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Ayesha Siddiqa’s MILITARY INC: A Deflective and Derogatory Book

February 23, 2009

Dr. Ayesha SiddiquaDr Ayesha Siddiqa’s ‘The Military Inc.’ is a book deflective of reality, highly derogatory and against the very notion of sovereignty.

Dr Ayesha Siddiqa launches the book by giving the impression that her intention is to cover the entrepreneurial activities of military worldwide. However, in depth reading reaffirms suspicions that her book massively targets the Pakistan Military and the top echelons of the Armed Forces, most of which are based upon self serving assumptions and intentional hoodwinking. A labyrinth of financial figures is presented to further obscure the ordinary reader’s intelligence.

The book sets forward four arguments. First, that MILBUS (Military Business) is military capital that perpetuates the military’s political predatory style; and is kept concealed and includes questionable transfer of resources from public sector to individuals connected with armed Forces. Second, the military’s economic greed increases in totalitarian systems. Third, Military convinces the citizens to bear additional costs for security on basis of conceived threats to the State. Fourth, the book considers the Pakistan Military the cause of all ills, social disparity and democratic fiasco.

Let’s start by setting the record straight. MILBUS in Pakistan – is the result of honest intentions and visionary policies – to raise independent resources, to self-finance the on-going national technological development, to modernize strategic assets, and most importantly, the determination to rely less on Foreign Aid. While at the same time, build facilities for retired military personnel and their families; and slowly withdrawing from National Defense budget allocation as a percentage of GDP.

MILBUS also exists in well developed countries like the USA, UK, France, China, Israel or even Turkey. The Milbus or the PMEs (Private Military Enterprises) are generally known as the Private Military Industry. Famous US PMEs include Halliburton, Black-water worldwide, Defensecurity, Titan Corporations, Kellogg Brown & Root, Air Scan, DynCorp’s, CACI International, etc. Famous UK PMEs include Black-Op’s and Aegis Defense Services. Most of these are active beneficiaries of the Iraq War. The worldwide PME industry is now worth over $100 billion a year. Thus, this is not just a Pakistan specific industry.

MILBUS in Pakistan is being criticized unnecessarily, with the sole intention to malign the Armed Forces. The Pakistan military has never intended to deliberately conceal their economic activities and they do not cause injustice by weighing heavily on civilian corporate sector or individual leaders.

The book ‘Military Inc’ is based upon a series of presumptions and false accusations. Throughout her book, the author obstinately insists that the growth of Military economy is the case of self interest and predatory acquisition by senior officers, in which it allow the Generals to seek benefit for themselves and their clients.

The author fails to provide, any concrete evidence that could confirm her allegations, that questionable transfer of wealth is made to individuals connected with armed forces. All she could give in example were the 500 sq yard official plots given to the Generals at the end of their service, as part of their benefits, and hence her assumption that a retired general is worth from Rs.150 million to Rs.400 million.

Rarely do critics mention, that nominal deduction from the pay of all military officers are made during their service, in return for a small apartment or a small housing, which is handed over at the time of their retirement. However, this facility is still not available to all retiring servicemen.

Next, the book alleges that the military’s economic greed increases in totalitarian systems, where the general public, private businessmen, civilian corporate sector and national business units are all oppressed to encourage and endorse military business units. Her book focuses largely on the four welfare projects managed by the Pakistan Military i.e. The Fauji Foundation (FF), the Army Welfare Trust (AWT), Shaheen Foundation (SF) and Bahria Foundation (BF), and in some places the Frontier Works Organization (FWO).

The author believes that “the profit earned by military is directly proportional to power and gives the armed forces a sense of being independent of the incompetent civilians” – which can only be considered as an extremely reckless comment.

There was great wisdom behind establishing these welfare projects. The visionary minds knew that “the profit earned by the military will be directly proportional to Sovereignty of the Country and the Institution”.

The Military established its first welfare foundation in 1954, with funds received from the British as part of Pakistan’s share of the Post War Services Reconstruction Fund. In India, those funds were distributed immediately amongst those who fought the Second World War. Unlike India, Pakistan’s wise military opted to use those funds to establish projects that would ensure the overall well-being, availability of jobs, and a decent pension for their armed forces.

The initial purpose of these welfare projects was to create employment opportunities for the honorable retired or disabled military personnel.  Servicemen – whose only obligation is defending the borders of Pakistan.

