The economics of defence
The classic premise of economics when analysing the maintenance of large armed forces is that it entails non-productive expenditures not conducive to economic progress. As such it is not surprising that this issue arouses considerable adverse attention in the world, being of particular concern in the third world. Countries with large debt servicing problem are perennially faced with the prospect of justifying seemingly profligate expenditures on the defence services, this being the bane that causes credit donors to remain wary. In a simplistic manner it can be held to be true, but this does not take into account the genuine defence needs of such countries, which have their sovereignties endangered by unrelenting foes but are deeply committed to preserving their freedoms.
Pakistan has a major debt servicing problem though not as acute as some countries. Blessed with a large population and burdened by foreign loans, we tend to sink deeper into the debt morass on a daily basis and yet it is impossible for us to curtail our defence expenditures when confronted with such an implacable enemy like India to the east and Russia to the northwest. In such situations one does get into the habit of eating grass — and liking it. Consider India for starters. It deploys the bulk of its armed forces on our borders, exceeding ours by more than three to one in many areas, a favourable attack ratio. With massive infusion of the latest Soviet armaments at less than market prices and paid for in Barter by commodities and products on a deferred payment basis rather than in hard cash, the Indians have gathered an awesome military machine, in utter contempt of its teeming, poverty stricken, hungry millions.
With the deployment of T-72 tanks and MIG-29 aircraft, along with leased Russian nuclear submarines, the qualitative edge that Pakistan enjoyed in weapons and equipment has been considerably narrowed down, the favourable ratio in Pakistan’s favour in the quality of manpower and leadership being offset by Indian numerical strength. A large indigenous defence industry in India has started making state-of-the-art electronics, sophisticated radars, tanks, aircraft, self-propelled medium guns, missiles, etc. To add to all this, the escalating Sikh problem has destabilized the border region adjacent to Pakistan.
With the element of Bonapartism available in India a la Rajiv, a historical penchant to solve their internal problems by the means of external solutions and a quagmire of their own choosing in Sri Lanka, the Indians are apt to do anything. What option has Pakistan left with except to deploy the barest minimum of defence forces possible within its means to contain the enemy and if possible to have a limited offensive capability to deter Indian adventurism, particularly since we lack a geographical depth in defence? In such circumstances it is incumbent on our defence planners to ensure that we have adequate forces that can inflict heavy punishment on any invading forces simultaneously causing him to deploy additional forces to counter any thrust to his sensitive areas; all in all make it expensive enough deterrent for the enemy to re-think his ambitions. Take our other friendly neighbour, Russia, on the north-western borders.
If it had not been for the Afghan Mujahideen, the Russians were well on the way to reaching the warm waters of the Indian Ocean, a Czarist dream shared by our Soviet-ized comrades, spiced favourably with the coveted oil (capitalistic thoughts?) of the Persian Gulf. Less than a decade ago when the Russians entered Afghanistan we did not have a credible defence posture to deter the Russian threat which we now have, thanks to generous economic and military aid from the US of A. Now when the Russians are pulling back from our borders with great fanfare, oozing peace from every tank-track, the lethal power of helicopter gunships is being used to cover the routes of withdrawal of their armoured forces which can again be utilized to return in the same manner. When our neighbour changes back from being a satellite of Russia to its original form of Afghanistan (which one expects in the near future), we may well breathe a little easier, depending upon the populist tendencies of the future rulers of Kabul at that time and how they view the Durand Line.
All this brings us to the question, can we afford to let our guard down? The one major lesson of September 6, 1965 is that we were caught unawares when we should not have been and it took only a superhuman effort from our Defence Services with quite a bit of help from Divine Providence to keep Gen. Chaudhri from enjoying his drink at the Lahore Gymkhana. One has to spend money on defence, only that it has to be spent wisely, innovation and imagination being used to turn the disadvantage of non-productive expenditure to productive utility. The numerical strength of the Armed Forces in such circumstances such as ours is necessary as well as the modern weapons and equipment to go with it, it is just that the economic viability has to be logically addressed and gainful peacetime employment of the defence services have to be properly organised and publicised. One method may be to ensure that selected journalists from major news media spend some time more frequently on attachment with field units of the Armed Forces to build up a personal picture and human rapport. The Armed Forces are a major source of employment in Pakistan drawing a majority of its personnel from such rural areas where it is impossible for families to eke out a living on the available arable land. No great publicity effort has ever been made to properly explain the reasons why so many servicemen seem to come from such few areas. Mostly bereft of agriculture, (and industry) in their areas, the families of servicemen are surviving for the most part on the salaries of their kins in the defence services.
With the increase in population, even where arable land is available, the human density makes the land un-economic for survival. As such the money earned from the government exchequer is a major catalyst for the economy of the area. This money brings food, clothing, medicine and education, it pays for various services including the provision of shelter and maintenance thereof. The meagre cash flow thus generated from the simple salary of an individual in the Defence Services generates economic turnaround in his village home when totalled together. The same holds true for many urban areas which are faced with a shrinking job market and the youths turn to the Armed Forces as a means of employment. The requirements of the Armed Forces are met at the local level by the various Formations, logistics areas, units and sub-units.
