PREFACE The Regional Centre for Strategic Studies has been conscious of the link often made between ‘governance’ and ‘defence spending’. In recent years and particularly in South Asia, these are issues of concern that confront all governments in the region. Yet, the link between defence expenditure and governance requires comprehensive evaluation that includes not only economic indicators and impacts, but also a clear understanding of the security needs - perceived and/or real - of the concerned state.

The project addressed major issues in this context, some of which are mentioned here. What is the level at which defence spending becomes “high” enough to significantly affect the objectives of development? What are the indicators of impact of defence spending that could provide a policy framework? Specifically, from social and economic points of view, what are the indicators of “defence burden” with particular reference to South Asia? Does defence spending affect economic growth and social development? If so, how and to what extent? Are there social, economic and technological spin-offs? What are the available inter-sectoral cost-saving avenues and options? At the geo-political level, what are the factors that predispose the decision-making process with respect to defence spending? Who are the actors involved, and what is the framework of perception of threats to national defence and security - real and/or perceived? Finally, what are the categories and considerations that determine the balance between developmental and security goals in South Asia?

These were some of the research questions that delineated the scope and focus of the present study. The principal objective was to provide an informed and dispassionate policy framework on the dichotomy between def ence expenditures and good governance in South Asia.

It was planned as a collaborative study with contributions from Bangladesh, India, Nepal, Pakistan and Sri Lanka. Regrettably, the views from Bangladesh and India were not possible to be obtained in spite of our best efforts. Yet, what we have here are three very perceptive analyses of defence and development in three countries of South Asia with serious policy implications for their respective states and the world.

We are grateful to the Japan Foundation Asia Center, for support to this important project, which we are privileged to share with a wider audience in South Asia and the world.

Dipankar Banerjee August 2001 Executive Director

Mixed Up Priorities: Governance and Defence Spending in Pakistan

Rasul Bakhsh Rais

Pakistan cannot boast of establishing any high standards of good governance by any definition. Rather, it has accumulated all the problems of bad governance corruption, inefficiency, misuse of public funds, low level of social development, weak institutions, and, more disturbingly, growing decay of state and governmental institutions. This chapter will address the question of governance in the economic and political contexts of Pakistan, and explore how and why defence spending could be responsible for its problems of governance. In examining the question of governance, we may not, however, restrict ourselves to any single factor, but look at a wide array of variables that account for the Pakistani state’s inability to deal effectively with the problems of governance. In our view, the question of defence spending is more than an economic

or a budgetary issue, it is about the role of the Army in the political structure of the state and the stunted growth of democratic institutions.

Governance in a modern sense is the function of the institutional capacity of the state to provide political stability, maintain social peace and optimal economic development through efficient use of available resources. The defence expenditure that has been constantly on the rise, or been at levels that are unsustainable, has produced three structural constraints in the way of good governance. First is the size of the Armed Forces and the huge expense that is incurred on their equipment and upgrading. In developing economies like Pakistan, huge budgetary allocations for defence displace social development. It is not surprising that Pakistan’s social indicators depict a dismal picture. If we take the optimistic estimates of the Government of Pakistan, about 62 per cent of the population is illiterate and the country is adding 2.5 million illiterate citizens each year.1 About 31 per cent children of school-going age have no schooling at all, and 40 per cent of the population has no access to safe drinking water.2 The literacy rate for women is estimated to be much lower than that of men. With such a poor record of social development and human welfare, Pakistan cannot aspire to make much economic progress until it takes the challenge of human development head on.

Second, the tradition of praetorian rule in Pakistan cannot, and should not, be separated from the rise of the Armed Forces as a modern, cohesive and the most powerful institution in the country. This may not be the only explanation of almost two decades of direct military rule, but a very significant factor in derailing democracy in Pakistan four times since its independence in 1947. Each military regime, including the present one headed by Gen. Pervez Musharraf, has vowed to revive the economy, provide good governance, institute accountability of corrupt politicians and bureaucrats, promote national unity and establish democracy at the grass-roots level.3 Our contention is that military rule by its nature is against building democratic institutions or promoting the development of civil society. Contrary to popular expectations and high promises of the military elite, the praetorians in the past weakened the social and political basis of participatory politics in Pakistan, and its tampering with the Constitution, along with other legacies, has made democratic transitions difficult, and quite often, unstable.4

Third, due to the heavy defence burden, Pakistan’s economy faces serious imbalances and distortions. The budgetary deficit in recent years has ranged in the neighbourhood of 6–7 per cent of the Gross National Product (GNP), which by any standard is one of the highest. This forces the government to borrow heavily both from domestic and international markets, which has raised the debt servicing to an unmanageable level. Imbalance in foreign trade, a poor record of tax collection, and slump in the industrial and agriculture production have created further difficulties in economic recovery. The drought for past three consecutive years has hit the agricultural economy so hard that it is making the task of the military authorities more difficult to revive the economy than was expected.

Many of the problems that Pakistan has accumulated over the past 54 years pose serious dilemmas for state and society. Among them, the main challenge facing Pakistan is ungovernability, which means declining ability of the government to fulfil its primary responsibility of political order and economic development. The two complement each other. Without political stability, social peace and rule of law, no internal or external investor would like to risk his investment in a society torn by conflicts or political confrontations.5 The problem of ungovernability has visited Pakistan in two forms. First, economic and social problems have acquired a life of their own. No government may be able to address them seriously without undertaking deep and wide-ranging structural reforms in many vital areas of national life. Given the political risk involved in attacking vested interests and political opportunism of the ruling elite, these problems have not found enough space on the political agenda of elected governments. Even with a massive electoral mandate and overcoming every obstacle to his rule,

ousted Prime Minister Nawaz Sharif demonstrated little political will to introduce much-needed economic reforms.6 Second, ethnic and sectarian violence, political polarization and frequent breakdown of law and order is symptomatic of weak states, ineffective governments and anarchical societies.7 Pakistan has experienced much of this during the past 12 years. After overthrowing an elected government on 12 October 1999, the military regime has promised structural reforms in all areas of national life. Good governance, revival of the economy and what the General calls “true democracy” through a devolution plan are the key elements of his reform package.8 Will the proposed reforms be effective enough to change the course of economic and political development in Pakistan? It is yet to be seen, but there are strong voices in Pakistan that raise the question of the legitimacy of the reformers in uniform, about their political capacity to undertake reforms. At the moment, bolstered with validation from the Supreme Court and with authority from the court to amend the Constitution, if necessary, to implement the seven-point agenda, the military regime seems determined to change the political order.

The Problem of Governance

The concept of governance has not caused as much concern among political scientists as political culture, political structure or political socialization did. Since it has not attracted much scholarly attention, the conceptualization of governance remains largely inarticulated and fuzzy in terms of its application. Perhaps it was considered too narrow to merit full treatment in many of the works on modern state and society. Impressed by the elegance of system theory and structural functional approach to analyse politics, political scientists have focused on “political systems” as a universal category. The classical writings in this area differentiate and compare political systems according to their structures and functions. There is a twofold assumption: political systems have different structures, and, therefore, perform different functions. We have traditionally compared systems of developed and developing states essentially according to structures and functions.9 It is out of the purview of this paper to analyse various aspects of the system-function approach to politics. The classical debate is, however, relevant to the point it touches upon: the capacity of a political system to satisfy the demands and interests that particular groups in the society articulate and communicate effectively to the political authorities. According to Almond and Powell, we can compare and evaluate the performance of political systems on the basis of four categories of outputs or functions. In their view, one critical aspect of political system is its extractive activity. The extractive performance can be measured by the success or failure of tax collection both in volume and in relation to the productive capacity of the society. A second significant category of performance relates to the distributive functions. One may look at the quality and range of social services like education, health, sanitation or values like prestige, security and status. Regulation of human behaviour is one salient category of according to which the performance of a political system can be judged. Regulatory mechanisms of the system concern crime and punishment, and enforcement of rights and obligations on groups and individuals. A fourth area of political system output is symbolic performance. This is about historical memory, the past of the nation, and important values like equality, liberty and community, and how leaders use these elements to enhance the overall performance of the political system.10 Therefore, governance in the traditional sense is about the performance of all essential functions by a government within the larger environment of its social and political systems. It is important to mention the systemic conditions, because they determine the ability of a government to perform legislative, executive, judicial, economic and social functions. In an interdependent world system, the external environment is no less important than the domestic one to examine the function of a political system. Explaining governance with reference to comprehensive evaluation of the activities of the government is an important but still a narrow approach. Much has happened in the field of political studies and in the operational milieu of the

states that warrant going beyond the fundamental functions of political systems and the responsibilities of modern governments.

It would be instructive to point out that the concept of governance is no longer confined to the realm of politics. Other disciplines have adopted it, and have drawn different meanings from it for their purposes. For instance, those who work in the field of business administration explain governance in terms of the principles of work in a business corporation.11 Drawing from the classical liberal theory based on civil society, property rights and legal systems, management theory defines good governance in terms of efficiency, quality control and auditing.12 The Non-Governmental Organizations (NGOs) in the field of social and participatory development in the Third World refer to governance in much broader terms. Their discourse on governance focuses on the political ability and commitment of a government to function within the parameters of the law, give priority to social development in the allocation of resources, provide a secure environment, be accountable, and check the accountability of corrupt government officials and politicians fairly.13 They single out political corruption and failure of governments to control violence, both ethnic and sectarian, as examples of bad governance. Many of these NGOs are engaged in advocacy for good governance and in building institutions of civil society. Social and participatory economic development are their special areas of interest. The NGO phenomenon is a new but growing field of activity in most Third World countries. This movement has really caught up in Pakistan with the new approach of donor countries to go beyond national governments and fund NGOs directly. It is too early to assess the overall impact of NGOs, but governance is one important issue that they have popularized in public discussion. Working collectively as a pressure group, NGOs have generated a lot of support at grass-roots level among those sections of society that benefit from their activities. Their objective is to articulate demands for social development and clean, lawful governance. In association with other professional groups, NGOs may build up enough pressure on governments to show greater sensitivity to problems of governance than they did in the past. The emergence of so many diverse actors both in the domestic and international environments of states that influence public policies of governments has opened the issue of governance to wider criticism. For example, Transparency International, which investigates corruption in the ranks of governments, or Human Rights Watch that probes violations of human rights, work closely with donor agencies and like-minded organizations within countries to make governments accountable and responsive. In the traditional view, although governance is about the activities of governments, in the words of James Rosenau, “it also includes many other channels through which commands flow in the form of goals formed, directives issued, and policies pursued”.14 The NGOs, international institutions like the World Bank, International Monetary Fund and development agencies provide alternative “channels” of goal formation and policy articulation in promoting what they believe is good governance. Governments in the developing world may find it increasingly difficult to act arbitrarily any longer. Many of them, like Pakistan, are groaning under debt burdens, have limited resources to undertake social development and lack political will to bring about structural reforms in vital areas of national life. Consequently, over the decades, they have lost a lot of autonomy and sovereign authority to shape public policies independently.

In recent years, the World Bank in particular has come down hard on governments that have been failing to pursue good economic policies. The rising debt crisis, threat of insolvency, fiscal deficit, inability to raise adequate revenues and wasteful, non-development expenditure are some of the areas that the Bank and IMF have been highly critical of. Unlike the past, these two institutions have started tying up fresh loans and development assistance to structural reforms in the economy and proof of financial discipline.15 In a narrow financial sense, the World Bank pursues the issue of governance from the point of view of correction of and some control over the economic and social policies of a government in order to bring about “discipline”. In the broader understanding of the Bank, governance encompasses “interlocking disciplinary practices whereby

the state is disciplined by the society, and society by the state”.16 In order to promote this perspective, the World Bank has begun to apply a number of “disciplinary techniques” to force Third World governments to accept the new developmental ideology. The Bank focuses on accountability, a legal framework for development, information and transparency as fundamentals to promote good governance.17

The concept of good governance, as defined and promoted by the Bank and other international institutions, including Western governments, is intrinsically linked with the political philosophy of liberalism.18 The concepts and categories that we use in the understanding of good governance are familiar and indistinguishable from liberal democratic precepts. At the root of this philosophy are two important notions: that all societies are malleable, therefore, can be transformed; and that of a conception of a government which is representative, responsive and responsible. Therefore, the theory and practice of good governance cannot, and should not, be separated from the larger categories of liberal democracy. In the emerging new world order that is driven by the supremacy of democracy and capitalism over other models of economic and political organization, the Western countries and global institutions that they control are likely to push good governance as a new working ideology for developing countries. The whole project of instituting good governance and theoretical insights of liberalism are indisputably relevant to economic and political engineering in the Third World. There is no harm in accepting them in the interest of human progress. We are aware of the practical difficulties of restructuring Third World societies in the liberal image of the world. The social and political conditions are often too stubborn to give way to new, enlightened thinking. What we suggest is an incremental approach that is sensitive to local cultural values. A process of “change in continuity” and accommodation of tradition and modernity may, over time, alter the perceptual milieu and make the entire process of restructuring less painful.

More than the people, it is usually the political opposition that provokes resistance to reforms to make political mileage out of the short-term difficulties that can be avoided. It opposes any agreement that the government of Pakistan signs with the WB or IMF to implement structural reforms as a sell-out. Programmes like reducing heavy government subsidies, raising tariffs on utilities and widening the tax net as recommended by the WB and IMF have frequently been denounced as surrender of national sovereignty. The Opposition, which would have had to do the same things were it in power, is opportunist rather than pragmatic in exploiting economic crises to its advantage.19 No matter how strong the political barriers and social obstacles, the reform agenda directed at creating conditions for good governance is simply unavoidable. These reforms can be postponed only at the risk of impending economic collapse and brewing social crisis.

Although good governance would benefit from sound, rational, economic policies formulated within the framework of economic liberalism and free markets, it should not be confined to the economic aspects alone. The political elements of good governance are perhaps critical to the realization of economic objectives. I must say the two complement and reinforce each other in creating a favourable climate for restructuring of the society through dedicated reforms. Therefore, it is necessary that we conceptualize good governance both as a political structure and an economic process that work parallel and in one direction.

In a political sense, governance is connected with the general institutional capacity of the political system to initiate and manage modernization and social change without serious disruptions or political crises. It also raises the question about the relationship of the state and society on the one hand, and the elite and masses on the other. The first refers to the efficacy of the state to sink its roots in society, so that it is not perceived as alien, oppressive or culturally detached from the values of society. An organic, natural and culturally symbiotic relationship between the two would enable the state to go about institutionalizing governance without any

resistance. The second relationship is about representation of the political elite and their legitimacy. Both legitimacy and representation would provide them enough support within the political community to enact and implement reforms that may seem painful in the short term, but rake in greater rewards and benefits for the society in the long term. The elite representing different classes, institutions and interests will have to accept a normative framework of good governance and pursue policies towards this end. Otherwise, dissent among them and political opportunism would not produce political stability, which is essential to any semblance of governance, let alone good governance. Let me restate this theme. Successful good governance would depend on how and to what degree the strategic actors in the political system mutually accept limitations of law and subordinate themselves to the general principle of public interest. In the context of Pakistan, the military, civil bureaucracy, business, feudals, political parties, religious, ethnic and sectarian groups are all strategic actors, as they inf luence all issues that come within the purview of good governance.

Before concluding, one more vital aspect of governance that relates to the processing of social conflict needs explanation. No society is free of conflicts that arise from new demands and pressures from organized groups. The developed societies have better institutions and political mechanisms to resolve most of the conflicts. Third World societies like Pakistan face demands particularly from ethno-regional and religious groups that cannot be resolved because they conflict with the interests of other similar groups, or governments lack economic and political resources to settle them. Quite often, demands with religious and ethnic orientation have provoked violence, disrupting social and political peace.20 Therefore, among other things, evidence of good governance should be seen in the ability of a regime to manage multiple conflicts resulting from demand aggregation peacefully and on a sustainable basis. The process of handling conflicts is complex, but conflicts cannot be wished away. It would depend on the efficacy of political institutions and the elite and how they formulate policy responses to demands in a fashion that they do not produce violent conflict and that groups remain within the mainstream national political system. Going by the experience of many African and Asian countries, containing and managing conflicts below the threshold of violence may be an optimal attainable strategy. Their experience also suggests that if the demands are not addressed in time or conflicts are left unattended, they disrupt normal politics. The relative success of some West African countries in conflict management suggests that good governance could be achieved by promoting a national consensus on political values. These values may also serve the purpose of regime legitimacy and help establish new institutions in order to replace the old ones when they have outlived their utility.21

What is suggested in the foregoing is that the problem of governance has many dimensions and can be analysed in many different ways. Traditionally, elements like institutionalization, legitimization, nation building, integration, strengthening values that help states acquire wide-ranging capacities to manage transitions while meeting legitimate expectations of the people have received great deal of attention. In societies going through democratic transition, the system of representation has raised the level of political consciousness, empowered new groups, increased demands, and has vastly enlarged the size and power of electorates. Pakistan’s record in this regard is mixed because of the switch-on, switch-off democratic tradition.

The classical literature on the capacities of the political system remains valid, but insufficient, to address the new crop of economic, social and political problems that governance in the modern context has to address. It may serve some statistical purpose if we enlist some of the salient indicators of good governance. These are: legitimacy, representation, rule of law, conflict management, elite consensus, political stability, supremacy of democratic institutions, effective public institutions, transparency in public affairs, accountability of pubic office holders, a corruption-free society, fiscal discipline, affordable defence, respect for human rights, a

respectable economic growth rate, distributive justice, and an assertive civil society. Many of these factors may support and strengthen one another and help governments perform their functions in the best interests of society.

Pakistan’s Crisis of Ungovernability

It would take too much space if we apply each of above indicators to Pakistan and evaluate its performance. At best, Pakistan’s record is mixed to poor, and at worst, it is dismal in many areas of governance. However, while discussing the crisis of ungovernability,22 we may selectively focus on some of the aspects of good governance as outlined above. Today, the principal challenge facing Pakistan is the threat of ungovernability—the decaying capacity of governments to perform their primary functions. The problem of ungovernability has been manifested in three forms in Pakistan. First, there is accumulation of intricate economic, social and political problems that have no easy solutions. Governments have been unwilling to confront them to avoid political costs. Consequently, they have grown more stubborn. We will look at some of them in detail as we go along. Second, Pakistan has witnessed a series of violent and destructive ethnic and sectarian conflicts with greater frequency during democratic rule than under military rule. The problem is not democracy itself, but the weakness of the political system to handle demands before their escalation to different stages of conflict. Third, political polarization among political elite, ethnic and religious groups has crystallized too much to bring them around to a new consensus or to accepting any normative framework as a basis of good governance. The deep malaise that has infected the Pakistani polity for decades has also kept fuelling multiple polarizations. The one developing at the present is between political forces and the military government over the issue of restoration of democracy. The confrontation among different elements in society greatly undermine the ability of governments to manage conflict or institute deep structural reforms that would set the country on the path of political stability and economic development. Let us examine in some detail some of the problems that have affected governance.

A World Bank brief on Pakistan lists the following problems of governance: politicization of routine public -sector decision making; declining effectiveness and capacity of public institutions; lack of effective law enforcement and timely dispensation of justice; evasion of taxes, loan repayments, and utility bills; and underdevelopment of local governments and other civil-society institutions.23 According to the WB, “these factors have severely reduced the effectiveness of public expenditure and the tax collection machinery, held back and distorted the development of the private sector, weakened macroeconomic management, harmed the environment, and exacerbated the other structural problems Pakistan faces”.24 It will also be illustrative to mention some of the findings of a report prepared by a distinguished group of policy makers, public representatives and intellectuals on the question of good governance under the direction of former Prime Minister Benazir Bhutto. The report presents an authentic but grave picture of economic, social and political conditions in Pakistan which gives an idea of how bad things are. The report has the following to say.

• Corruption is endemic at every level and in every sphere of national life. • Misuse of public money and assets is widespread. • There is no regard for or recognition of merit in government jobs. • The state is no longer performing its basic functions, such as safety of life and property or

providing justice and law-and-order. • The police treats ordinary citizens inhumanly in lockups and extorts money. • Women do not get the respect they deserve and are abused at will at police stations and

lockups. • Inflation and unemployment are basic problems a common man faces.

• The state has failed to ensure delivery of basic services and amenities to the people. Low literacy rates, high population growth, low life expectancy, poor health and nutrition, deteriorating conditions of women, lack of a proper public transport system, shortage of irrigation water, lack of clean drinking water, poor sanitation, adulterated food and medicines all have adversely affected the common man and the society.25

There is no better evidence of bad governance than the above findings. The report was intended to recommend remedies to the problems of Pakistan and make a new beginning in good governance. Unfortunately, talk of a “new social contract” and “good governance” turned out to be mere political rhetoric. While the Bhutto Government was preparing the report on good governance, the Prime Minister, her husband Asif Ali Zardari and a large number of their close relatives, friends and party cronies were amassing wealth through kickbacks from awarding contracts, purchase of military equipment and other illegal means.26 The Ehtesab (accountability) Bureau of the Nawaz Sharif Government, though partial and one-sided, detected hundreds of bank accounts in the names of the Bhutto family with hundreds of millions of dollars in them. Some of the accounts have been frozen by the governments of Switzerland and Great Britain, pending inquiry into the sources of huge amounts. The military government of Gen. Pervez Musharraf has not withdrawn corruption charges against the Bhuttos. It is conducting a fresh investigation of their foreign properties, assets, companies and monies and how they were secured.27 A court in Switzerland has already indicted Benazir Bhutto and her husband, Asif Ali Zardari, on charges of money-laundering.28 On 23 September 1998, the Ehtasab Bureau released the list of Zardari’s properties and assets. According to this list, the estimated value of the foreign assets as indicated by the shareholding interest in the front companies, the value of moveable and immovable properties and funds in the various bank accounts in the names of Asif Ali Zardari and Benazir Bhutto is about $1.5 billion.29 Like any other politician in such a situation, Benazir Bhutto denies all charges against herself and her husband and accuses former Prime Minister Nawaz Sharif of political persecution and says the Swiss court has been duped by the chief of the Ehtasab Bureau. There are many other things on public record that she did, which show flagrant violation of accepted norms of good governance. She allotted hundreds of lots of urban property to her friends and party loyalists in Islamabad. The market price of these properties may run into tens of billions of rupees. Grant of loans, mostly without any securities or collateral from public financial institutions, to favourite individuals amount to several billions. Since there are hardly any institutional checks on the exercise of executive authority, she claims no wrongdoing in enriching friends and family through public largesse. To be fair, Benazir was not the first one to push patronage to the point of corruption.

