in the military failed and led to further growth in military business enterprises. In particular, the undisguised role of the secret services in the dissolution of elected governments unsettled the prime ministers and left them no choice except to favor the generals across the board. Sharif also supported many a subsidy fraud out of self-interest. For example, between 1997 and 1999, 700,000 tons of sugar (value: 60 million USD) were exported to India. The sugar came from the refineries of the Fauji Foundation, of Army Welfare Trust and also the sugar companies owned by the Sharif family. The Central Board of Revenue subsidized this trade at over $ 100 per ton, i. H. a total of USD 86 million in subsidies went back to manufacturers. In the 90s the commercialized Bahria Foundation and Shaheen Foundation also their educational systems, d. H. they opened private universities on state property for which they pay no rent, etc. The years 1999 to the present are characterized by a professionalization of economic interests. The commercial enterprises work together specifically with foreign providers in order to optimally use the home advantage in any tenders etc.

Land acquisitions

From the British colonial power to the present, the military has provided its soldiers with rented apartments as well as real estate and houses. The transfer of state land to military land and then further into the private sector justifies the military by the required mobility of soldiers, who can be transferred to different cities as required. So far, the military owns around 12% of the total state land in Pakistan. Of these 11.5 million acres (1 acre = 4,046 square meters), approximately 6.9 million acres are rural. Of this, only 70,000 acres are directly subordinate to the military as storage or oat or hay farms; 35,000 acres are owned by charities and 6.8 million acres are given as a bonus to individual generals. This land-generation practice was only discussed publicly in 2001, when the military in Okara (Punjab) forcibly seized the land owned by the Catholic Church of Pakistan. The approximately 16,500 acres included 22 villages and the area was farmed by more than 1,300 farmers. These farmers paid part of the harvest as rent to the Catholic Church. But now the military was demanding cash payments. The rented farmers were defeated twice by paramilitary rangers in a minor civil war, killing eight farmers. The rangers systematically cut off the villages from the public supply network so that the farmers could not hope for medicine or food supplies.

In real estate in cities, the main advantage is the military Defense Housing Authorities (DHAs) that they can buy real estate much cheaper and sell it much more expensively than private providers, who are increasingly displacing them from the market. The military housing units enjoy more trust - if only because of their neighbors - because they are considered to be much safer and they actually experience fewer break-ins than civil real estate and housing projects.

Men's welfare

The military's power of attraction lies particularly in the promises of social advancement: "The military takes care of its men" Additional bonuses, compensation payments and pensions, including pension-like performance commitments, are a real component of the comradely ethos that is at the core of the military as a social organization. Not only the most exclusive clubs (keyword: "Civilians not allowed"), Guest houses, etc. belong to the military; it also provides its men with an education and health system that is qualitatively far superior to the public one.

But in addition to higher incomes and pensions, the military offers a variety of opportunities to support retired employees in particular and to secure them socially and financially. Alone Fauji Foundation leads 276 welfare projects including hospitals, schools and technical training centers. The other three charities are trying in particular to generate employment opportunities for retired military workers, since, for example, a major in Pakistan can retire at the age of 40. There is also or alternatively that Askari Bank's Army Welfare Scheme, i.e. a fixed-term deposit account with an annual credit interest rate of around 9%.

Chum Capitalism: Corrupt or Matey?

Milbus has significant economic and socio-political costs, and the negative side effects of these military clashes are enormous. On the one hand, these businesses deform the beginnings of the free market economy and displace private companies "from the market". On the other hand, numerous projects carried out through the charities are usually not cost-effective, not economical.

Grare 2007 discussed possible effects of international sanctions, for example trade bans or similar options for action by the international community against companies of the four foundations of the military, which are central steps to limit militarization and jihadization in Pakistan and to give democratization a serious chance. For European and American observers, it is central that, in the light of the network-like interdependencies between the military and a supposedly civilian economy, briefly outlined here, the generals of Pakistan are not interested in a democratization process as they have never been in Pakistan's history.


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