Fighting for the bottom line

Ayesha Siddiqa became a wanted woman in Pakistan almost as soon as this provocative book was published in April. In May, amid street protests against the sacking of Pakistani chief justice Iftikhar Chaudhry, the official launch of Military Inc, at an elite Government-controlled club in Islamabad, was cancelled at short notice. Several weeks later, Siddiqa received legal demands for 1 billion rupees in damages from a retired military commander and was warned that her life was in danger.

The Government-run Associated Press of Pakistan described Siddiqa's book as "a plethora of misleading and concocted stories" that cast aspersions on "one of the country's most prestigious and honourable organisations". Although Pakistan's besieged President Pervez Musharraf is yet to address directly Siddiqa's revelations about the military's lack of financial accountability, he branded the London-educated defence analyst a traitor during a television interview in October. Siddiqa was out of the country and has yet to return.

On November 5, within days of the declaration of emergency rule, Pakistani parliamentarian Sheikh Waqas Akram, defending Musharraf on Government-controlled television station PTV, cited Military Inc as an example of the present threat to Pakistan's security. In a reply posted on a popular Pakistani website, Siddiqa said she "had nothing but the interest of the armed forces of Pakistan at heart ... I have presented objective facts and figures to conclude that the involvement of military in private business is undermining the capacity, efficiency, professionalism and image of this prestigious institution."

In subsequent interviews with me, Siddiqa remained adamant that a military that benefits to the tune of 200 billion rupees ($3.7 billion) a year from private enterprises is dangerously political by nature. In Pakistan, military-owned businesses produce everything from knitwear to cereals to cement, run the trucking and construction sectors and control strategic land allocations in urban and regional districts. A good example from Siddiqa's book is the Fauji Foundation, which describes itself as "a uniquely combined welfare-cum-industrial group, operating sugar, cement, fertiliser, power, oil, gas, corn, financial services businesses benefiting nearly 10 million ex-servicemen."

Siddiqa has a doctorate in war studies from King's College, London. Her specialty is threat perception, and after working in the civil service for 11 years she became the first civilian and the first woman to be appointed director of naval research for the Pakistani navy, a post she held from June 1998 to September 1999. In recent years, working as an independent analyst and commentator, her expertise in arms procurement and production, military technology, strategic defence and nuclear deterrence has expanded to include a focus on civil-military relations in South Asia.

Pakistan's official defence spending consumes 3 to 4 per cent of its gross domestic product. Neighbour and nuclear rival India spends 2.5 per cent. But Pakistan's figures are inaccurate, according to Siddiqa, who estimates military-controlled business generates up to $US50 billion ($56.4 billion) annually. "Factor in the army's extensive business operations and the annual spending is much higher," she told me. "How does the military meet its annual salaries otherwise?"

In Military Inc, Siddiqa returns repeatedly to the idea that the sheer scale and scope of the military's business activities distorts all assessments of Pakistan's economy. She uses the term MILBUS (military business) as shorthand for what can happen to developing societies when the military has a pervasive influence on the economy. "Their purpose is not straightforward capital accrual ... if their businesses were based purely on wealth accumulation they would be far more efficient," she told me. "Their main purpose is to monopolise assets as an extension of political power, giving themselves a financial economy, a sense of confidence, in which the army can become a state within a state."

She cited National Logistic Cell as an example of MILBUS. One of the largest trucking companies in South Asia, with a fleet of 1,689 vehicles, it is also builds roads, bridges and grain-storage facilities. Technically a department of the Ministry of Planning and Development, NLC is in fact run by the army and staffed by serving army officials, according to Pakistani analysts. Profitable subcontracts prioritised to military-owned businesses are commonplace.

"It's always problematic to calculate accurate annual military spending, because most of its economy is invisible underground," Siddiqa said. From rural land distribution to strategic re-employment for retired military personnel, the Pakistani military's economic activities provide critical political support for Musharraf. Controlling 12 per cent, or close to 4.86 million hectares, of the nation's land, the military owns more than any other Pakistani institution, at least half of it under the control of individual members of the armed forces, mainly officers.

In Military Inc, Siddiqa combines narrative outrage with academic rigour and meticulous research. It's no surprise that her penetrating inquiry into the Pakistani military's business interests has disturbed the ruling elite in Islamabad. Her writing rewards close reading in these troubled times for Pakistan.

Central to Siddiqa's densely argued treatise on the social and economic consequences of Pakistan's militarisation is her response to Samuel Huntington's famous 1996 tract The Clash of Civilisations and the Remaking of World Order, a darkly argued prophecy of an inevitable showdown between the West and Islam. In Military Inc Siddiqa challenges Huntington's assertion that in many parts of the developing world "the military are generally better placed to undertake nation building than the ill-groomed politicians". Siddiqa begs to differ and the turmoil in Pakistan would seem to add strength to her case.

In comparison with other developing countries, democracy building in Pakistan takes second place if the US's response to Musharraf's emergency rule is any yardstick. Shortly after Musharraf's announcement, George W. Bush asked him to resign his military commission and confirm an election date. While the general has paid lip-service to the US's demands it's a fair bet he is working hard to convince Bush that without him, the war on terror is unwinnable.