The former Prime Minister, Mr Nawaz Sharif, also gave away thousands of plots to reward or bribe an increasing class of individuals who have become rich overnight by grabbing public assets. In 1993, when Justice Majid Tiwana of the Lahore High Court took suo moto action against the misuse of public funds, it was revealed that Mr Sharif had allegedly allotted almost 2,000 plots during his tenure as Chief Minister of Punjab from 1985 to 1990. Among the beneficiaries of this bounty were 42 politicians, 22 journalists, 16 senior bureaucrats, and 9 judges of the Lahore High Court, one of them now promoted to the Supreme Court of Pakistan.30 All other Chief Ministers of the provinces and former Prime Ministers are also guilty of similar corrupt practices. The industrial group of the Sharifs grew by 4,000 per cent since he first took political office, from a paltry $5.4 million to a staggering $217 million.31

The problem is that Pakistani politicians, in the feudal traditions of the country, have never separated the public sphere from the private one. Politics is generally taken as a means to power and private profits at the expense of public interest, and not a public service. The legal system and institutions of civil society have been rendered too weak to prevent daylight robberies of the public exchequer. A horde of greedy bureaucrats, businessmen, politicians, journalists, and

members of other professions, including the judiciary, have taken full advantage of the politics of plots, loans and lucrative jobs for their sons and daughters. This is symptomatic of the erosion of public morals and values brought about by decades of misrule and bad governance, for which both the civil and military regimes are responsible. The military government has renamed the Ehtasab Bureau as the National Accountability Bureau, which is headed by one of the senior serving generals. The purpose of the NAB is to conduct across-the-board accountability of corrupt elements of society. In practice, it has selective ly focused on bureaucrats and the politicians. The public at large has welcomed the accountability process, but it wants it be institutionalized, independent of the sitting government, and include in its mandate all sectors of the society.

Some documented examples would show how most of the institutions of the state and civil society have decayed or have gradually become paralysed. Public education, which would be the most fundamental vehicle of modernization and social change, is perhaps in the worst state. This writer has witnessed many elementary, middle and high schools in the rural areas of Punjab province, which is relatively prosperous and more developed than others, where the majority of teachers do not attend to their duties and yet continue to draw their salaries. In 1996, the education department in the province of Sindh conducted an inquiry about schools in the rural areas and found that 2,932 of them were found closed or existed only on paper. Out of these, 1,154 are for boys, 1,275 for girls, and 10 for both boys and girls. It is reported that hundreds of such schools have been turned into guesthouses, stables and granaries of influential people.32 Likewise, the Punjab government has also uncovered more than 1,600 “ghost schools” in the province, which never operated, but whose teachers got paid for years. Both the management and standards of public education have declined over the years throughout Pakistan, more in the remote rural areas than in the cities. The huge education bureaucracy at federal, provincial and district levels has proved inefficient to administer this vital public service. And the politicians have turned a blind eye to this criminal negligence that has thrown millions of innocent children into the dark pit of ignorance and poverty.

Pakistan’s banking system was one of the best and fastest growing sectors of the national economy before the late Zulfikar Ali Bhutto decided to nationalize anything that worked for profit, from small rice husking units to schools and colleges run by the Christian charities and all banks and industries. He did this in his vision of Islamic socialism and distributive justice when he took power in 1971 after the military debacle in East Pakistan, now Bangladesh. All successive regimes have used nationalized banks to dole out financial favours to friends. The bureaucracy that has been running the public enterprises has caused loss in the billions each year, an unbearable burden on the weak national economy. The case of defaulted loans illustrates how the financial institutions, the backbone of any economy, have systematically cheated, defrauded and bled the country white. These are the loans that have not been repaid. According to the State Bank of Pakistan’s Annual Report, 1999–2000, the amount of non-performing loans increased to Rs. 240 billion, while defaulted loans stood at Rs. 148 billion.33 The defaulted or non-performing loans in early 1998 stood at Rs. 127 billion, which increased to Rs. 282 billion in 2001.34 Without the recovery of bad loans, the financial health of the banking system cannot be restored, and it will remain unattractive to prospective buyers for their liabilities. The campaigns of the last government of the Pakistan Muslim League and the present military government, after giving some incentives for easy payment schedules and initially taking tough measures to recover loans, lost steam. The big fish and the most influential business and political families have escaped the net. Comparatively, the military regime has done slightly better, but fearing that toughness may further hurt the confidence of the business community, it went soft on recalling loans. The previous government wrote off billions to benefit friends and political cronies and sanctioned them more without any collateral. The Agriculture Development Bank of Pakistan, which extends short-term loans for agriculture-related purposes has almost been rendered bankrupt. Politicians,

industrialists and whoever had any influence with any government in power have refused to pay back 2.5 billion rupees of loans on one pretext or another.35 Other institutions of the government are no better. Former Prime Minister Nawaz Sharif on several occasions characterized the system of governance in Pakistan as “rotten” and always pledged to change it. One wonders what stopped him from doing so, as he had a massive mandate of which he boasted a lot. But it is easier said than done. The performance of his government in the first year was somewhat better than the Bhutto Governments, but he soon lost track. He, like many of his predecessors in power, lacked vision, political will and the capacity to do anything. His popularity graph went down with each successive blunder, mishandling of issues and confrontational style of politics. Many of the initiatives that he took to reform the economic system and governmental institutions lacked credibility, as they were mostly driven by his urge for personalizing power.

His decision to conduct reactive nuclear tests on 28 May 1998 brought the structural problems of Pakistan’s economy to the fore. The debt burden (which now stands at $38 billion), dependence on international financial institutions for financing foreign trade and the budgetary deficit might have caused an economic melt-down had the IMF and the Western powers refused to bail Pakistan out of the post-bomb economic crisis. Pakistani decision makers took a calculated risk by embarking upon the open nuclear path to match India’s capability. The US and other Western countries had forewarned Pakistan about the consequences of nuclear testing. It was hardly surprising when they imposed the same sanctions against Pakistan that they had announced against India. The economic sanctions have hurt Pakistan more than they have India.

In the wake of the sanctions regime, the IMF became tough on Pakistan both for defying the Western powers on the nuclear issue, and for purely economic reasons. Pakistan, for the past many years, has not met the targets of economic reforms that were set as a condition for release of funds that were already committed. A number of bad steps by the Sharif Government further compounded the economic crisis. First was the dispute with the Independent Power Producers (IPPs) over the issue of power rates. It weakened the confidence of foreign and domestic investors that sent the Karachi Stock Exchange into a spin that lost about 50 per cent of its value between the months of April and July 1998. Then came the freezing of foreign currency accounts on the heel of nuclear tests and economic sanctions. It seems the past three governments used up $11 billion in these accounts to pay for the balance of payments deficit. This has shattered the confidence of overseas workers who no longer seem inclined to send their earnings to Pakistan through formal banking channels. This further put pressures on the foreign exchange situation. About 56 per cent of the national budget goes to debt servicing, while defence claims 28 per cent. The federal and provincial governments are left with very little to spend on social and economic development. The question now is: How will Pakistan deal with the problem of debt burden? Will Pakistan default on the repayment of foreign debt or continue to squeeze resources and repay on a regular basis as it has been doing? The current strategy is to retire short-term high mark-up loans and negotiate with the World Bank and the IMF to reschedule the loans with some breather. The military government has also resolved some of the problems with the IMF, like raising power tariffs and honouring the agreements with the IPPs.36 But the targets on issues like widening the tax base of the country, reducing the fiscal and budgetary deficits and rationalizing defence spending seem difficult to achieve in the near future. During the past one and a half years, the downward trend of the economy has been halted and there are mixed signs of economic recovery, but the country is not out of dire straits as yet.37 If the military government fails to revive the economy, not only will it lose legitimacy, which is already being questioned, the crisis may have a profound impact on the ability of the country to maintain its current rate of defence spending. The views of Opposition leader Benazir Bhutto seem quite valid that “the imperative of a fragile dependent economy have come into an irreconcilable conflict with an over-extended national security state. The economy has finally refused to take this burden.”38 It is much easier to say these things while in the Opposition; in office, she did nothing to address this problem.

Let me turn briefly to two other problems–ethnic and sectarian conflict that have a direct bearing on the problem of governability. Sindh has witnessed more ethnic polarization and violence in recent years than any other province in Pakistan. Most of the violence has, however, been confined to Karachi, the port city of Sindh and the financial and industrial centre of the country. As the city has grown in population from less than half a million in 1947 to more than 10 million, there is an uneasy relationship among different ethnic groups that now share this sprawling metropolis. Karachi represents all nationalities of Pakistan. Sindhis are the only native groups, while others settled there after the creation of Pakistan. The Mohajirs came to Karachi in large numbers at the time of Partition. But their settlement in Karachi and other major towns of Sindh gained momentum with Karachi becoming the capital city and carving it out as a federal territory. Sindhis protested against this move because they feared that more refugees from India would be brought in. This is precisely what happened. In the early years of Pakistan, from 1947 to 1951, one million Mohajirs were settled in Sindh. Liaqat Ali Khan, the first Prime Minister of the country, and himself a Mohajir, had a generous policy towards the newcomers in the allotment of prime urban properties through the Evacuee Property Trust.39 In 1951, within four years of Pakistan’s creation, Mohajirs constituted about 50 per cent of the population of the urban areas in Sindh. They gained majorities in Karachi, Hyderabad, Mirpur Khas and Nawabshah.40 More significantly, the Mohajirs dominated the newly established central government of Pakistan, which they used to the benefit of their community. From the very beginning, the Sindhis resented concentration of Mohajirs in their province, their monopoly over government jobs, state institutions, and undue favours in allotting them urban properties. The political and ethnic polarization that has taken a violent form in Sindh goes back to the early years of Pakistan’s policy of resettlement of immigrants from India.

More ethnic groups have settled in Karachi for economic reasons. According to the 1981 Census, Sindhis made up 55 per cent of the population of the province. Mohajirs constituted the second-largest group at 24 per cent. Punjabis were 10.6 per cent, Pashtuns 3.06 per cent, and Baluchis 6 per cent.41 Most of these ethnic groups have taken up jobs and businesses in Karachi or in other urban areas. The flow of Mohajirs and other ethnic groups from the neighbouring provinces has continued. Sindhis fear that they may be reduced to a minority. Naturally, for decades, Sindhi national sentiment has run very high, which is directed both against the Mohajirs as well as the central government of Pakistan.

The Mohajir community of urban Sindh has its own grievances. It has reacted sharply to the policies of Sindhi empowerment through the affirmative action programmes. Though their representation in the federal and provincial governments is disproportionately higher than their numbers, it has declined considerably compared to the early decades of Pakistan. These two factors, along with the bad economic conditions and unemployment have generated popular support for the Mohajir, now Muttahida Qaumi Movement (MQM). This party continues to dominate electoral politics and street power in Karachi. The party has been blamed for much of the violence in the city. It is suspected of killing its political rivals, dissenters from the party ranks and government officials. The MQM accuses the intelligence agencies for murdering its workers. During the last Benazir Bhutto rule (1993–6), the MQM workers, who were suspected of terrorism, were targetted by the security forces. Ethnic violence among various groups continued in the 1990s despite the fact that until July 1998 the MQM was a coalition partner of the Muslim League Government in Sindh. The prospects of Pakistan’s economic recovery, foreign investment and industrial productivity are hostage to the ethnic conflict in Karachi. The problem of ethnic polarization and frequent eruption of violence cannot be addressed by administrative measures alone. Some structural changes in the distribution of power among the ethnic elements, good governance and provincial autonomy could be the starting points.

Sectarian violence, particularly in Punjab, the largest province in the country, has erupted off and on during the past few years. Militants belonging to the Shia minority sect of Islam and Sunnis, the largest denomination, have been attacking mosques, religious educational institutions and top leaders of each other. The Sipah-e-Mohammad and Sipah-e-Sahaba (SSP), the two armed groups representing the Shia and Sunni sects respectively, are interlocked in a vicious war of vendetta. Most of their acts fall within the category of terrorism, as their victims are generally innocent worshippers or those attending religious congregations. In 1,126 incidents of sectarian violence from 1987 to April 1997, there were 469 persons who lost their lives and 2,258 were injured.42 Sectarian violence did not end with the military takeover in October 1999. It continues to claim lives and disrupt peace and harmony among the two major religious sects.

Sectarianism is a very complex phenomenon that a number of factors have caused over a long period of time. The most fundamental reason is the designation of Pakistan as an “Islamic state”. The concept has fuelled a struggle for power among various sects. And this conflict may not end until the state recognizes religion as a private affair. Unfortunately, many successive regimes have hypocritically advanced the agenda of the religious political parties that may have street power but no strong base of popular support. The Islamic revolution in Iran also raised the expectation of religious leaders in Pakistan that they would also be able to capture political power or press for Islamization programmes. Compelled by his own political ambitions, in the 1980s the late Gen. Zia-ul-Haq began to enforce Islamic laws that generally conformed to Sunni interpretations of the shariah (the sacred Islamic code of jurisprudence). This enraged and alienated the Shia sect. Shia religious leaders, inspired and strengthened by the revolution in Iran, reacted by demanding the enforcement of their own version of Islam.43 Rivalry between Iran and some Arab countries plays a great role in the sectarian violence, because both sects are suspected of receiving funds and patronage from these powers. The Government of Pakistan seems helpless against this interference from several Islamic countries that it terms friendly. Internal security institutions are too weak, corrupt and crippled to handle the sectarian terrorism. Successive governments have evaded the issue, and quite often have courted the ethnic and sectarian groups that are involved in terrorism.

Any discussion of the crisis of governance in Pakistan would be incomplete without some reference to the blowback effects of the war in Afghanistan. The disintegration of the Afghan state and continuing civil war along ethnic and sectarian lines has affected Pakistan’s security in many ways. The terrorist factions of the Sipah-e-Sahaba and the Taliban of Afghanistan, which now dominate almost all of the country except a few pockets left under the control of the Northern Alliance, have common theological and political roots. Most of them studied together in the religious institutions of Pakistan. It is widely known that some of the sectarian terrorists of the SSP have got training inside Afghanistan and escaped there after committing murders. The country has become a sanctuary and a haven for arms dealers, smugglers, and drug traffickers. Pakistan’s economy and internal security have been badly affected by the inflow of arms and drugs. About 1.5 million Afghan refugees continue to live in Pakistan because their life support system has been destroyed by the war. The presence of Afghan refugees in some areas in Baluchistan has upset the demographic balance between Baluchis and Pashtuns, the two native ethnic groups. The legacy of the Afghan conflict may further complicate Pakistan’s security if relations between Taliban-dominated Afghanistan and Iran and some Central Asian states that support the rival outfit, the Northern Front, continue to deteriorate. Iran’s ambitions and active involvement in the Afghan power game may deepen Pakistan’s support to the Taliban regime.44 Regional rivalry that seems to have replaced the great power competition may prolong the civil war, with disastrous consequences for the country and regional stability.

MILITARY TAKEOVER

The Defence Burden

There are many ways to measure the effects of defence spending on the overall health of the economy of a country. However, the problem is that while the various models and approaches to study the impact of defence spending have proliferated, they have generated more heat than light. Another problem is that most of the studies have been conducted on the impact of defence spending in the industrialized capitalist economies, and the same models have been applied to developing countries like India and Pakistan. This raises problems of relevance, given the very different nature of the economies, productive capacities and civil-military relations. Over the decades, two views have dominated the debate on the question of the defence burden. Those who would like greater devotion of resources to productivity, economic growth and human development see defence expenditure as a burden on the economy because they feel it has an opportunity cost. They argue that money spent on arms procurement and salaries of uniformed and civilian personnel engaged in maintaining the military machine would be more productive if it were spent on education, health, development of infrastructure and the environment.45 These pacifists also assert that military spending retards investment, and in the case of developing countries, results in intervention by the military in politics. They do not advocate winding up of the military as an institution, but suggest a rational, affordable and practical approach to defence. One of the biggest challenges that many Third World countries face is how to maintain a balance between national security needs, development and general welfare. Since resources are scarce, one may be accomplished at the expense of the other sectors of national well-being.

At the other pole of the debate are the defence economists, who do not see any contradiction between defence, development and economic growth.46 They argue that all government spending has an opportunity cost. By comparing the adverse and favourable effects of defence spending, Benoit, a leading expert in the field, concludes that

the evidence does not indicate that defence has had any adverse effect on growth in developing countries…. The crucial evidence in this matter was the finding that the average 1950–1965 defence burdens (defence as a percent of national product) of 44 developing countries were positively, not inversely, correlated with their growth rates over comparable time periods: i.e., the more they spent on defence, in relation to the size of their economies, the faster they grew and vice versa. This basic correlation was strong enough so that there was less than one chance in a thousand that it could have occurred by accident.47

This has been one of the most startling conclusions, which has been contested by others in the field of defence and development. But the issue of growth is only one element of the national economy. It would be useful to mention both the adverse and beneficial effects of defence spending here before we draw any conclusion. The following are counted among the adverse effects of defence spending.

1. Investment Cost: the defence sector appropriates scarce national economic resources and foreign exchange for the purchase of equipment and other services.

2. Productivity Cost: all government-controlled economic activity is wasteful and unproductive. The same amount of resources if invested by the private sector would produce more than those invested by the government.

3. Income Shift Cost: the size of the civilian non-defence sector is reduced by the allocation of resources to defence.

In calculating the aggregate adverse effects of defence spending on any economy, one will have to take into account a host of different factors, like the size of the army, the economy, and the national resource base. As indicated earlier, the specific conditions of each country would

require a more focused study and analysis. In the case of Pakistan, according to Deger and Sen, the “impact of defence on growth is negative and very high. The tank and tractor trade-off for the economy is quite crucial.”48 There is growing agreement among economists that defence leaves very little for social development. And the present economic crisis in the country should not be seen as an isolated phenomenon, but the product of a host of complex factors, including defence spending over the past many decades. We will return to this subject later when we discuss the impact of defence outlays.

There are also some favourable effects of defence spending that defence economists generally refer to. Four in particular need to be mentioned here.

1. Training Benefits: A large section of recruits from rural areas are shifted from subsistence to cash economy. Discipline and technical skills, which they receive during training, prepare them for the modern economy and a better life. They transfer modern behaviour to their family members, relatives and village folk in their areas.

2. Infrastructure Benefits: The militaries are called upon to undertake major infrastructure development projects, like roads, railways, airports and communication, which are also used by the civilian population.

3. Welfare Benefits: The Armed Forces provide food, clothing, shelter, education and medical facilities to a substantial number of recruits from different areas of the country.

4. Security Benefits: Security cannot be quantified or measured in tangible terms. Both internal as well external security are necessary to provide a peaceful atmosphere for human progress, as well as economic activity. Therefore, defence can be ignored only at the risk of anarchy and destruction of the state.

These are possibly desirable effects of spending on the Armed Forces. But there is no guarantee that defence spending would produce all the above favourable effects. In many Third World countries, including Pakistan, the Armed Forces have used force against their own citizens. The Army designed and implemented policies in its narrow vision of the “national interest” that produced more anarchy, violence and fragmentation in the country. The negative and adverse effects of defence spending in many countries (including Pakistan) outweigh the intended benefits on the society. The negative effects of high defence spending will be outlined in the following sections.

In the industrialized countries, defence procurement is indigenous. They control the full cycle of production of arms from research and development to design and manufacturing. Therefore, like any other investment and industry, the defence sector contributes to the growth of the economy, helps innovation by applying new technologies, and creates jobs. The defence industries in the West and in Russia have found a captive market for their military hardware in the Third World countries. South Asia has been one of the largest markets for these arms. The usual assertion, often supported by sterile econometric models, that defence spending promotes growth of the national economy or generates investment may be misleading.49 Although Gavin Kennedy rejects any negative relationship between defence spending and economic growth, he does recognize that “defence and development have a far more complex inter-relationship than the simple opportunity cost models suggest”.50 In the case of Pakistan and many other countries in similar situations, the opportunity cost models cannot and should not be ignored. What benefits could the economy have if we spent the same amount of resources on tractors, water management, education or infrastructure instead on the purchase of 20 F-16 aircraft? The question is pertinent and cannot be dismissed by the rhetoric that defence has primacy over all other things that society needs. Without underrating the importance of national defence, it should be considered holistically and must encompass the totality of social and economic realities of the nation, not just the security of the borders.51

The issue of the defence burden needs to be examined more broadly than only in terms of its ratios to GNP or Government Expenditure (GE), which are important indicators by themselves. Before we turn to the traditional approach of measuring the burden, let us have a look at the issues of investment, growth and foreign debt and how they are affected by defence spending. These issues are important because they have a direct bearing on the overall development of the society, its governability and the institutional capacity of the state. Investment of resources invariably leads to growth, jobs, and revenues for the government and to social development. There can be differences in the rate of return or the pace of development. The problem with defence economists is that they place the whole of defence in the category of “investment”, and trivialize the rate of returns through modelling if a similar amount of defence resources were invested in the civilian sector. By definition, economic resources are scarce and good planning would require optimal use of them. One cannot say that all defence expenditure is wasteful or unnecessary per se. But what is suggested is a pragmatic balance between threats and responses, including the question of good governance, that will help achieve national solidarity and promote a true spirit of patriotism against foreign foes.

Contrary to some of the findings of Benoit and Kennedy, it is hard to believe that the defence burden does not constitute a drain on national resources. We argue that the volume of defence outlays and the specific economic conditions of a country should be the yardsticks by which to measure adverse effects on the economy and society. But the plain truth is that a shift of resources from normal industrial and economic development to the purchase of foreign high-tech, expensive defence systems with limited shelf life are a waste. Imported arms do not add to the productive capacity of the domestic economy, increase employment or produce any spillover effects like technological innovation. Such a policy diverts foreign exchange resources, causes balance of payments deficits and adds more burden by way of maintenance, spares and training of personnel. Over time, these arms become outdated, requiring commitment of more foreign exchange resources to acquire new systems. For the sake of argument, even if defence may contribute marginally to economic growth, could it be adopted as a national strategy of economic growth and national development? Not at all. The unique economic conditions, defence needs and level of development of each country are important to understand the complex relationship between defence, development and good governance.

Some studies of developing countries show that defence expenditure decreases the rate of investment, which is a critical factor in promoting economic growth anywhere. Saadet Deger has found ample empirical evidence to establish a negative relationship between defence, economic growth and investment in a number of studies that he has conducted on more than 40 developing countries.52 Diversion of resources from the civilian to the military sector for which it competes raises the defence burden on the society in aggregate terms when all costs are compiled and put together. Deger argues that a rise in the military burden (defence as a percentage of GNP) produces four negative effects on the economy. It increases trade deficit, lowers the savings rate, reduces capital investment and takes a big chunk of scarce resources away from productive uses.53

Conversely, decrease in the defence burden and investment of resources in human development like education, health and job-creating economic activities would increase the rate of growth. Deger’s critics like Kennedy stick to their guns that not all defence expenditure is unproductive. Nor are the administrative and economic structures in the Third World efficient to safely project the higher rates of growth if resources were diverted from defence.54 Lumping all the developing countries together to study the issue of the defence burden and its impact on governance may be risky, given their diversity. We are aware of the advantages of comparative studies. But to understand how defence expenditure limits growth or how the military is socially

unproductive and is a barrier to good governance when it seizes power would require a case study approach. It is for precisely this reason that we turn to Pakistan.

It would be pertinent to give the defence and economic data on Pakistan to further explain the nature of the defence burden and its implications for Pakistan.

