Military Economic Cabals

Once again the begging bowl rattles ....

The Fauji Foundation Part Of The Pakistan Military

 

Pakistan has been hit by extensive floods, coincidently, at the same time as it had been negotiating a $1.1bn bailout from the International Monetary Fund (IMF).

The reason for the bailout from the IMF was to help the cash-strapped and corrupt economy, run by a kleptocratic elite, avoid defaulting on its international debts. The economy is further skewed by the fact that the armed forces (the 9th most powerful military in the world) are running their own tax free parallel economy, which operates as a multi billion-dollar corporate empire, across various sectors.

Which via companies such as the military-owned Fauji Foundation (one of the largest conglomerates in the country), dominate entire economic sectors, yet the armed forces also accounted for 18.3% of national government expenditure, after interest payments, in 2021.

The Pakistani government had long ago exempted both the Army Welfare Trust and the Fauji Foundation from income taxes, giving them an unbeatable edge over privately owned companies, while the armed forces Defence Housing Authority is a dominant force in the country's real estate sector, after it evolved into a multibillion-dollar entity in the private sector, from its original role of developing homes for serving and retired military personnel.

The military economic sectors are:

1. The business ventures of four welfare foundations (small businesses such as farms, schools and private security firms, and corporate enterprises such as commercial banks and insurance companies, radio and television channels and manufacturing plants);
2. Direct institutional military involvement in enterprises such as toll collecting, shopping centres and petrol stations; and
3. Benefits given to retired personnel such as state land or business openings.

The rest of the economy is often centred in highly protected, low-productivity sectors leaving Pakistani businesses both globally uncompetitive, and only able to provide shoddy services to its domestic consumers, leading to a low rate of foreign direct investment, particularly in export-oriented sectors, and with a high rate of dollar exodus.

The result: recurring balance of payments crises that require regular IMF bailouts. But following the floods, Pakistan's planning minister Ahsan Iqbal has declared that they caused at least $10bn (£8.5bn) of damage having washed away roads, crops, homes, bridges and other infrastructure.

They have called on richer countries to help Pakistan financially as Mr Iqbal said Pakistan was a victim of climate change, which had been caused by the "irresponsible development of the developed world" ... so those same developed countries should help Pakistan financially.

Official Pakistan financial figures released recently show that the country had only enough foreign currencies in reserve, for about a month of imports, as its economy struggled with an annual inflation rate of almost 25% ... the IMF hinted at the imbalance in the Pakistan economy by saying that as well as the post COVID and Ukraine issues, that had "buffeted" the economy with "adverse external conditions" by adding that another factor was it having to "accommodative policies that resulted in uneven and unbalanced growth."

The Pakistan military last month spent $500 - $700 million on seven second hand C-130 transport planes from Belgium and are negotiating for three more from Spain .... surely money that could and should have been spent on flood relief? The assets of just the Army Welfare Trust, the Fauji Foundation and the Defence Housing Authority alone, are at least US $2.5 billion, with many of their holdings not being listed on Pakistani stock exchanges ..... money that could be recouped by the state selling them to the private sector.

Until there is economic and political reform in Pakistan .... that begging bowl should be ignored.