Pakistan's Military Spending: Socio-Economic

Dimensions
ABSTRACT
In the past years, Pakistan's defence expenditure has always been on
an increase and on the higher end. Even though Pakistan's fragile
economy has been unable to support it, the military spending in
Pakistan has been at the cost of development expenditure. The factors
claimed by Pakistan to be behind the high defence spending are the
perceived security threat from India, the Soviet invasion of Afghanistan
which gave an opportunity to the Pakistani military to fulfill its long
desired modernization plans, and domestic factors such as societal
violence and sectarianism. However, the fact remains, that the military
enjoys immense control over the decision-making process in Pakistan
and, thus, the defence budget has been prioritized over the social
sector. This is evident in the form of the retarded growth of the social
sector in Pakistan. An increasing non-development budget has also
entailed huge cuts in the development budget and, thus, has badly
affected Pakistan's economy. Initially, the declining development
budget was financed through debt. Consequently, debt repayment and
debt servicing increased the non-development budget. With the
progression of time, borrowing financed the non-development budget
also. Currently, Pakistan is in a position where new loans are being
acquired to repay the old ones. Thus, the defence expenditure has
added to the miseries of Pakistan in a spiralling manner.
A heavy debt burden, rising inflation and a nation starving for
development mark the economy of Pakistan, but it continues to focus
on an ever-increasing defence expenditure. Pakistan has always
accorded priority to territorial security as compared to social and
economic security, using the argument that it is military strength and
stability that can ensure the overall security of the country.
Islamabad also believes that effective defence of the state borders and
the resultant expenditure provide strong spin-off effects for the
economy. 1 The implementation of this belief is evident in the gradual
increase in the nation's defence expenditure, despite the fact that the
Pakistani economy is increasingly unable to support this burden. The
gap between the economic growth of Pakistan and its defence
expenditure has been steadily widening. Defence spending has been at
the cost of socio-economic growth in Pakistan.
This article aims to study the trends in Pakistan's defence expenditure
and the factors behind the high level of defence spending. Also, an

attempt has been made to study the economic and social impacts of
the same.

Service

Total Active Duty Personnel Total Reserve

Army

620,000

600,000

Navy

28,000

5,000

Air Force

68,000

10,000

Paramilitary Forces

302,000

Classified

Classified

921,000

528,00

Coast Guard
Total

Trends in Defence Expenditure :

Pakistan announces only the overall figures of its defence expenditure
and does not provide any details. The defence expenditure of Pakistan
as a percentage of total expenditure for the last three decades is
enumerated in Table 1.

Pakistan's defence spending shifted into higher gear following the IndoPak War of 1965 when it more than doubled in one year from Rs. 1,262
million in 1964-65 to Rs. 2,855 million in 1965-66. 2 In terms of
proportion of its Gross Domestic Product (GDP), this rise amounted to a
jump from 4.82 per cent to 9.86 per cent of the GDP. 3 It came down
over the next two years, before beginning to rise again. The US arms
embargo which was consequent to the launching of Operations
"Gibraltar" and "Grand Slam", and receipt of military assistance from
China and also some Arab countries, led to the reduction in defence
expenditure. Pakistan's defence expenditure again increased in 197172, when the army was deployed in a repressive role in East Pakistan
and because of the costs of the war later in the year.
Though with the secession of East Pakistan as independent
Bangladesh, the defence needs ostensibly reduced, the expenditure on
this front continued to grow. Pakistan's domestic equations among its
civil, military and political leaders and their respective interests
influenced these increases in the defence spending.
Factors Behind High Defence Spending :