This one wise decision, not only raised the morals of the serving military men, but also gave the ordinary citizens a reason to join the Armed Forces of Pakistan and serve their country. Assured that their future is protected, the servicemen live their lives in testing times on borders, remote locations and a life away from family.

The Fauji Foundation, Shaheen Foundation and Bahria Foundation were all established under the Charitable Endowments Act 1890. The Army Welfare Trust was established under the Societies Registration Act 1860.

Then all these entities are registered Tax-paying Companies. The Army Welfare Trust and the Fauji Foundation pays tax at 20% of their profits. Shaheen Foundation and Bahria Foundation pay Taxes at 30% of their profits. Fair enough!

This limited industrial base that evolved over years added to the military’s credibility and resolves to contribute towards the Nation’s socio-economic development and Pakistan’s Gross Domestic Product (GDP). Like any ordinary successful businessmen or multi-national corporations (MNCs), the Pakistan Military utilized their available structure, nominal budget and dedicated their human resources for the welfare of the uniformed men and civilians working in those companies. While also pioneering technology, developing expertise and establishing quality control.

The book ‘Military Inc’ accuses the Pakistan Armed forces of running business (MILBUS) that are diverse in nature, ranging from small scale to large scale corporate enterprises. As examples, it quotes Schools, Banks, Insurance Company, Radio and TV, a Fertilizer company, Hospitals and Clinics, Cement plant, Universities and institutes, etc.

Dr. Ayesha Siddiqa left no opportunity to magnify and exaggerate the limited and partial presence of MILBUS competing in Pakistan’s broad based expanding economy.

Let’s analyze the limited magnitude and negligible worth of these Military run ventures, compared to similar mega business entities currently present in Pakistan.

According to State Bank of Pakistan, there are total 73 Banks in Pakistan. From which, there are 24 Limited banks, 11 Foreign Banks, 8 Financial Banks, 4 Specialized Banks, 13 Investment Banks, 7 Micro-finance Banks and 6 Islamic banks. Out of these total 73 banks – Dr Ayesha Siddiqa tends to be intolerable towards ONE ‘Askari Bank’ run by Military? In 2007, Askari Bank paid a Tax of Rs. 743 million.

According to Federal Bureau of Statistics, there are 24 Cement plants in Pakistan, and only ONE owned by ‘Fauji Cement Company Ltd’. A Tax-paying company listed on the Stock Exchange.

According to State Bank of Pakistan, there are total 59 Insurance companies in Pakistan. There are 4 in the Public sector, 50 companies in the private sector and 5 are incorporated abroad. Why should anyone be narrow-minded towards ONE owned by military – ‘Askari General Insurance Ltd’, which is listed on the Stock Exchange and pays Tax?

According to the Health Division and the P.M.D.C, there are around 924 Hospitals, 12,726 Medical Institutions, 560 Rural Health Centers and 4712 Dispensaries all over Pakistan. Out of these, if 10 Hospitals and 20 Medical Centers are being run by Fauji Foundation, what’s the hue & cry about? These Medical services are offered to the military and civilians alike. Even the prestigious Aga Khan Health Services (AGHS) own 7 Hospitals and 164 Medical Centers.

According to State Bank Pakistan, there are above 10 Fertilizer Plants in Pakistan from which 6 are State owned and the rest are private. Out of these, only ONE is military owned, the ‘Fauji Fertilizer Company Ltd’, which is listed on the Stock Exchange and audited by KPMG Taseer Hadi & Co, and pays Tax annually.

According to Higher Education Commission, there are 122 Universities in Pakistan. Out of which, 65 are in the Public sector and 57 in the private sector. Foundation University and Bahria University are the only two affiliated with Armed Forces providing quality education to all citizens alike.

Foundation Schools have 90 branches all over Pakistan; compared to the City School which has more than 150 branches and the Beacon-house School which has around 130 branches. We as a Nation should triumph the quality education being promoted by the Foundation schools and the model paradigm implemented.

The Securities and Exchange Commission of Pakistan (SECP) has 50,125 companies registered with it. From these only 9 are MILBUS projects. Why can’t Dr. Ayesha Siddiqa accept these 9 MILBUS projects out of the 50,125 projects broadmindedly?

The author also alleges that Military’s Internal Economy is hampering the growth of Pakistan’s free market economy – which of course is not true. For her information, under this same system and era, and under the leadership of General Musharraf, Pakistan’s free market economy boomed from $75 billion in 1999 to become $160 billion in 2007.

