Pakistan Power and politics
Pakistani army's '$20bn' business
Al Jazeera takes a look at how the Pakistani military is turning a profit.
Last Modified: 17 Feb 2008 07:55 GMT

The army is considered by many Pakistanis as one of the country's only functioning
institutions but its  influence over the economy is a cause for concern [GALLO/GETTY]

As legislators in Pakistan go to the polls against a backdrop of political protests and religious militancy, a recent book on the Pakistani military has thrown light on the army's role in private enterprise. 

The Pakistani military's "welfare foundations" run thousands of businesses worth tens of billions of dollars, ranging from street-corner petrol pumps to sprawling industrial plants, says Ayesha Siddiqa, the author of Military Inc: Inside Pakistan's Military Economy.

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And Siddiqa told Al Jazeera that whoever emerges as the eventual winner following Saturday's presidential election, they are unlikely to tame the economic power of the military.

"These politicians continue to negotiate with the military and despite populist politics, and calls for civilian rule, they are still inclined to strengthen the military."

The main street of any Pakistani town bears testament to the economic power of the military, with army-owned bakeries, banks, insurance companies and universities, usually fronted by civilian employees.

Retired military personnel are often involved in the army's business ventures, and according to Siddiqa, this reflects a similar pattern found in the Turkish and Chinese militaries.

"Pakistan, however, displays more of an indirect exploitation through the retired personnel. They act as primary conduits for the covert use of the country's resources," she said.

Double standards

Siddiqa says the military's private wealth could be as high $20bn, a "rough figure", she says, split between $10bn in land and $10 in private military assets.

The Pakistani military is under pressure,
but profits are said to be healthy [EPA]

She also estimates that the military controls one-third of all heavy manufacturing in the country and up to seven per cent of Pakistani private assets.

The author told Al Jazeera that the naming of the new army chief, and a power-sharing deal between Pervez Musharraf and Benazir Bhutto, is another attempt to maintain the army's control in politics.

Bhutto herself had supported a number of the military's business ventures.

A number of projects by the welfare foundations were sanctioned under her government.

"None of the political governments raised any major objections to the military-business complex during the 1990s," Siddiqa said.

Ventures 'needed'

Discussion of the military's role in Pakistani society has provoked strong reactions, with many military officials refusing to speak to Al Jazeera about the issue.

But Talat Hussain, a retired general, told Al Jazeera that discussion of the military's role in private enterprise was considered taboo.

"This area has always been considered a sacred cow in our society".

Whoever wins the forthcoming elections, the
military is likely to remain a force [EPA]
According to government figures, welfare foundations, or 'pensions funds' for retired personnel, invest in over $10bn in commercial ventures including oil and gas exploration, sugar mills, security and employment services.

Last year, the commercial operations of the Fauji (Soldier) Foundation accrued at least $500 million.

However, Syed Arif Hasan, the managing director of the Fauji Foundation, believes there is nothing wrong with the army's commercial interests.

He said: "It is vital that we invest in the commercial sector. These businesses generate the welfare schemes for hundreds of thousands of retired soldiers and officers."

"There are very little options, and it also benefits the country's economy."

Asked if there was a conflict of interest in the army's penetration into society, he denied Siddiqa's claim that political control is a factor.

"We have no intention to politicise welfare organisations," he said.

According to their website, the Fauji Foundation provides welfare services to around 9.6 million people, seven per cent of Pakistan's population.

Fauji labels itself a 'welfare-cum-industrial' group, and is dependent on industrial operations to maintain their services, as approximately 80 per cent of Fauji's profits are obtained through investment.

No apologies

The military boasts that it can run such organisations better than what they view as "incompetent and corrupt civilians".

In a speech in 2004, to open a new business owned by the Fauji Foundation, Musharraf boasted of "exceptional" military-owned banks, cement and fertiliser plants.

"Why is anyone jealous if the retired military officers... are doing a good job contributing to the economy?" he said.

Siddiqa fears that her book may step on some powerful toes. "Over the past three years a lot of my friends have advised me not to publish this book. They think I have suicidal tendencies."

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