Pakistan’s defence burden has declined marginally from the peak 8.1 per cent of the GNP in 1987 to 5.7 per cent in 1999. The defence burden as a percentage of the central government expenditure has also come down from the highest of 29. 3 in 1987 to 24.2 in 1997. But the decline is not significant. Compared with the world military expenditure at the ratios of 2.8 per cent of the GNP and 9.9 per cent of CGE in 1995 and the South Asian ratios of 3.0 per cent and 15.0 per cent, Pakistan’s ratios of military expenditure as percentage of GNP at 6.1 per cent and 25.3 per cent of the CGE in 1995 was about 100 per cent higher. Whatever data is available for the recent years confirms this trend. There are very few countries in the world that have a higher level of military burden than Pakistan. But these countries are either in Africa engaged in civil wars, or in East and Central Europe reorganizing their militaries after independence. Surprisingly, no other country has military expenditure above 6 per cent of the GNP at a constant level. Equally, Pakistan’s military expenditure as a percentage of the CGE ranging from 25.3 per cent in 1995 to 29.3 per cent in 1987 is one of the highest in the world.55 The official data on defence do not include everything that is related to defence. The nuclear programme, special funds for the three Service Chiefs and funds allocated for paramilitary forces are not included.56 Pakistan is not in a happy situation as it continues to face hard choices between the “poverty trap” and the “security dilemma”.57 Obviously, demands for economic growth come into conflict with the imperatives of national security, as both compete for a limited resource base. Here, I would attempt to raise three questions. Can Pakistan sustain the present level of military expenditure? What factors compel Pakistan to give so much primacy to military security? What is the impact of military expenditure on governance? The last question is dealt with separately.

Let us take the first question here. Interestingly, Pakistan’s economy grew on average by about 6.6 per cent per annum in the 1980s, which was quite impressive compared to other developing countries and regional states during the same period. In the 1990s however, barring a few years, economic growth came down to 4.4 per cent and the average for the last five years of that decade was barely 2.8 per cent, which led to a negative growth in per capita income. Rapid regime transitions, changes in economic policies, a deteriorating state of governance and widespread corruption are some of the factors, along with debt and defence burden that caused the economic decline. During the last decade, investment decreased from 19 per cent in the 1980s to 15 per cent in 1998–9, while poverty increased from 17.3 per cent in the 1980s to 32.6 per cent in 1998–9.58 Therefore, until recently, Pakistan didn’t feel the pinch of overspending on the military because the economic growth rate was, by international standards, reasonable. Two other factors contributed both to economic growth and to Pakistan’s ability to pay for its heavy defence. First, it was the foreign exchange remittances of overseas Pakistani workers (mainly in the 1980s) that helped Pakistan procure military equipment, service debt, overcome the unemployment problem and generate economic growth. Pakistani workers sent $2.5 billion to over $3 billion a year for over a decade and a half. This source of foreign exchange was more than 60 per cent of the total exports of the country. Second, US economic and military assistance to Pakistan in the 1980s highly subsidized arms acquisition; although Pakistan paid for most of the equipment, the interest rates were low and the repayment period was long. US military aid on concessional rates saved national resources and hedged Pakistan against the adverse effects of the defence burden on economic development. It is no longer possible. There is almost a reversal of US policy towards Pakistan from a close strategic partnership in the 1980s to imposing economic sanctions in the 1990s.

Pakistan’s indigenous defence production is inadequate. Compared to India, it has a weaker industrial and technological base and a poor record of human resource development. Pakistan has invested heavily in defence industries by importing technologies from abroad over the decades, but its arms production capacity is still limited. It is self-sufficient only in the production of small arms and ammunition, like artillery and mortar shells, anti-tank and anti-aircraft weapons, landmines, rifles, recoilless rifles and machine guns of all varieties. It has started producing barrels of large guns, but the quality is inferior. With assistance from foreign countries, Pakistan has started manufacturing mechanical components of armoured personnel carriers, tanks and military vehicles. It is partly assembling and partly manufacturing anti-aircraft and anti-tank missiles. In collaboration with China, it is producing a training aircraft, Karakoram-8. The aeronautical complex at Kamara has facilit ies for overhauling Mirage-3 and Mirage-5 aircraft and Chinese MiGs. In recent years, it has started producing very high frequency electronic communication sets, optical instruments, rangefinders and explosive propellants. In 2000–2001, it started producing the main battle tank, Alkhalid. Pakistan’s missile development and production programme has picked up in the last few years. The Shaheen-2 is ready for testing, which reportedly has a range of 2,400 km. The Ghauri-1 that has a 1,500-km range is now operational, and its 2,500-km range version would reach any target in India. Hatf-1 and 3 short-range missiles are also at the production stage. During the Cold War period, Pakistan exported small arms and ammunition to a large number of countries within the region. But even in peak years, exports never went beyond $50 million a year.59 This is beginning to change, as Pakistan is exploring new markets for the export of small arms and ammunition. The Idea-2000 arms exposition held in Karachi in November 2000 which attracted a large number of countries was meant to promote Pakistan’s defence industry.

The factors that sustained military expenditure without creating an economic crisis in the 1980s are no longer there. The remittances of Pakistani workers have declined significantly to $731.45 million in 1999–2000 from $1,467.48 million in 1991–2.60

In the face of economic difficulties brought about by the second Gulf war, the Arab states have either completed most of the projects or have downsized their development plans, reducing the demand for foreign labour. This sluggish trend in the export of Pakistani manpower may further cut down Pakistan’s foreign exchange earnings. The export of able, relatively young, enterprising and technically skilled work force had adverse effects on Pakistan’s own growth, something that needs to be studied. Second, the United States has withdrawn its security cooperation from Pakistan since the fall of 1990 on the grounds that Islamabad, despite pledges, has continued to develop its nuclear weapon capability, a charge that Pakistan does not refute any more as it demonstrated its nuclear capability by testing the devices on 28 May 1999. This brought an other wave of sanctions. Pakistan missed an opportunity of obtaining massive economic and military assistance that the United States was promising if Islamabad did not test. Many analysts have argued that testing was not necessary as Pakistan already had the capability, and that to do so would further cripple Pakistan’s economy due to sanctions that the Western powers were threatening to impose. In the emotional and highly charged atmosphere of the subcontinent, Pakistan decided to go ahead. Once again, rational economic calculations lost out over the primacy of defence. For the bomb lobby, the Indian tests were the only window of opportunity, which the CTBT regime would have closed. In hindsight, the economic and political costs of that decision have been staggering.

Afghanistan, which brought the United States close to Pakistan in the 1980s, now presents serious problems. Washington is not happy about Pakistan’s continued support to the Taliban regime, which it accuses of providing sanctuaries to international terrorists. The global concerns and priorities of the United States have changed in the post-Cold War era which have pushed countries like Pakistan to the periphery of American interests. Democracy, human rights and

combating terrorism and drug trafficking have taken the top slots on the American agenda. Pakistan is afflicted with some of these problems, which are both the source and outcome of bad governance. Political instability and corruption have caused military takeovers, and military rule has stunted the growth of democratic institutions. This vicious cycle continues, deepening the political crisis.

The third problem that Pakistan faces is the economic crisis. It is mainly the product of mismanagement of the economy, political corruption and the declining ability of the state to provide good governance. Good governance is both the cause and effect of the economic crisis that Pakistan faces today. The macroeconomic indicators of Pakistan paint a very bleak picture. The budgetary deficit reached 6.4 per cent of the GDP in the latter half of the 1990s. This shows a big jump from 3.2 per cent in 1994–5.61

Although the military government has taken effective measures, its pledge to the IMF to bring the fiscal deficit down to 5 per cent of the GDP remains unachieved. The current account deficit is yet an other problem that shows macroeconomic imbalances. It has risen to 4.5 per cent of the GDP from 3.9 per cent in the 1980s.62 These levels of fiscal and current account deficit are not sustainable. They will adversely affect the macroeconomic stabilization and impede progress towards economic revovery. To meet the resource gap between earning and expenditure, governments in Pakistan have resorted to domestic and international borrowings. This has sent the economy into even deep crisis. Domestic borrowing leaves very little for the private sector, and thus retards investment and pushes up the inflation rate. International borrowing adds to the debt burden, which has already reached a critical limit of $38 billion. A cursory look at Pakistan’s annual budget would show that defence and debt servicing consume nearly 70 per cent of the resources. Domestic resource mobilization is the only alternative to the economic crunch, but it is difficult and may have some political costs, which the present military and previous elected governments have been unwilling to pay. New taxes on agricultural income, general sales tax at retail level, and even normal income tax is evaded in Pakistan. According to government sources, only 1 per cent of the population pays taxes, the rest is out of the tax net.

The military government has initiated a plan of economic recovery. This includes broadening of the tax base, linking expenditure to revenues, improving governance through transparency in economic policy making, reforms in the energy, banking and capital market sectors. It has launched programmes like poverty alleviation and development of small and medium enterprises. It has set up a high-level committee to look into the problem of debt burden and suggest various means to reduce it. In order to restore investors’ confidence and improve relations with international monetary institutions, it has resolved the tariff and other problems with the Independent Power Producers, like Hubco. It plans to accelerate the pace of privatization of banks and several utilities and use the sale proceeds to retire some of the expensive debts. It will take time before these measures take effect and the economy is put back on the rails of reasonable growth. The fiscal year 1999–2000 recorded a modest recovery in growth, mainly due to better performance of agriculture and rebound of large-scale manufacture, excluding sugar.

The optimistic view of the economy projected by officials is not shared by many independent economic analysts. They claim that exports have stagnated and the bad loans crossed the mark of Rs. 263 billion in the first 15 months of the military rule, showing an increase of 24 per cent. Revenue collection has fallen far short of the targets. For instance, in the first half of the financial year 2000–2001, the government is Rs. 30 billion short of its expected revenues.63 The economic growth rate for the year, which the government set at above 4.5 per cent, may not be achieved due to negative growth in the agriculture sector. The government estimates that the growth rate may stay between 3.6 and 3.8 per cent.64 Independent experts, however, estimate that due to the drought and its effects on wheat production, it is going to be difficult to achieve even

this modest target. Due to sanctions and the transitional character of the military regime, as it has indicated that it would hold elections by October 2002, foreign investors have not shown much interest. The general image of the country, the unresolved issue of the CTBT and the unsatisfactory law and order situation are some of the obstacles. Foreign investment went down by over 74 per cent in the first 8 months of the financial year 2000–2001. Only $81 million were invested, compared to $315 million in the same period the previous year.65 The economic reform agenda of the military government as spelled out above, if implemented fully, will take a few years to show positive results. It is too soon to say whether these reforms are going to bring the country out of the economic mess or not. The IMF and the World Bank are coming down very heavily on Pakistan to introduce reforms, and now they are linking the release of loans to the progress of reforms, looking at the pace of privatization, tax collection and controlling the fiscal deficit. Some measures like withdrawing subsidies on agriculture and increase in the tariffs of utilities hurt the common man. A general feeling is that it will have to do much more to overcome structural problems that have some safety net for the poor. If Pakistan does not address its economic problems decisively and boldly, there will be a greater negative impact on its ability to sustain the defence burden and maintain social order.

The present economic crisis, which may last for some time, has resulted from a combination of several factors. The World Bank attributes the situation to “weak governance, deep and long-standing structural problems, and persistent macroeconomic imbalances”.66 By looking at these broad categories of problems, one can very easily see the impact of defence spending over the decades on fiscal deficits. The debt burden, which stands close to $38 billion as of 2001, cannot be seen as independent of arms imports. Many developing countries skillfully separate arms procurement from general imports. While they borrow for social development or to pay for trade and budgetary deficits, arms are usually paid for from exports earnings. That is an accounting trick, but any borrowing would mean that the government is spending more than it can earn. Also, Western countries show great willingness to come up with “attractive” financing plans for the sale of their defence equipment. The attraction is in low interest rates, but over time, such deals add to the debt burden.

Foreign donors and world financial institutions like the IMF and WB recognize the linkage between Pakistan’s economic woes and its current defence burden. It is no secret that in extending loans for the Social Action Program and structural economic adjustment, the IMF has conditioned these loans with containing the defence spending to 4.6 per cent of the GDP.67 But even this much reduction, which looks unlikely, will not contribute to the growth of economy if other factors, such as infrastructure, law and order and the investment climate do not improve.68 Will Pakistan reduce the defence expenditure? Going by the statements of government functionaries, it may, but only marginally in the face of the security dilemma.69 President Tarar declared that “we cannot ignore our defence needs until the issue of Kashmir is resolved”.70 This is a typical line that all those who matter in the power hierarchy repeat quite often.

There are three important factors that compel Pakistan to spend on defence at such an alarmingly high level. First is the deep-rooted conflict with India over the disputed territory of Kashmir, which is the mother of all problems between the two countries. India and Pakistan have gone to war three times in the past. In 1999, they fought a local war over the Kargil heights and their forces continue to face each other in the Siachen glacier area, which is perhaps the toughest battlefield in the world. All attempts in recent years to defreeze their frosty relations have failed. Unfortunately, both have resorted to a new covert war, subversion and terrorism against each other’s civilian targets. Pakistan accuses India for the involvement of its intelligence agency RAW in the explosion of bombs in running trains, buses and in aiding ethnic terrorists in Sindh. Similarly, India constantly points to Pakistan for its troubles in the disputed state of Jammu & Kashmir where an insurgency has been going on for the past seven years. It seems India and

Pakistan have decided to conduct diplomacy through intelligence agencies, and engage each other in a deadly, low-intensity covert conflict.

The second factor, which is frequently stressed by Pakistan, is the ever-expanding war machine of India. In just the last two years, Indian defence spending has risen by roughly 44 per cent: 28 per cent in the year 2000 and 14 per cent in 2001.71 India justifies maintaining the fourth-largest Armed Forces in the world with reference to its size and domestic and regional security concerns. India is the largest producer of arms in the Third World, and in terms of arms imports, it has been in the top seven countries in the world. Its advanced missile and nuclear programmes further add to its military capability. Pakistan reads in India’s military power a perfect design for regional dominance. For decades, it has countered the Indian threat by aligning itself with the United States and China. In response to the overall threat environment and India’s nuclear capability, Pakistan has also been trying to achieve a credible degree of nuclear deterrence of its own, which it tested successfully on 28 May 1998 even in the face of international economic sanctions.72 The tests were conducted as retaliation against the Indian nuclear tests of 11 and 13 May. The action-reaction cycle and the arms race, though asymmetrical, forces Pakistan to maintain a high degree of military preparedness. Pakistan acts according to the classical notion that no sacrifice is too big for national security. There is a problem in defining national security primarily in the military sense, but we will come back to this theme later in this article.

Third, there is, so far, a wide consensus in the country on maintaining the current rates of defence outlays. However, voices of dissent within civil society are beginning to question defence spending by highlighting poverty, underdevelopment and neglect of the social sector. Two things need to be mentioned here briefly. For historical reasons, the military has acquired a strong social base and somewhat institutional autonomy. Both feed into the process of consensus at the elite level. There are now tens of millions of families in Pakistan, more in the Punjab and North-West Frontier Province than others, that are, or have been part of the defence forces for more than a century, including the British period. As an institution, the military in Pakistan enjoys more autonomy than other government organizations. Democracy has not struck deep roots, and the civilian governments dismissed five times since 1988 have been too weak to challenge this autonomy. Former Prime Minister Nawaz Sharif’s decision to remove Gen. Pervez Musharraf as the Chief of the Army Staff resulted in the dismissal of his own Government on 12 October 1999. With this in mind, civilian leaders in future may think many times before confronting the Armed Forces on any significant issue. In the past, they have carefully avoided taking any radical step in reducing the defence budget, and they may not do so in future without taking the generals into confidence. Perhaps the generals may themselves be forced by the logic of economic forces to cut down defence expenditure or rationalize defence spending in a manner that it will remain sustainable. Whenever there is any hint of reducing defence expenditure even nominally and with the consent of the military brass, the Opposition parties begin questioning the patriotism of the government in power.73 This posturing is also meant to score points and position oneself better in the power game by aligning with the military. Therefore, intense political polarization pushes the question as to how best to tackle the problem of the defence burden out of serious political debate and discussion.

Impact on Governance

I would like to discuss the impact of defence on governance in three important areas—state formation, institutional development, and social decay.

State Formation

Here, we will raise the question how the military-bureaucratic elite in Pakistan captured political power in the critical years of state formation and set its course away from democratic

governance. Failure to institutionalize a democratic form of governance was more a result of the interplay of internal factors than can be attributed to the malignant regional security environment. Operating a parliamentary system, as Pakistan did in the first decade, required, at the minimum, disciplined political parties, a federal Constitution, and some measure of political consensus on the tricky questions of representation and provincial autonomy. Unfortunately, the Muslim League, the party that led the struggle for the creation of Pakistan, disintegrated into rival factions. The constitution-making process was delayed over the issue of distribution of power between the federal government and the provinces. A host of other factors, such as the personal ambitions of factional leaders, dominance of the executive, and increasing imbalance between the bureaucratic -military establishment and autonomous political institutions further deepened the crisis of democratic governance in Pakistan. As a consequence, political power began to shift in favour of the bureaucratic elite who had succeeded in manoeuvring their way to the highest political offices in the country.74 They exploited every political situation to weaken the political forces and strengthen their own personal and institutional power base. More dangerously, the state elite had a narrow vision of a secure and stable Pakistan. They were quick to accumulate the power of the central state apparatus mainly by expanding the infrastructural capacity of the coercive institutions, while willfully stultifying the growth of the representative political system.

The most critical element in the expansion of the state was the allocation of enormous resources towards raising the defence forces of Pakistan. From day one, the military establishment had received disproportionate political attention and entitlement to funds. Strengthening of the Armed Forces was considered central to the strategy of survival through a strong state. Although internal divisions and the potential for secessionist movements required a strong army, much of the rationale came from the assessment of the regional security environment. The Indian threat loomed large in the Pakistani perception of security. At least in the first decade, Pakistani leaders thought that India was not reconciled to its independence and wanted to undo Partition. Enemy images that were born in the communal frenzy of the pre-Independence era were projected on the independent states of India and Pakistan. The war over Kashmir (1948) and the dispute itself further estranged the two dominions, setting them on a confrontation course. This pushed Pakistan to building a stronger defence. The issue is not that the defence forces were irrelevant to the threats that Pakistan confronted, but that such endeavours resulted in distortions of the balance of power between the state and civil society.

In the military-dominant view of security, Pakistan’s own resources were severely limited for raising a sufficiently strong military power to counterbalance the perceived Indian threat. Pakistan’s top military leaders and their allies in the civil bureaucracy looked for external factors to compensate for the weak resource base, a usual practice in the balancing game. Pakistani leaders found the international constellations of Cold War power relations propitious for their search for external military assistance. The US policy of containing Communism in the “northern tier” brought it squarely into the strategic plans for the region. Although a strong propensity for building an optimal defence capability already existed, the alliance with the US provided the essential means, for the first time, for expanding and modernizing the Armed Forces. The question persistently raised is about he linkages between the growth of the Armed Forces, the external alliance, and the politicization of the Army. In the normal evolution of a state, where larger issues of political power have been settled and constitutional norms run supreme, one would find no causal link between the expansion of defence capability of a country and the military’s intervention in domestic politics.

The development of the military as an institution occurred in Pakistan at a time when the country was going through severe crises of state formation, national identity, and a search for political order. It had yet to set itself firmly on a well-defined constitutional course. The political forces in the country had been weakened by manipulations of the military-bureaucratic elite, who

were loath to accept the supremacy of the representative institutions. Rather, they had appropriated real political power for themselves while allowing politicians to exercise nominal authority. Changing political loyalties, making and breaking political alliances, and the politics of intrigue had badly stained the character of the feudal politicians. But they were not alone: the bureaucratic -military leaders had their part in building up and playing off one group against another.

The military establishment views political instability as dangerous for the country’s internal and external security. In the assessment of the top military leaders, the politicians had failed to deliver to the country a workable political structure; they were neither capable nor to be trusted to run the affairs of the state; they were corrupt, irresponsible, power-hungry, and lacked essential vision for constructing the Pakistani state in the true spirit of the independence movement.75 While the politicians had attracted enough blame, this indictment was enacted to justify the imposition of martial law in 1958, 1969, 1977 and 1999. Besides domestic political disorder, international alignment was also a factor in the calculations of the military in capturing the state apparatus during the first praetorian rule of Ayub Khan. In its containment strategy, the United States had considered the military officer corps as a major rallying point for the defence against Communist expansion and penetration.76 The military might have been encouraged by this assessment as is evident from the wide-ranging support Ayub Khan, the first military ruler of Pakistan, received from the United States and the West. Given the time span, the developmental strategies and the political institutionalization undertaken by Gen. Ayub Khan and Zia -ul-Haq, they did not intervene simply to restore political order. They had a larger mission before them: structuring the Pakistani state in their mage of national security.

The political vision of the current military ruler, Gen. Musharraf, is no different from that of his predecessors. Unlike Zia -ul-Haq, he has carefully cultivated a liberal, reformist and tolerant image of himself and his regime. But like all men in uniform who ruled Pakistan, he too wants restructuring of all administrative, economic and political institutions of the country. He has placed grass-roots democracy, local government, devolution of power to the lower tiers of the government and reviving of the economy by focusing on privatization on the top of his agenda. He has indicated that he would amend the Constitution, a power that the Supreme Court has granted him in its verdict validating the military takeover, in order to implement reforms. It seems in the new political arrangements that are beginning to unfold, the military will retain greater power behind the scenes than in previous periods. It may do so by restoring the power of the President to dismiss governments, as it was under the 8th Amendment to the Constitution, which was unanimously repealed by Parliament through the 13th Amendment. They may also create a National Security Council that will oversee, guide and control the political process. Much of this is being paraded under the banner of good governance. Whether the measures that the military is planning to implement (or its direct rule) will promote good governance or further retard its development is yet to be seen. One important reason for the military to intervene in Pakistani politics is that the system of governance had become unresponsive to the concerns of the masses and was marred by widespread corruption. The public’s faith in the system has declined considerably, which can gauged from the fact that only 35 per cent cast their votes in the 1997 elections.

Institutional Development

In the absence of democratic rule, all governmental institutions have decayed. As pointed out earlier, good governance is a function of the institutional capacity of the state, which suffers under a military-dominant political system. All studies of parliament, political parties, the judiciary and the bureaucracy suggest a considerable decline in their performance. Let us take the case of political parties first. Barred from organizing political activities for a long duration, they

did not grow fully into effective structures. After 53 years, they still have personalized leadership and they are not more than loose factions or groups in search of political patronage. Tribal chiefs and the landowning class dominate the ranks of the parties. Had the political system evolved along the lines of representation, a new generation of able politicians might have emerged from the urban middle and professional classes. Both the urbanized and middle class have rapidly expanded over the past 20 years, but this change has yet to find any meaningful expression in the power structure. Long spells of military rule have, rather, strengthened the hold of feudal elements over political power. Although the new system of district and local governments under the devolution plan of the military has yet to take definite shape, our assessment is that it would further strengthen the hold of feudal families.

Civil liberties and political participation always stimulate growth of independent intellectual and social movements. The development of civil society, which is vital to holding governments accountable and creating alternative sources of interest articulation, was retarded. It has been showing some signs of vigour, but its weakening has undermined the institutional basis of democratic politics. As the experience of many developed countries shows, the growth of civil society and democratic governance go together, with one strengthening the other.