In the last 6 years, the free market economy of Pakistan expanded by $85 billion. The expansion and growth the Civilian Corporate sector, National Business Units and Multi-National Corporations witnessed in these last 6 years remain unprecedented in Pakistan’s Economic History. Hence proven, that Military’s Internal Economy did not hamper Pakistan’s free market economy!

According to Dr Ayesha Siddiqa’s book, the worth of Fauji Foundation is $169m, the worth of Army Welfare trust is $862m, the worth of Shaheen Foundation is $34.4m and the worth of Bahria Foundation is $69m. Total worth of MILBUS entities in Pakistan arise to ONLY $1.135 billion.  

Hence, the presence of MILBUS companies, in Pakistan’s free economy of $160 billion, amongst these other sectors and enterprises arises to a negligible maximum 0.8%.

The Karachi Stock Exchange (KSE) Market Capitalization in January 2008 stood at $75 billion. MILBUS worth as compared to KSE again arises to only 1.5%.

It’s amusing to note that Dr Ayesha Siddiqa wrote a whole book, to malign a system (MILBUS) whose worth does not exceed 0.8% of Pakistan’s free market economy.

Dr Ayesha Siddiqa’s desire to portray the Pakistan Military as a coercive and self serving breed aiming to consolidate their economic power at the expense of Pakistan, not only erodes her neutrality into bias, but the above economic comparisons also contradict all her presumptuous and sham claims. As MILBUS in Pakistan has been competing fairly in free market and contributing to today’s knowledge-based economy. It has played an active role to generate revenue for Pakistan and in contributing to overall GDP.

One of the greatest wisdom foreseen, behind establishing MILBUS was to liberate the Pakistan Armed Forces of international aid assistance and interference. Classified financial autonomy gives the Armed Forces a sense of self-respect and confidence of being independent of the dominating ‘International Coalition of the willing’ and their foreign aid.

The Pakistan Army has received a total of around $17 billion from the United States for arms, equipment and compensation since 1954, the year the United States entered into defense pacts with Pakistan. Much of it was uselessly spend during the 1980’s Afghan war and the wars Pakistan fought with India. After 9/11, the famous foreign assistance of $10 billion comprises 60% reimbursement costs for expenditure incurred by the Pakistani Military while patrolling on PAK-Afghan border, recorded in the ‘Coalition Support Funds’. These worthless assistances have not helped the Pakistan Army contrary to perception propagated in media reports.

Because, with these insignificant and worthless assistance, follows a series of humiliating articles and editorials composed in American print media. The clueless and prejudice Pakistani media ignorantly picks up the chanting and further plays an important role in distorting and altering the actual facts and figures. No relevant person is approached to clarify and set facts straight. Authors like Dr Ayesha Siddiqa bank on such distortion to further slander the admirable Pakistan Military.

After year 2000, the $85 billion expansion of Pakistan’s economy, decreased the ratio of US aid & assistance to Pakistan’s economy by around 100%. Now the U.S aid & assistance account to only 6.25% of Pakistan’s expanding economy. Pakistan is successfully wriggling out of foreign influence. Visionary MILBUS was the right step in the right direction at the right time!

Pakistan Military requires a proper platform utilized to clear the misperceptions being propagated against them and counter the sham allegations. In short, Pakistan military lacks the exposure to enhance their PR with the Public. Pakistani GHQ and ISPR should take up an active role similar to Pentagon and make their interactions more effective.

Next, the book ‘Military Inc’ considers Pakistan Military the root cause of social disparity and democratic fiasco. It alleges that socio-political fragmentation would result in strengthening the army’s control over politics. Throughout her book, Dr Ayesha Siddiqa lambasts and scoffs at the concept of MILBUS accusing the military of building assets and calling them as the ‘new land barons’.

In her desperation to smear the Army, she even fails to condemn the corruption practiced and coercive measures exercised by the inept political leaders. How these redundant leaders influence the bureaucracy, alter the constitution, plunder national institutions, stagnated the trade & exports, multiplied the foreign debts for the country, rob the country of the foreign reserves and accumulate their wealth in developed countries – is all together ignored by her conveniently.  

The truth is that the Armed forces are forced to intervene reluctantly and take control of the state to save it from the irresponsible and hopeless politicians, who drag the country towards brink of collapse, every time they come to power.

