Enigma of the Defence Budget

in my earlier post, i meant to write that public sector entities cannot attract people from the private sector.

romiar, perhaps you can shed some light on how plot allocation system works in the army and how senior officers take advantage of the system. i know few retired senior army officers in karachi. none of them have a lifestyle that can be described as luxurious. a couple of my uncles retired as generals few years ago. both of them got one plot each in defence. both of them built a house on that property by getting bank loans. both of them have put their houses on rent because they could not afford the payment. they themselves live in rented apts.

i also have friends whose father retired below the rank of general. some of them live in askari apts which were built for the army if i am not mistaken. others live in places like seaview. these places in karachi can be described as upper middle class. btw, if you want to compare lifestyles, sherry rehman`s husband as the number two man at citibank pak was making over a million rupees a month and used to drive around in a mercedes that according to my estimate cost between rs. 6-7 million. btw, i also saw an interesting comment in today`s news on govt and plot allotment:

http://jang.com.pk/thenews/

``...Wife of a retired government employee on this occasion told the prime minister that her husband could not get plot during his service. The prime minister told her that the government would develop some more sectors and added that new allotments would be purely on merit through balloting...``

i also agree with you that public sector companies should not give preference to retired army officers. however you have to realise that there is a huge shortage of senior level skilled manpower in pak. most engineers graduating from places like ned end up moving abroad. the ones who cant end up in places like kesc and wapda. if you were running a public sector entity in pak, would you prefer to hire someone from wapda or someone from the army? and please remember that public sector entities can attract people from the private sector.

overall, i agree with you that reform is necessary. however i dont trust people like zardari and nawaz sharif to bring in reform. army acts as a check on these politicians and these people will destroy the army much in the same manner is bhutto destroyed the private sector.

faisaluno #55: `` have no problems if at retirement after 20 years of loyal service, senior pak army officers are able to afford a 500 yard plot in defence and a toyota corolla.``

Yes, there is nothing wrong with this. In fact, I am all for it. However, there is a better way to do this. The salaries of junior officers should be raised. Specifically those who have high qualifications. My friend, with a Ph.D, teaching at NUST, should not be making 1/8th the salary of my friend, who also has a Ph.D., teaching at LUMS. Which is currently the case. Also, my friend commanding an F-16 squadron should not be making 1/4th to 1/5ht the salary of my friend who is the Captain of an Airbus in PIA...........

However, this is not how the problem is handled. What is done is that people who make it to the General ranks are compensated heavily through multiple plots (not just one) etc. More importantly, those who have contacts, after 20 years of service, end up in lucrative positions, in PIA, Fauji foundations etc.

Why in the world should a pilot who has had a career of 25 years in the PAF, be placed in PIA? Which airline of the world allows that? When there are hundreds of qualified pilots in their 20s, who have never had a single govt. job. What about them? Similarly, why should a General after 35 years of service, not just retire into silent oblivion. Why should he then go on and become an ambassador or be made CEO of Fauji Cement.

All these guys are taking jobs away from someone. And that too, after having a full career in the military, already.......If there were a shortage of pilots in Pakistan, one could understand the PAF sending someone to PIA. But there isn`t. There is actually a large excess. Similary if there were a shortage of people who can run cement factories, one could undersand, Generals runing them, or sitting on their Boards. But there isn`t a shortage........

There are people in Pakistan, who are literally living off the govt. One career in the military. Then another one in another govt. owned organization, like PIA, PIDC, Foreign service. And for some, even a third........They have become very wealthy through this........

``as far as i know, salaries of even generals are much lower than those of their counterpart in the pvt sector.``

This is true. But the solution is not to give them plots galore, to make up for it. Or place them into PIA etc. If they think their salaries are low, they should be allowed to quit and compete in the private sector. They should quit and apply for a job in PIA, or in a bank. If they cannot get such a job, then they are not qualified enough............They shouldn`t just be placed there......

I was hugely underpaid in the military, in comparison to the job I was doing. I eventually quit. And then looked for another job. I thought about trying in PIA, but did not have any contacts to get the job. Then I started another career in IT.......That is how it should work........