The last military ruler, Zia -ul-Haq, made changes in the 1973 Constitution that have constantly interfered with Pakistan’s transition to democracy during the past 13 years. One significant amendment he introduced changed the balance of power between the President and the Prime Minister. Three different Presidents (including himself) dissolved the national and provincial assemblies four times in order to dismiss governments. Although those controversial aspects of the Constitution, namely the power of the President to dismiss an elected government, were removed by the 13th Amendment, a proper balance has yet to emerge between the two offices. In 1997, under a controversial chief justice, Mr Sajjad Ali Shah, the judiciary became an important player in political disputes between the President and the Prime Minister. In order to empower the then President Farooq Leghari once again to dismiss the Nawaz Sharif Government, he, without any hearing, suspended both the 13th and 14th Amendments that were unanimously brought about by Parliament. No other court in the world has ever suspended any part of the Constitution which binds the judiciary to function within its confines. This is symptomatic of the underdevelopment of the governing institutions. The distorted constitutional legacy of military rule has proved to be an undemarcated field of landmines that exploded the political process several times. The present military government, as mentioned above, intends to introduce amendments to the Constitution. It is not clear yet how they will restructure the political order, and whether or not future democratic governments would not reverse them.

Some other effects of institutional underdevelopment have found expression in the political polarization that started with the ousting of Z. A. Bhutto in 1977 and his execution later in 1979. Much of the political history of Pakistan since that time has been shaped by this polarization between Bhutto supporters and the several antagonistic groups, both political and religious, that were patronized by Zia. The rise of sectarian and ethnic terrorism that continues to dominate the political scene of Pakistan is the result of the undemocratic policies of Zia and his Islamization programme. The violence of these groups has quite often paralysed the law-enforcing institutions of the state. The military attributes emergence of multiple conflicts to misgovernance and “sham democracy” of the elected governments, which is true if we look at the general character of the political class and its feudal style of governance. But the question why the roots of democratic governance have been so shallow in Pakistan begs deeper reflection than shifting the blame to others. Army rule itself in the past has contributed to the underdevelopment of democratic traditions.77 Will it be different this time around? Social Decay

Pakistan’s social development indicators show a very poor performance in this vital area of national life. Literacy in the country (by official estimates) is 56.5 per cent for men above the age of 10, while for women it is only 32.6 per cent.78 The literacy rate for women drops further down in rural areas. This affects the quality of political participation, the population growth rate and the general atmosphere of both agricultural and industrial development. An illiterate population of the size Pakistan has is hardly the stuff for progress. The overall educational system of the country is in decline for political, administrative and financial reasons. The present state of elementary education is alarming. About 7.36 million children of school-going age are never enrolled in schools. For its poor record in primary education, the World Bank ranks Pakistan 134th among 180 states. The standards and quality of education at high school, college and university levels have also declined. The burgeoning population pressure, increasing at the rate of 2.4 per cent, has further added to the problems of social decay. The reason is simple: Pakistan has not invested enough resources in the education system, or in other social development projects. Rather, other pressing problems, notably defence and bureaucracy, have claimed a larger chunk of the national resources. They have elbowed out the social development of the country, which directly impinges on governance.

A report on debt reduction and management strategy released in 2001 by the Debt Reduction and Management Committee that was constituted by the military government admits that there has been a serious upsetting of the balance between defence and development since the early 1980s. The share of development declined from 40 per cent in 1980 and 25 per cent in 1990 to 13 per cent in 2000, while real defence spending has doubled.79 This stark imbalance has affected governance in Pakistan severely. Before we make any further comment, let us turn to human development indicators of Pakistan.

It is surprising to note that in terms of real GDP or the Purchasing Power Parity Scale (PPPS), Pakistan makes it to the rank of middle -income countries, but its human development profile is one of the lowest in the world. The wide gap between economic growth and human development, according to Mahbub ul Haq, is one of the many contradictions of Pakistan.80 He attributes the higher growth rates to the dynamism of the private sector, and poor social development to the combination of bad policies and dominance of the feudal class over political power.81 The fact is that the Pakistani state has failed to tax the wealthy, politically effective and powerful sections of society, like businessmen, retailers and the landowning aristocracy.

The resultant imbalance between the military security of Pakistan and human security of the citizens has worsened over the decades. The concept of human security is holistic, as it comprises economic, environmental, physical and social aspects. This security demands adequate resources and good governance. Investment in human security pays good dividends of internal peace and a productive, skilled community. Pakistan and India, so far, have not internalized the new conceptions of security and continue to live by the old ideas that may not get them anywhere. To begin with, at least, Pakistan needs to strike a balance between human and military security, as the latter is consuming more resources than the former. Some of the notoriously adverse effects of the neglect of human development are already working against the interests of internal security. The sectarian and ethnic terrorism, lawlessness, drugs and Kalashnikov culture, corruption and proliferation of arms have torn the Pakistani society apart. These problems which Pakistan faces today are typical of the “ungovernability syndrome”. The traditional law-and-order approaches which various governments have adopted have not yielded any significant results. The ungovernability syndrome may impede progress in every direction unless structural reforms are undertaken. Only development and the mobilization of human capital on a sustained basis may reverse the trend in Pakistan. This would naturally require greater amount of resources, resetting of national priorities and rationalization of defence expenditure, so that there is enough for investing in human welfare. This is likely to be a global theme and major responsibility of nation

states in the coming decades. Left unattended, the social decay would work against the interests of national integrity, internal peace, political order and economic development.

Conclusion: Is There A Political Will?

In the foregoing sections, we have examined three questions: What is good governance? What is the state of governance in Pakistan? What is the relationship between defence expenditure and governance in Pakistan? We have argued that good governance is about the institutional capacity of the state to perform its basic functions effectively and meaningfully in public interest and in the development of its society and citizens. The capacities of the state cannot and should not be measured in terms of coercive ability or the size of its security apparatus devoted to the defence of the borders and maintenance of peace among the various elements of the population. Capacities develop out of political institutions and legitimacy of the regimes that control them. Political institutions will be ineffective until the rulers have acquired legitimacy from the population. Therefore, what is necessary for good governance is institutionalizing the state in society and interlocking interaction between the two through two-way traffic, society transferring legitimacy and the state delivering good governance. Through this process, social support for the state would earn it greater capacity to govern than any amount of arms or repression. Citizens’ consent, support and sense of stake in governance are some of the fundamental values of modern political structures. They can be ignored only at the risk of popular alienation, weakening of support for the state, and social anarchy. A state devoid of social support becomes intrusive, repressive and is seen as alien by the people.

There are other vital aspects of good governance that need to be considered: the high value of public service, commitment to public interest, human development, economic growth, distributive justice, efficiency of governmental institutions and facilitative approach to economic development. Equally important are human rights, freedoms, civil-society development initiatives, empowering of citizens, accountability of public functionaries and transparency of their transactions. The management of the economy, rationalization of defence expenditure and a balance between defence needs and human development can affect and are affected by good governance.

Despite impressive economic growth in the 1980s compared to many developing countries, and with the per capita income of a middle -income country, Pakistan’s record of governance by any criterion of good governance is poor. The institutional capacity of the state has declined, the legitimacy of many governments has been questionable and authoritarian political culture has been more stable and deep-rooted than democratic norms. It is mainly due to the weak institutions that even elected governments have used executive author ity to enrich themselves, family and friends without any regard for the well-being of millions mired in deep poverty. After plundering national wealth brazenly and openly, they still retain a dubious representative status. They knew that they could get away with all that because of the weak institutions of justice, accountability and public participation.

Population pressures, unemployment, widespread corruption and mismanagement of the economy have contributed to ungovernability in Pakistan. The sporadic eruption of ethnic violence in Sindh, sectarian terrorism in Punjab (now contained to some extent through administrative measures), and the drug and arms economies of Baluchistan and NWFP are symptoms of bad governance. Government forces, and even the top-ranking political executives are reluctant to take on these anti-social forces, fearing loss of political power or due to personal stakes in the illegal businesses. All of them operate more like organized mafias with increasing power to bribe and intimidate state functionaries. They have freely terminated rivals, attacked law-enforcing agencies and damaged their credibility.

The problems of governance have many causes, but defence expenditure is perhaps one of the most important ones. Pakistan’s defence burden at 5.7 per cent of the GDP is one of the highest in the world. Since the creation of the country, defence expenditure has grown at the rate of 5 per cent. For obvious reasons—Kashmir, Indian hostility, the arms race, and history of conflicts between the two—Pakistan continues to maintain the eighth-largest military forces in the world. All rulers have given primacy to the problem of national security. Their argument is that the country cannot reduce its defence burden until the Kashmir dispute and other issues with India are resolved. There are yet no prospects of resolution of these historical problems. Alternative visions of national security and how to deal with India have not gained enough support or strength.

Defence expenditure has left three profound effects on Pakistan’s society. First, the size of the Army, its expansion through and linkages with the West created a praetorian state. This resulted in the suppression of democracy and popular participation. After remaining an important political player behind the scenes for 12 years of democratic transition, the military has assumed direct control of the state. Second, the Army has developed into an autonomous institution with the image of the guardian of the state. It has informal alliances with some ultra-religious nationalist groups, some sections of the media and powerful social groups in recruitment areas. These informal but powerful alliances have generated political support for military rule in the country. The disgruntled religious groups having been rebuked by the voters several times, look towards the Army to promote their vision of an Islamic state in Pakistan. Third, military spending has taken the lion’s share of national resources, leaving very little for investing in the development of society. Pakistan faces great difficulties in renegotiating balances among various institutions of the state, strengthening democracy and cultivating a climate for good governance. Only the restoration of democracy, constitutional rule, and consensus and coalition building may rectify that imbalance. That has yet to happen.

Notes and References 1. Draft Education Policy 1998–2010, Islamabad: Ministry of Education, Government of Pakistan, n.d. 2. World Bank, Country Brief: Pakistan, World Bank Internet Home Page, 11 February 1998. 3. See the statement of Gen. Pervez Musharraf, News (Rawalpindi), 20 April 2001. 4. On civil-military relations and the Army’s impact on the Pakistani state, see Hasan-Askari Rizvi, Military, State

and Society in Pakistan, London: Macmillan Press, 2000. 5. The US Ambassador to Pakistan gave the following reasons for lack of interest on the part of American companies

to invest in Pakistan: a poor law-and-order situation, inconsistent government policies, administrative inefficiency. News (Rawalpindi), 18 February 1998.

6. See a report by Arif Nizami in Nation (Islamabad), 18 February 1998. 7. William J. Olson, “The Crisis of Governance: Present and Future Challenges”, Terrorism and Political Violence,

vol. 6, no. 2, Summer 1994, pp. 14–162. 8. Government of Pakistan, National Reconstruction Bureau, Devolution of Power and Responsibility: Establishing

the Foundations of Genuine Democracy: Local Government, Proposed Plan, Islamabad: NRB, May 2000. 9. On this debate, see the following works: Gabriel A. Almond, Political Development: Essays in Heuristic Theory,

Boston: Little, Brown, 1970; Gabriel A. Almond and G. Bingham Powell, Jr., Comparative Politics: System, Process, and Policy, Boston: Little, Brown, 1978; David Easton, The Political System: An Inquiry into the State of Political Science, New York: Knopf, 1971; David Easton, A Framework for Political Analysis, Englewood Cliffs, N.J.: Prentice-Hall, 1965; Gabriel A. Almond and J. S. Coleman, eds., The Politics of Developing Areas, Princeton: Princeton University Press, 1960.

10. This section is based on the works of Almond and Powell, ibid., Comparative Politics, pp. 283–321. 11. Richard Whitley and Peer Hull Kristensen, eds., Governance at Work: The Social Regulation of Economic

Relations, New York: Oxford University Press, 1997. 12. David G. Williams, “Governance and the Discipline of Development”, The European Journal of

Development Research, vol. 8, no. 2, December 1996, p. 170. 13. This assessment is based on the comments and statements of various NGOs in Pakistan. 14. James N. Rosenau, “Governance in the 21st Century”, Global Governance, vol. 1, no. 1, Winter, 1995, pp. 13–

43.

15. Dawn, 6 February 1998. 16. David G. Williams, “Governance and the Discipline of Development”, European Journal of Development

Research, vol. 8, no. 2, December 1996, pp. 157–77. 17. Development in Practice: Governance, the World Bank’s Experience, Washington, D.C.: World Bank, May 1994;

Governance and Development, Washington, D.C.: World Bank, April 1992. 18. On liberalism, see the following: L. T. Hobhouse, Liberalism, New York: Oxford University Press, 1977; John

Stuart Mill, On Liberty, New York: Penguin, 1984; Isaiah Berlin, Four Essays on Liberty, New York: Oxford University Press, 1969; Michael J. Sandel, Liberalism and its Critics, New York: New York University Press, 1987; John Rawls, Theory of Justice, Oxford: Oxford University Press, 1971.

19. See, for instance, “Benazir’s Game Plan”, editorial, Nation, 25 February 1998. She had been using the conditionalities of the WB and IMF and their recommendations for imposing general sales tax and raising the rates of gas and electricity against the interests of Pakistan.

20. Mohammad Waseem, “Sectarian Conflict in Pakistan”, in Conflict in South Asia, ed. Kingsley de Silva, Kandy, Sri Lanka: International Centre for Ethnic Studies, 2000.

21. William Zartman, ed., Governance as Conflict Management: Politics and Violence in West Africa, Washington, D.C.: Brookings Institution Press, 1997, p. 2.

22. On the threat of ungovernability, see William J. Olson, “The Crisis of Governance: Present and Future Challenges”, Terrorism and Political Violence, vol. 6, no. 2, Summer 1994, pp. 146–62.

23. World Bank, op. cit., n. 2 above. 24. Ibid. 25. “Report of the Task Force on Social Contract: Good Governance”, unpublished, prepared on instructions of former

Prime Minister Benazir Bhutto, January 1994. 26. Humayun Akhtar, “Of the Mirages, Agostas and National Interests”, Pakistan Link (Los Angeles), Internet edition,

13 February 1998. 27. See a full two-page investigative report by the New York Times, 10 January 1998. 28. The Swiss envoy handed over the indictment order of Benazir Bhutto to the Government of Pakistan on 2

September 1998: Nation, 3 September 1998. 29. Nation, 23 September 1998. 30. Amina Jilani, “Brigands and Old Tricks”, Nation, 19 January 1998. 31. Humayun Gauhar, “Genius at Work”, Nation, 30 June 1998. The Observer (London) carried a story on 27

September about how Nawaz Sharif and his family siphoned off tens of millions of dollars out of the country during 1993–6, and refused to pay back huge amounts that his industrial group took from the Pakistani banks. See a report in News, 28 September 1998.

32. Sarfaraz Ahmed, “3,000 Schools Closed or Exist on Paper in Sindh”, Dawn (Karachi), 18 February 1998. 33. Abdul Karim, “Bad Debts: Forgotten or Forgiven”, Dawn Economic & Business Review, 12–15 February 2001. 34. News, 20 April 2001. 35. The daily Nation published a list of ADBP loan defaulters on 1 January 1998. The list is a who’s who of Pakistan’s

political families. The relatives of former President Farooq Ahmad Leghari, provincial Chief Ministers, federal ministers and well-known national personalities can be found on this, by Western standards, an ignominious list.

36. Nation, 25 September 1998. 37. See a statement of the Chief Executive, News, 20 April 2001. 38. Benazir Bhutto, “National Survival: A Three-Front Situation”, Nation, 30 August 1998. 39. The policy of allotting land to the Mohahirs discriminated against the Sindhis. Almost all immigrants got

something, most of them showing no records of their properties in India. A simple affidavit was enough to claim property in Pakistan as a compensation for having left India.

40. Shahid Kardar, “Polarizations in the Regions and Prospects for Integration”, in Regional Imbalances and the National Question in Pakistan, ed. S. A. Zaidi, Lahore: Vangaurd, 1992.

41. Government of Pakistan, Census 1981. 42. Compiled from an article by Adnan Adil, “Sectarian Killers Cripple Sharif Government”, Friday Times (Lahore),

2–8 May 1997. 43. See a detailed study of this subject by Afak Haydar, “The Politicization of the Shias and the Development of the

Tehrik-e-Nifaz-e-Fiqh-e-Jafaria in Pakistan”, in Pakistan: 1992, ed. Charles H. Kennedy, Boulder, Colorado: Westview Press, 1993, pp. 75–94.

44. Lt. Gen. Javed Nasir (retd), “Iran-Afghan Restraint, Conciliation or Confrontation”, Nation, 28 September 1998. 45. In Pakistan, those who want to see Pakistan’s relations improve with India and see a change in civil-military

relations articulate this view. The Pakistan–India People’s Forum in particular advocates improvement of relations between the two countries, liberalization of trade and cultural exchanges.

46. See, for instance, the works of Gavin Kennedy, Defence Economics, New York: St. Martin’s Press, 1983. 47. Emile Benoit, Defence and Economic Growth in Developing Countries, Lexington: Lexington Books, 1973, p. xix. 48. Saadet Deger and Somnath Sen, “Military Security and the Economy: Defence Expenditure in India and Pakistan”,

in The Economics of Defence Spending: An International Survey, ed. Keith Hartley and Todd Sandler, New York: Routledge, 1990, p. 219.

49. Benoit, op. cit., n. 47 above, p. 18. 50. Kennedy, op. cit., n. 46 above, pp. 188–9. 51. There is a growing volume of literature that questions the relevant of traditional approaches to national security.

See, for instance, Marvin G. Weinbaum, “Security Regimes in South Asia: Definitions and Priorities”; Itty Abraham’s critique of neo-realist paradigm and its application to South Asian security, “Towards a Reflexive South Asian Security Studies”, in South Asia Approaches the Millennium: Reexamining National Security, ed. Marvin G. Weinbaum and Chetan Kumar, Boulder, Colorado: Westview Press, 1995; Brian L. Job, ed., The Insecurity Dilemma: National Security of Third World States, Boulder, Colorado: Lynne Rienner Publishers, 1992; Ken Booth, ed., New Thinking About Strategy and International Security, London: HarperCollins Academic, 1991; Edward E. Azar and Chung-in Moon, eds., National Security in the Third World: The Management of Internal and External Threat, College Park, Md.: Center for International Development and Conflict Management, University of Maryland, 1988; Barry Buzan, People, States and Fear: The National Security Problem in International Relations, Brighton: Wheatsheaf, 1983; Mohammed Ayoob, “The Security Problematic of the Third World”, World Politics, vol. 43, January 1991, pp. 265–73.

52. See some of his works: Saadet Deger, Military Expenditure in Third World Countries: The Economic Effects, London: Routledge & Kegan Paul, 1986; Saadet Deger and Somnath Sen, “Military Expenditure, Spin-Off and Economic Development”, Journal of Development Economics, 1983; “Optimal Control and Differential Game Models of Military Expenditure in Less Developed Countries”, Journal of Economic Dynamics and Control, 1984.

53. Deger, ibid., Military Expenditure. 54. Kennedy, op. cit., n. 46 above, pp. 199–200. 55. These statistics have been complied from World Military Expenditures, Washington, D.C.: ACDA, 1996. 56. Ayesha Sidddiqa-Agha, “Pakistan’s Military Expenditure Decision-Making Process”, in Demystifying the Peace

Dividend, ed. Jorn Brommelhorster, Baden-Baden: Nomos Verlagsgesellschaft, 2000, p. 193. 57. On the interaction between the poverty trap and the security dilemma, see R. Rothstein, “National Security,

Domestic Resources Constraints and Elite Choices in the Third World”, in Defence, Security and Development, ed. Saadet Deger and R. West, London: Frances Pinter, 1987.

58. Finance Division, Economic Adviser’s Wing, Economic Survey 1999–2000, Islamabad: Government of Pakistan, 2000, pp. vii–xxii.

59. Information in this section is based on the author’s interview with Lt. Gen. (retd) Talat Masood. Gen. Masood served as Federal Secretary of Defence Production and Chairman, Pakistan Ordinance Factories Board in 1981–90. The interview was conducted on 24 September 1998 in Islamabad.

60. Ibid, p. 100. 61. World Bank, op. cit., n. 2 above. 62. Finance Division, op. cit., n. 58 above. 63. M. Ziauddin, “Exports Stagnate, Bad Loans Mount to Rs. 263 bn”, Dawn Economic & Business Review, 15–21

January 2001. 64. News, 11 May 2001. 65. Ihtasham ul Haq, “Continued Sanctions Hinder Foreign Investment”, Dawn Economic & Business Review, 18–22

April 2001. 66. World Bank, op. cit., n. 2 above. 67. Nadeem Malik, “Defence Spending to be Contained at 4.6% of GDP”, News, 12 November 1997. 68. Robert Looney, “Budgetary Dilemmas in Pakistan: Costs and Benefits of Sustained Defence Expenditures”, Asian

Survey, vol. 34, no. 5, May 1994, p. 426. 69. See a statement of the Ministry of Finance, Government of Pakistan saying that “donor agencies cannot demand or

suggest reduction in Pakistan’s defence budget”: Dawn, 21 February 1998. 70. See his statement in Pakistan Link, 6 February 1998. 71. Hasan-Askari Rizvi, “Economic Cost of the Conflict”, Dawn, 11 April 2001. 72. Nation, 29 May 1998. 73. Whenever Nawaz Sharif hinted at reducing the defence spending (though marginally) by cutting the excess fat,

Benazir Bhutto accused him of “downsizing the armed forces” and risking national security. It is merely a reversal of roles. When Bhutto was in power, she was also accused of being a national security risk by Nawaz Sharif.

74. Syed Nur Ahmad, From Martial Law to Martial Law: Politics in the Punjab, 1919–1958, trans. Craig Baxter, Boulder, Colorado: Westview Press, 1985.

75. Mohammad Ayub Khan, Friends Not Masters: A Political Autobiography, New York: Oxford University Press, 1967.

76. Supplement to the Composite Report of the President’s Committee to Study the United States Military Assistance Program, vol. 11, Washington, D.C.: US Government Printing Office, 1959, p. 79.

77. For a detailed study on this subject, see Rasul Bakhsh Rais, “Security, State, and Democracy in Pakistan”, in Weinbaum and Kumar, South Asia, op. cit., n. 51 above, pp. 63–78.

78. Finance Division, op. cit., n. 58 above, p. 125. 79. S. M. Naseem, “Untackled Problems of Debt and Development”, Dawn Economic & Business Review, 9–15 April

2001.

80. Mahbub ul Haq, Human Development in South Asia, 1997, Karachi: Oxford University Press, 1997, p. 37. 81. Ibid., pp. 37–8.

Governance and Defence Spending in South Asia:

Assessing Policy Implications in Sri Lanka

Bertram Bastiampillai

Background to the Civil War and Defence Spending

No single subject has invited as much interest among writers as the Sri Lankan ethnic conflict or civil war.1 Ethnic differences between Sri Lankan Tamils and the majority Sinhalese in Sri Lanka, later a strife, blew up into a bloody war between the Sri Lankan Government and the Tamil militants, now reduced to one obdurate militant group (also called “terrorists”), the Liberation Tigers of Tamil Eelam (LTTE). Sri Lanka (east of the southern tip of India) became independent in 1948, and from 1956 onwards, differences soured between the ethnic minority of Sri Lankan Tamils and the majority community of Sinhalese. Sinhalese alone was legally declared the official language, which handicapped the Tamils who used their language, Tamil. Riots off Batticaloa added to their hurt.

