Since 2001, the U.S. government gave more than US $11 billion to the military regime under Pervez Musharraf. Of the total $12.3 billion in U.S. aid to Pakistan since 2002, less than 27 percent went toward development and economic assistance

It is a common joke that Pakistan is a rare place where an army has a country instead of the other way around.

The armed forces in Pakistan emerged as the stabilizing force under whose command we’ve witnessed growth rates in large-scale manufacturing historically. It is the only institution capable of providing that need fiscal discipline, perhaps at the expense of social, democratic progress. The military is unlikely to let go of this privileged position and the political clout to influence economic decisions. This vested economic interest discourages the armed forces from allowing democratic institutions to flourish in an environment where the military finds it more beneficial to stay in power.

The Pakistani government spends 3.3 percent of GDP more on defence than other countries of its income level. The overspending on defence is roughly equal to the sum of the under-spending on health and education as a percent of GDP and almost twice as much is spent on defence as is on health and education combined. Pakistan’s defence expenditure as part of its GNP is the highest in South Asia.

Ayesha Siddiqa notes that military expenditure is just one part of the army’s wealth accumulation and that business ventures with military involvement in their economic stakes form a large part of the political economy, referring to the businesses that the military is involved in that are for private gain.

Pakistan’s military empire is estimated to be worth billions of dollars and its two groups – The Fauji Foundation and the Army Welfare Trust – are the largest business conglomerates in Pakistan. Siddiqa’s argues that the military is both a cause and an effect of a feudal, authoritarian and non-democratic system. The Fauji Foundation is the largest corporate player with over Rs. 10 billion in assets. Shah Mehmood Qureshi, current Foreign Minister of Pakistan, confessed in 2002 that “all civilian governments ignored the military businesses or provided economic opportunity to placate the military”.

Keeping in mind the absence of other institutions that undertake development, the military takes responsibility for building and investing in large industries and capital-intensive projects. Donors have also historically valued armed forces as instruments of domestic stability and support. This very legitimization of the economic interest of the military contributes to underdevelopment and social regression. For example, despite a lack of resources, that is often touted as the cause for underinvestment, the Pakistani government doled out US$ 25 million and US$ 20 million in subsidies to the Fauji Foundation in 2004 and 2005, respectively.

According to Saadet Deger and Somnath Sen (1990), “for Pakistan, no economic sacrifice is too much for eternal military vigilance”.

The military as an effective yet unaccountable institution:

When it comes to delivery of services, the Pakistani army is known to be effective and reliable. When the earthquake hit north of Pakistan in 2005, it brought in its wake a full-blown humanitarian crisis. Homeland Defence secretary Peter Verga appreciated the Pakistani army for being the first one to respond to the crisis with aid and reconstruction efforts. Verga said “We must note the exceptional performance of Pakistani army during the crisis”.

There are more examples of the army’s social work. Over 2.1 million patients are treated per year through the military healthcare system; approximately 41,112 students are enrolled in the army education system; and over 6,000 individuals trained annually through the vocational and technical training centres. For a charity trust with so much money, it is surprising there are no publically accessible annual reports or audits. Accountability Ordinance (1999) precludes the military and judiciary from being questioned under the new accountability rules. From a legal standpoint, the welfare foundations are not required to make their operations public, as they were chartered under Charitable Endowments Act 1890 as private entities.

The Role of Donors in Exacerbating Underdevelopment:

The amount allocated to economic and development assistance, including food aid, from 2001 to 2007 was US $3.1 billion while military assistance was US $7.9 billion.

Since 2001, the U.S. government gave more than US $11 billion to the military regime under Pervez Musharraf. Of the total $12.3 billion in U.S. aid to Pakistan since 2002, less than 27 percent went toward development and economic assistance. Recently, Hillary Clinton acknowledged that the aid efforts in Pakistan had been haphazard and the policy for the last three decades had been ‘incoherent’.

Until 2009, information on US aid to Pakistan was either “hidden from the public or released in a form too aggregated to allow for effective public oversight”. $30 million were given to the Pakistani army to build roads, but there was no evidence that they had been built. This is evidence of corruption at the highest levels of the government and military.

A report for the Belfer Centre for Science and International Affairs by Ibrahim A (2009) confirms that US funds have discouraged democratization by giving the military a disincentive to submit to civilian control, increasing the latter’s independence from government, and ignoring evidence of profiteering. The report also points towards evidence of corruption within the Pakistani military. Despite the army’s known public record of corruption, no verification was undertaken between 2003 and 2006. According to Ibrahim, only 10 percent of the total funds were explicitly for development. By the end of 2007, the US was paying for roughly a quarter of Pakistan’s military budget.

Security concerns, whether real or not, have been used to justify the military’s extensive involvement in the economy to the extent that the people of Pakistan do not even question the huge sums of money that are misdirected. The institution is touted to be effective even though there are no standard accounting practises that would reveal the nature of expenditures. It is not surprising then, that rent-seeking opportunities are exploited and personal gain is the biggest motivation for officials who may as well be handed a carte blanche at the expense of the rest of the country. When so much money has been ambiguously unaccounted for, it implies that corruption reaches the highest levels. The role of the military as an economic empire and a policy-maker in Pakistan should be investigated as a contributing factor in reduced funds for development, possibly affecting outcomes of reform both during military regimes and under democratically elected governments.

Rabayl Manzoor is a development economist and self-identified feminist working with Rural Support Programmes in Sindh for Monitoring, Evaluation and Research of the Landless Peasants Project. She also volunteers at Gender Interactive Alliance that works for the rights of transgender people in Pakistan. She teaches Economics and History at SZABIST and blogs http://obamasaysdomore.wordpress.com. She's based in Karachi and can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it