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Pakistan army is deep into business

Pakistani lawyers protest against President Pervez Musharraf during a demonstration in Islamabad on Monday.

TEXT OF INTERVIEW

KAI RYSSDAL: So far in Pakistan it's been the lawyers who've been leading the opposition to the state of emergency that was declared over the weekend. Business owners might have been a more effective choice. Because they at least speak the same economic language as many Army officers. Some estimates are that Pakistan's army controls businesses worth as much as $40 billion. Maybe 10 percent of the whole economy. The Rand Corporation's Seth Jones says the army occupies a unique spot in Pakistan's society. And has for decades.

SETH JONES: The Pakistani army has a role in many ways, and that is it's not just involved in defense but it also has quite a complex conglomerate. You know most of these small scale and large scale corporate enterprises range the gamete from private security firms and bakeries, farms, schools, to insurance companies, cement and cereal manufacturing plants

RYSSDAL: Military organizations, when you rise to the top you've demonstrated some organizational skill, but really what do Pakistan's generals know about running business?

JONES: I'm not sure they know an extraordinary amount. Although most of these business ventures really began in the 1950s. So, over the years they have built a pretty serious economic enterprise system within Pakistan. So, I suspect there has been learning over the decades, but I think most of these military officials involved are military officers first and businessmen and entrepreneurs second.

RYSSDAL: Is this all above board? Does everybody know about this?

JONES: Well I think most people, both in Pakistan and internationally, do understand to some degree that the Pakistani military is involved. But the specifics are very secretive.

RYSSDAL: Where do the profits go that these enterprises generate?

JONES: It's my understanding that the profits actually go to the Ministry of Defense and the individuals involved in it. I don't think there is a really good reliable estimate of how much we're talking about but it's in the billions of dollars.

RYSSDAL: So when a company goes out and puts a want ad in the paper and it says I need bakers for my new bakery shop that I'm gonna open up in Raul Pindi does it say, you know, that the Pakistani Army is hiring today or something like that?

JONES: I would guess in most cases it probably does not. Although with some of the social welfare organizations that are run by the Ministry of Defense they do have advertisements. But I think you know there is an effort to conceal most of this activity.

RYSSDAL: So over the past five or six years Pakistan has gotten about $10 billion I guess, plus or minus, from the United States. What has it done with that money?

JONES: Well, the Pakistani military in general has increased its competence primarily in conventional weapons and conventional combat capability. It has deployed some forces to the federally administered tribal areas to conduct very limited operations against Al Qaeda and other militants. But for the most part a lot of this funding and equipment is geared towards what could be considered combating the Indians.

RYSSDAL: So not strictly speaking counter-terrorism?

JONES: So not strictly counter-terrorism. Nope. By no means.

RYSSDAL: The money that the Bush administration has sent to Pakistan aside, the Pakistani economy, in and of itself, is really doing pretty well. Isn't it?

JONES: Yeah, the economy is doing fairly well. It will be interesting to see with the rioting in the streets how this will impact general business, but the economy has done fairly well.

RYSSDAL: Do you suppose the military stands to lose any money if this state of emergency goes on too long?

JONES: If demonstrations persist, levels of violence increase, you could see an impact on the general state of the economy. Then I expect if the economy begins to suffer significantly in Pakistan, then the military, which again is deeply involved in a variety of different businesses, will probably suffer with it.

RYSSDAL: Seth Jones. South Asia analyst at the RAND Corporation in Washington. Mr. Jones thanks for your time.

JONES: Thank you, very much.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.
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