Differences between the two significant communities gradually escalated as the Tamils, mostly public servants, sensed discrimination and alienation since they were placed outside the pale owing to their incompetence in the official language. In 1958, another anti-Tamil riot erupted when the use of Sinhalese was enforced on the number plates of motor vehicles, which the Tamils protested against. Thereafter, Tamils lost out on official employment, a mainstay of their livelihood, and as Tamils studied in the Tamil medium and the Sinhalese in Sinhalese, the communities got riven further apart. The Tamils, who were principally from the island’s north and east, also realized that Government-aided settlement of Sinhalese in areas in the east, in particular, and to a lesser extent in the north, was encroachment that deprived them of space for occupation and economic usage.

In July 1983, yet another of the familiar riots took place, but more frightful and ravaging.2 Starting on a Sunday in Colombo after some soldiers were fatally blown up by a landmine planted by Tamil militants in Jaffna, the riots continued for a couple of days and intensified severely on Friday, fuelled by a baseless and false alarm that the Tigers (LTTE) had converged on Colombo. The loss of life, limb and property suffered by Tamils was immense. Every anti-Tamil riot had its consequence in murder, maiming, looting and vandalizing of Tamil victims. Many believe, however, that the riots of 1983 were organized and orchestrated by some political figures. The police and the military looked on indifferently, and a few even participated in reprehensible atrocities, after the initial riots of 1956 in the east.

It is argued by many that 1983 was the crucial year for the conflict triggered by the Tamil militants against the majoritarian Sinhalese Government and its mainly Sinhalese-composed security forces: the Army, Air Force, Navy, and police. In addition, there were reserve police who are on active duty and home guards. It is pertinent that the police too function under the Ministry of Defence; their Special Task Force (STF) is deployed in security functions and defence, more so in the east. Home guards are also harnessed in duties related to the conflict. Perhaps 1983 could be taken as the commencement of the intractable conflict raging presently.

There are others who trace the origin of the conflict to the mid-1970s. Tamil youth got frustrated when admission of entrants to prestigious job-oriented courses in universities was based on communitywise standardization of marks scored at the university entrance

examinations. A Tamil student, whether he answered in Tamil or English at the examination, was required to score higher marks than a Sinhalese.

Then in 1974 a tragedy took place in the northern city of Jaffna when the International Association of Tamil Research conducted its final session outdoors. The police had warned them to celebrate the session indoors, but enthusiastic crowds poured outside. A Muslim South Indian Tamil scholar addressed the gathering passionately. The crowds could not be confined within the hall, and shooting in the air by the police to disperse the people ruptured a live electric wire: nine members of the audience got electrocuted fatally. This added a stimulus to anti-Governmental feeling.

Moreover, two articulate and eloquent Tamil politicians had not won elections in 1970. They became active fomenters in their speeches about Sinhalese discrimination of Tamils and enthused the Tamil youth and people. Further, by 1976 the predominant Tamil political party declared that in view of the failure of Sinhalese Governments to redress the discrimination wrought against Tamils, and consequent inequality and injustice perpetrated on Sri Lankan Tamils, their goal would be a separate state. All this spurred the Tamil youth, who had combined in more than one militant group to vent their bitterness against the Sinhalese Government in sporadic guerrilla attacks on Government police officers and establishments such as banks. These activities really paved the path for the post-1983 anti-Sri Lankan Government conflict. The conflict was on a quest to wrest the north and eastern parts of the island from the Government of Sri Lanka and turn them into a separate state of Eelam.

Growth of the Defence Forces

Sri Lanka had to contend with two abortive coups, one in January 1962 and another around 1966.3 Then there were two insurrections against the Government. Both were staged by the Janatha Vimukti Peramuna (JVP) in April 1971 and in 1987–9.4 They were successfully suppressed. Even then, spending on defence did not rise steeply. On these occasions, the threat was to the Governments in power. But the threat that was posed by the militant Tamil youth soon after, pursued only by one militant Tamil group, the LTTE, popularly “The Tigers”, from 1983 onwards, was to the sovvereignty of the Sri Lankan state over the island and the island’s integrity.5 There was to be a secessionist state in the north-east.

Since Independence in February 1948, the security forces, including the Army, were called upon to play a relatively limited role. In 1952, a hartal or strike turned violent. The fledgeling Army, Navy and Air Force were deployed to restore law and order in support of the police, which was a comparatively bigger force. In spite of a “lack of intelligence, manpower, communications and transport” which was a constraint, the situation was quickly controlled.6 The Army was indeed required to aid the civil power on occasion, as when disturbances erupted following the declaration of Sinhalese as the Official Language Act in 1956.

Also, since 1952 the Army had been used to thwart incursion of illegal immigrants from India into the island through entry in the north-west, the north and the east. This was undertaken by a combined force of the Army, Navy, Air Force and police. Volunteers were mobilized periodically by the regular force, as the Army suffered a paucity of personnel. The forces, especially the Army, were usually employed to contend with disaster relief during floods and cyclones and maintain essential services during strikes. Nevertheless, needed “equipment and armaments were denied” and the Army as well as the Navy and Air Force “were employed occasionally in non-military duty much to the detriment of professional training”.

By 1971, widespread youth revolts and unrest by the JVP (referred to earlier) compelled the Army for the first time to face “an armed enemy” using explosive devices in operations. With foreign assistance, and the Army in full action, the uprising was controlled in a few months.

Assured of foreign help, the Army “did not need to be expanded, trained or equipped to face challenges”. Tamil militants’ conflict later proved this a mistaken notion of the Government. And the Army had drifted along “carrying out a miscellany of tasks and not being professionally trained”.

However, a change occurred in 1977. In 1976, the non-aligned summit convened in Colombo. The Army was involved in this, “perhaps the largest peace time operation carried out by the Army and other forces”. Thereafter, from 1977 onwards, the professional side of the force was boosted with the establishment of training institutions. Overseas training was increased, some equipment replaced, and new units including commandos and a women’s corps raised. Then the plunge followed when an armed threat was curbed in 1979 even though law and order in the north and east still continued to be abnormal.

Rebel forces of Tamil militants had established international links and developed skills. The Army’s first casualties in the insurrection occurred in 1981 and in 1982. Thirteen soldiers were killed, as referred to earlier in July 1983. Anti-Tamil violence reared in Colombo and elsewhere “on an unprecedented scale”. Since then the Army, subsequently aided by the Navy and Air Force, were engaged in a high-intensity operation in the north and east of Sri Lanka. Troops had to counter a rebel or “terrorist” movement led by a fierce but able guerrilla leader with aid from trained, motivated followers using guerrilla operations. At times, “conventional” engagements occurred.

An Indo-Sri Lanka accord was signed in 1987 and an Indian Peace Keeping Force (IPKF) was inducted to quell and settle the bloody conflict.7 But the militant rebel leader was intransigent. This constructive exercise had to be abandoned. Many in Sri Lanka, particularly the JVP, were opposed to resorting to Indian aid. And the JVP started their own insurgency in southern Sri Lanka which the Sri Lankan forces subdued after a time. The Indian forces left, and the LTTE continued with militant activity.

Meanwhile, the Army had been increased to 50 times its original size and the Navy, Air Force and police had grown equally larger.8 Thousands in the three forces and more from the rebel group have, in continuing conflicts, perished. Many others have been maimed.

Increasing Expenditure On Security Forces in Relation to Governance

A year after independence in 1949, the Sri Lankan Army was allocated Rs. 1,346,802 from the national budget, or 0.24 per cent of the budget. A steady rise in amounts was allocated to the Army alone from 1968. By 1977, after a fall from 1973, the allocation rose to Rs. 104,052,000 or 1.09 per cent of the budget. The upsurge of allocated sums to the Army was consistently on the climb. By 1986, the figure reached Rs. 1,131,942,000, but its percentage of the budget was 1.68. By 1999, the Army received Rs. 22,500,000,000, or 6.63 per cent of the budget.

The general expenditure borne by the Government on defence, which includes all branches of the security forces, namely the Army, Navy, and Air Force, in 1982 amounted to Rs. 0.48 billion, which was 1.4 per cent of the budget and 0.5 of the Gross Domestic Product (GDP). A notable rise in the cost of defence occurred in 1991 after the departure of the IPKF. A sum of Rs. 10.61 billion, or 8.85 per cent of the total budget and 2.85 per cent of the GDP was incurred. By 2000, defence in Sri Lanka cost Rs. 65.40 billion or 5.3 per cent of the GDP. Defence expenditure had already amounted to Rs. 42.49 billion or 15.8 per cent of the budget and 4.18 per cent of the GDP. Moreover, in 2000, and even a little earlier, allocated sums were increased by supplementary grants whish made budgeting awry and threw estimates of expenditure out of gear. Indeed, defence costs had grown alarming. On 10 January 2001, the Executive President of Sri Lanka sounded a grim warning to the Government parliamentary group that rising military

expenditure was a deterrent to development. Naturally, the unavoidable consequences impacted badly on governance.9

Defence Spending and Governance

It is easier to examine governance, its virtues and its deficiencies after a brief study of the varied costs of defence, which cumulatively depresses governance.10 One cannot divorce defence spending from governance because they are ineluctably connected. Stockholm’s SIPRI remarks correctly in an examination of the Military Balance (1998–9) that the deadly combat between Government forces and the LTTE rages on. The death toll alone is estimated to be over 50,000 in a population of little over 18 million. Unavoidably, an unending secessionist war compels the Government to spend on overcoming it. Sri Lanka was to procure more armaments and military needs such as a British M-10 hovercraft and two Ukrainian Mi-24 helicopters. Sri Lanka already buys military equipment from the United States, Ukraine, Israel, and the People’s Republic of China. It also uses mercenary pilots from the Ukraine, another costly exercise.11

In 1996 and 1997, Sri Lanka’s defence expenditure totalled Rs. 48 billion and Rs. 53 billion, or $868 and $898 million respectively. It demonstrates how sharply increase on war expense fluctuates from year to year. And now Sri Lanka is geared for electronic warfare with Ukrainian Mi-24. The more sophisticated the combat grows, the costlier defence is, and governance gets poorly provided for. Up to about 1998–9, Sri Lanka’s Army was calculated to reach 90–95,000 strong, inclusive of 42,000 recalled reservists and 1,800 women. The total Armed Forces are 110–115,000 personnel inclusive of 4,200 recalled reservists. The Army has 1,100, the Navy 1,100, and the Air Force 2,000 reservists respectively. The obligation of a reservist is to serve 7 years post-regular service.

To this, it is reasonable to add a percentage of the police force as they too participate in defence activities. The police force under the Ministry of Defence amounted to 80,000 in 1998–9 including reserves, 1,000 women and the STF which is deployed on anti-terrorist duties often, and is a 3,000-strong anti-guerrilla unit. The National Guard amounted to 15,000 and Home Guard to 15,200 personnel. This is indeed together a big contingent engaged in the isle’s defence and eats into a big slice of the Government’s finances, which in turn leaves governance underfunded, and consequently not adequately cared for. As a contrast, it may be noted that the estimated strength of the rebel militant guerrilla LTTE group is around 6,000. Again, submissions vary in regard to the quantity of the defence forces. The total strength of the Armed Forces by one estimate was 58,660 in 1986. By 1996, it was estimated to be 235,000 with the Army having 129,000 personnel, the Air Force 17,000, the Navy 21,000 and the police 68,000.

Even by 1999–2000, end to the civil war, waged vigorously since 1983 between the Government and the LTTE, seemed remote. Government offensives in January–March 1999 resulted in territorial gains. Yet, the Sri Lankan Government has to continue facing a constant expense on seeking a military solution to the conflict as long as the LTTE obstinately remains offensive. The official Sri Lankan defence outlay in 1998 amounted to Rs. 57.2 billion or $886 million, which was 189 million dollars over budgeted expenditure. With the addition on outlays for paramilitary forces, total costs were estimated at Rs. 63 billion or $975 million. The Army recently acquired 36 type 66 152 mm towed artillery from China, the Air Force want two modernized Mi-35 (export variant of the Mi-24) armed helicopters from Russia in 1999. The more novel and modern the equipment, the greater the financial drain, the greater the burden, the loser being finance to sustain governance. Decreased expenditure on governance means that the quality of governance suffers owing to voluminous expenditure on war expenditure. From Rs. 4,732 million in 1988, a decade later in 1997, Rs. 44,000 million had to be expended on defence: escalation of costs thereafter became steeper. With such certain aggravation of military expenditure alone, it is well-nigh impossible to plan governance or execute it.

While figures on defence or military expenditure can be reeled out, basically the full cost in relation to the impact on governance is difficult—or impossible—to ascertain. Civil war entails huge, prolonged social and economic costs. The residual effect of civil conflict are long-abiding economic, political and social crises which are difficult to quantify. Economic advancement suffers a setback for years.

Other Costs of War and Defence

It is callous and presumptuous to present human and socia l costs of fatalities, maiming, and dispossession in rupees or dollars.12 Nor can psychological trauma accompanying violence and terror be measurable. Only purely economic costs can, in principle, be worked out in rupees or dollars. The results of Sri Lanka’s ongoing violent conflict have impacted on all features of social and economic life. Widespread insecurity and vulnerability affect people incalculably. The youth sense despair and hopelessness. Political, legal and social rights get eroded. All this is inevitable because some constitutionally assured rights remain suspended during times of emergency, and much of the period of conflict has experienced emergency rule. Governance suffers badly when rights get suspended and special emergency regulations are in force.

Loss of life in battles, of equipment, and of civilian victims, enormous destruction of assets and property, damage to infrastructure, ravage and loss of cultivated and cultivable fields during the protracted conflict have been formidable. However, the real figures of losses are not easy to gain. The state gives information; the LTTE also provides no data. No reporting from centres of conflict is allowed, and censorship on war-related news prevails. A substantial civilian population has fled seeking refuge or has been relocated away from homes, sometimes repeatedly, and refugees have moved across frontiers. Again, no one can quantify numbers or costs in respect of all these damages. It is pertinent to state here that censorship affects sound governance intrinsically.

However, it is more pragmatic, prudent and in consonance with factors reckoned in the measurement of human development to account for the economic costs of or spending on defence in the war by reckoning the resources expended on the war, and the value of physical assets destroyed and damaged, both in the north and east and elsewhere. Loss of opportunities of development and progress that were forfeited too should be counted.

Second, human loss owing to violence and conflict include mortality and injuries sustained by engaged parties and civilians. The pain of grief-stricken widows, orphans and dependents also is a part of human loss. Homelessness and displacement of people aggravate this loss. Loss of human beings also entails productive life lost through death or injury. Earning gets restricted through displacement; the cost of maintaining and rehabilitating such displaced beings is also expensive. This adds to the cost of human loss caused by conflict. All this is part of war expenditure.

Third, social and political cost to the country comprise damage to the democratic political system and the restriction and abuse of fundamental and human rights. The evil wrought on the moral foundations of society owing to the widespread and common violence is incalculable. Governance gets worse.

According to a study in January 2001, direct military expenditure on the war by the Sri Lankan Government and the LTTE is calculated to be Rs. 295 billion. It is essential to count the LTTE too, because their role and activity in the conflict has also affected governance. They hold authority over people in “uncleared” areas, while the Government runs “cleared” areas. The Rs. 295 billion excludes costs borne by India during 1987–90 when the IPKF was in the north and east. The additional military cost to the Government amounts to Rs. 213.32 billion. Moreover, Rs. 40 billion was expended on maintaining public order and safety during 1983–98. It is estimated

that the LTTE spent around Rs. 42.6 billion in terms of 1998 currency values. All these monies were lost to the betterment of governance by spending them instead on salutary human needs, good health, improved schooling and advanced learning, housing and shelter and on other such useful areas. Instead, the monies were unproductively spent on war.

The economic infrastructure of the north is ravaged and widely damaged in the east. Similarly, substantial harm has been caused to the infrastructure elsewhere, Colombo in particular. Likewise, damage has been done owing to the conflict to commercial and Government property, housing in border villages abutting the north and east, roadways and bridges, irrigation schemes, plant and machinary, communications and fisheries.

It is believed that Rs. 90 billion have been lost by the damage and destruction. The cost of damages, inclusive of repair and replacement, is calculated at Rs. 137.1 billion at 1998 currency values. Governance was either absent or hardly possible even in an elementary and inadequate manner owing to the situation in the affected areas.

Spending on displaced beings and refugees cost the Government Rs. 250 million per month at the end of 1996. These unfortunate homeless persons were inside and outside welfare centres. Up to 1998, total additional expenditure on displacement owing to the conflict amounted to Rs. 38 billion. This sum too could have been better spent on improving governance countrywide, and the population would have gained in good living, but was wastefully used in war-related expenditure.

The cost of the war should also embrace not merely direct expenditure on war but also income forfeited and output denied. In the north and east, the economy rests mostly on cultivation and fishing. Though industry was limited, a few important state enterprises had engaged in cement, paper, chemicals, mineral sands and salt production. The decline in crop and fisheries production and in other enterprises caused a resultant loss of output due to the conflict in the north and east. It has been worked out as Rs. 273 billion according to 1998 prices. It is estimated that per capita income fell by 40 per cent if emigration had kept the population level even. The lost potential can be projected, taking the war into count, to be approximately an additional Rs. 392 billion in the region: again, a cost of the war.

The Organisation of Professional Associations comprising 34 bodies has intimated to the President that derterioration of society, which is economically depressed with moral, religions and ethical standards at their lowest ebb causes concern. The current war situation and resultant loss of life and expenditure accounts for it. Moreover, other, e.g., intolerable price hikes of fuel, gas, electricity and essential goods affecting the cost of living have made governance farcical. Unemployment and consequent unrests, depreciation of the rupee, deterioration of standards and discipline with rampant corruption, growing unrest in the country leading to acute suspicion and animosity have all contributed to the inexorable conclusion that governance, if there is any, is bad.13

Hundreds of thousands of people have quit Sri Lanka owing to the war: thousands are in refugee centres in India, while an estimated 250,000 have migrated to several countries in Europe and Canada.14 These include various professionals, who form human resources lost. Thus, loss in human resources has had ill effects on governance, their contribution to the economy having been lost. For 1998 alone, it has been reckoned that loss of human capital could amount to be Rs. 15 billion. Over the period of the 10 years of war since 1983, a sum of Rs. 112.5 billion (1998 prices) has been lost, assuming that migration occurred equally in the years. Investment on strengthening diverse aspects of governance thereby became remarkably poor.

Tourism, another foreign and local money-earner, waned severely as a result of the continuing war. Apprehensions about the security conditions, particularly with violence outside

the north and east and the 1987–9 violent JVP insurgency, led to less visitors after 1983, after a steady annual growth at 22 per cent between 1975 and 1982. It is remarked that because of the war which retarded an even flow of tourists, potential earnings lost were around Rs. 200 billion (1998 costs), along with a value added net loss of Rs. 120 billion. Again, earnings which could have been utilized to fortify elements of improved governance were not available, and growth of governance got stymied.

Then the effects of the war on investment along with constraints caused by macroeconomic policies and deficiency of supportive infrastructure accounted for an investment of only about $1.48 billion between 1982 and 1998. Economists predict that investment would have been higher if peace and stability had prevailed, perhaps up to $2.56 billion. The inflow lost was about $1.08 billion or Rs. 75 billion. Improvements in administration and life could have been executed if foreign investment had flowed in higher quantity in the absence of conflict, and would have definitely enabled the Government to enhance the quality of governance. Real costs and costs of missed opportunity were less and depressed the standard of governance during the protracted war years.15

If, instead, peace had prevailed, the 1998 GDP founded on value added sectors too would have been 13 per cent higher, about Rs. 1,032 billion. The rate of the economy’s growth in lieu of the actual 4.6 per cent would have reached 5.4 per cent, on the basis that in the north and east, growth would have equalled that elsewhere. It can be reasonably presumed that in the absence of war, average annual growth rate would have hovered around 7 per cent. Then the GDP for 1998 could have reached Rs. 1,304 billion (1998 prices). Thus, a further 43 per cent could have been used for consumption and investment, which would have raised the level of governance, a boon to society indeed.16 But this chance was lost and governance did not benefit.

Altogether, direct expenditure on the civil war, cost of damage and wreckage of physical assets plus expenditure on displaced people mounts to a formidable Rs. 423.3 billion (1998 value). Realistically, the whole cost of the war encompasses the sum of all resources that could have provided an alternative path of consumption, growth and investment, had not the aggregate of resources been expended on the war or relinquished owing to decreased output or missed opportunities. This amount has been calculated as over Rs. 1,443 billion, and could not be utilized to foster better governance. No doubt, war did not deter the economy growing between 4 and 5 per cent. Nevertheless, it is estimated that the expenditure on the war contributed a mere 0.22 per cent of the GDP to the economy’s growth rate. Therefore, the war was no major source of demand for stimulating the economy, which would have assisted the development of better governance.

Expenditure on the ruthless war has to accommodate human suffering and misery wrought by it among people. Around 50–60,000 have been estimated to be killed in the war, where prisoners are rarely captured. Civilians comprise half the dead. Additionally, disabled soldiers are about 10–15,000.17 Welfare and compensation are better extended to the relatives of dead soldiers, while disabled soldiers, in contrast, experience lack of recognition and respect and a decline in social status. Dead soldiers and civilians constitute an irreparable loss of human resources. Their efforts in building up the country have been nullified. The disabled soldiers and civilians too often can only contribute subnormally or nothing to productivity, and the nation loses.

On the contrary, the nation spends on the welfare of the maimed, and on dependents of the dead. This money too is lost in the contribution to national growth, which, if peaceful, should follow efficient governance. Funds and resources which could have been employed in development which could enrich governance are, instead, diverted elsewhere. However, in a war-ridden context, humanitarian and social welfare of the war-affected people is a responsibility that

accompanies just governance, which cannot be neglected. But it also could be argued that this spending arising out of war could have been better and more positively used on furnishing elements towards salutary governance if peace and stability had been ushered.18

A sad phenomenon of the merciless war is that the nation has to contend with a growing number of widows and households headed by women.19 Such adversely affected persons sometimes receive compensation to eke out their living. This again is money that could have been more rewardingly spent but for this pathetic human cost. Moreover, these grief-stricken women are socially disadvantaged owing to their plight. This yet again illustrates relief money disbursed and concern that could have been more profitably expended on effecting progress in governance. But once more, governance has to contain within its ambit the responsibility of caring for these women. Yet, it is at the cost of advancing causes that enhance good governance.

Quantitatively worse is the expenditure defrayed upon displacement and homelessness engendered by the war. Tamil, Muslim and Sinhalese together add up to about 800,000 displaced people. Around 650,000 lack much-needed security, leave alone the comfort and privacy of homes. About 40,000 desperate families huddle in elementary makeshift welfare centres and several have been forced repeatedly out of one miserable shelter to another. Expenditure on these ill-fated beings is also associated with defence costs, and money is thus spent which may have gone otherwise into bettering governance. Governance means, in practical terms, only provision of the bare, basic needs to these wretched, suffering folk.20

Along with those whom war has condemned to dire penury, children affected by the violent conflict are in a most pitiable state. Boys and girls who had been coerced into combat, orphans and others suffering traumatic effects of abuse and brutal violence are among the war-affected children. About 200,000 of the displaced are below 14 years of age.21 Once more, resources that could have been better targetted to build a good civil society are being spent on caring for these forlorn children and in endeavouring to draw them back into the community.