#55 by faisaluno on July 3, 2005 7:32am PT

why do you need good people....When you had the heights in Kargil and the Indians counter-attacked, you turned tail and ran...When the Indians had the heights in Siachen, your mission to revocer the heights has been a miserable failure...

the Paki army can achieve the same lack of success if the recruited you....

romair,

i have no problems if at retirement after 20 years of loyal service, senior pak army officers are able to afford a 500 yard plot in defence and a toyota corolla. this is contingent upon pak army selecting and promoting people on merit as much as possible. also it makes no difference to me whether you compensate senior officers by cash or by allocating them a plot. as far as i know, salaries of even generals are much lower than those of their counterpart in the pvt sector. a good bank executive with around 15 years of experience these days makes around rs 3-4 lacs a month. a very senior bank executive with foreign experience makes rs. 5-7 lacs. i would estimate senior officers at the top echelon of pak army earn a fraction of this.

i think you have to pay a decent salary if you want to attract and retain good people and take away incentive for peole to be corrupt. this concept should also apply to police officers as well as bureaucrats. i think there is a proposal with govt to do away with perks and pay govt employess cash instead. this proposal is being resisted by vested interest who benefit by defrauding govt through fake bills etc.

They have also called in to reduce and nearly eliminate the number of servants attached with officers for monetary compensation and for hiring civilian workforce. I am confused about the consequences of that.. however i feel that goes in line with the ``reduction`` of armed personnel.. shame shame sir musharraf..

My tour of indian metros continues.......

pic of CHENNAI (formerly MADRAS)....the 4th largest metro in India...


http://www.skyscrapercity.com/showthread.php?t=212307&page=4

#45 by fuzair :

``I wouldn`t hold up the example of the CCP and Mao Zedong as ``proving`` the virutes of ``Dictator for Life.`` Mao was arguably the worse thing that ever happened to China (upto and including the Opium Wars and the Japanese invasion). Read some Chinese history and find out what Mao did during the Great Leap Forward and the Great Proletarian Cultural Revolution.

Now, if you were to hold up Deng Xiaoping as ``proving`` why a lifetime job is a good thing, that is another matter! ``

I was not intended to proved Mao as the Dictator faced by China, but if you know in China Communist Party the bottom up approach of constituiting leadership always chose him to be the chairman of its party. For the coincidence of Benazir Bhutto who herself proclaimed to be the denominator whereby she is included by the majority people to continue this designation would be proven the same if done democratically. And by that way she is nominating her subordinates and authorities which also should be elected by themselves so reversing the socio political procedures making the party weak.
Mao is criticized for his Laep Forward plan for transforming from rapid agricultural growing economy to modern light industrialization where China faced many droughts at those couple of years. But it was a positive incentive towards uplifting rural growth and making new opportunities in Urban Development. The real picture at macro level can be described by an economist.

faisaluno #49: I know next to nothing about Sherry Rehman.

Zardari is obviously massively corrupt. And has been convicted in Switzerland. And will be convicted in Pakistan also, if the cases are allowed to go through completely. And I have written many times, on the double-speak of PPP urban, ``liberals.`` They, on the one hand, portray themselves as liberals, and on the other hand, support life party presidents, and leaders who have wives married to the Quran. So I agree with you there 100%.

I also agree with you that politicians are much more corrupt than Generals.......

But that does not excuse the fact that the Army Generals are corrupt also. Army has legalized corruption. It is corrupt at a smaller scale than many other groups, but it still practices it. And the more it gets into business ventures the more corrupt it will get. If these business venture opportunities ever go below the rank of Brigadiers, and reach the Leiutenants and Jawans, there will be no fighting Army left.

This is what happened to the Mughal armies and others. All their Generals started getting more interested in getting land and money........

There is absolutely, without an iota of a doubt, no reason for the Army or Air Force or Navy to be in the civilian business sector. It is a huge conflict of interest. It is not where the training of the Generals happens to be. It chokes the private sector. And it corrupts the Army. Not to mention the fact that the Generals cannot run private sector ventures in profit. Fauji industries only run in profit, where there is a near monopoly, or where the Army can fill their coffers with the Army`s assets (e.g. Askari bank).

