The economics of war
The consequences of war on the economy seldom fazes the enthusiasm of those who would rush into battle at the drop of a hat. War brings with it many privations, without prejudice to both the victor and the vanquished, the only difference being in varying degrees. Few nations have the luxury of having enough time for gearing up for battle, particularly those engaged in defensive operations. While one can safely say that pre-World War II most of the major combatant nations had time enough to prepare for battle, nonetheless all the countries had tremendous problems re-aligning their economies onto a war scale. While the US had the advantage of early positive decision making by the combination of Roosevelt and Gen Marshall, the Atlantic and Pacific moats remained an obstacle within which the economy of the US never did have to undergo a sea change, even then the Japanese attack on purely military targets in Pearl Harbour shocked the US, both by the element of surprise and the destruction wrought on the US Pacific Fleet. The ending of World War II saw the economies of the nations of Europe almost totally devastated, among the Allies the victors, the British, the Dutch and the French could not hold their vast Empires together. Rising Phoenix-like from the ashes, Germany and Japan, the two defeated nations of the Second World War, are the paramount economic powers today. One of the victors (and a Super Power, Soviet Union, is looking to these two countries for economic aid, most of Gorbachev’s Perestroika depends upon attracting foreign investment. The economy of the other Super Power, US of A, is under constant pressure from Japan’s widespread investment in mainland USA.
War brings with it death and destruction. While material losses are replaceable, there is a finality about death that gives no such opportunity. If death was confined to uniformed personnel, logic would argue that death is acceptable because they have gone into the vocation of wearing a uniform out of their own free choice, sad to say that weapons cannot differentiate the uniformed ones from the non-combatants with the result that innocents by the hundreds, proportionately much more than the combatants, are killed and maimed, a majority usually being women, children and old men. While one says death is blind, in war this blindness is total. Drums beating and flags flying may be terribly romantic, the images of horrific mindless slaughter and endless devastation are much more real. Sometimes this sacrifice is unavoidable, one’s concern should only be that it should be worth the sacrifice.
Given that we are forced into a situation where there is no alternative like the present inevitability of war with India over Kashmir, is the economy strong and flexible enough to withstand the waging of war? For all third world countries the answer is an unequivocal and resounding NO. India is very much part of the third world and despite pretences to the contrary is in no position to sustain a large war. It is true that India may have greater economic resilience, being a bigger country their industrial installations are much more and further from the immediate battlefield, on the other hand their need is that much larger and such the economic strain that much more greater correspondingly. Still, on a pro-rata basis we do not go into war economically on an even footing, India has a decided advantage which it will seek to drive home by sustained aerial attacks on economic targets. The Pakistan Air Force will have their work cut out trying to establish local air superiority over the battlefield and defending vital economic targets. We should be mentally prepared to accept great losses, in fact it amounts to a great gamble whether to employ the air effort over the battlefield or defend own vital installations, can the PAF pull it off by doing both?
Forced into a situation that envisages great economic sacrifice, we must be prepared to face economic retardation in the aftermath of war because of the damage to the socio-economic infrastructure. We may be deprived of electricity, gas, water, telecommunications and other such utilities for a prolonged period. While more than 90% of our population already faces such hardships, it is the rich and the educated urban elite rather than the masses that shall physically feel the loss acutely.
A war economy requires a major production effort in order to (1) directly support the war effort and (2) indirectly support the war effort. In the direct support are those essential manufactures of (1) lethal and (2) non-lethal supplies for the Pakistan Armed Forces as also the production/services effort to keep the machines of state moving to sustain the essential manufacture. While the supplies for the Armed Forces must have been stockpiled to last some time, our problem stems from the fact that stockpiling for any length of time, particularly for ammunitions and missiles may not be enough for a sustained war. As the Iran-Iraq war has shown, sometimes what seems to be a limited engagement can extend for years and years, requiring a commensurate production effort supplemented by constant imports. Iran, which was once the richest oil-exporting nation in the world, is now almost US$ 150 billion in debt after having spent all its precious foreign exchange reserves. Iraq has been more lucky because all the rich Arab nations, scared out of their wits by Iran’s revolutionary ardour, ganged up to pay its war bills, even then they are more than US$ 70 billion in debt. However, with Iranian ports mostly knocked out, the major problem on both the sides was to keep supplies coming in as fast as they were using them up. For Iraq, with Jordan, Saudi Arabia and Kuwait in the vicinity the logistics problem was more manageable. Iran had greater problems handling cargoes over longer land distances through Turkey and Pakistan.