Within the most war-affected north and east of the island, the estimated drop in output shows that household incomes have halved from 1982. Severe want of a wide variety of necessities like fuel, fertilizer, pesticides and pharmaceuticals deterred production. In certain areas, nutritional levels declined and infant mortality rose. Neither the Government nor the LTTE catered adequately to satisfying fundamental needs such as healthcare, education, water supply, sanitation and food supplies for some people. Social structures like the extended family have collapsed owing to the conflict’s consequences. The north and east witnessed Government forces and the LTTE engaged in combat which cost so much in money, material and military equipment. As a result, governance declined; even it’s semblance was missing. Governance was no one’s obligation or responsibility, and life proceeded left to each one’s design, more so in uncleared areas of the north and east.

In general, governance deteriorated since a feeling of insecurity gripped quite a large part of Sri Lanka’s population. About 130,000 families whose household members took part in the war were ever in anxiety fearing the worst: death.22 Even others never know when or where violence would assail them, and terror stalked some, frequently in an unforeseeable manner.

The prolonged war had turned transparency and accountability in society into a casualty.23 The political system, Governmental financial transactions, and respect for human rights got vitiated in the isle. The country (or portions of it) continued to be administered almost all throughout in a state of emergency ever since 1984. Under emergency, the Government has exercised its authority to proscribe political parties, ban rallies and censor the media. Stringent, questionable and extremely severe legislation like the Prevention of Terrorism Act and emergency regulations have been imposed, restricting normal life. Political personalities and leading members of political parties have been assassinated. Free movement of parliamentarians

and access of citizens to them has been drastically constrained by armed protectors. Some carry firearms. In the north and east, the population has been largely deprived of democratic rights. There is no elected provincial council in the north-east, civil administration can be interfered with by security heads, in some places judicial authorities are almost non-functional. Governance is lamentably impaired as resources are wastefully spent both by the Government and the LTTE in actively battling one another in the war.

Sri Lankan citizens have to bear restrictions on civic and human rights owing to the war and related security operations. Detentions and arrests according to emergency regulations are common. While war continues, denial of human rights and civic freedom in the north and east prevail, certain fundamental rights enshrined in the Constitution remain suspended or restricted, and this has encouraged abuse, arbitrary and capricious exploitation of the restrictions on civic and human rights, the use of the Prevention of Terrorism Act and attendant powers of detention, and abuse of emergency regulations. This perversion of governance is a mala fide act, a price people pay so long as the civil war between the combatants continues, bolstered by more and more expenditure in the pursuit of belligerency.

Again another abuse that militates against just governance is the practice of torture under the guise of the context created by war.24 War has indeed brutalized society. Degrading treatment and torture of people taken captive under the Prevention of Terrorism Act or Emergency Regulations have evoked grave concern, as expressed by Amnesty International and the UN Committee Against Torture. Judicial decisions too have identified and condemned deplorable, repulsive acts of torture and degrading treatment by the law-and-order authorities. The LTTE has behaved no better, and is known to be equally reprehensible in dealing with those who are, in their view, “traitors” or “informants”.

With decline in transparency and accountability in public business following the war, laxity in financial accountability crept in, offering occasions and chances for corruption to permeate dealings. The colossal repeated increase in the defence budget which was a prime cause for the depreciation of the rupee against the dollar, deficits in budgets, supplementary votes, imposing a “save-the-nation” and a national security levy, and general austerity and economic hardship, presented additional opportunities for corruption.25 Negotiations took place for large procurements. There has been wide criticism of suspicious and fairly convincing wrongdealing in some instances. The cloak of secrecy lent by censorship has afforded some cover to such allegations. But good governance requires fair and open dealings. The continuance of war and the need for funding purchases in confidentiality has been hindering normal practices relevant to honest governance.

The ethnic cleavage commenced in the mid-1950s. Ultimately, it led to violent civil conflict between the militant rebel Tigers and Government security forces. Violence against men, women and children because of ethnicity has been indiscriminately directed largely against the minority community of Tamils since the mid-1950s. Civil society has been utterly depraved and brutalized because inhuman and callous violence has destroyed moral values of civil society. Owing to the almost uniethnic Sinhalese security forces and the predominantly majority-community, Sinhalese-manned police, anti-Tamil minority violence has been committed, at times with impunity. Even an act of indemnity was passed once giving protection to the Forces from suits against crimes or illegal acts committed during conflict.

Violence has been of a fratricidal character. It has spawned bitter hatred and vehement hostility between a majority and minority group, both citizens of the same island. Those who strive to survive in a ruthless violence-ridden society have become insensitive to morals or ethics.

The violent atmosphere of the unending and escalating war, ready availability of lethal arms (some extremely sophisticated), and an inordinately large number of deserters from the Services who turned criminal and were often detected to be deeply involved in lawless acts, have contributed to create a milieu conducive to ubiquitously flourishing crime within the political system and in society.

All these events prompt the belief that governance has broken down in Sri Lanka. Law and order, the rule of law, efficient, effective policing, respect for order, and at times even confidence in justice, appear to have been eclipsed, as one can conclude from regular accounts in the daily press.26 Policy Implications for Sri Lanka: Defence Spending and Governance

In a way, Sri Lanka can be self-satisfied that, in spite of the war and turmoil, some aspects of democratic rule have endured (particularly regular elections), blurred, of course, by extensive interludes of emergency rule. Tensions exist and institutions of governance have to withstand them. Populist nationalism that reasserted ethnic, lingual and religious differences challenged adherence to pluralism and secularism. It is, nevertheless, clear that reversal to secularism and acceptance of pluralism cannot be evaded in formulating policy. Tolerance of diversity and acknowledgement of equality of all people are imperative in policy making.

Another concern in implementing policy should be the maintenance of autonomous institutions and activities in an independent manner, such as “public” institutions and functions, the judiciary, conduct of elections, management of the police and security forces, and the press, universities and schools.27 Politics infecting such institutions have wreaked more damage to governance. A fresh policy which will leave such civic institutions unsullied is essential. Fair governance requires that constitutions should be reasonably designed to cater to diverse entities in a multi-ethnic society, and political manipulation in narrow partisan interests avoided. Unfortunately, governance suffered a setback when elections were, as alleged, manipulated to serve ruling Governments. The emergency situation and war positively aided such unusual trends in management.

Abnormally excessive power centred in an elected Executive President rendered cabinets of ministers weak, provincial councils amenable to executing dictates by the centre, the President, and bureacrats. The President, not easy to be arraigned before court while in and after office, can act autonomously, unaccountably, and powerfully. Local bodies could be directed to perform as desired by the centre. Governance was far from democratic in a real sense: there was an executive unanswerable and insulated from indictment. Politicization of the bureaucracy without an independent Public Service Commission to appoint, transfer or discipline officers has spawned a pliant bureaucracy executing whims of political overlords. The number of successful fundamental rights cases, overturning and condemnation of arbitrary authoritarian decisions by the judicia ry, demonstrate that governance has been fouled. Inability to sustain normal conditions in war and exercise usual control over expenditure has contributed adversely to influencing public administration.

Expenditure on war has affected employment as development diminished. The rate of unemployment is high. With the literacy rate high, and employment below aspiration, there is also a spectacle of increasing levels of education. Nevertheless, curtailment in the number of jobs since the war started has deterred fresh ventures or economic expansion, leading to restive stirrings among educated youth, particularly in universities. This will pose a recurrent problem of governance to state authorities committed to their priority on winning the war at any cost, unless this priority is abandoned for a peaceful settlement.

Expenditure on war has naturally depressed concern for peasant and plantation agriculture. The plantation and peasant sections contain a greater potential for providing increased output, higher incomes, and greater employment openings. Governance should demonstrate attention to this aspect of the economy as the long-term returns will be more stable and productive. Concentration on victory in war has contributed to the neglect of this imperative in governance.

More relevantly and importantly, to hold the island together and manage the plague of ethnic conflict is the bewildering, vital and immediate task that confronts governance. Distrust among a fratricidal society is a grave obstacle to bridging differences of experience and perceptions. While the 13th Amendment to the island’s 1978 Constitution in1987 has stressed Sri Lanka as pluralist, much is required to be done to fortify democratic institutions. Differences being voiced and settled peacefully should be permissible. Unwisely, in the task of post-colonial consolidation, expansion and state formation, successors to colonial rule ignored forces like language, culture, religion and the ethnic character of the minorities. In formulating and executing governance over the island, Governments did not heed the ethnic factor in forming state policy.

Consequently, Sri Lanka had to learn the hard way that ethnic strife hampers economic growth. Civil liberties and political rights get stifled when the Government gathers strength to ward off challenges to authority from the minority group. State power was used in a variety of partisan ways. The Armed Forces were utilized as the minority rebel dissenters protested peacefully against neglect of their claim. Then riots, rebellion and terrorism set in and ultimately escalated into a separatist agitation and violent civil war. Also, trans-border links between the ethnic groups of Tamils, international concern for human rights, international terrorism, and access to international arms bazaars transformed the Sri Lankan conflict into an internationalized phenomenon. Imprudent governance accounted for this serious metamorphosis, which was not favourable to Sri Lanka.

The policy for Sri Lanka to follow in such a situation is to get the contending parties to negotiate. This may require the services of a facilitator or even mediator, but it is, right now, an inescapable policy option given the deep distrust between the conflicting parties. Additionally, in adopting a policy of implementing a negotiated settlement, the Government has to ensure that another minority group existing within the territorial limits occupied by the minority, that is embattling for a fair deal and just dispensation, should not be able to deny a similar reasonable and equitable deal to the other “trapped” minority of Muslims. If no solution to wholly defuse the civil war is possible, then another policy option is to manage the conflict with a peaceful arrangement for coexistence.

A prudent policy also demands that imposition of majoritarian authoritarianism be abandoned and substituted by peaceful governance founded on magnanimity and inspired by a liberal, generous, imagination.28 Coercion of the minority should be eschewed, instaed, a policy of accommodation needs to be followed. Disruptive conflicts need to yield to a policy of reconciliation.

An equitable sharing of economic benefits should be an ingredient in a policy appeasing the hurt and alienated Tamil minority in welding them with the majority. Equally, if not more, political arrangements to effect reconciliation matter most in policy. Mechanisms for power sharing from the highest policy-making levels, institution of regional units or peripheral autonomous regions and local-level authorities for local administration and decentralization of administration are indispensable to create confidence among a minority in a predominantly majoritarin milieu. Above all, true statesmanship and tolerance are vital for just governance to be manifest in any policy which could usher in peace and stability, obviating expense on war.

Finally, the policy most useful and healthy to be pursued in Sri Lanka will comprise economic good, political and institutional adjustments, and a pragmatic approach in governance in order to resolve controversial issues before they worsen. Any policy aimed at bringing about rapprochement between combatants in the civil war should be flexible enough to tolerate expediency and substitute alternatives without insisting on an abstractly and theoretically formulated design. Self-righteousness, intensive zeal, and unchangeable rigid stances in policy need to be abandoned. Peace, though without room for separatism, and unimpaired stability, integrity and sovereignty of the island should be the goal to reach through negotiations between estranged groups. Accommodative institutions that cope with divergent views but do not tolerate division should inform a policy bent on rebuilding peace among the isle’s ethnic communities.

Involving a policy the government cannot exclude the need to formulate it in a way so that it could be conducive to build peace. Any further increased spending and continuance of the civil war can only spell the onset of a full catastrophe to replace an already prevalent calamity. Donors, international funding agencies and other concerned organizations have made it clear that defence spending should decrease, governance should receive more concern, and that peace is essential. The policy should provide for appropriate governance which could accommodate diverse identities in Sri Lanka, and not destroy them. The policy should promote and protect the rights of persons from the national, ethnic, religious and linguistic minorities. This will contribute to political and social stability in Sri Lanka. People of varying ethnic communities should be ensured equality in the common domain, pluralism should be facilitated in togetherness, and where appropriate, as in largely Tamil-populatled areas or Muslim-populated enclaves, cultural or territorial autonomy will help bring in peaceful coexistence. Any policy that would reduce defence costs and engender good governance would contain provision for the above needs to be satisfied. The three characteristics outlined (a common domain, pluralism in togetherness, and autonomist arrangements) carry ineluctable implications for policy, institutions, for the process and participation in good governance to grow.

In the common domain where everybody can interact, universal human rights should be equal to all. Non-discrimination should be the governing principle, and governance ought to be ethnically blind. Not even affirmative action should contribute to differentiation. The common domain includes access to jobs, goods and services, housing, communication, transport and health services.29 All interact across cultural borders. It is the failure to have such a policy and type of common domain that initially triggered ethnic conflict, civil war, and expenditure on defence. Human rights necessitate that everyone within the nation have the same rights to political representation. In an ethnically divided society as in Sri Lanka, there should be no control by a hegemonic group, the Sinhalese majority. Instead, incentives should be provided for peaceful group accommodation. Respect for their identity and justified interests need to be ensured. The Sri Lankan state, as a policy, ought to protect the existence and the national or ethnic, cultural, religious and linguistic identities of minorities within respective territories. Conditions for promotion of their identity should be fostered. Appropriate legislative and other measures to achieve the ends detailed above need to be followed. Moreover, as a matter of policy, minorities should enjoy the right of effective participation in decision making on a national—and where appropriate a regional level—regarding the minority to which they belong or the regions they inhabit. The electoral process should facilitate minorities to participate in the political sphere. Apart from this, the electoral system needs to facilitate equitable minority representation and influence.

Policy-wise, just governance in heterogeneous societies, as in Sri Lanka, requires both multi-culturalism and inter-culturalism.30 Multi-culturalism accepts as a policy diverse cultures of various ethnic groups by permitting the use of different languages, education in different languages, and allows room for the manifestation of different cultures. The policy of inter-

culturalism facilitates and encourages reciprocal respect between members of different ethnic groups. It allows the establishment and maintenance of the common domain of equality and non-discrimination for all people in society.

Inter-culturalism, to function well, requires governance to support and foster development of a civic culture that transcends different ethnic cultures. In Sri Lanka, for adopting such a policy, tremendous goodwill and effort are essential. Government authorities and the minorities should pursue an inclusive, transparent, and accountable process of consultation to maintain confidence. Moreover, the media ought to be coaxed to sponsor inter-cultural understanding and address concerns of minorities.

In shaping policy which will contribute towards generating peace and stability, decrease spending on defence, and build better governance, policy should be predicated on inalienable fundamentals governing the scene. The Lankan Tamils, for instance, have lived in almost separate habitats, particularly in the north, and the community has been more or less compact. Thus, they have been territorially separate but have also lived in sections of the east and elsewhere in the island, as in Colombo, interspersed with other groups. And the Tamil group has been culturally different.

A consociational democracy in such a context can provide a model to build Sri Lankan policy. In this arrangement, power is shared through maintaining a multiple balance of power among the constituents of a plural society. It permits decision making by the “grand coalition method”: consociational democracy is an alternative to majoritarian democracy and better suited to furnishing “good Government in plural societies deeply divided by significant ethnic, linguistic, religious, or cultural differences, where the groups are large and clearly identifiable”. Consociational democracy allows for “legislative accommodation, executive power sharing and a certain degree of self administration for each group, whether they live together or separately”. Sri Lanka and the combatants can examine this policy arrangement in negotiations.

Another alternative policy that may be tried out to buy peace, “subdivision” through federal systems or autonomies, offers yet another option. New models of federalism, autonomy, and local Government have been experimented with in recent times. All commonly grant a degree of autonomy for a subunit within a sovereign state. Autonomy confers competence to substate units to make autonomous decisions. In contrast, scholars opine that non-territorial cultural autonomy is often a better policy to cater to autonomist demands.

It better serves those minorities living dispersed in the land, who would not benefit from merely subunit territorial autonomy. At the same time, it allows reconciliation of the need for maintaining inherited territorial borders within which several ethnic groups live together, while ensuring maintenance of their own identity through self-management for each of them.

An advantage in territorial decentralization, on the other hand, is that it facilitates effective participation by ethnic groups, which could then influence decisions taken at national level. There also ought to be measures in decentralization to promote national minorities’ involvement, so that a sense of belonging to the nation will grow. Functions generally of central authorities include defence, foreign affairs, immigration, customs, macroeconomic policy, currency and monetary matters. Other functions can be devolved on minorities or territorial administrations or shared with central authorities, if essential. Functions can also be allocated asymmetrically to respond to different minority situations within the same state, of course. This can be subject to discussion.

As the war in Sri Lanka has been enveloped in acrimony and profound distrust between combatants, the suitable policy option, if executed after negotiation, may be premised as one declaring the island of Sri Lanka to be the common “home” for all components of its resident population, but under guaranteed and observed conditions of equality. There should simultaneously be preservation of separate group identities under conditions which make it

possible to develop the identities. Within the common territory or “home”, space should be available for the different communitie s like Sinhalese, Tamils, and Muslims to develop their culture and traditions. Decentralization, either by federalism or similar arrangements, would provide the space for communities to exist within the common territory. This would constructively enable the reflection of the multi-cultural composition of the island’s society. Equivalence of esteem of the diverse communities should prevail, and relations have to be characterized by reciprocal tolerance and appreciation of diversity as a source of richness.

Still, there should be a common “home”, with equality of treatment in the common domain.31 Neither should the majority Sinhalese nor the minority Tamils and Muslims be able to assert their identity in a manner that denies the possibility for others to do the same, nor should there be room to permit discrimination of other communities in the common domain. As a cardinal attribute of policy, the Sri Lankan state’s primary role ought to be the facilitation of equitable sharing of the economic wealth and social benefits of the country. Also, priority in minority protection should be extended to members of vulnerable communities, who should not be discriminated against or marginalized by the majority community.

Conclusion

There is no possibility of further increasing or sustaining defence spending at the present high levels, without disaster in Sri Lanka. International and national personalities and organizations have observed it to be a prohibitive indulgence. A developing economy stagnated in Sri Lanka and fell behind other South Asian countries. Imperative requirements of social and infrastructure growth got stunted, governance suffered gravely.32 Law, order, institutions, moral values, social welfare—name it, all good things got stifled. Still, the state cannot shirk defence when threatened by a rebel group trying to wrest a separate state. But development and growth of national interests too cannot be overlooked by Sri Lanka.

Confronted by such competing interests of equal validity and importance, the reasonable and prudent alternative policy, specially in a fratricidal civil war, is to work out a fair and viable negotiated solution acceptable to the Government and the combatants. There is no other better policy option, and good governance cannot be neglected for long. It is the primary function of and rationale for any government. “Let us never negotiate out of fear, but let us never fear to negotiate”, and John Fitzgerald Kennedy emphasized that “Mankind must put an end to war or war will put an end to mankind.” Clearly, the implication for policy is not more defence spending, but the pursuit of peace without which governance will be non-existent. Notes and References 1. See, among others, K. M. de Silva, Managing Ethnic Tensions in Multi-Ethnic Societies: Sri Lanka, 1880–1985,

Lanharn, M.D.: University Press of America, 1986, and his Reaping the Whirlwind, New Delhi: Penguin Books, 1998; J. N. Dixit, Assignment Colombo, New Delhi: Konarak Publishers, 1997; David Little, Sri Lanka: The Invention of Enmity, Washington, D.C.: United States Institute of Peace, 1994; S. D. Muni, Pangs of Proximity: India and Sri Lanka’s Ethnic Crisis, Oslo: Peace Research International Organisation, 1993; M. R. Narayan Swamy, Tigers of Lanka: From Boys to Guerrillas, New Delhi: Konarak Publishers, revised 1997; Stanley J. Tambiah, Sri Lanka: Ethnic Fratricide and the Dismantling of Democracy, Chicago: University of Chicago Press, 1986; A. Jeyaratnam Wilson, The Break-Up of Sri Lanka: The Sinhalese-Tamil Conflict, Honolulu: University of Hawaii Press, 1988.

2. T. D. S. A. Dissanayake, The Agony of Sri Lanka, Colombo, 1983; C. Suriyakumaran, The Anguish of “83”: Sri Lanka’s Ethnic Crisis and the Way Out, Colombo, 1984; Sinha Ratnatunga, Politics of Terrorism: The Sri Lankan Experience, Belconnen, 1988.

3. Donald L. Horowitz, Coup Theories and Officers’ Motives, Princeton University Press, 1980. 4. A. C. Alles, Insurgency, 1971, Colombo: Colombo Apothecaries, 1976; and The JVP 1969–1989, Colombo: Lake

House, 1989; C. A. Chandraprema, Sri Lanka: The Years of Terror: The JVP Insurrection, 1987–1989, Colombo: Lake House, 1991.

5. Chelvadurai Manogaran, Ethnic Conflict and Reconciliation in Sri Lanka, Honolulu: University of Hawaii Press, 1987; Jonathan Spencer, Sri Lanka: History and the Roots of Conflict, London: Routledge, 1990.

6. Sri Lankan Army, Sri Lankan Army, 50 Years On, 1949–1999, October 1999. 7. Rajesh Kadian, India’s Sri Lanka Fiasco: Peace Keepers at War, New Delhi: Vision Books, 1990; Shelton U.

Kodikara, Indo-Sri Lanka Agr eement of July 1987, Colombo: University of Colombo, 1989; S. C. Sardeshpande, Assignment Jaffna, New Delhi: Lancers, 1992; Depinder Singh, The IPKF in Sri Lanka, New Delhi: Trishul, 1992.

8. Sri Lankan Army, op. cit., n. 6 above. 9. Ibid. See Frank De Silva, “Defence Expenditure in Sri Lanka: Prospects for Reduction”, in Defence Expenditure in

South Asia: Bangladesh and Sri Lanka, ed. Chowdhury Abrar and Frank De Silva, RCSS Policy Studies 11, Colombo: Regional Centre for Strategic Studies, 5 April 2000, Appendix 11 for the strength of the Army and allocation of funds, and especially Annex 1; also National Peace Council of Sri Lanka, Economic, Social and Human Cost of the War: Sri Lanka, Colombo: National Peace Council of Sri Lanka, January 2001, the text as well as tables.

10. Quite a few studies in the recent past on defence expenditure and cost of the war have appeared. See John M. Richardson, Jr. and S. W. R. de A. Samarasinghe, “Introduction: Economic Dimensions of Ethnic Conflict, Theory and Practice”, in Measuring the Economic Dimensions of Ethnic Conflict, ed. S. W. R. de A. Samarasinghe and Reed Coughlan, London: Pinter Publishers, 1991; G. H. Peiris, “Changing Prospects of the Plantation Workers of Sri Lanka”, London, pp. 156–93; John M. Richardson, Jr. and S. W. R. de A. Samarasinghe, Measuring the Economic Dimensions of Sri Lanka’s Ethnic Conflict, London, pp. 194–223; Stockholm International Peace Research Institute (SIPRI), The Military Balance, 1998–1999, pp. 161–2; The Military Balance, 1999–2000, pp. 152, 155, 158, 167–8 for information on weapons, strength of forces and costs.

11. K. M. de Silva, ed., Sri Lanka: Problems of Governance, Kandy: International Centre for Ethnic Studies and New Delhi: Konarak Publishers, specially pp. 42–82 and “Conclusion”, pp. 399–415.