A corps commander of Lahore should want that position because he wants to defend his country, and progress his professional training and career. He shouldn`t want it because he can get a plot or two, in Lahore Defence Society, which he may not be able to get if he is commanding a corps in Mangla. A retired Colonel should not end up in civilian organizations, and take jobs away from civilians. Imagine if someone from the Foreign Service or PIA or the highway authority etc. was appointed a Brigade commander........

All of this should end. The Army is becoming the butt of jokes now, which highly affects the morale of the junior fighting officers, who do the actual fighting..........

Sherry

When next time PPP comes to power, reduce the regular recruitment in the Army by 10%. Also reduce the Army budget by 10%.

If the Army Chief does some `choon charaan`, fire him. At that time, do not compromise just to keep the `throne`. Appoint the next senior most as Army Chief and not your `favourite`.

It is pointless writing these articles & TV discussions. 50% of blame rests with the spineless and principle-less politicians. Even now, 50% of the paliament (politicians) is with military Government.

nhk

romair,

if you want to gauge the level of political corruption in pak, read the u.s. congress investigation on zardari`s citibank account activity. also fyi, sherry rehman is currently married to the guy who used to head citibank`s retail banking arm in pak in mid to late 90`s . guy`s name is nadeem hussain and he is currently based in london if i am not mistaken. another ineteresting fact about nadeen hussain is that he indirectly reported to shaukat aziz. also if i am not mistaken, shaukat aziz also testified in the hearing because he used to head citi pvt banking globally.

given nadeem hussain`s position within citi, its simply not possible that he does not know details of zardari`s corruption. and since nadeem hussain knows the truth about zardari, so does sherry rehman. and yet she continues to represent him in pak. if this does not tell people how despicable sherry rehman is i dont know will.

details of the investigations are available at the following link:

http://hsgac.senate.gov/110999_report.htm

``...During the period 1994 to1997, Citibank opened and maintained three private bank accounts in Switzerland and a consumer account in Dubai for three corporations under Mr. Zardari`s control. There are allegations that some of these accounts were used to disguise $10 million in kickbacks for a gold importing contract to Pakistan....Two deposits, totaling $10 million were made into the account almost immediately after it was opened. Citibank records show that one $5 million deposit was made on October 5,1994, and another was made on October 6, 1994...The staff invited Ms. Bhutto to provide additional information on the M.S. Capricorn Trading accounts, but she has not yet done so. ...On February 25, 1995, a third deposit of $8 million was made into the Dubai M.S. Capricorn Trading account. Records show that the payment was made through American Express, with the originator of the account listed as ``Morgan NYC.`` Citibank indicated it does not know who Morgan NYC is, nor does it know the source of the $8 million.

HP #3

`` Would someone correct me if I erroneously suggest that specifics of the defense budgets are never discussed in open congress sessions in the US too? AFAIK, this practice is followed by most countries including India, UK and France too. ``

What qualifies as a military expense ?
Subsidized land, medical care for retired military personnel
pensions for ex-servicemen
...


`` Both buy equipment in the international market.
Dollar = Indian RS 45.
Dollar = Pak Rs. 59.
That’s why the Pak percentages are higher. ``

Military equipment including spares and servicing is a fraction of the total military budgets.
Both India and Pakistan have puny procurrement budgets.

`` Nobody ever said that nuclear deterrent capability was to reduce the conventional forces. In fact, it is a downright childish argument. Unless you link the reduction of conventional forces to better relations with India and reduced tension in Kashmir, your argument would always fall flat. There is no history and not even India has reduced its conventional forces because it is nuke ready. The PPP in 1977 used this argument to promote the Nuke option in the international community and the army slammed ZAB’s head on the walls in Adialla. ``

Pakistani Army won`t reduce it size because nukes are useless against internal opponents.


romair # 7
`` I think the author may have missed the biggest financial problem, related to the Army. It is a crisis. There are now more retired Army personnel than serving. And the pension bill for the Army is larger than the salary bill now............ ``

Cut the pensions :-)

`` There is a simple solution to this:

- Cut the General Staff by 2/3rd
- Get the military out of the business sector completely
- Raise the salaries of the qualified young military officers manifold, to at least bring them, in line to some extent, with the public and private sector ``

Your solution makes military burden worse unless you reduce the standing size of the army

faisaluno #46: ``also i agree that there might be some senior army people who might be corrupt. these problems can be tackled with vigourous enforcement of laws.``

It is more than a few Generals, who are corrupt. There are a few who are corrupt at the politicians` level. But quite a few others who are corrupt; albeit at a level below the politicians` level. The second thing is that the corruption system has been legalized. Hence technically it is not viewed as corruption...........

