Armies that create their own lucrative empires

The vast commercial ventures of South Asia’s military are a threat to civil society, writes RAHUL BEDI in New Delhi

The vast commercial ventures of South Asia's military are a threat to civil society, writes RAHUL BEDIin New Delhi

MANY SOUTH Asian military bodies are running lucrative commercial ventures that rival private businesses, in so doing threaten not only to militarise civil society but also to corrupt the services.

Pakistan’s military, which tops the list, has business interests worth about $20 billion ranging from running bakeries, sugar factories, power plants, airlines, banks, the communications industry and transport networks.

It is followed by Sri Lanka, Bangladesh and India.


These countries also routinely appoint retired and serving military personnel to senior government posts including the diplomatic corps, incrementally but dangerously eclipsing civilian bureaucracies.

Over the past six decades, there have been three bloodless military coups in Pakistan and two in Bangladesh, where there were also 19 attempts by renegade soldiers to overthrow incumbent civilian administrations in Dhaka since the country’s formation in 1971.

The Pakistani military’s business interests fall broadly into three categories: those controlled directly by the army chief; the services and defence ministry that run ordnance and armament factories; and four charitable trusts in which serving and former servicemen run factories and manufacturing plants.

Pakistan’s Fauji or Soldier Foundation, however, the country’s largest industrial conglomerate is the “jewel” in the army’s crown.

Headed by a three-star officer, it provides “womb to tomb” facilities for almost nine million retired servicemen that include resettlement and re-employment schemes, a private airline, educational institutions, power plants, steel and cement factories and even businesses that produce electronic items, sugar and breakfast cereals.

It is often said that all countries have a military but Pakistan’s military has a country, which it runs at a tremendous profit.

Sri Lanka, which is south Asia’s most militarised country, opted, after defeating the Tamil Tiger guerillas in May 2009, to involve its bloated military in a range of commercial activities.

Instead of downsizing its 300,000-strong defence forces after the bitter civil war ended, President Mahinda Rajpakse’s administration encouraged their involvement in large-scale commercial activities such as selling vegetables and religious bric-a-brac, running travel agencies, hotels and highway restaurants and collecting refuse in the capital Colombo.

The army is even responsible for building houses and has built a cricket stadium and renovated another for last year’s World Cup.

On the northern Jaffna peninsula, the army has converted one of its messes into a 22-room luxury resort while the navy runs ferry services and tours for whale-watchers.

Analysts and non-government organisations, however, question the involvement of the services in commercial ventures, claiming it could ultimately lead to Rajpakse’s administration using the military to perpetuate its rule as it would be too difficult and ruinous to disentangle it from the national economy.

In nearby Bangladesh, the military’s business empire, estimated at about $500 million, includes the hotel and hospitality trade and ownership of at least two five-star properties in Dhaka with another being built in the southern port city of Chittagong.

The Dhaka Radisson hotel, which is owned by Bangladesh’s Army Welfare Trust, was built on dedicated military land giving it a commercial advantage in a city of rocketing real estate prices.

The Bangladesh army also owns the Trust Bank, which has about 40 branches nationwide. In 2007, the military-backed caretaker government granted it exclusive rights to the fees for passports.

The Army Welfare Trust has also spawned the Sena Kallyan Sangstha to care for veterans and family members of servicemen.

Over years the SKS has expanded its industrial and financial operations to include vast interests in the food industry.

The Indian military, south Asia’s largest, has assiduously and determinedly been denied all commercial and business opportunities by successive civilian governments, fearful of coups similar to those in Pakistan.

However, the Indian army still manages to operate about 100 golf courses and clubs which were recently the focus of a corruption inquiry by the country’s auditor.

The auditor found these were “unauthorised” and that money earned was not credited to the government account but presumably to regimental funds.

While this can be dismissed as relatively tame compared to the commercial activities of neighbouring militaries, there has been an alarming rise in the number of Indian military officers charged with corruption, many of whom have been court-martialled for offloading highly subsidised defence rations and liquor on the open market at great profit.