12. SIPRI, op. cit., n. 10 above, for details quoted. 13. Economic, Social and Human Cost, op. cit., n. 9 above, for details. 14. “OPA Expresses Grave Concern at Present Situation”, Island, 19 February 2001, p. 7. 15. Economic, Social, and Human Cost, op. cit., n. 9 above, specially Part 2, pp. 39–45. 16. As early as in 1977 itself, apart from expenditure losses in real terms, other social and human costs were

worrisome: see Harry Goonetilleke, “In Retrospect: Three Years of Conflict”, Weekend Express, 23–4 August 1997; on human displacement, see V. Suryanarayan and V. Sudarsan, Between Fear and Hope: Sri Lankan Tamil Refugees in Tamil Nadu, T. R. Publications, 2000.

17. Economic, Social, and Human Cost, op. cit., n. 9 above: Tables 1 to 11 are amply illustrative of costs in a detailed manner under several heads.

18. Ibid. 19. For an introductory survey, see ‘Truthfully Speaking Sathya’, “On Peace Dividends and Cost of War”, in Weekend

Express, 19 April 1997. 20. Economic, Social, and Human Cost, op. cit., n. 9 above, Part 2, “Female Headed Households”, p. 41, and Part 3,

“The Human Cost of the War: Case Studies”, pp. 50–64. 21. Asbjorn Eide, Good Governance in Ethnically Heterogeneous Societies, Neelan Tiruchelvam Commemoration

Lecture Series No. 1, International Centre for Ethnic Studies, 2001, pp. 17–32. 22. Economic, Social, and Human Cost, op. cit., n. 9 above, “Children Affected by the War”, p. 6. 23. Ibid. 24. Ian Martin, “Human Rights, Political Conflict & Compromise”, Neelan Tiruchelvam Memorial Lecture, 30 July

2000, International Centre for Ethnic Studies, Colombo, pp. 20, 21; and specially, “Human and Civil Rights”, in Economic, Social, and Human Cost, op. cit., n. 9 above, p. 43.

25. Economic, Social, and Human Cost, op. cit., n. 9 above, “Torture”, p. 44. 26. Several articles on corruption in defence procurement have repeatedly appeared in a few Sunday newspapers. 27. Many articles have been published in newspapers about the shortcomings in society. Also see Defence Expenditure

in South Asia, op. cit., n. 9 above, specially “Defence Expenditure in Sri Lanka: Prospects for Reduction”, to obtain an insight into laxity in accounting which could be conducive for corruption to prevail; also on defence spending, see Nisha Arunatilake, Sisira Jayasuriya and Saman Kelegama, The Economic Cost of the War in Sri Lanka, Colombo: Institute of Policy Studies, 3 January 2000.

28. K. M. de Silva, op. cit., n. 11 above, Part 5, “Conclusion”, pp. 399–415. 29. Eide, op. cit., n. 21 above, “Governance Implications” and “Concluding Remarks”, pp. 17–32. 30. Ibid. 31. Ibid.

32. Ibid.

Nepal: Governance, Defence, and Development* Lok Raj Baral

Trinity of Governance, Defence, and Development

Governance is both a process and function of a governmental system. Governance can, in course of time, establish procedural functioning as against personalized regime behaviour depending on the whims and aspirations of a ruler. It is a more regularized and institutionalized pattern that demands normative culture of governance. As Rosenau states: “Governance, in other words, is a more encompassing phenomenon than government. It embraces governmental institutions, but it also subsumes informal, non-governmental mechanisms whereby those persons and organizations within its purview move ahead, satisfy their needs, and fulfill their wants.”1 The concepts and attributes of good governance vary, though the legitimacy of any government is determined by its commitment to and support for a kind of intertwined relationship between process and functions. In democracy, the making and enforcement of policies is done by the institutions created for such functions. The involvement of ministries and the legislature for making governance more legitimate and effective becomes crucial. Thus, accountability, stability, transparency and quick discharge of functions are the accepted attributes of today’s governance.

Such theoretical aspects of governance are seldom practiced in countries like Nepal. Both historical cultural moorings, and the overwhelming impact of the anarchical political behaviour of the elite and the declining role of civil society are in conflict with the legitimacy and efficiency of governance. Nepal’s ongoing democratic exercises are characterized by both negative and positive trends, but governance is still a distant reality. The government has a tendency to govern by foul means, because the persons running the government are too myopic and self-centred to think of other issues concerning the country. Defence, which is a part of comprehensive security, is one such related area that demands efficient handling, dexterity and judgement. What is more significant today is that security in the conventional sense does not hold much ground as many non-conventional sources of security/insecurity are becoming more overarching and crucial than the issue of conventional defence.

Nepal’s defence spending is relatively low in the overall context of South Asia. A huge military build-up is, therefore, not on the agenda of any government. Yet, Nepal has been continuing its tradition of a standing army of about 50,000 in addition to a regular police force of 28,000 as a law enforcement unit of administration. Now the Armed Police Force (APF) of about 15,000 (in the first instalment) is being created for tackling the Maoist insurgency which started in 1996. The Army is seldom called out for maintaining order, and even if it assists the police for some specified tasks, it is not as frequent as we see in other countries. Nepal’s own internal situation, as of now, remains relatively peaceful despite some violent activities conducted by the Maoists in selected remote areas of the country. During the early years of the royal regime, the Army was mobilized to thwart the Nepali Congress (NC)-led insurrections as well as to tackle the Tibetan Khampas in the western hills and adjoining Nepal-Tibet border areas. Similar other minor incidents could have engaged the Army, but it never became a regular feature.

The issue of “good” or “bad” governance cannot be easily correlated with defence spending or defence build-up in Nepal. The Nepalis, however, are not yet quite clear about the actual role of the Army in the overall context of national life. During the royal regime, it worked as a first line of defence of the King, but under the democratic regime, political legitimacy is derived from the people through periodic elections and governmental performance. It does not mean that the elected government does not deploy the Army for averting serious threats to the system. Such a decision was manifested in the wake of the intensified Maoist People’s War in 2000 forcing the government to seek the assistance of the Army. And it is within this framework of governance that both defence and development are examined here. But before proceeding, a brief history and

the ethos of Nepali military tradition should be discussed for better comprehension of the Nepali political and military tradition.

State Formation and Military-dominant Culture

The birth of Nepal as a unified modern nation state in the eighteenth century coincided with the consolidation of the expanding British empire in the Indian subcontinent. King Prithvi Narayan Shah, the representative of the erstwhile Gorkha kingdom, who subsequently succeeded in integrating all small kingdoms and principalities into a greater Nepal with the help of the Army drawn from various tribal and caste groups, provided the contours of Nepal’s defence and foreign policy to his successors defining Nepal as a “yam between the two boulders” (China and India) requiring the rulers of Nepal to be conscious of this geographical reality. The organization of the military was an integral part of the process of state formation to which the ambition of rulers and the assistance rendered by their courtiers, local lords and other state functionaries played a significant part. What was more important in this context was that the newly created “greater Nepal” represented varied cultural, religious and tribal formations, which later became a synthetic culture and tradition, despite a distinct Brahminical religious, cultural caste hierarchy followed by the Nepali rulers. Thus, “participation in the political process became the virtually exclusive prerogative of two high-caste Hindu groups, Brahmans and Kshatriyas, which were further subdivided into several factions and families”.2 According to Hindu scriptures and ethos, only a member of the Kshatriya, a warrior caste, could become the ruler but his Raj Dharma (state function) was influenced by the Brahmins who were the intellectual elite and “spiritual preceptors”. Groups numbering four castes and 36 varna (tribes) worked as the bastion of the state by being recruited into the State army or were only the docile praja (subjects) of the ruler.

Throughout its modern history, Nepal was a militaristic state with the rulers identifying invariably with military culture in both form and substance. Prithvi Narayan himself “conceived of the state as resting on two sturdy pillars, a contented peasantry and a loyal army”. In his Dibya Upadesh, he mentioned several measures for guaranteeing the Army’s strength, directing “first of all that soldiers be provided with lands exempt from major taxes, so that they would be able to fight without anxiety for the welfare of their families”. Shah also “demanded from his soldiers courage and skill in battle as well as absolute loyalty”.3 As Stiller states: “It was this very importance of the military in the unification of Nepal as well as the influence that the military classes had in the court itself that made it essential for the King to be the type of man who could command that loyalty and control and direct the energies that this group represented.”4 The Rajput and Khas (Kshatriya) soldiers formed an “inner circle”, while the other groups of the Kirat community of Mongoloid origin constituted the larger force. Despite the changed context and time and with other caste groups also joining the Army, the higher echelons of the Nepal Army are still dominated by the Kshatriyas, who are relatively closer to the King than others. As of now, no Commander-in-Chief has been appointed from the ethnic groups below the Kshatriyas. Yet, the King’s aide-de-camp and other high-ranking officers are also from other ethnic groups, showing the trend of upward mobility in recent years.

Before giving regular shape to the Army, it was created and disbanded by the rulers depending upon the need of the time and circumstances. Over the years, this system produced a huge number of trained militias, but allowed the only high-ranking officials to remain during peacetime. Bhimsen Thapa, who was the strongman during the 1804–37 period, raised the standing army and started the process of modernization by initiating the new recruitment policy and building arsenals, barracks, and an ordinance factory. The concept and construction of the tundikhel (parade ground), which is seen today in every district headquarters and the capital, was his creation.

When Jang Bahadur captured power through a bloody coup in 1846, he, by virtue of being one of the functionaries of the Army, used armed power as well as his own tact and presence of mind in quelling his rivals, thereby establishing the Rana oligarchy. It continued until the armed movement launched by the NC overthrew it in 1950. The rise of “Ranarchy” in Nepali history could be attributed to three prinicpal factors: political instability heightened by the divisions within the traditional court politics; use of the Army by a tactful person like Jang Bahadur; and a favourable external environment. Such a military tradition of Nepali politics, or what was called a “military culture”, was more exemplified by the Rana rulers whose progeny from their very birth received military titles, thereby establishing a close relationship between governance and the military. As “the Prime Minister was in practice the head of the Army, just as in-charge of the civil administration”,5 it was a fusion of civil and military administration, thus creating a new administrative culture in Nepal. Judged by historical evidence, the Nepal Army generally obeyed the powers that be, the glaring example being the involvement of the Army for suppressing the anti-Rana movement in 1950. King Tribhuvan had supported the democratic forces by leaving the palace and taking political asylum in the Indian embassy in Kathmandu, giving impetus to the armed movement then being organized in India. Yet, the Army continued to be loyal to the Ranas, dispelling the hypothesis that the Army was always loyal to the King.

However, in the post-Rana period of Nepali history, the Army was increasingly identified with the King, who gradually started consolidating his position during the era of party politics. Since political parties became weak due to intensified personal and intra-party and inter-party feuds and machinations, the Kings, who were stripped of de facto power by the Ranas, could now regain royal authority at the expense of the political parties. Consequently, the first ever democratic election was conducted on the basis of the Constitution granted by the “sovereign King”, a radical departure from the spirit of a duly elected constituent assembly as agreed upon during the 1950–51 anti-Rana movement. So, in 1960, the role of the Army was reversed as King Mahendra not only used the Army to stage a coup against the first elected government, but he and his successor also relied upon it as the mainstay of power during the royal regime for about 30 years. The process of restoration of the monarchy was complete in 1960, and the Army, supported by both the domestic political situation and the dramatically changed geopolitical context in Nepal’s immediate environment created by the India -China conflict, played a crucial role for accomplishing it. However, it is ironical that even under the new democratic dispensation in the 1990s, Nepali leaders continue to be haunted by the same psychology, treating the Army as the exclusive domain of the King.

The Army and System Maintenance

During the decades of the “partyless Panchayat” regime (1960–90) patronized by the King, the foreign-security policy of Nepal was geared to strengthening domestic politics. Resources, both political and economic, were mobilized to strengthening the capacity of the Army and other state functionaries for the consolidation of the royal regime. Conceived and operationalized by the King himself, the regime’s interest at once became the national interest, because the new regime was superimposed for what the King called promoting Nepali “nationalism”. The then emerging geopolitical trends in Nepal’s neighbourhood, particularly precipitated by the Sino-Indian conflict, had been skilfully exploited by King Mahendra for consolidating his regime. Thus, “Nepal’s foreign policy objective did considerably neutralize the domestic government along with the dismantling of the multiparty democracy itself. Some other political parties also opposed the King but others supported the regime on the pretext of ‘nationalism’ to be promoted by the King.”6 Since the partyle ss regime was called a buffer system between the two competing ideologies—the liberalism of India and the Communism of China—its rationale was found in nationalism, spiritualism and the cultural heritage of the country, together with its eclectical contents derived from various other systems prevailing in such other countries where multiparty

parliamentary democracy was discarded. Those who denounced or opposed the royal coup and the regime were hounded and persecuted as “anti-national elements” bent on selling out Nepal’s interests to a “certain foreign power”, by implication, India, and hence the need of extensive mobilization for countering such activities. The Army was used to foiling the armed insurrections mounted by the NC. As it has been stated by a Nepali scholar that “…it is these regimes, and their bureaucratic and intellectual hangers-on” defined “the threats to the security of the society as a whole”.7 Conceivably, the coercive nature of the state rather than free debate and acceptance of all shades of political opinion eventually proved that its legitimacy was too weak to resist the popular demand for its termination.

During the first phase of the regime, the Army, backed by various draconian laws and controlling measures, was used to act as a counter-insurgency force and became successful too, but as the mainstay of power it didn’t work when the regime faced a crisis of legitimacy. In 1990, the regime collapsed owing to its own failure to enlist the support of disparate ideological and professional groups banned parties and intellectuals impressing us that the regime’s sustainability would depend more on its intrinsic strength than its mere reliance on the coercive apparatus of the state, such as the Army or police. How the Soviet Union collapsed like a pack of cards could well substantiate its argument. But what is attempted here is to correlate the Army’s role with that of the regime’s sustainability or fragility, depending on time and context.

In Nepal also, the Army and police were used to suppress the movement in 1990, but such a mobilization of force did not prevent the collapse of the regime. The movement launched by the NC and supported by a wide spectrum of political forces, members of civil society, and the international community, became successful forcing King Birendra to give in to the major demand—the revival of the multiparty system in the country. The Interim Government that was installed following the termination of the various organs of the discarded regime was entrusted the task of preparing a Constitution and holding general elections to form a new parliament in accordance with the spirit of the movement. The Interim Government soon faced a major crisis when the local vigilante groups apprehended some people in police uniform suspecting them as the mandales or agents of the previous regime. Five of them were beaten to death and six others were severely injured, revealing their identity as genuine policemen, provoking the angry policemen to go berserk. The Army was called out to control the police. The King, after having been requested by the Prime Minister, came out with a statement urging everybody to support the new government, thus pointing to the fact that the King backed by the Army continued to be reckoned as a force even in the context of a multiparty system.

The Army’s role often figures in the post-1990 politics as it, in essence, continues to be under the command of the King as well as the Prime Minister, contrary to the spirit of the Constitution. While drafting a new Constitution in 1990, it was reported that the “military Operation and Staff Duties Unit of the Royal Nepal Army Headquarters (RNAH) sent a circular (No. 1103/46/ 179) on June 23, 1990 to all Royal Army Units directing them to submit the following suggestions to the Constitution Recommendation Commission headed by a judge: “His Majesty should remain the Supreme Commander-in-Chief and Field Marshal of the Royal Nepal Army. Sovereignty must be vested in His Majesty, who should also control the Army. The post of Commander-in-Chief should have a constitutional status as before, and appointment to the post must be made by His Majesty”, and Nepal should be declared a Hindu state because the Nepal Army has been worshipping Hindu God Mahadeva and goddess Kali, and Hindu ceremonies are performed at military barracks.8 It was also reported that the delegation of the Army men which went to see the Prime Minister and Defence Minister made similar suggestions, which Prime Minister K. P. Bhattarai did not take favourably. Subsequently, the Chairman of the Constitution Commission, Biswa Nath Upadhyaya, who subsequently became the Chief Justice of Nepal, was

reported to have said that the Commission had not solicited suggestions from the Army, nor from anyone else. In his opin ion, the Army and police should be responsible not to any individual, but to the nation and the system.9 Such a sentiment had also been expressed by B. P. Koirala, who, accepting their blunder in keeping the Army under the King, wrote in his Jail Journal that the Army should have been placed under the government.

Nepali politics today has undergone a major transformation due to a number of reasons, both national and international, but the eroding credibility of parties’ leaders particularly in addressing the problems of good governance and showing their confidence in their leadership roles has failed to establish a correct constitutional and functional relationship between the elected governments and the Army.

Political leaders in the post-1990 period did not overcome their inherited fear psychology and instead went on mentioning the King-Army relationship as the sensitive part of Nepali politics. All the Prime Ministers said that the King could not be undermined due to the loyalty of the Nepal Army to the King. According to the Interim Prime Minister, K. P. Bhattarai, he wanted to change King’s attitude towards the democratic set-up rather than frighten him by radicalizing the image of his government. Taking the King as one of the three forces, the other two being the NC and the Communists, leaders of political parties invariably stated this factor, which itself was contradictory to the Constitution according to which the Nepali people are sovereign, along with the constitutional monarchy, a multiparty system and the inalienable fundamental rights of the people. Thus, it was nothing else than the inferiority complex of party leaders who, instead of conforming to the letter and spirit of the Constitution, preferred to bring back the role of the King to the centre stage of politics. And the Army is perceived as the key element for such a political equation.

Whether the demand of the Nepal Army was fulfilled or not, the 1990 Constitution of the Kingdom of Nepal continues to make the King, like many other heads of state, the “supreme commander of the Royal Nepal Army”. But the King would make the appointment of the Commander-in-Chief on the recommendation of the Prime Minister, who is also the Chairman of the National Defence Council that consists of the Prime Minister, Defence Minister, and the Commander-in-Chief. In actual practice, however, the role of the National Defence Council is a mere formality, as the Army continues receiving special attention of the King.

How the Army came into political controversy in the context of today’s governmental instability often dominated the national headlines of the country. On one occasion—in the context of the dissolution of the House of Representatives in January 1998—the Army appeared to be independent of the elected government, because the Prime Minister and Defence Minister were incapable of telling the truth following the disclosure of Army surveillance on former Chief Justice Biswa Nath Upadhyaya on whose advice Prime Minister Surya Bahadur Thapa was said to be asserting his prerogative vis-à-vis the King to dissolve the House. His opponents did not like this move of the Prime Minister, and Upadhyaya was made a villain of the unfolding events. Meanwhile, the Royal Nepal Army Headquarter’s (RNAH) statement had substantiated the fact asserting that the Army had, in fact, planted its agents for surveillance. The statement said: “In view of different circumstances connected with national security, the Military Intelligence Directorate of the RNAH has been keeping a watch on the activities of the foreigners. It will not be proper to publish other details about the report of some media that some military intelligence agents have been arrested outside the residence of Ex-Chief Justice Biswa Nath Upadhyaya.” In fact, the statement came in response to Upadhyaya’s objection to the posting of Army intelligence agents whom the police had arrested and handed over to the Army.10 More surprising was the ignorance of the Prime Minister (himself the Defence Minister) about the “surveillance” to which Upadhyaya objected, saying that as a citizen of the country he had every right to know about it. After some time, the Prime Minister, while talking to the government news agency, praised

Upadhyaya as a distinguished person of the country but avoided mentioning the Army’s involvement in the incident.

Defending his decision for holding fresh parliamentary elections to remedy the malaise in the process, Prime Minister Thapa also took the pre-emptive step of denying an opportunity to another coalition comprising his own party’s dissidents and the communists for holding the elections under them if they could snatch the support of a few free-floating members of parliament. But he knew that unless the NC remained intact in the parliament, no alternative government could be formed by his opponents.

However, the King did not oblige the Prime Minister, referring it instead to the Supreme Court for advice on whether the House should be dissolved on the advice of the Prime Minister, or a special session of the House as demanded by the members of the House was needed for deciding the fate of the government. A fierce debate started for and against the King’s move, as the parties in the coalition government and others (including former Chief Justice Upadhyaya) took it as an infringement on the prerogative of the Prime Minister, while the Opposition groups supported the King on his decision. The court, to the chagrin of the government, advised the King for a special session with a view to exploring the possibility of an alternative government, which was taken as a precedent set by the previous verdict of the Supreme Court. Ironically, such a court verdict in the past had not only restored the dissolved parliament facilitating Opposition parties to form a government, but was also interpreted by others as having set a new precedent with which no dissolution was possible unless the Opposition parties failed to prove their majority.

Although Thapa’s move was to avoid his own party’s internal threat then arising from the division, he was now forced to face the House, which he did by managing to ensure a technical victory in a vote of a no-confidence motion following his unequivocal commitment to relinquish office in order to transfer power to the major coalition partner—the NC. Politically, it was the defeat of the Prime Minister and other parties including the major section of the NC including its president, G. P. Koirala, because of their compromise on not holding the election as per the Prime Minister’s advice to the King. A minority group of the NC had actually berated the Prime Minister for departing from his previous decision on holding the fresh election. Thus, the politics of equations and the lack of basic party homogeneity compromised and diluted the role of the elected Prime Minister in a short span of time.

What was the practice in defining the relationship between the Army and the government? Part of the answer was given while presenting both the conventional roles of the Army and the threat perceptions articulated by the new power elite of Nepal. Sometimes, the Army seemed to be annoyed at the government’s casual handling of incidents of a security nature and reported to the King, who also showed concern. The Prime Minister, responsible for overall governance, reportedly had to answer the King with explanations of the functions undertaken by him.

The Army’s reluctance to involve itself in anti-Maoist combat operations was frequently made explicit with the Commander-in-Chief himself saying that an all-party consensus was necessary for such a role of the Army. For the first time, however, the Army–government row came into the open following the Maoist attack on the Dolpa district headquarters of Dunai on 25 September, killing 12 policemen and injuring 40 others. Information and investigations then pouring into the capital indicated that the local administration did not get any support from the Royal Army, despite the latter’s knowledge of such an attack. At a meeting held subsequently, the Council of Ministers held “serious” discussions on the role of the Army, the police and the National Investigation Department in the context of internal security. Consequently, the Home Minister, speaking at a press conference, not only announced his decision to resign for facilitating

the newly formed investigation committee, but also apportioned blame on the Army for not assisting the police while they were fighting the Maoists in Dolpa.11

Defence Needs and International Linkages

Nepal has had been trying to update its weaponry by trying to import arms from some friendly countries like China, the US, UK and India, which, often leads to a strain in relations between India and Nepal, because the former sees in it a move for undercutting the bilateral security arrangement stipulated by the 1950 Treaty of Peace and Friendship and the accompanying Letter. Article 2 of the 1950 Treaty states that the “two governments hereby undertake to inform each other of any serious friction or misunderstanding with any neighbouring State like ly to cause any breach in the friendly relations subsisting between the two Governments”. Regarding the purchase of arms from third countries (USA and UK), Article 5 obligates Nepal, saying that “the government of Nepal shall be free to import, from or through the territory of India, arms, ammunition or warlike material and equipment necessary for the security of Nepal. The procedure for giving effect to this arrangement shall be worked out by the two Governments acting in consultation.” The letter accompanying the treaty was more explicit in bilateral security relations, laying down the following provisions:

Neither Government shall tolerate any threat to the security of the other by a foreign aggressor. To deal with any such threat, the two Governments shall consult with each other and advise effective counter-measures. …any arms, ammunition or warlike material and equipment necessary for the security of Nepal that the Government of Nepal may import through the territory of India shall be so imported with the assistance and agreement of the Government of India. The Government of India will take steps for the smooth and expeditious transport of such arms and ammunition through India.12

Although the erosion began soon after the signing of the treaty and letter, it nonetheless continues to be one of the controversial issues in Indo-Nepal relations. Whatever the motivations of the leaders of India and Nepal for signing such a treaty in 1950, the security of the two countries was defined within certain parameters, despite such parameters being irrelevant to the emergent geopolitical reality in the 1950s. Nepal established diplomatic relations with the People’s Republic of China in 1955, and started diversifying its foreign policy further by reaching out to as varied nations as Pakistan and Israel, with which India either had strained relationships, or no relations at all.