In short, Pakistan’s external debt rose from $18 billion in 1988 to become $38 billion by end of 1999. In 1999, Pakistan’s total debt (internal & external) was almost 90% of its GDP. External debt in ratio to foreign exchange earnings were 347%. Debt servicing allocated in 1999 budget was 61% of total revenue resources. According to the World Bank, in 1999-2000 Pakistan was amongst the highly indebted countries.

Despite the above mentioned debacle for Pakistan – the substantial expansion in the personal wealth, land and business interests of Mr. Zardari and Mr. Nawaz Sharif has earned them a place in the ‘Top 5 richest people’ of Pakistan in 2007. Not a single General or military servicemen made it to the list of ‘Top 40 Richest Pakistani’. Who should we consider a peril to Pakistan’s existence – these fraudulent politicians or the reserved military?

The Raiwind complex of Nawaz Sharif, build on an area of around 2000 acre, consist of palatial  residences, 300 acre farm, 500 bed hospital, a school, 200 acre dairy farm, etc – constructed at a cost of above Rs. 800 million. He personally owns Ittefaq foundries, three Sugar mills, numerous Textile mills, Steel Mills, Paper Mills, Spinning mills, Engineering companies, and numerous other business units. He owns several residential properties in Lahore and Muree. He owns vast acres of lands in Sheikhapura, Chunian, Raiwind, Multan and Bhopattian. These feudal turned politicians can easily be labeled as the ‘old Pakistani barons’.

Dr Ayesha Siddiqa also alleges that the military convinces the citizens to bear additional costs for security on basis of conceived threats to the State. She wants the public to believe that their taxes are being exploited at the expense of the notion ‘National Security’. This statement of hers is an attempt to ignore and snub the volatile situation Pakistan faces at its borders.

She also remains oblivious to the fact, that India allocates 5 times that of Pakistan’s defense spending.

However, under President Musharraf, the military spending DECREASED as percentage of GDP and National budget. It now stands at 3% of GDP and 15% of National budget. It strikes out though, how Dr Ayesha Siddiqa veils and ignores the bulk of the National budget of 85% that lies at the disposal of the manipulative hands of our shady politicians. The public has the right to know, what proper utilization has been brought about with that unaccountable 85% in the 1990’s?

This derogatory book ‘Military Inc’ intends to sow seeds of disenchantment amongst the general public against the modest and patriotic institution of the Armed forces of Pakistan, and lower its grace.  Those Armed Forces of Pakistan that run to protect and deliver relief, to ordinary Pakistanis in times of calamities, natural disasters, floods, train accidents, and earthquakes. Does Pakistan have any other force or institution which is as disciplined and effective in providing speedy help immediately? Shouldn’t we strengthen this only institution that we have?

The publication of Dr Ayesha Siddiqa’s own book ‘Military Inc’ in 2007, in President Musharraf’s era, repudiates her claims to term the military rule as manipulative and suppressive. It’s evident that no subtle or coercive measures were taken against her or any arm-twisting to curb the publication of this highly controversial book! Where would she find such boundless and gracious freedom? The book ‘Military Inc’ has become a checker of the chessboard being maneuvered by the unknown and ambiguous foreign powers interested in Balkanization of Pakistan.

The ultimate objective of the book ‘Military Inc’ is to perpetrate friction and cause dissent amongst the ranks of the disciplined Armed Forces. By deliberately triggering upheaval within the lower ranks, the intention appears to encourage internal revolt. As a consequence, the unity, discipline and allegiance of the Armed Forces of Pakistan can be destroyed.  

Thus, to protect the allegiance of the Armed Forces, the whole concept of visionary MILBUS is justified, as a set of activities for the development of Pakistan’s military might, meant to counter the rising regional threat convergence and decreasing dependence upon foreign aid – ultimately protecting the sovereignty of Pakistan and its savior Armed Forces!

Glory and Triumph to Pakistan Armed Forces!

Afreen Baig is an independent analyst majoring in International Relations and Economics. She can be reached at afreenbaig@gmail.com

2 comments

  1. Just passing by.Btw, your website have great content!


  2. Our pseudo-intellectuals are now after the only entity in Pakistan which is still functioning as unified, committed and sincere to the Country – wonder whose agenda they are fulfilling. Yes, they may have certain issues but compared to other institutions they still are the best to defend the country.
    work.



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