Pakistan claims that it is India's military posture that has a deep

impression on Pakistan's defence planning. 4 The early 1970s
comprised the era of Bhutto and the late 1970s that of General Zia,
who resisted almost all ideas aimed at defence reduction. Being a
military man and dependent on the support from the army, General Zia
never supported cuts in defence spending.
This high level of defence spending during the 1970s also resulted in
heavy growth of force levels. The effect was a substantive increase in
military power, especially between 1972 (after the war) and December
1979 (before the Soviet intervention in Afghanistan) when the size of
the army nearly doubled, the navy grew three times and the air force
grew one-and-a-half times. 5
During the 1981-1990 decade, defence expenditure grew at a slightly
slower pace (as evident from Table 1), but the defence spending was
maintained at a much higher level after 1988. In the 1980s and 1990s,
Pakistan's policy-makers quoted the "perception of threat" as the root
cause of the high defence spending.
During General Zia's time, Pakistan faced tremendous pressure from
international institutions to cut its defence spending. During Prime
Minister Junejo's time, it was the security issue, which was highlighted
to convince them, and also to thwart any effort aimed in the direction
of bringing down the defence budget. 6 General Zia did not allow any
cuts in defence allocation, because, according to him, "How can you
fight a nuclear submarine or an aircraft carrier with a bamboo stick?
We have to match sword with sword, tank with tank and destroyer with
destroyer. The situation demands that national defence be bolstered
and Pakistan cannot afford any cut or freeze in defence expenditure,
since you cannot freeze the threat to Pakistan's security". 7
This perception of threat by Pakistan has continually been the
argument provided in favour of the nation's rising defence spending to
the foreign aid donors, as well as domestically, to prevent a cut or
even a freeze in the defence expenditure.

TABLE 1: DEFENCE VS EDUCATION AND HEALTH (% of GDP, 1999)

Country

India
pakistan

Public Spending on Health

Public Spending on Education

Defence Spending

0.91

4.1

2.3

0.9

1.8

4.6

Threat Perception
Perceived Security Threat From India :
Pakistan's strategic environment has been, to a great extent,
conditioned by its perception of a security threat from India. Its
adversarial relations with India definitely play a vital role in the
formation of its official threat perception and national security plans.
The two nations have fought a number of wars and experienced
countless border clashes. This perceived threat from India has led the
nation's security planners being constantly engaged in a search for a
situation that could generate a sense of security.
It has led the defence planners of Pakistan to raise well-equipped,
modern armed forces. Pakistan looks at India as a powerful state with
hegemonic ambitious. The most disconcerting factor is the
rationalization by Pakistan of this inequality between the two nations.
This insecurity has taken strong roots due to the fragmentation of
Pakistani society. The governments in Pakistan have used the security
issues like Kashmir and nuclear deterrence to generate a national
consensus. Eventually, this has increased the fear of India in the minds
of the people.
The logic of Pakistan's nuclear weapon programmed is Indo-centric. It
aims to neutralize the inevitable conventional military superiority of
India. The impetus for Pakistan's nuclear development came in January
1972, when Prime Minister Zulfiqar Ali Bhutto announced a plan to
develop nuclear arms at a meeting with Pakistan's top scientists at
Multan. 8 Pakistan's defeat in the 1971 Indo-Pakistan War and India's
proven conventional military superiority over Pakistan were the main
reasons for Pakistan's decision to go nuclear. Pakistan's nuclearisation
has been aimed at managing the Indian threat by matching India's
nuclear capability. Former Prime Minister Zulfiqar Ali Bhutto's remarks
that Pakistan will "eat grass" if necessary to stay at par with Indian
nuclear capability demonstrate the depth of insecurity in the nation.
Agha Shahi, the former Pakistani foreign minister, said about the
Pakistan nuclear programme, "The rationale of the programme is linked
to the sovereignty, independence and security of Pakistan. It is
grounded on the security imperatives of Pakistan to equalise, to
compensate our military imbalance that hangs like the sword of
Damocles over the head of the nation, which cut our country into two
in 1971." 9 Then, by 1983, Pakistan had formulated plans to develop a
nuclear weapon programme, and it was reported that in May 1983,
China had tested a Pakistani nuclear device. 10 Since then, it has
aggressively pursued a covert nuclear programmed which reached
fruition in the 1990s. The maintenance of conventional balance and

Pakistan's decision in 1998 to follow India in going overtly nuclear

depicts Pakistan's sense of insecurity vis--vis India.