If a person retires from PAF to PIA, after a full career, and takes the seat of a 25 year old civilian. Is it corruption? In my opinion, it is legalized corruption. He should go out in the civilian world and compete for jobs. This is small time legalized corruption.......

Somewhat larger corruption is the creation of all these Fauji industries. They are there to give jobs to retired Generals. And to create a system, where they can make money legally. What is the need for having the Army run banks, software companies, fertilizer companies, housing societies.

Can you name some other countries in the world, where serving Generals are the Chairman of the Boards of privately incorporated banks? What is the need for this?

This corruption pales in comparison to the corruption that was carried out in banks by the ruling MNAs, during the 90s. For example, Habib Bank had 11 Presidents in 10 years, during NS and BB. Each appointed the one who would give out the most corrupt loans to the ruling MNAs.

But the Army`s involvement is still a fraud. A General gets allocated a plot in Defense Housing Authority, for being a Corps Commander at dirt cheap rates. He can sell it in the evening (literally) for 1 crore ruppees. All legal...........

The military should not be allowed to place its officers in other institutions. They should have to compete for jobs, after retiring. And the military should not own, either directly or indirectly, any business venture. It should simply look after its officers and jawans, specifically junior ones, through competitive salaries............

Pakistan`s Army Generals can no longer fight. I am telling you this as first hand knowledge. I know so many of them. Every time I have met them, on my trips to Pakistan, all they talk about are plots. The Air Force ones are still OK. Luckily, Pakistan`s junior officers and sepoys and jawans are some of the best fighters in the world. This again is based on personal experience...........

romair,

i agree with you that conflict of interest is a concern with some of these organisations. also i agree that there might be some senior army people who might be corrupt. these problems can be tackled with vigourous enforcement of laws. this is not as far fetched as it sounds. recently fauji fertilizer has been involved in a tax dispute. here are the details from a research report:

FFC’s plant functioning smoothly

Morning Shout - 17 June 2005
Shagufta Irshad
sirshad@kasb.com


``...We strongly rule out rumors in the market yesterday about plant shut down at Fauji
Fertilizer on account of non-payment of property tax for its plant site....The management also highlighted the fact that any dispute with tax collecting authorities over the property tax cannot lead to suspension of work at any time as closure of FFC plant would not merely mean production losses for FFC but would also be an economic loss for the country which is currently facing urea shortage to meet requirements of the agricultural sector...``

i think if tax authorities can be empowered to move against faujis then so can s.e.c - the govt entity responsible for checking corporate abuse.

also fyi, national bank, a govt owned bank is also the house bank of govt of pak and as a result enjoys a huge advantage over other banks. pak economy in fact is one of the most freest in the world and as a result, there are very few restrictions on businessmen. as a result, mansha can own the largest textile concern and the fourth largest bank. similarly jang newspaper is allowed to run a tv channel. until recently, very few coutries permitted this.

overall, as i said before, i agree that fauji foundation`s operations need to be more transparent. i also think govt needs to make clear that its not going to bail out these foundations if they lose money. govt also needs to audit these entities very throughly every year to insure that these entities do the job for which they were set up which is to invest for the purpose of earning a decent return on the retirement saving of the personnel of armed forces. i know the situation is not perfect. however it is also no where as bad as its made out to be in the liberal press.

Ms. Zehra,

I wouldn`t hold up the example of the CCP and Mao Zedong as ``proving`` the virutes of ``Dictator for Life.`` Mao was arguably the worse thing that ever happened to China (upto and including the Opium Wars and the Japanese invasion). Read some Chinese history and find out what Mao did during the Great Leap Forward and the Great Proletarian Cultural Revolution.

Now, if you were to hold up Deng Xiaoping as ``proving`` why a lifetime job is a good thing, that is another matter!

BTW, why do so many otherwise seemingly intelligent people have this hangup about extolling the virutes of socialism? What long term good has socialism ever achieved?

could the editors of chowk please properly credit the articles -- this first appeared in Dawn, in early June -- this is for the record