125-132 Book Review -Eng.Qxd

MILITARY INC. Ayesha Siddiqa. Military Inc.: Inside Pakistan's Military Economy. London: Pluto Press, 2007. 304 p. Reviewed by Gennady Evstafiev In 2007 Dr. Ayesha Siddiqa, a Pakistani political analyst and Woodrow Wilson Center scholar, published her fundamental research on a specific phenomenon, observed in a number of third world countries, looking into its history, development, current situation and influence in Pakistan. This phenomenon is an increasing participation of the military forces in the business and economic life of some countries, contracted as Milbus. Even though Dr. Siddiqa scrutinized abundant data related to the situation in her native coun try, nearly all revealed trends and methods of penetrating into the economic life of a state are also characteristic of the military in Indonesia, Thailand, Myanmar, more so in Turkey, and to different degrees in a number of other countries, including those in Latin America, and even countries like China (before 1988). The degree to which the military have penetrated into the economy and the general level of their influence in society directly depends on and is proportional to the degree of their access to political leverage and relations with other key political players of a country. Naturally, meth ods used by military circles depend on the historical circumstances in which specific countries emerged and developed, as well as on the nature of relations between civil society and top mil itary echelons, power and influence of specific political institutions in some countries, espe cially the democratic ones. The conclusion made by Dr. Siddiqa is very much wellgrounded and can be handy in analyti cal research of the role the military play today in developing countries that for various histori cal, economic, and political reasons are prone to longterm instability and imbalance of polit ical systems. The author defines six typologies of relation between civil society and the military. Within each of them, the ability of the military establishment to preserve and promote their strictly corpo rate interests depends on the strength of the country’s civil society. Let us not get into the six typologies (described in detail on pp. 41–57). Let us note, however, that splitting military dic tatorships into three types–totalitarian, partnership, and hegemonistic–looks a little far fetched, and, perhaps, makes the object under analysis cumbersome and even overcompli cated. Book review First of all, it is important to understand, what Milbus implies. It is a particular kind of military capital with no entity to govern it, which is essentially different from what we understand as defense budget. Milbus is usually hidden from public view and is often labeled as the military establishment’s internal economy. And these assets are far from being insignificant. Smysl, a Russian magazine, reports that in Turkey «the Turkish military is a corporate economic entity controlling 17 percent of the country’s economy.»1 SECURITY INDEX No. 1 (83), Volume 14 125 Milbus means military capital used fully for the personal benefit of the military fraternity, espe cially the officer cadre, which is neither part of, nor recorded as part of, the defense budget. Its major component is entrepreneurial and other business activity that is not subject to conven tional accounting commonly applied in the country and is used to reward military personnel and their protégés. However, it is obvious that a lion’s share of the revenue goes to the officer cadre, primarily to top military echelons. Notably, either Milbus is controlled by the military right away or it is under their indirect, or sometimes even direct, patronage. Financial autonomy gives the armed forces a feeling of power as well as confidence that they can be independent from incompetent civilian authorities. Milbus is there in many countries: in such ones as the United States, Great Britain, France, Israel, and some others, it has been in place since a historically distant date, but operates via established partnership mechanisms with the civil corporate sector and the government. In other examples, it is manifested in partnership with the dominating political party. However, its pure form as in Turkey, Indonesia, Pakistan, and Thailand, would mean that the military itself and its conscious efforts mainly account for the power of Milbus. Dr. Siddiqa uses the example of Pakistani military establishment to show that the high brass and the whole officer cadre took decades to build up gradually their efforts aimed at increas ing their role and influence in the country’s political life, as well as direct involvement in state policy decisionmaking, even going to the decisive extreme, which opened a gradually widen ing opportunity for a strong penetration into the economic side of life in Pakistan. The author notes that activities of the military and their economic entities in Pakistan (where they are grouped around two powerful business conglomerates, Fauji Foundation, and Army Welfare Trust) are extremely selfcentered