The Afghan Crisis :

Strategic developments like the Soviet invasion of Afghanistan gave a
chance to the Pakistani leadership to enhance its perception of threat.
In fact, it also added a new dimension to Pakistan's threat perception.
Islamabad was of the view that after consolidating its control over
Afghanistan, Moscow would proceed further with the objective of
reaching the "warm waters" through Pakistan. 11 The Soviet invasion
gave an opportunity to the Pakistani military to fulfill its long-desired
modernisation plans. This was also the time when tension between
India and Pakistan escalated and, thus, the threat from the former
USSR was used by Pakistan to acquire weapons from the US.
There was, in fact no evidence of the Soviet's intentions of a prolonged
stay in the territory or of extending their invasion into Pakistan, but
Pakistan held the notion that the former Soviet Union, in cahoots with
India, had plans to reach the "warm waters" through Pakistan.
Indubitably, pressure on the northern borders had increased, especially
after Islamabad's involvement in backing the Afghan Mujahideen
against the Soviet troops. 12 The threat posed due to the Soviet
presence on Pakistan's northern borders was an opportune moment for
Islamabad to cash in on the fear and anger of the American people and
their policy-makers, and, possibly with the help of the American Central
Intelligence Agency (CIA), that fear was exploited. 13
To make the threat appear more realistic, the (late) General Zia opened
the country's doors to the Afghan immigrants and started a
programme for the formal training of both Afghan Mujahideen and
Pakistan Army personnel to fight a clandestine war in Afghanistan. 14
The hype created during the early 1980s helped the Pakistan
government in persuading the US to provide it with arms. Thus, the
fundamental inspiration for Islamabad attaching so much importance
to the Afghan invasion was to convince the Americans of its need for
armaments. The quality weapons that Pakistan's armed forces had
desired since the 1960s could only be obtained if there was unopposed
convergence of strategic perceptions between Islamabad and
Washington-an opportunity provided by the developments in
Afghanistan.
Also, the event was sufficient to convince the Pakistani public of the
importance of increasing defence spending.

TABLE 2: INDIA, PAKISTAN AND THE REST OF THE WORLD

Category
Defence Spending-GDP (%)
Defence Spending-Central
Govt. Expenditure (%)
Military Personnel-Labour
Force (%)
Arms Imports-Total Imports
(%)

year

India

pakistan Low-income World

countries
average

2001
2001

2.5
14

4.5
23

2.3
13.1

2.3
9.8

1999
1999

0.3
1.6

1.18
9.7

0.56
2.1

0.7
0.9

Source: World Development Indicators Database (World Bank, 2003)

Domestic Factors :
Pakistan has been troubled with internal problems, and has been
continuously experiencing periodic upheavals. A consistent search for a
viable political system, lack of national cohesion, economic problems
and disparities among the federating units that form Pakistan, are
some of the factors which have contributed to an unstable and
insecure state. Pakistan has not been able to evolve a stable political
system with high quality leadership, and political experimentation at
various periods by different leaders has delayed the solution for this
economically distressed and socially fractured state. Although since
1985, the nation has been trying to latch onto democratic practices,
political stability has still not surfaced, with democratically elected
regimes, since 1988, being dismissed on various grounds.
The Pakistan government faces an acute dilemma with politicised
ethnic consciousness, incumbent population imbalances and high
levels of unemployment. Confronted with an intense political divide,
increasing economic problems, active drug trafficking, gun culture,
increasing societal violence, terrorism and sectarianism, Pakistan's
sense of insecurity has deepened. And this fear appears to manifest
itself in the form of increasing defence expenditure.
Another factor that has facilitated large allocations to defence revolves
around the inability of the resource managers to either suggest
alternatives or to logically make a case for reduced defence
allocatiions. 15 Usually, in democratic countries, resource managers are

the concerned members of the executive and legislature, but under

authoritarian regimes, the resource control is often confined to a few
individuals. And Pakistan has experienced parliamentary and
authoritarian forms of government in almost equal proportion. The
budget is formulated by a few, select individuals but is presented
annually before the Parliament.

