The Militarization of Pakistan’s Economy

November 1, 2011

Shahrukh Rafi Khan: The Military’s dominant role in Pakistan’s politics supported by its economic power

Shahrukh Rafi Khan: The Military’s dominant role in Pakistan’s politics supported by its economic power



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Story Transcript

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington. As US-Pakistani relations continue to deteriorate–witness the testimony of Admiral Mike Mullen accusing the Pakistani intelligence agency ISI of being directly involved in what they call the Haqqani terrorist network, or at least the Haqqani section of the Taliban. Prior to that, there was many statements from Mullen and others talking about Pakistanis’ military and intelligence perhaps protection in some way or another of Osama bin Laden, and Mullen’s direct accusation against the ISI being involved in the assassination of Saleem Shahzad, a Pakistani journalist who did a lot of reporting on the Pakistan military, including for The Real News Network. The whole role of the Pakistan military and its role in Pakistan society and in the Afghan War has become more and more an issue. And, of course, US policy towards it. One of the things that doesn’t get discussed very much is the important economic role the Pakistan army plays in Pakistani society and the relative autonomy that gives it. Now joining us to talk about all of this is Professor Shahrukh Rafi Khan. He’s a visiting economics professor at Mount Holyoke University in Massachusetts. Thanks very much for joining us.

SHAHRUKH RAFI KHAN, PROF. ECONOMICS, MOUNT HOLYOKE UNIVERSITY: You’re welcome.

JAY: And Professor joins us from the PERI institute at Amherst, Massachusetts. So let’s start with talking about the important role the Pakistan military plays, ’cause it’s not a role that people in the West, at least, are so used to, where the military has such direct economic holdings. I guess one sees it a bit in places like Thailand, Indonesia, maybe Turkey, but it’s very developed in Pakistan. Why don’t you elaborate a bit on this?

KHAN: One could say also in Egypt we heard about that after the uprising, with people saying the holdings could have been as high as 40 percent. In Pakistan, the documentation is obviously very difficult in terms of an absolute number, but it’s clear that they have very significant interests in the financial sector, the industrial sector, in real estate, in commerce. And it works through monies that they have received, with which they have developed their foundations, one for each service–the Fauji Foundation for the Army, Bahria Foundation for the Navy, and [incompr.] Foundation for the Air Force. And these conglomerates work as a kind of a welfare state to ensure that the military personnel, when they retire, particularly the senior military personnel, can essentially live the way that they have been accustomed–.

JAY: Why don’t you speak about that, the way they are accustomed to? Because the higher echelons of the Pakistani military, if I understand it correctly, live like very rich people. I guess they are very rich people.

KHAN: They are rich people with–they have good accommodations. They have service, good educational and medical facilities. So, yes, it is a very high standard of living. Plus through the services that they belong to, they can get real estate, they can get agricultural lands. So that continues to provide real income after they retire.

JAY: When they get these lands (and your–in your paper you call them a sort of continuation of land grabbing), do they get them personally, or it’s the military that owns the land?

KHAN: No, this is personally. The land goes to individuals.

JAY: Can you just give us a bit of historical context? From the beginnings of Pakistan, how does this develop that the army becomes such a economic institution? As you point out, the importance of that is it has such autonomy from civilian governments, and then when it doesn’t like civilian governments, it organizes coups. But a lot of that comes from this economic independence.

KHAN: Yes, that is what the theory suggests, and it seems to be playing out. When the country gained independence, Pakistan’s political forces were not as developed and sophisticated as in India. The civil service and the military were two institutions that were functioning, and in that vacuum that seemed to be created, without unity and galvanizing force of the political leaders, these two institutions acquired a lot of strength. Over the course of time, they started to get–particularly after the first intervention under General Ayub Khan, they started to institutionalize a role for the military in the civil economy. The foundations were basically created to provide welfare services, initially, but they started to expand. And so when there is a military intervention, the constituency for the military is not civil society or the citizenship broadly; it is the military, so that there comes a compulsion to please that constituency. And one way in which this is done is through creating the ability to provide them more services into retirement and while in service. I think that seems to be what is driving it. My own concern, of course, is that I personally would like to see the strengthening of the political process, because that for me has legitimacy and provides some hope for the citizenry, and particularly the disenfranchised, to become stronger.

JAY: The point here is that much of the Pakistan military budget and the monies they have to operate now comes through these foundations that own sections of the Pakistan economy and not through a national budget that actually gets passed and vetted by some kind of a parliament. Is that right? And do we have any idea of the numbers?

KHAN: Well, I’ve given some numbers in my paper, the ones that I’ve got. I mean, for example, one of the numbers that the Public Accounts Committee recently announced was that up to 50 percent of the expenses are subsidized, of these public sector corporations, so that without the subsidy they couldn’t survive. My concern, then, was that if they can’t survive, it’s not a level playing field and they’re crowding out private sector activity. No, we don’t know what, as a percentage of the total budget, how much they derive from internal sources, but we need to remember that what they derive from internal sources through their own economic holdings serves a particular purpose that’s not an operational purpose. For an operational purpose, it does come through the budget, and it has to be, now, because we have a civilian government, approved by Parliament.

JAY: Well, when you say not operational, then where does this money go? One is for pensions and such for retired officers. But what else does it do?

KHAN: Well, they’re monies would then provide facilities like better hospitals, better–. But it’s also–a lot of this is jobs. I think I’m trying to make a slightly different point, which is that the greater the economic stake that the military has, and the more that senior and retired–senior retired officers rely on these conglomerates, the more stake, then, they have in preventing any change in–any change of the system; the harder it becomes, then, for the political process to be revised. And any time they are threatened, such as when they were under Zulfiqar Ali Bhutto, when they were by Nawaz Sharif, then there becomes a case for intervening to protect those interests. What I’m saying is that it undermines the democratic process. Once they’re not beholden to Parliament for their funding–. And I think that the US funding can play the same kind of role, because–. But there is also another issue at this point, that parliamentary oversight simply isn’t there. I mean, you get the occasional statement from the public accounts committee that the funding is understated, because, for example, retirement incomes were first noted as part of the defense budget under General Musharraf’s administration–they stopped being counted as part of military allocations. And simultaneously we saw very [incompr.] that these monies, as a portion of what was going to equivalent civilian administrators, was much higher, 73,000 relative to an average of 12,000. So I think those are the issues that concern me more.

JAY: And how is this covered in the Pakistani media? To what extent can journalists deal with all of this?

KHAN: I think that there is silence for the most part, although in the last two years I’ve been able to read more in the newspapers than I did before. Particularly after Osama bin Laden was found to be present in Abbottabad, there was a disaffectation and more speaking. But things also changed. They’re very dynamic, and very often you find that people close ranks. And particularly when there’s a sense of not being treated fairly, then you find that people rally behind the Forces.

JAY: Thanks very much for joining us, Professor Khan.

KHAN: You’re most welcome.

JAY: And thank you for joining us on The Real News Network.

End of Transcript

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