Book Launch -- <i>Military Inc.: Inside Pakistan's Military Economy</i>

According to Ayesha Siddiqa's new book, Military Inc.: Inside Pakistan's Military Economy, Pakistan's armed forces have accumulated billions of dollars' worth of private assets and business interests in Pakistan, ranging from construction firms to breakfast cereal. At a September 18 Asia Program event cosponsored by the Middle East Program, Siddiqa spoke about the book, which focuses on the "internal economy" of Pakistan's military. This phenomenon refers to military business ("milbus"), or "entrepreneurial activity" conducted by Pakistan's military or under its patronage. She estimated the value of this "military capital"—which is not held to "normal accountability procedures" and is not recorded in Pakistan's defense budget—as more than 6 percent of Pakistan's total gross domestic product (GDP).

Siddiqa emphasized the global nature of milbus, insisting that it is not unique to Pakistan's military. Rather, it is evolving and manifesting itself in different forms worldwide. In the United States, milbus collaborates with the civilian corporate sector and government and is exemplified by firms such as Halliburton. In China and Iran, it partners with the main ruling party or individual leader. And in countries run by the armed forces—such as Myanmar, Thailand, and Pakistan—the military handles milbus on its own. It was her desire to study how military capital functions in an "authoritarian polity," Siddiqa explained, which led her to use Pakistan's military economy as the case study for her book.

Where in Pakistan does one find this military capital? Siddiqa argued that the structure of the military's economic presence has three levels. One level is institutional and comprises army-controlled public sector organizations such as the Frontier Works Organization and the National Logistic Cell (transport and construction "giants"), as well as smaller cooperatives (such as bakeries, cinemas, and gas stations). Military subsidiaries comprise the second level of Pakistan's military capital. The Fauji Foundation (established for the welfare of veterans) is, according to Siddiqa, one of Pakistan's largest business conglomerates. Additionally, the army (Army Welfare Trust), air force (Shaheen Foundation), and navy (Bahria Foundation) boast welfare foundations that enjoy holdings in agriculture, cement, the airline industry, and construction. These subsidiaries, Siddiqa asserted, are largely controlled by the armed forces. Finally, the third type of military capital can be found on an individual level, where perks are doled out to the "military fraternity." Land, jobs, and influential positions in corporations are provided to those currently in uniform, to retired servicemen, and to "beneficiaries of the military/business complex."

Siddiqa noted that Pakistan's military defends milbus by underscoring the welfare it provides to the country: milbus feeds 9 percent of the nation's population, it generates taxes, and it creates jobs for veterans. She acknowledged that these welfare benefits cannot be disputed. Yet she countered that beyond a certain point, the military's "commercial empire" entails tremendous costs. For example, the promising careers of young military personnel may be "diverted" by future profit opportunities—which in turn compromises military professionalism. Also, military businesses are often inefficient and require bailouts from Islamabad—which burdens taxpayers. Additionally, with the military's corporate tentacles penetrating deeper and deeper into the country, the armed forces intensify their "control of and visibility" in Pakistani society.

Indeed, Siddiqa contended that this economic clout, coupled with their formidable political power, reinforces and perpetuates the armed forces' central role in Pakistan's politics. The military's political power hastens its involvement in the economy, and its involvement in the economy enhances its political power. As a result, the military has little incentive to withdraw to the barracks. Furthermore, Siddiqa suggested that Pakistan's non-ruling political elite has its own reasons for supporting a military that remains entrenched at the forefront of Pakistan's political scene, because under the status quo this elite derives benefits and resources from the military economy. Ultimately, she concluded, to understand Pakistan today, "you must understand the nature of . . . [military] capital and the nature of the politics that revolve around this capital."

Drafted by Michael Kugelman, Asia Program Associate
Robert M. Hathaway, Director, Asia Program, Ph: (202) 691-4020