TABLE 3: Defence Expendture as % of GDP

Year

India

Pakistan

1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001

2.5
2.3
2.4
2.3
2.2
2.1
2.2
2.2
2.3
2.3
2.5

5.8
6.1
5.7
5.3
5.3
5.1
4.9
4.8
4.6
4.4
4.5

Source: World Bank Indicators (World Bank Data Base: 2003)

Main Players: Threat Perception and Defence Budget

Formulators

The Military Lobby :

The decision and policies of a nation are a reflection of the interests of
the players involved in the decision-making process. The military
enjoys immense control over the decision-making process in Pakistan.
It is the country's most powerful institution and is the largest organised
force with approximately 700,000 personnel. 16 There appears to be no
single democratic institution in Pakistan that can claim to have such
numbers. The cost of maintaining such a large force claims a large
amount of financial resources from the state.
The main reason for the military's emergence as the most influential
element in defence decision-making lies in its relevance in the
country's power politics. It has assumed the responsibility of guarding
the Islamic ideological identity and the frontiers of the country. 17 The
fear of India among the Pakistani policy-makers has always had a
serious ideological orientation. The perceived idea has been that India,
with a predominantly Hindu population, cannot tolerate the existence

of an Islamic Pakistan and, thus, the defence establishment needs to

provide security to this country.
In fact, this projection of threat from India appears to be fundamental
to the survival of the Pakistani establishment. Ironically, the nation
even views the domestic unrest as a continuation of the external
threat. This notion strengthens the ground for heavy military spending.
This exercise of blaming each other has been the most regular feature
of the strained bilateral relations between India and Pakistan. But the
Pakistan government's projection of threat fails to take into account
the inability of its leadership to handle the domestic unrest and the
internal forces which have been escalating such problems.
Pakistan used India's projection of its military capability in the 1980s
and 1990s as a justification for a similar military build-up. Also,
Pakistani leaders have highlighted the issue of Kashmir and its
significance for the survival of the country. This enables the military to
play a significant role in national security and political affairs.
Military personnel are highly motivated to be actively involved in
defence decision-making. The interest of the military is not only from
the strategic angle- their interests are also political, organisational and
personal. So, the defence decision-making in Pakistan has a
distinguishing feature in the presence of a strong military lobby.
However, the three Services do not have equal influence on the
defence decision-making. The Pakistan Army is more influential in this
regard. while the say of the other two forces, the air force and the
navy, in the strategic planning, has depended on their importance to
the army.

The Civil Bureaucracy :

The civil bureaucracy involved in the defence decision-making refers to
the Ministry of Defence (MoD), Ministry of Foreign Affairs (MoFA) and
Ministry of Finance (MoF).
The MoD's organisational structure is fashioned to function in the
interest of the defence organisation. Serving and retired military
officials are placed in central positions in the ministry to enable them
to control and monitor the work according to the desires of the defence
establishment. 18 It is presumed that the civilian officials of the ministry
do have adequate authority to handle military affairs on their own.
The MoFA assists the government in locating sources of supply for
weapons. The ministry is not proactive in the procurement process and

