The military millionaires who control Pakistan Inc

Elliot Wilson (The Spectator - UK)

Elliot Wilson says Pakistan ’s economy is dominated by a ruthless business conglomerate that owns everything from factories and bakeries to farmland and golf courses: The Army.

Sometime in late 2004, Pakistan 's all-powerful army made a curious decision. Under mounting pressure from London and Washington to capture Osama bin Laden, believed to be hiding in Baluchistan, Islamabad 's fighting forces instead turned their attention to a far more profitable venture: building golf courses.

In itself this wasn’t particularly unusual. With 620,000 soldiers, Pakistan boasts the world’s seventh-largest standing army, but its senior officers long ago realised the perks to be gained from commercial ventures. Since independence in 1947, the army has steadily intertwined itself into Pakistan’s economy: so much so that it’s hard to tell where the military stops and any semblance of free-market capitalism begins.

All too often, there is no dividing line. In her 2007 book Military Inc: Inside Pakistan’s Military Economy Dr Ayesha Siddiqa exposes the rampant commercialism pervading every aspect of the country’s military forces, until recently headed by President Pervaiz Musharraf. Dr Siddiqa, a former researcher with the country’s naval forces, estimates the military’s net worth at more than £10 billion — roughly four times the total foreign direct investment generated by Islamabad in 2007. She found that the army owns 12 per cent of the country’s land, its holdings being mostly fertile soil in the eastern Punjab . Two thirds of that land is in the hands of senior current and former officials, mostly brigadiers, major-generals and generals. The most senior 100 military officials are estimated to be worth, at the very least, £3.5 billion.

Many of the country’s largest corporations are also controlled by the military, thanks largely to an opaque network of powerful ‘foundations’ originally set up to look after the pension needs of army personnel. The largest three — the Fauji, Shaheen and Bahria foundations, controlled by the army, air force and navy respectively — control more than 100 separate commercial entities involved in everything from cement to cereal production. Only nine have ever published partial financial accounts, and all are ultimately controlled by the Ministry of Defence, which oversees all of the military’s commercial ventures.

The Fauji foundation, the largest of the lot, is estimated by Siddiqa to be worth several billion pounds. It operates a security force (allowing serving army personnel to double in their spare time as private security agents), an oil terminal and a phosphate joint venture with the Moroccan government. Elsewhere, the Army Welfare Trust — a foundation set up in 1971 to identify potentially profitable ventures for the military — runs one of the country’s largest lenders, Askari Commercial Bank, along with an airline, a travel agency and even a stud farm. Then there is the National Logistic Cell, Pakistan’s largest shipper and freight transporter (and the country’s largest corporation), which builds roads, constructs bridges and stores vast quantities of the country’s wheat reserves.

In short, the military’s presence is all-pervasive. Bread is supplied by military-owned bakeries, fronted by civilians. Army-controlled banks take deposits and disburse loans. Up to one third of all heavy manufacturing and 7 per cent of private assets are reckoned to be in army hands. As for prime real estate, a major-general can expect to receive on retirement a present of 240 acres of prime farmland, worth on average £550,000, as well an urban real estate plot valued at £700,000.

Unsurprisingly, the military is loath to release details of its commercial operations. The average Pakistani citizen earns just £1,500 a year, making his country poorer than all but 50 of the world’s nations. Most of the military’s junior officers and other ranks live in squalid tents pitched by the side of main roads, even in the capital Islamabad . Revealing to them that the top brass in their air-conditioned, top-of-the-range Mercedes are worth £35 million each (a few are believed to be dollar billionaires including, it is quietly suggested, Musharraf) would probably create widespread unrest. Little wonder that Dr Siddiqa’s book is banned in the country — and that Musharraf was so reluctant to take off his uniform and declare himself a civilian president.
Financial autonomy has also engendered in the military a dangerous sense of entitlement. When any premier or leading politician attempts to limit the army’s power, or even emasculate it, they get slapped down. In 1990 Benazir Bhutto, during her first stint as premier, made a concerted attempt to ‘secularise’ the army, installing non-army personnel at the highest level. Shortly afterwards, her government was forced out. She tried again in May 2006, joining with another former civilian leader, Nawaz Sharif, to issue a Charter of Democracy designed to reduce the economic power of the armed forces. Yet with Bhutto’s assassination, the latest move to tame the armed forces has again faltered — a rather convenient situation for the military.

It’s hard to imagine any individual or political body summoning up enough power or courage to challenge the army head-on. Each year the military gobbles up a bit more land, diversifies into new markets and industries and steadily consolidates power in the key sectors of agriculture, energy, natural resources, logistics and construction.

On the rare occasions when any constitutional body has stood its ground, the army has given it short shrift. In 2005, the Fauji foundation was asked by the elected parliament why it had sold a sugar mill at a ludicrously low price to senior army personnel. The Ministry of Defence refused to reveal any details of the deal. When the Auditor-General’s department questioned why the army was building golf courses — rather than attempting to capture bin Laden — its question was ignored. Yet the Punjab government had that year willingly handed over, for free, 30 acres of prime rural land worth more than £600,000 to the army, which promptly built a driving-range and an 18-hole golf course. Such ‘presents’ to the military are usually returned with interest, with senior civilian officials often being guaranteed a secure retirement on the board of one or more army-controlled ventures. Craven and submissive attitudes have thoroughly pervaded the political system, which defers to the military at every turn: little wonder that senior officers have so little respect for their civilian peers. Other countries have armies, but Pakistan’s army has a country.

Absolute power, of course, corrupts absolutely. It also engenders a sense of invulnerability — that the wielder of the power can get away with anything. This certainly seems to be the case in Pakistan . Land is being requisitioned left, right and centre across the country. In the financial centre of Karachi , the army has built eight petrol stations on land appropriated from the state. In 2004, the Karachi government again willingly gave land worth £35 million to the military, just because they wanted it. These are just two examples among many.

The military has also begun to act in the manner of a feudal landlord. When landless peasants in central Punjab complained in 2001 that the army had changed the status of the land on which they depended for their subsistence (forcing them to pay rent in cash, rather than working the land on a sharecropping basis) the army cracked down, beating many and leaving eight dead. At one point, Dr Siddiqa quotes a naval officer who questions why landless peasants should have any rights in relation to the land they till. ‘They do not deserve land just because they are poor,’ he says.

It’s hard to imagine anyone managing to circumscribe the economic power of Pakistan’s army. The military’s financial security reinforces its desire to retain control of the state. If full democracy were permitted in Pakistan, it would constitute a threat to the army’s throttling power. And since political power in turn creates greater economic opportunities, it’s in the interest of the military fraternity to perpetuate it. More political power leads to greater profit, and vice versa. The one factor that could still harm the army is its arrogant, dismissive attitude to its own people. Its flagrant profiteering engenders huge resentment in rural and smaller provinces, where the army is increasingly seen as an invading force rather than a protector. Ultimately, there is only so much abuse that an impoverished and subjugated populace can take before it rises up in protest.