For Siddiqa, the US avoidance of Musharraf's "command economics" raises questions about the real price of American foreign policy in the region. She believes Pakistan's response to insurgencies and to religious fundamentalism is often manipulated to suit Musharraf's political agenda. "The menace of extremism was caused by state policies ... We must comprehend the imperative for this kind of negative state interference," she writes.

In scrutinising the military's influence across Pakistani society, Military Inc presents convincing evidence that its unregulated financial activities render hollow the official boasts about Pakistan's buoyant economic growth. In reality, stagnating social development, acute unemployment, disproportionately low spending on health and education and widespread corruption has become a recipe for dissatisfaction and the growing influence of religious hardliners, particularly among Pakistan's young.

Pakistan has the highest birth rate in South Asia but more than 28 million people live below the poverty line and two-thirds of the adult population is illiterate, while maternal mortality is high (340 per 100,000) and one-quarter of newborns are underweight and malnourished.

Military Inc also highlights the $US1.5 billion in US aid Pakistan receives each year to assist the armed forces fight insurgencies in the North West Frontier provinces and Waziristan. But Siddiqa writes that the US does not make Pakistan account for how it uses this money. Further, the US's tacit acceptance of the Pakistani military's lack of financial transparency has consolidated Musharraf's power base.

In May, the US State Department released its 2007 Country Terrorism Report, which downgraded Musharraf's effectiveness in the war against terror by highlighting the anti-money-laundering bill stalled for two years in the Pakistani National Assembly. "Adoption of anti-money-laundering legislation consistent with international standards would significantly broaden Pakistan's ability to co-operate internationally on counter-terrorism finance issues," the report noted.

After the surrender of more than 150 Pakistani soldiers who were fighting militants in the Swat Valley in October, fresh questions emerged about the Pakistani military's state of preparedness and tactical competence for the fight against jihadists, al-Qaida and Taliban insurgents. A US Senate armed forces committee report released at the same time argued that the Pakistani military was ill-prepared to fight terrorism. But Siddiqa's opinion is more nuanced: "No military, especially South Asian militaries, which are essentially World War II armies, will find it easy to fight insurgencies. It's a difficult kind of warfare which militaries, trained to primarily to fight other militaries, are bound to find tougher. For the Pakistan military it's even more complex because its top leadership is so integrally engaged in politics, leaving little time to think about professional issues."

Have any of the billions of US aid been used to upgrade the military's insurgency-fighting capabilities? Or does this targeted, internationally sanctioned aid package go the unaccountable way of much else of Pakistan's defence spending? "There is no accountability of this money," Siddiqa said. "There is a lot of wastage in Pakistan's defence budget so I am sure this money is not being spent efficiently."

Members of the Pakistani armed services are uncomfortable with Musharraf's state of emergency, Siddiqa believes, but this doesn't mean there'll be a coup. "There is no possibility of a colonels' coup either, but if Musharraf orders the army to fight innocent civilians, we may have some defections," she told me.

As the ALR went to print, the 53-nation Commonwealth made good on its threat to suspend Pakistan after Musharraf failed to meet a deadline to lift emergency rule and resign as army chief. The biggest impact of emergency rule on Pakistani life, other than inducing fear in the populace, is "the stagnation of political and intellectual discourse", Siddiqa said. "Unlike the US and other Western societies, Pakistanis won't denounce the military because they've been trained to think in terms of the military's protective role in our society."

Siddiqa sees Musharraf engaged in a particularly dangerous political game with military aid. Using the "threat or fear of extremism to get support for the military regime from abroad", she says, there is always an underlying agenda of "saving militants for future use" while conversely using "external pressure as a ploy to get rid of groups problematic for the establishment".

Musharraf's regime has backtracked on its commitment to fighting militants within Pakistan's borders. When 800 militants captured in Pakistan were freed some months ago, 40 top radical leaders were among them. Securing political support from hardline Islamic parties and their leaders is one of Musharraf's most familiar political survival techniques.

Military Inc asks how, beyond the haphazard scope of its role in fighting terrorism and securing Musharraf's power base, Pakistan rationalises such a large military budget when social development is almost at a standstill. The answer, Siddiqa writes, lies partly in the cultural manipulation of Pakistanis since its formation after the 1947 partition from India.

Although the West largely believes Musharraf's military focus is on fighting terrorism, Pakistan's decade of increased militarisation has been primarily in response to India. The relationship between India and Pakistan was hijacked shortly after partition, Siddiqa believes. "Maintaining tension was beneficial to a select group of people in both countries." The strategic amplification of India's threat to national security radically changed the course of Pakistan's social and cultural development.

"There was a conscious effort to disassociate us from anything Indian," she told me. "Since 1947, the whole discourse, as well as our symbols and language, changed. Now ordinary Pakistanis believe there's something different about them.

"In politically underdeveloped societies the armed forces project themselves as saviours, protecting the state against corrupt politicians and other exploiters. Manipulating the impression of external and internal threats is central to the military's economic power. The public is made to believe that the defence budget and the 'internal economy' are a small price to pay for guaranteeing security."

The entire South Asian region needs "re-imagining", Siddiqa believes. "Right now it remains a very politically unimaginative and uninspiring prospect. We're all connected in spite of past disputes. As blasphemous as it sounds from both countries' perspectives, we have to find some way not just of normalising relations between India and Pakistan, but of reclaiming our commonalities. Boundaries are not sacrosanct."