Military-run welfare outfits dependent on state bailouts
Military-run welfare outfits dependent on state bailouts
By Khalid HasanWASHINGTON: With the three major armed services welfare foundations not willing to provide data about their activities, it is difficult to assess the extent of their contribution to welfare, but what is known suggests that they are inefficient and dependent on state bailouts, according to Dr Ayesha Siddiqa’s new book, Military Inc.The four welfare foundations she studied are the Army Welfare Trust (AWT), the Fauji Foundation (FF), the Bahria Foundation (BF) and the Shaheen Foundation (SF). Compared with the Fauji Foundation and the Army Welfare Trust, there is very little information available on the SF and BF. The author argues that the military welfare system creates its own set of problems, the most prominent being the “politics” of the distribution of military welfare as it contributes to the existing imbalance of resources between the various provinces. Since 75 percent of the armed forces come from the Punjab, that is where much of the welfare activity is concentrated to the frustration of minority provinces. “The welfare system, or the set of perks and privileges provided to the armed forces, is part of the greater distributive injustice that the country suffers from,” she adds.Dr Siddiqa writes, “Milbus (military business) has grown exponentially. It is a segment of the military’s economy which is largely hidden from the public and not subject to the government’s accountability procedures. Moreover, it serves the interests of a select group of people. A combination of these two features of Milbus makes this capital inherently illegal. An increase in the military’s economic power is directly proportional to its political power.” Many of the economic operations undertaken pose a burden on the defence budget and the larger national budget. It also encourages “crony capitalism” and hampers the growth of a free market economy. According to Dr Siddiqa, the military’s commercial ventures are not cost-efficient. Because of a lack of transparency, it is not possible, she points out, to gain access to updated financial information, which is why her study of the armed services’ welfare activities is confined to data obtained for the years 1998-2001. Since the four foundations were set up under the charities law, their accounts are not auditable by the Auditor General of Pakistan. The AWT set up in 1971 with just Rs 0.7 million was worth Rs 17.45 billion in 2001 and was running 31 projects. It had to be bailed out financially at least twice. The Fauji Foundation (FF) has been considered a better performer than the AWT and PAF and Pakistan Navy foundations. The FF currently, which runs 12 projects, has a capital of Rs 43.32 billion. Four of the projects did not make any money in 2001. All three of its sugar mills ran in loss totaling Rs 58.42 million. The author recalls that when a parliamentary committee summoned FF chairman Gen Muhammad Amjad to appear and explain the controversial sale of one of the FF sugar mills, he refused to appear. He told the author in one of her four interviews, “No one has the moral authority to question the military or run the country. Are the politicians trained for their job?” The government’s economic survey shows that since 2003 the FF was consistently subsidised to the tune of over Rs 1 billion annually. No other private sector organisation has been provided with help in the form of loans and financial guarantees as the FF has.The research found very little information on the two foundations run by the Pakistan Air Force and the Pakistan Navy. The former set up an airline but it was a financial disaster and it had to be sold, although it constantly used public resources without compensating the government. Over the years, the state has lost money because of the military’s appropriation of urban and rural land for distribution amongst military personnel. The study found that the conversion of state land from defence to commercial has increased under the Musharraf government. The study also came upon evidence of inefficiency in the Frontier Works Organisation (FWO), which challenges the military’s claim regarding its efficient running. Dr Siddiqa writes that the data regarding the performance of the four foundations is largely hidden from the public. The defence establishment, she argues, is not an agent of development as it likes to think. She also writes about the comfort technocrats such as former State Bank governor Ishrat Hussain feel towards military regimes and vice versa. She calls the military bureaucracy a “short-time troubleshooter.” She argues that the millitary’s direct involvement in economic development through its business complex has an opportunity cost and creates market distortions. Milbus exacerbates cartelisation in the corporate sector.
By Khalid HasanWASHINGTON: With the three major armed services welfare foundations not willing to provide data about their activities, it is difficult to assess the extent of their contribution to welfare, but what is known suggests that they are inefficient and dependent on state bailouts, according to Dr Ayesha Siddiqa’s new book, Military Inc.The four welfare foundations she studied are the Army Welfare Trust (AWT), the Fauji Foundation (FF), the Bahria Foundation (BF) and the Shaheen Foundation (SF). Compared with the Fauji Foundation and the Army Welfare Trust, there is very little information available on the SF and BF. The author argues that the military welfare system creates its own set of problems, the most prominent being the “politics” of the distribution of military welfare as it contributes to the existing imbalance of resources between the various provinces. Since 75 percent of the armed forces come from the Punjab, that is where much of the welfare activity is concentrated to the frustration of minority provinces. “The welfare system, or the set of perks and privileges provided to the armed forces, is part of the greater distributive injustice that the country suffers from,” she adds.Dr Siddiqa writes, “Milbus (military business) has grown exponentially. It is a segment of the military’s economy which is largely hidden from the public and not subject to the government’s accountability procedures. Moreover, it serves the interests of a select group of people. A combination of these two features of Milbus makes this capital inherently illegal. An increase in the military’s economic power is directly proportional to its political power.” Many of the economic operations undertaken pose a burden on the defence budget and the larger national budget. It also encourages “crony capitalism” and hampers the growth of a free market economy. According to Dr Siddiqa, the military’s commercial ventures are not cost-efficient. Because of a lack of transparency, it is not possible, she points out, to gain access to updated financial information, which is why her study of the armed services’ welfare activities is confined to data obtained for the years 1998-2001. Since the four foundations were set up under the charities law, their accounts are not auditable by the Auditor General of Pakistan. The AWT set up in 1971 with just Rs 0.7 million was worth Rs 17.45 billion in 2001 and was running 31 projects. It had to be bailed out financially at least twice. The Fauji Foundation (FF) has been considered a better performer than the AWT and PAF and Pakistan Navy foundations. The FF currently, which runs 12 projects, has a capital of Rs 43.32 billion. Four of the projects did not make any money in 2001. All three of its sugar mills ran in loss totaling Rs 58.42 million. The author recalls that when a parliamentary committee summoned FF chairman Gen Muhammad Amjad to appear and explain the controversial sale of one of the FF sugar mills, he refused to appear. He told the author in one of her four interviews, “No one has the moral authority to question the military or run the country. Are the politicians trained for their job?” The government’s economic survey shows that since 2003 the FF was consistently subsidised to the tune of over Rs 1 billion annually. No other private sector organisation has been provided with help in the form of loans and financial guarantees as the FF has.The research found very little information on the two foundations run by the Pakistan Air Force and the Pakistan Navy. The former set up an airline but it was a financial disaster and it had to be sold, although it constantly used public resources without compensating the government. Over the years, the state has lost money because of the military’s appropriation of urban and rural land for distribution amongst military personnel. The study found that the conversion of state land from defence to commercial has increased under the Musharraf government. The study also came upon evidence of inefficiency in the Frontier Works Organisation (FWO), which challenges the military’s claim regarding its efficient running. Dr Siddiqa writes that the data regarding the performance of the four foundations is largely hidden from the public. The defence establishment, she argues, is not an agent of development as it likes to think. She also writes about the comfort technocrats such as former State Bank governor Ishrat Hussain feel towards military regimes and vice versa. She calls the military bureaucracy a “short-time troubleshooter.” She argues that the millitary’s direct involvement in economic development through its business complex has an opportunity cost and creates market distortions. Milbus exacerbates cartelisation in the corporate sector.
posted by India News Watch at 6:26 PM
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