There is no doubt that Karachi (and Port Qasim) shall be naval blockaded, since we have been stupid enough not to develop alternate port and ancillary facilities, a naval quarantine shall be effective against us — far away out of reach of our Exocet mounted aircraft and screen of naval submarines. Over the short run this will make no difference, over the long run it will mean privations, the lack of continuing supplies will cause difficulties in sustaining a long war. India’s blockade from a distance cannot stop our sea commerce with the Gulf countries with small country vessels. For us the land route with adjacent Iran becomes of crucial importance, the Silk Route connecting China may be capable of taking heavy loads, but the distances involved are too large for economical loads of anything but critical items. The innovative capacity of the Afghan guerrillas developed over years of struggle could be gainfully used. Our economy must gear up for paucity of many of the items that we are used to among our imports. One of the major essentials is food, luckily for us we are of one of the few third world countries which are self-sufficient. This is of immense importance to us, now we must ensure proper distribution of the available supplies so the whole populace faces the same wants and privations.
Our greatest long-term problem will be fuel, both the crude oil supplies and the refined products. To keep the war machine going we have to ensure constant supplies as well as continued refining capacity. Very much like Germany doing the last stages of World War II we must immediately spread our refining capacity around the country and in smaller units. While the source of crude oil imports will not be a problem, keeping a constant supply line open will be one of the major factors. As soon as mobilisation occurs we must bring in full fuel rationing as well as close down all non-essential commercial establishments and industries.
One of the war time necessities would be to totally ban all non-essential consumer products so that our critical resources are economically husbanded. This planning should not be left for the outbreak of war but must be a clear part of a comprehensive Civil-Defence plan. Some industries which totally depend upon raw materials from outside and are not essential to the war effort should close down forthwith. At the same time steps must be taken to substitute with our own manufactures some items necessary for the duration e.g. sandbags are normally made out of jute, could be alternated by cloth bags, raw cotton, textiles being in plentiful supply in Pakistan.
One of the best ways to support the war effort would be to keep normal commerce and industry going which does not conflict with or diverts critical resources. Frankly, this would be quite a juggling act and involves the masses in self-discipline to ensure that badly required material and services are not depleted by dissipation in useless endeavours or just sheer luxurious waste. In this respect while wartime blackouts helps in conserving electricity, hydel-power should be used to the maximum rather than use fossil fuel to generate energy, this would involve a major transmission and re-distribution effort but would conserve the fuel for only necessary requirements.
We must bring in extreme measure to enforce financial discipline all over. Local and foreign funds must be conserved, diverting resources to only essential needs. Each penny saved now will help us in the future. To keep the economy functioning to as close to peacetime normally as possible, we must beef up all our economic stations abroad, effort being not only to line up materials but also funds. Outright grants and credits from rich and friendly Muslim countries would be more than welcome. There are many other actions one must take but necessarily these active/passive measures must be clandestine and not limited to bolstering our own economy only, putting spokes in the Indian economic wheel should be an avid and practicing vocation. In this respect, the help of our businessmen, some of the captains of commerce who are rich and famous today because of Pakistan, must be taken. Reluctance should be directly proportional to future government largesse.
War is madness, one that we have to live (or die) with it in an illogical, unjust world. War is not fun, it is total, we cannot have reservations about employing any strategic and tactical means about shoring up our economy, already fragile under the best of circumstances. While we must do the maximum in our power to avert hostilities, once war is imminent, we must make an all out effort to put the economy on a total war footing, prudence demands that the first step to that eventuality must be taken now. We must not live in a dream world, it is necessary now to wake up to a reality that is almost upon us.
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