its significance in arms procurement decision-making has varied with

the heads of government in Pakistan.
The MoF is important in defence decision-making. Though the ministry
controls the finances of the defence establishment, it is not in a
position to dictate terms to the military in Pakistan. It does not have
the power to override decisions taken by the military. The MoF faces
tremendous pressure from the military to provide funds for the
maintenance of the existing infrastructure and for fresh acquisitions.
And, despite the resource limitation, the ministry cannot afford to take
its own decisions. At the most, it can delay the decisions. Thus, the
civil bureaucracy in Pakistan is largely a follower of the military in the
defence budgeting process.
The Decision-Makers :
In the last two decades, the president of Pakistan emerged as one of
the most important players in defence arms procurement policymaking. This was due to several factors.
Firstly, the constitutional power acquired by President Zia-ul-Haq
through the Eight Amendment. This empowered him to dismiss the
government, appoint the chiefs of the three Services, and appoint the
chairman, Joint Chiefs of Staff Committee (JCSC). 19 His successors
inherited this legacy. Moreover, this authority was exercised frequently.
Especially in 1989-90, when a controversy surged between the
president and the prime minister over the appointment of Admiral
Sirohey as the chairman, JCSC, it was the president's will that
prevailed.
Secondly, personalities like General Zia strengthened the president's
office. In 1977, he installed himself as the chief martial law
administrator (CMLA) and later assumed the position of president.
Even after the restoration of democracy in 1985, he continued to enjoy
this status.
Thirdly, in the absence of the constitutional position, the military
resorted to co-opting the president as a junior partner in defence
decision-making and also in the formulation of policies affecting the
armed forces. The president in Pakistan, has always catered to the
interests of the military.
The armed forces in Pakistan do not allow any interference in the
general military planning and administrative control of the armed
forces. When former Prime Minister Nawaz Sharif threatened the core
interests of the military, he was accused of conspiring to destroy the

institution of the military and this led to his removal. Before him, Prime
Minister Junejo met the same fate in 1988.
As far as the Parliament in Pakistan is concerned, it has never been in a
position to impose its will on the military. In the national budget,
defence expenditure is categorised as "charged" expenditure on which
public debate cannot take place. And, conventionally, the elected
representatives do not have the power to debate on defence
expenditure. Thus, there is little chance of the Parliament playing an
important role in defence decision-making.

Economic and Social Costs of Military Spending :

The high level of defence expenditure in Pakistan has resulted in an
adverse impact on Pakistan's economy. According to one study,
"Defence expenditure in Pakistan has a negative impact on GDP when
it increases to over 6.5 per cent of the GDP for a decade and more.
During the 1978-88 decade, this threshold had already been crossed
with defence expenditures averaging 6.8 per cent." 24 The study, which
covered a period of over a quarter century since 1960, concluded, "An
examination of a budgetary trade-off in Pakistan found that economic
services as a whole were adversely affected by military expenditure."
From the time of the creation of Pakistan, 40-50 per cent of the
revenue has been spent on defence, totalling more than Rs. 10,000
billion till now. Currently, 55 per cent of the revenue is spent on debt
repayment, 30 per cent on defence and 10-15 per cent on civil and
administrative costs. 26 This is in spite of large quantities of high
technology weapon systems being acquired as part of external aid.
An increasing non-development budget has also entailed huge cuts in
the development budget and, thus, has badly affected Pakistan's
economy. Initially, the declining development budget was financed
through debt. Consequently, debt repayment and debt servicing
increased the non-development budget. With the progression of time,
borrowing has financed the non-development budget as well.
Currently, Pakistan is in a position where new loans are being acquired
to repay the old ones. Thus, the defence expenditure has added to the
miseries of Pakistan in a spiralling manner. Added together, debt
servicing and defence expenditure exceed the total national income of
Pakistan. The country has been living beyond its means and its
economy is in a downward spiral.