and rather predacious. Just to mention: the first of the two groups controls at least 17 major enterprises, from mineral fertilizers, including a mining com pany in Morocco, cement, gas production and oil distribution, and even educational and train ing facilities. The leadership of this military conglomerate claims that they offer charity to 8.5 million of former servicemen and members of their families. In its turn, Army Welfare Trust, established in 1971, controls 26 major industrial, agricultural, and commercial enterprises, also representing banking, leasing, and insurance; and is involved in 13 other projects as a shareholder. The conglomerate’s staff alone includes around 5,000 of former military person nel, its assets exceed $862 million, considered significant in Pakistan. All this started with Act 1860 and a pitiful initial endowment of $12,000 to «generate funds for the welfare and rehabil itation of the orphans and widows of martyrs, disabled and retired personnel of Pakistan Army,» baby needs new shoes! In their turn, members of the Pakistani Air Force have established their own foundation called Shahin, which also started modestly, but raised its assets to $35 million with the annual turnover exceeding $10 million. Naturally, the majority of Shahin commercial activities are linked with aviation business. The Pakistani Navy doesn’t fall too far behind creating its own business entity under the name of Bahria Foundation, which, obviously, as in the examples above, is headed by former and active admirals and officers of the Navy. The Navy is involved in 19 major projects and possess even larger assets than the Air Force–$69 million. When explaining activities of the above Milbus units in Pakistan, it should be noted that there are some vital organizational points that lie beyond any legal framework and account for their success. The figures above vividly demonstrate that military groups with strong political influ ence and financial autonomy within the country use both their political power and their finan cial autonomy to establish a business empire, which today uncontrollably uses billions of dol lars to its own strictly corporate ends. Justifying this idea, the analyst mentions nearly com plete lack of transparency in operations of militarycontrolled companies, as well as no finan cial monitoring by the government together with preferential tax treatment of military corpora tions, which have long been backed by their claimed charity status. Amazingly, even today Fauji Foundation and Army Welfare Trust pay only 20 percent of corporate income tax, which is incomparably lower than the figure for civilian corporations. Even more amazing is the fact that Shahin and Bahria Foundation, though with much less influence in the country, pay 30 percent of corporate income tax. A wellknown rule in Pakistan: the Green machine rules the game. 126 MILITARY INC. Success and commercial advantage of the military is most obvious in appropriation of land. Thanks to its political influence, Milbus managed to decorate the affair good and hard. Land appropriation is in line with best practices of feudal traditions in Britain under the socalled Colonization of Government Lands Act of 1912 at a pitiful price ranging from 40 cents per acre in 1960s to $1.2 per acre in mid1990s. Today, the average price of an acre exceeds $4,000, with the total value of Milbusowned land property approaches $12 billion in Pakistan, as esti mated by Dr. Siddiqa. In some cases, large lots of land still remain untaxed. This way, the mili tary got over 11.5 million acres (5 million hectares) of land. Keep in mind: it translates as 12 percent of all government land (p. 174). A land reform that took place never affected the interests of generals and top officers, who used the time under a number of military administrations in the country (in fact, military dicta torships) to turn into outstanding land owners and managed to stream a significant share of foreign economic aid in the 1950s1960s into implicit subsidies to gain upper hand in the agri culture. A prominent statesman ended up claiming that «foreign aid was designated for the Army.» Or was it? Interestingly, as Dr. Ayesha Siddiqa argues that even today generals, includ ing Pervez Musharraf himself, Admiral Abdul Aziz Mirza, and others, use military personnel in Pakistan Army active service for security and agricultural works at their lots, in Bahawalpur, to name one. Even more illustrative is the penetration of Milbus in urban land and housing, which started at full swing after 1999, i.e. after the current regime had come to power. The most exposing fact, however, is that out of the 46 housing development projects directly carried out by Milbus none gives an opportunity for the lower ranks to join in. Everything has been ceased by top officers and business circles with ties to them. All this happens in a country that has a shortage of 6.3 million houses, that is why even the military has its layer that is against this collusive cor ruption (p.

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