Pakistan has asked the IMF
(International Monetary Fund) for some financial help. The IMF will do so, but
only if the Pakistanis reduce their military budget by 30 percent over the next
five years. The financial crises stems from government spending more money than
it has, in order to keep people happy, while continuing to build up their armed
forces. This lack of fiscal discipline has made potential lenders reluctant to
throw good money after bad.
The U.S. has
given Pakistan nearly $8 billion in aid since September 11, 2001. About 40
percent of that was economic aid, while the rest was for the military, mainly
to assist in fighting Islamic terrorism. But much of the money intended for
counter-terrorism was diverted to shore up forces facing India, and some of it
was stolen. The Pakistani generals are willing to stare down the U.S., and the
IMF. While the U.S. has backed off, the IMF is another matter. Thus Pakistan is
continuing to beat the bushes for a few billion bucks to bail them out, before
facing the IMF.
619,000 personnel in the Pakistani armed forces, most of them in the army. It's
an all volunteer force, and recruiters can be picky about who they let in, for
there is no shortage of applicants. The official military budget is about $5.3
billion a year (now less than $4 billion because of the local currency be
devalued because of the financial crises). That's about three percent of GDP.
But in reality, the military get close to 7 percent of GDP. That because the
military has a welfare trust (the Fauji Foundation), set up over half a century
ago, that controls commercial firms amounting to about six percent of GDP.
Profits from these operations pay for health, education and other benefits for
members of the armed forces (active and retired) and their families. The senior
officers in the armed forces benefit most from this arrangement.
the army has been using a lot of that money to improve health and education
benefits for the troops and their families. Housing and living standards for troops
will also be improved. All this will improve the morale of the troops,
apparently to maintain morale because of the offensive against Islamic
militants that has been underway for several months now. This morale boost is
needed because the Taliban and al Qaeda have turned some parts of the Pushtun
and Baluchi tribal territories into terrorist sanctuaries. From these
locations, attacks are planned and carried out against targets within the
tribal territories, and the rest of Pakistan. In effect, the Taliban and al
Qaeda are at war with the government of Pakistan, and have made public
announcements to that effect. But about fifteen percent of army personnel are
Pushtun, and many of these have kin in the tribal territories. In this case,
morale and motivation matters, a lot. The Taliban and terrorists are funded by
drug gangs in Afghanistan (which produce most of the heroin produced in the
world), while the Pakistani depend on their own mismanaged economy, and the
generosity of the United States.
Pakistani military is greatly outclassed by the Indians, and the only real
defense they have are nuclear weapons. The U.S. is trying to convince the
Pakistanis to stop competing with India in conventional weapons, and turn more
to troops expert in counter-terrorism. Pakistan has lots of civil unrest, but
the generals still see a conventional war with India as a major worry.