Since 1982, Islamabad has carried a growing burden of defence and

debt servicing which obviously resulted in a growing gap between
revenue and expenditure. To exemplify, in 1982-83, the Pakistani
annual deficit was Rs 25,654 million, that increased to Rs 56,060
million in 1989-90, and in 1994-95, it was at an astronomical level of
Rs 103,405 million.
In 1999-2000, the budget deficit amounted to Rs 183.7 billion, being
six per cent of the GDP as against the target of 3.5 per cent.
Constant borrowing by one government after another has left the
nation facing a total debt of approximately US$38 billion. 31 The
present military regime has been struggling to service this debt and
has been on the verge of defaulting. Since the time it assumed power
in October 1999, it has been negotiating with the International
Monetary Fund (IMF) for a US$2.5 billion three-year credit fiscal
credibility. Pakistan managed to temporarily avert the crisis of
immediate default when the IMF approved a 10-month stand-by credit
of US$596 million in November 2000. 32 However, Pakistan would have
to adhere to the stiff conditions imposed by the IMF in order to obtain
all the tranches of the IMF package. 33
Another reason for this continued high defence spending is the "high
percentage of wastage of resources" which grew as a result of
oversight, and the encouragement of the top managers at the highest
decision-making level in the MoD and the armed forces. 34 This wastage
occurred due to the excessive number of employees, the duplication of
activities, and corruption. The cost-effectiveness of the Pakistani forces
is not very high. General Musharraf, is now in favour of thrift in defence
spending, and getting the most out of what is spent on the forces.
A significant proportion of military spending, especially the purchases
of major weapon systems, is met from extra-budgetary sources. The
resources or funds are diverted from the organisations created for the
welfare of retired military personnel. These four organisations-the Fauji
Foundation (est.1960), Army Welfare Trust (AWT) (est. 1979), Shaheen
Foundation (est. 1977) and Bahria Foundation (ets. 1981)-were created
with the objective of contributing to the pension fund and the welfare
of retired military personnel. 36 These organisations operate various
projects-airlines, fertilisers, gas stations, etc. But they have contributed
in increasing the defence burden, as some of the overhead costs are
met from the annual defence allocation. Also, these organisations
represent monopolistic tendencies and create an additional burden by
not paying the taxes for their corporate ventures as they are
established as welfare organisations.

The distortions of the heavy debt burden and deficit are significant. In
the period 1988-2000, debt servicing overtook defence expenditure,
and the end of the century, Pakistan reached a stage where it had to
reschedule part of its US$30 billion external debt only to keep afloat.
Though it has been quoted that external borrowing ballooned in the
period from 1988-98, when domestic governments were in power, the
fact is that they were compelled to keep the military happy by giving
them their allocations, even if it meant reducing allocations for the
social sector and development, where the money was needed the
most.
The negative influence of defence spending and borrowing is obvious
in the form of retarded growth of the social sector in Pakistan.
Pakistan's social conditions are pitiful and the state of development is
deplorable. Pakistan ranks 9th among 117 market economies in terms
of the government's expenditure on defence as a percentage of total
expenditure.

Conclusion
Although questions have been raised in Pakistan regarding the military
burden and its negative impact on the economy of the country, no
reduction in the defence expenditure has taken place in the past. The
economic aid donors have asked Pakistan to bring down its deficit
spending through decreasing its non-developmental expenditure, the
most significant being defence. 40
Successive governments in Pakistan have tried to convince the donors,
citing their threat perception and concept of national security.
Increasing non-development expenditure in a less than healthy
economy invariably increases poverty and unemployment. This leads
to increased societal disparities, resulting in internal disturbances and
conflicts, and, consequently, to political instability and secessionist
movements which jeopardize the national security. Thus, the concept
and the argument, which Pakistan uses for defence modernizations,
seem inadequate. This interpretation of "national security" is adding to
Pakistan's pitiful social indicators.
The Soviet Union and China are two recent examples which prove that
strengthening of the military capacity does not essentially pave the
way for strengthening of the nation itself. During the Cold War, the
former Soviet Union indulged in enormous military spending to stay at
par with the United States, at great cost to its economy. Neglect of
human security eventually led to the dismantling of the Warsaw Pact
and the disintegration of the former USSR. In the Sixties and Seventies,

even China built an enormous military capability but, fortunately,

started focussing on economic and social development well in time.
The spin-off effects of defence spending cited by Pakistan in
justification of its increasing defence expenditure are not evident. Big
investments in arms procurement and production do not seem to be
impacting the economy positively. In fact, conventional wisdom would
dictate spending on the civil-industrial sector, potentially resulting in a
positive spin-off on the defence sector.

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Www.hinduonnet.com/2001/07/14/stories/05142524.htm

Siddiqa, Ayesha. Pakistans Arms Procurement DecisionMaking, 1979-94. PhD. Thesis submitted to the department of

War Studies, Kings College, University of London. 12/95. pp.

109, 111

Www.sbp.org.pk/publications/wpapers/wp06.pdf

En.wikipedia.org/wiki/Military_history_of_Pakistan