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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: BubbaFred who wrote (41480)	11/8/2001 1:56:15 PM
From: BubbaFred	Read Replies (1) \| Respond to of 50167

Pakistan: Armed Forces Inc. NOVEMBER 12, 2001 NEWS: ANALYSIS & COMMENTARY businessweek.com@@Z1IynGYQvvX8eAIA/premium/content/01_46/b3757042.htm The country's military dominates the national economy It's early morning in Islamabad, and a middle-class child sits down for breakfast. He pours sugar refined from Fauji Sugar Mills into a bowl of Fauji oatmeal, which his mother cooked using gas bottled by Fauji LPG. In the next room, his father logs onto a computer run on electricity produced by the Fauji Kabirwala power plant and clicks onto a program that uses Fauji software. The house they all live in was, of course, built with Fauji cement. The Fauji group is a pervasive commercial presence in Pakistan. And the Fauji Foundation that the companies are all part of is closely linked to an even more ubiquitous institution--the Pakistani military. As Western policymakers try to figure out how to help the economy of Pakistan, their reluctant ally in the war against terrorism, the issue of the military's role in the economy could turn out to be divisive. The military's heavy influence on business has hampered development of companies that might compete with military enterprises. It also gives the generals a huge stake in maintaining the status quo--though the economy has lurched from crisis to crisis. "The clout of the army makes it more influential than any other corporate body in terms of influencing nonmilitary decisions," says Tariq Rehman, a professor of South Asian Studies at Quaid-i-Azam University in Islamabad. "It impedes the development of a civil society." The Fauji Foundation is at the heart of the military's economic machine. With annual turnover of more than $500 million and profits of $41 million, Fauji provides womb-to-tomb benefits for more than 8.5 million ex-military men and their dependents. Retired servicemen get preferential hiring for the 10,000 jobs at the foundation's companies. Thousands more find work at Fauji subsidiaries, while top management jobs are reserved for retired generals. BIG PLAYER. And Fauji represents just part of the military's business operation. The army, navy, and air force operate their own corporate foundations. Beyond that, the Defense Ministry pours public money into its own lucrative businesses, which engage in such pursuits as road building and property development. Just how big a slice of the pie the military controls remains secret, but it's safe to say it is a big player. Fauji Fertilizer Co. was one of Pakistan's most profitable companies in 2000, earning $44 million on sales of $170 million. Askari Commercial Bank, controlled by the Army Welfare Trust (AWT), is the country's largest private bank. Military companies enjoy access to prime real estate, easy bank credit, and tax breaks, and routinely beat out civilian companies in bidding for contracts. Foundation Secretary retired brigadier Mumtaz Hussain denies that his group has any special privileges. "The environment is ruthlessly competitive," he says. "If we offer better deals, we win. If we can't, we are nowhere." But many Fauji offshoots are in deep trouble. Because of massive overcapacity in the cement industry and crippling debt, Fauji Cement Co. has lost $23 million since it began operations in late 1997. Another dog is Fauji Jordan Fertilizer Co., funded in part by the Export-Import Bank of the U.S. The Fauji Foundation has had to inject cash to keep the company afloat. Nonetheless, the military foundations and other army-connected companies are above reproof. "If you criticize the armed forces, you are committing treason," says Rifaat Hussain, chairman of defense & strategic studies at Quaid-i-Izam University. Less reticent are some ex-military men. Speaking of some business debacles at the AWT, former Interior Minister and retired general Nasirullah Khan Babar says: "There should be accountability. But because [managers] are protected by the army, there are no checks." Nonmilitary critics worry that the system, which also provides free health care and top-ranked schools to ex-military, perpetuates a big gap between the military haves and the civilian have-nots. "It's a flaw in the system," says Hussain. "It doesn't operate on the principal of equal opportunity and access." And Pakistan won't either until it stops tilting the playing field to favor the military. By Frederik Balfour in Islamabad