The areas and population adjoining to the cantonments enjoy economic benefits through the ensuing commerce because cash flow is established with commensurate economic generation. The Director General Defence Purchases and its various ancillaries look after the major necessities of weapons, equipment and other supplies on a centralized basis. Except for the foreign exchange spent for those items which cannot be manufactured or obtained indigenously, every penny spent within the country directly or indirectly contributes to the economy through industry, agriculture commodities, services, construction sector, etc. If some barracks are being built, cement and steel is being used and labour is being paid, all eventually contributing to the economic basket. In a manner of speaking, for third world countries, large armies not only act as major employment centres but as a means of supply sided economics, a benefit thus being derived from supposedly non-productive expenditure, howsoever reverse the logic various bleeding hearts may perceive it to be. There is a catch to all this and lest we fall victim to a feeling of euphoria that we have now a workable solution to the economic problems of the world by putting everyone into the Armed Forces, it should be clearly understood that this is a grave misconception, particularly in those countries having no autarky in defence production. Unfortunately salaries and indigenous purchases make up less than 30-35% of the defence budget, the majority of the balance being eaten up by foreign exchange outlays for modern weapons and equipment purchased from various external sources. This is a tremendous economic drain, the loss of foreign exchange acting as a FORCE-MULTIPLIER on our economic miseries. There is considerable diversion of our hard earned foreign capital collected through our export efforts and still we have to go, hat in the hand, to various donors to balance the large deficit outstanding, year after year.
The cumulative debt multiplies as it goes along becoming an unbearable burden for the rest of the economy. There is no immediate answer to alleviating our condition given our geo-political circumstances, except to create a military-industrial complex capable of manufacturing indigenously a fair portion of the weapons, equipment and material that we now purchase. Unfortunately our efforts in this direction have been worse than third-rate (excepting outstanding examples like certain factories of the POF) as we tend to purchase stuff from abroad as an easy route to follow rather than attempt to force-feed their manufacture in Pakistan. Given the size of the Armed Forces, the numbers are right for economy of scale with added benefits derived from buy-back methods for export. Why only lip-service has been attempted is an open question.
A clear new concept has to be introduced starting from quick technical evaluation of defence material to early decisions on purchases, with responsibilities well defined among selected individuals with great integrity who must be able to have a credible answer for their decisions. The General staff has an unenviable task, to cater for the burgeoning requirements from an increasingly small kitty, to ensure priority purchases and it just cannot afford sweetheart deals. This is further compounded by inflation as delay in decision-making ensues. The next problem that has to be addressed with alarm is wastage. There is nothing that irks civilian ire more than the perceived misuse of funds on requirements not directly related to defence needs. Within the Armed Forces there is a constant campaign to curb various malpractices, eg. misuse of transport and other facilities, extravagant functions, unnecessary use of manpower, lack of coordination in critical areas, in short any activity not contributing directly (or indirectly) to the defence effort. There is genuine effort in the higher echelons to curb the tendency to overlook mismanagement of such nature but a serious effort can only be made effective by clear-cut but pragmatic instructions, the violation of which may be considered as major misdemeanours and not treated lightly as is usual with a rap on the knuckles by dismissing malfeasance as a part of “prevalent customs”. Accountability must become a part of the system. One of the first actions should be to curb use of first line transport. The tank in which Lt. Gen. Abraham Mendler of the Israeli Army was killed in the 1973 Arab-Israeli war in the Sinai had been reconditioned some years previously but still had less than 100 miles on the milometer. The money spent on the Armed Forces by any third world country is a trust that has to be exercised most responsibly by the Armed Forces themselves and it becomes incumbent on the military hierarchy to ensure this by exercising strict budgetary control at all levels, beginning with the sub-units. The present economic boom in the USA started eight years ago with the policies followed by President Reagan on his assumption of office.
He went full steam ahead with the re-arming of America, a significant change from the vacillation towards defence needs practiced by President Carter. Purchases of new weapons and equipment, billions of US dollars spent in Research and Development, bringing battleships out of mothballs, initiatives in SDI, etc have contributed to revitalising the US industry with commensurate effect on the economy. The enormous largesse that went into the defence sector has brought unparalleled prosperity to the American people with unemployment at the moment at its lowest rate, inflation well under control and the US dollar on its way up in the world currency markets.
Defence spending was the locomotive that initially drove the economy forward. This is despite the horror stories in the Pentagon’s purchases like the US$600 toilet seat cover, the US$ 250 hammer, etc. The crucial difference between Pakistan and the United States in maintaining a large war machine lies in the fact that we do not possess an industrial complex that can manufacture most of our defence needs and, therefore, their import becomes a straight monetary loss to us tending to drive the economic advantage of sustaining a war machine into the abyss of an economic burden. A supreme effort in industry is required so that we can turn the expenditures into useful purpose for the economy.
There will be war with India, it will not be of our choosing but will be thrust upon us despite our efforts for peace. This is an eventuality from which there is no chance of redemption so we might as well be prepared for it. For India it will just be another attempt to try and become a regional superpower, it will be a matter of survival, of life and death for us, our religion and our way of life. This survival aspiration is not confined to us alone but also to the other South Asian countries, Bangladesh, Sri Lanka and Nepal.
The Armed Forces, particularly the Pakistan Army, carries an enormous burden of responsibility, the cost of its existence being the premiums paid for insurance against Indian hegemony, borne by a hopeful, trusting nation. One cannot label the Armed Forces as a drain on the economy because in balance while the cost is prohibitive it is necessary, the safe-guarding of our independence outweighing other factors. The Defence Services genuinely contribute to the economy, a ripple effect, which is overtaken by our costly foreign purchases. It is in the interest of everyone that we attempt to justify every penny spent for the Defence Services, striving endlessly to have maximum defence material manufactured in Pakistan indigenously. The solution lies in getting satisfactory bang for the buck and quite aptly the decision-making buck stops firmly at the desk of the military leadership.
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