Conceivably, the spirit of the treaty, obviously directed against the emergence of Communist China in Tibet, had ended in the 1950s and 1960s, with Nepal and China agreeing to expand their relations through intensified diplomatic and strategic activities, including the opening of the northern Nepal–China (Tibet) border by constructing the 104-kilometre Kodari–Kathmandu road. China was also used as a counter-weight to India in the early 1960s when the royal regime was under pressure from the NC’s armed movement carried out from across the India–Nepal border, which the Nepali side perceived as the Indian design for embarrassing the regime supposed to be hostile to India. Speaking at a banquet in Beijing to “celebrate the first anniversary of the Nepali boundary treaty”, Chinese Foreign Minister Ch’en-ye declared that “in case any foreign army makes a foolhardy attempt to attack Nepal…China will side with the Nepalese people”.13 Coming as it did in the wake of the combat operations of the Nepal Army against the NC insurgents, it produced expected results, forcing the NC to suspend the armed movement, allegedly on the advice of the Indian government. However, King Mahendra didn’t like to create a permanent hiatus with India, and took steps for improving bilateral relations. During his visit to India in August 1963, the King showed his interest in the modernization and reorganization of the Nepal Army with the help of India. Later,

on the basis of detailed discussions held from time to time, the two sides reached an understanding in January 1965 by signing an agreement on the mode of import of arms as underlined by the 1950 Treaty. According to the agreement, the “Government of India would undertake to provide all training facilities required for the Nepalese armed forces personnel in the training establishments in India, as necessary, and by sending training personnel to Nepal at the request of His Majesty’s Government.” With regard to the import of arms from either the USA or UK, the agreement says:

The Government of India understand that the Governments of the U.S.A. and the U.K. have also agreed to furnish some defence assistance to His Majesty’s Government with a view to supplementing assistance from India. The Governments of the U.K. and the U.S.A. have given the Government of India to understand that if there are any shortfalls in the supply of arms and equipment by the Government of India, these two Governments will fill the gaps to he extent of their ability. At an appropriate time the details can be suitably coordinated.14

Such training and defence-related materials (besides other facilities to be provided by India) had also been included in the agreement. Although it was kept as a secret document by the two sides, its contents had been leaked to some foreign scholars who used it extensively in some of their publications. But its actual text was deliberately published through a journalist in the 27 May 1989 issue of an Indian daily, The Statesman, in the wake of strained Indo-Nepal relations following India’s unilateral decision not to renew the Treaty of Trade and the Treaty of Transit after March of that year.

Why the regime, supposed to be “nationalist” in orientation, concluded such an agreement was not fully explained even after it was disclosed. However, one of the signatories, Y. N. Khanal, then Ambassador of Nepal to India, tried to show the correlationship between the suspended NC armed movement and India’s possible hand in resurrecting it if the time came. According to him, the movement was not terminated, hence the danger of being revived with the help of India prompted King Mahendra to pre-empt such a move.15 Yet, the 1950 Treaty as well as the 1965 Agreement got eroded significantly in 1969 following the Nepali Prime Minister’s letter sent to India for the withdrawal of Indian military Liaison Groups, and the withdrawal of Indian technicians and observers posted on Nepal’s northern checkpoints along the Chinese border. In addition, Nepal also demanded that there be no more consultations on security matters with India under the provisions of the 1950 Treaty, and the termination of the 1965 Agreement seeking India’s “permission and agreement for import of arms by Nepal”.16

In 1989, the issue of the treaty and the 1965 Agreement generated some heat in Indo-Nepal relations following Nepal’s decision to import arms through China. India objected to Nepal’s independent decision to import “sizable quantity of arms”, including anti-aircraft guns and AK-47 automatic rifles. According to the Nepalese interpretation, these arms did not come through India, hence the need of consultation as per the 1950 Treaty did not arise. Nevertheless, an Indian scholar stated that “the arms imports from China violate the spirit of understanding and cooperation envisaged under the 1950 Treaty”.17 Nepal, on the other hand, defended its position and said that “it is the right of every country to explore the best options to enhance its defensive military capacity…the arms that Nepal has procured from China are defensive in nature and limited in quantity. They cannot be said to pose even the smallest threat to India.”18

The repercussions of strained Indo-Nepal relations on the Nepalese economy and polity were adverse, with the Panchayat regime collapsing in April 1990 and the economy showing no definite direction. The Most Favoured Nation (MFN) regime was immediately enforced, without creating prerequisites for it. Moreover, the status of Indo-Nepal relations was incomprehensible, encouraging the anti-regime forces to hone their weapons for a decisive movement against the

partyless regime. Since the regime had almost exhausted all its resources—political, economic and strategic—it relied on force for combating anti-regime activities. The 1989 Indo-Nepal crisis, therefore, had prepared the background to the mass movement launched by the NC in February 1990. And all the outlawed parties regardless of their ideological positions censured the regime for its failures on all fronts. What was more intriguing was that the crisis management mechanism, often used in the past, proved abortive with the regime’s supporters turning into its foes.

In the post-1990 period also, the issues of arms and the 1950 Treaty had been raised in India and Nepal. Replying to a question on the issue of arms purchased by Nepal in the past, the Interim Prime Minister, K. P. Bhattarai, had said since the arms purchased from China were cheaper than those of other countries, Nepal opted for them. Similarly, another Prime Minister, Sher Bahadur Deuba, said, “…it is a routine procedure to purchase arms for improving the capability of our army. We will do so from any country where prices are cheap.”19 A small quantity of US arms weas imported in the mid-1990s for familiarizing the Nepal Army with the latest weapons which could be used, besides others, for training purposes for those who are regularly deployed for United Nations Peace Keeping Operations in various parts of the world. This time, India didn’t seem to have raised any objection to having received arms from one of the countries (US) mentioned in the 1965 Agreement, or perhaps, its rationale was well articulated by the Deuba Government, on which India preferred not to blow up the issue. Defence Organization and Rationale

Nepal’s defence expenditure has increased considerably during the post-1990 democratic era. The allocation of budget for defence during 2000–2001 was 8.96 per cent of the total national expenditure. The government was under pressure to increase the police budget by 12.11 per cent because of the mounting Maoist insurgency during the period since 1996. Taking the 10-year period (1990–2000), the total police budget was increased by 800 per cent. Under the Armed Police Force Ordinance (APFO) promulgated by the King on 22 January 2001, an Armed Police Force has been mobilized to control armed struggles, armed insurgency, terrorist activity and religious and communal riots taking place or likely to take place in any part of the country. Headed by a separate Inspector General of Armed Police, the Armed Police Force personnel would also be trained by the Army in order to maintain better coordination between the Armed Police and the Army. As the Army, presumably on the prompting of the palace, had opposed the creation of a separate armed police under the command of the Home Ministry, coordination with the Army was essential in the given reality of Nepal. Only a few days before the promulgation of the ordinance, Prime Minister G. P. Koirala said that the APF mobilization was just one step away from Army mobilization in the fight against the Maoist insurgency. Surprisingly, however, the rationale of increasing the size of the standing army (about 50,000) is beyond anybody’s knowledge. Such questions were raised seriously in the context of the Army’s “non-cooperative” attitude to avert the Maoist threat.

Although no government authority ever raised the issue of the relationship between the Army and the King openly, politicians in government and in Opposition seldom hide the interest of the King for keeping the Army as an exclusive domain of the palace. This aspect seems to play a role in not encouraging the elected government to arm the police with sophisticated weapons unless the Prime Minister resolved it with the King by sending him the draft of the ordinance informally before giving it final shape. However, embarrassed by the new developments after the Dolpa incident, Prime Minister Koirala seemed to be serious about the role of the Army and of himself as elected Prime Minister. Making his position more flexible, he inducted a new Defence Minister so as to bolster his role in the three-member National Security Council headed by

himself. Besides the Prime Minister and Defence Minister, the third member is the Commander-in-Chief. Until such arrangement was made, the Prime Minister, who always held the defence portfolio, was apparently uncomfortable with the C-in-C whose loyalty to the government was/is always suspect.

The organization of the Army in a country like Nepal is determined by: the tradition of the Army; the Army as a symbol of independent sovereign identity; occasional Army operations for maintaining internal security; and loyalty to the King. Represented mostly by the high-caste groups and the members of various ethnic hill communities, the Nepal Army has been providing employment, despite the small number of such employees compared to the number of unemployed people in Nepal. It has been argued that an armyman can maintain a minimum of five family members, which itself becomes an indirect source of employment. But the people of the Tarai (Madhise) feel themselves deprived of such opportunities due to the lack of a tradition of enlisting the Tarai people in the standing army. There has been a persistent demand of the Nepal Sadbhawana Party and other people of the Tarai (Madhise) that they should also be represented in the Army, just as other hill communities (Pahade) are recruited.

Nepal is one of the least developed countries in the world, and its overall economic performance for over three decades has been abysmally low, rather, dismal. Its high population growth rate of more than 2–3 per cent has overtaken all developmental efforts. Since only 18 per cent land-use is possible due to barren, snow-capped mountains, hills and a difficult topography, people coming from different directions tend to concentrate in certain accessible pockets, thus further complicating the land-man ratio. It is not being suggested here that it is only because of the existing force level of the military that there is a national crisis, but can the country afford to increase the defence expenditure for conventional security, while non-conventional sources of insecurity like poverty, employment, crisis of governance, rise of Maoist insurgency, nexus being developed between various international terrorist outfits, population, migration and refugees, crime, trafficking of drugs and women are becoming increasingly more serious?20 National Budget and Security Needs

Whatever the motivation of the traditional rulers to keep the standing army, the latter was the symbol of a sovereign state. And a rationale for keeping a standing army was also advanced in view of Nepal’s physical location between India and China, despite no comparable combative capacity of the Nepal Army to counter any threat emanating from its two neighbours. Such a symbolic function, along with the emerging security-related dimensions of the Nepal Army gets only a casual reference in the budgetary allocation which, compared to defence, is increasing in the social and economic sectors. The trends of major economic indicators show that education is being prioritized in recent years. The budgetary allocation for education increased from 9.5 per cent in 1986 to 13.5 per cent in 1997 and 18.99 per cent in 2000–2001, while in health it went up to 3.82 per cent during the same period. Nevertheless, such increases do not give the real picture of the expenditure, because either the money is used for subsidizing higher education, or for running hospitals. In 1986 and 1993, the share of defence was 7.5 per cent and 9.2 per cent, but in 2000, it reached 8.96 per cent. Why the share of defence suddenly declined in 1997 was not explained. As percentage of GNP, defence (including the police) has remained more or less the same, with slight variations of 1.7 per cent in 1986, 1.8 per cent in 1993 and 1.6 per cent in 1997. According to the 2000–2001 budget, social services and defence (including the police) received 35.12 per cent 21.7 per cent respectively.

Nepal’s security needs are on the increase, with a variety of trends including the determined bid of the Maoists to dismantle the established democratic order. Corruption and myopic decisions adopted by the ruling parties who took their turns in governance due to “hung parliaments” that denied a majority to any party in the House of Representatives (Lower House)

were easily exploited by anti-democratic forces impressing on the people that such a decadent order would not emancipate the poor Nepalis from the yoke of poverty and feudalistic nature of the state. Innocent people of the remote areas where the Maoist activities were/are concentrated might have been easily attracted and even feared by such revolutionary campaigns casting a shadow on democratic governance itself. Although it is not a unique phenomenon in South Asia, for a country like Nepal, huge resources and psychological preparation need to be preserved for responding to such threats. What is more alarming is that the duly elected democratic governments led by various political parties, regardless of their ideological positions, lacked a good image, vision and confidence in governance. So whatever aberrations and negative trends are noticed today in governance could be attributed mainly to the failures of party leaders who, instead of leading the parties and the country, are led by the selfish elements within the parties and outside. Thus, even an NC Government with a huge electoral mandate has failed twice because of intra-party squabbles intensified by self-seeking individual leaders. Since the major parties are being fragmented owing to lack of organizational homogeneity and discipline needed in any party, the prospects of good governance are still remote. In 1999, the NC party came to power with an absolute mandate, but the extent to which senior party leaders are jockeying for power and status without regard to minimum norms of the party system has once again dashed the hope for good governance. The big bang approach adopted by the Party President, G. P. Koirala, to provide good governance, security and fight against rampant corruption also petered out after some time. Koirala had indeed aroused high hopes this time when he not only took the risk of dislodging his own senior colleague, K. P. Bhattarai from the post of Prime Minister after 10 months of his election, but also promised to fulfil the above agenda. Flouting all norms of the established multiparty parliamentary system, the NC, however, continues to be plagued by internal strife and anarchical trends. So whoever becomes Prime Minister faces a perennial inner-party crisis heightened by his own recalcitrant colleagues who seem to flounder on the basics of the role of a party in the parliamentary system.

Defence, Governance, and Development

Democratic experience of 10 years has demonstrated that the old mindset and functional behaviour of the Army remain the same, as whatever activities are carried out by the Army are considered to have been possible due to the blessings and guidance of the King. The unswerving loyalty of the Army to the King has been displayed by the publications of the Army. One such publication, published on the occasion of the 25th year of King Birendra’s accession to the throne, listed a variety of works encompassing security-related operations, like disarming the Khampas (armed Tibetans), quelling of NC insurgents, and other activities for restoring civil authority. Among other duties, the Army is also mobilized for welfare activities when the situation arises due to floods, landslides, earthquakes or other forms of natural, mechanical or man-made disasters.21 Although the Army has acknowledged its role in controlling and maintaining order during the anti-regime mass movement in 1990, nowhere are the names of the Prime Ministers or Defence Ministers mentioned in their publications. The pro-democracy movement and the changes that took place afterwards find no mention, as if the functionaries of the government matter little to the overall activities of the Army. The Government cannot take decisions that do not get approval of the King. One such decision was the permission given to Indian helicopters to conduct search operations after the crash of a Thai Airway’s jet in 1992. Later, the helicopters were sent back after the Army allegedly objected to the decision of the Prime Minister for using Indian helicopters.

Nepal has experimented with various types of elected governments within a short span of six years—one-party government of the NC, minority government of the Communist Party of Nepal (Unified Marxist-Leninist or CPN [UML]), and the coalition governments headed by the NC and

the National Democratic Party (NDP), with the latter changing partners frequently between the NC and CPN (UML) depending upon time and circumstances, but none of them appeared to be confident on the issue of the Army. All of them still consider it as the sensitive issue, as it involves the interest of the palace, contrary to the role of the King as a constitutional monarch. Thus, the King, perceived as he is by party leaders as one of the forces of the present power equation, seems to have been successful in continuing the old tradition of the relationship between him and the Army. Such a perception, if not a reality, might have worked negatively in relating the Army to other areas of governance, but neither does the King nor the Army seem to create any obstacle to effective governance by sending wrong signals for taking over power from the elected government (as in Pakistan, where even the Prime Minister with a two-thirds electoral mandate had been dismissed by the Army). Dictated by events during the movement and due to personal initiative, King Birendra had preferred a smooth transition from an absolute to a constitutional monarchy after the triumphant democratic movement. During the 10-year exercise of multiparty democracy, no political parties’ leaders have ever openly raised any complaint against the interference of the King in the day-to-day governance of the country. Yet, the trajectory of Nepali politics is as much shaped by the informal and covert behaviour of the actors, as by established constitutional procedures. So the dynamics of Nepali politics are deceptive because of the domineering influence of the traditional patterns of informal relationships between the King and the Prime Minister and other politicians. Nepal is in the middle of its ninth plan, since the first five-year plan was launched in 1956. And during its long plan haul, this landlocked Himalayan country witnessed spectacular changes in politics, oscillating between a multiparty system, a partyless regime and back to a multiparty system. All these changes took place in the name of development, stability and good governance. Dismantling the parliamentary system and dismissing the first ever elected government in 1960, King Mahendra had declared:

… keeping in view nothing but the good of the country and the people, we have this day, in exercise of the powers conferred on us by Article 55 of the Constitution, dissolved by this proclamation the cabinet along with both the Houses of Parliament; and have assumed unto ourselves the entire administration of the country….22

And the alternate model, which he subsequently introduced, was called “developmental”, aimed at accomplishing the task of development within 10 years for which other countries had taken 100 years. After 10 years, King Mahendra again said that the coming decade (1970s) would be the decade of development, without, however, mentioning the progress of the past decade since the termination of the multiparty system on unspecified charges.

What could be the motivation of various donors and multilateral agencies or financial institutions? Such questions could have been easily answered in the Cold War period, or when relations between nations were competitive and conflictual, but the context changed with countries like Japan, Germany and Nordic countries trying to help Nepal to develop economically in order to make it capable of integrating its market into that of the world. Liberal economic policies that demand competitive market regimes, which big players like Japan and Germany would also enter, might have prompted them to help the least developed countries like Nepal. Moreover, the South Asian region itself appears to be lucrative for industrialized countries willing to invest. Although India has become the obvious choice for such investment and joint ventures after the opening of the Indian market since 1991, their interest in smaller countries having all the potentials of integrating their markets into both regional and global markets is likely to continue. Yet, from the point of view of foreign aid to be doled out to a country like Nepal, other humanitarian aspects might have also played a part.

Whatever foreign assistance has been made available to Nepal, the basic economic indicators remain almost the same. Nepal’s GNP per capita is $220 (official figure) as compared to $309 for South Asia and $970 for the developing countries. Military expenditure as a percentage of GDP is 1.1 per cent, which is less than 3.8 per cent for South Asia. The Human Development South Asia Report states:

Nepal is still at a very low level of development, with a per capita income of only US $190 [now 220], which is the eighth lowest in the world, and a ranking of 151 out of 174 countries of the Human Development index ladder. It has an extremely poor record in terms of social development. Officially, about 40 per cent of the population lives in absolute poverty, though almost everyone in Nepal is poor by any reasonable international standard.23

What principal factors can be attributed to such a state of affairs? What are the remedies likely to change the existing scenario? These pertinent questions relate to good governance. Or is the development problem “beyond the power of the State”, as explained by the authors of Nepal in Crisis. According to their study on Nepal’s problems of development, “Nepal’s inability to change a direction (or rather a slide) to catastrophe is part of the crisis”, though crisis itself is a “complex process; a changing manifestation of underlying structural contradictions which reveal themselves in a variety of forms, from the chronic to the acute. Nepal’s crisis is…rapidly becoming acute.”24 This projection was made 30 years ago. But serious crises are likely to creep into the country owing to various other intervening factors and trends, like lack of effective governance, lack of direction and almost anarchical behaviour of the political elite. Moreover, the continued trend of centralization of power in Kathmandu (the capital), along with the tendency of political representatives to remain in the capital throughout, making them absentee politicians par excellence, has aggravated the situation. As Nepal is now involved in economic development through a process of participatory democratic based on a competitive multiparty system, parties are the vehicles of such change, as well as the means of democratization. However, the alarming trend of the decline of parties was observed since the restoration of the multiparty system in the country. The decline of parties has shown no definite trend as to what shape would take place in the near future. Moreover, parties, whether in or out of government, were more involved in intra-party conflicts rather than in establishing norms and procedures.

Parties are anarchical in that they seem to be adroit in violating parliamentary rules or codes of conduct. So none of the parties seem to be serious about the people they represent, nor do they ever think of building broad consensus on various core national issues demanding immediate attention.

One negative development in the party system is that winning elections with a good majority alone is not necessarily a precondition for political stability and good governance. The NC, for example, could win two elections and form its own majority government, but it has been facing the perennial danger of being toppled by its own members of parliament. And even if the government survives by making compromises at the cost of principles, its capacity of governance is seriously afflicted by intra-party machinations. Thus, the classical theory and practice of cabinet stability no longer exists, as the role of the Prime Minister in the parliamentary set-up is drastically reduced due to the erosion of the role of party leadership. However, other positive aspects of the ongoing exercises are no less significant, as the people at large are developing their own evaluative power, which would eventually take their representatives to task, making them more accountable for what they do.

Developmental Security or Military Security?

Unlike some of its South Asian neighbours (particularly India , Pakistan, and also Sri Lanka), because of its own internal situation, Nepal cannot rely entirely on military security. Yet, the

strength of the military and police is increasing every year. It is estimated by the IISS (London) that the Nepal’s Army’s strength would reach 50,000, and the police force increased and updated with sophisticated weapons because of domestic security compulsions. And hence the reason for increase in defence spending. The profile of military spending in South Asian countries itself would provide us with a comparative picture of defence spending in relation to per capita expenditure on education, health, etc.

Nepal’s Army had fought many wars during the early phase of state formation. Military build-up was then prompted more by the expansionist psychology, which time and again had paid some war dividends in form of extension of territory. The role of the Army today is negligible even for maintaining internal security, which normally falls on the police. The Army is seldom called out for performing civilian duties. It does not mean that Nepal did not need any standing army, because countries keep armies for a variety of reasons, and not only for their active involvement in all kinds of regular works. Contingency operations and symbolic duties performed by the Army are also significant for sovereign nation states. Yet, how the native Army is being used and for what purpose becomes important in a democratic country. People have every right to discuss all aspects of the standing army, as it is often perceived by the people either as a status symbol or a reserved force of the King, who may or may not use it for enhancing his cause, as King Mahendra did in 1960. All such actions are determined by a number of factors—failure of political parties to provide good governance, where both performance and rational-legal legitimacy should be established, and national and international supporting factors and trends.

There has had been a trend in Nepal that not all expenditure on defence is transparent, despite the budget allocation for defence. The Auditor General’s report also does not explicitly spell out the details of expenditure of the Army. Why is openness lacking in the area of defence? Political parties, which have had their roles in governments, kept quiet because of the “sensitive” nature, a pet word invariably used by them for avoiding the issue.

Whether the present strength of the Army is relevant or not, Nepal’s security policy depends on its own economic development and on strategies of nation building. Diplomacy is one of the best tools for achieving national security, because small states feel secure on the basis of successful diplomacy. Rothstein is of the opinion that the role of small powers has arisen in the present international system while their relative strength in the traditional elements of power has actually declined.25 Nepal’s reliance on diplomacy has been successful throughout its history, not only for achieving international status, but also for extracting maximum assistance for the development of the country. Such resources generated for the country’s development went awry with regime functionaries misappropriating them for their own interests, but defence spending was not a causal factor for the country’s underdevelopment, nor does the Army project its interventionist role for creating good or bad governance. The major setbacks for good governance in Nepal are the failures of regimes—either authoritarian or democratic—for creating a work culture through established institutional mechanisms at all levels. In the absence of viable mechanisms to which no party pays any serious attention today, no good governance seems to be feasible despite high-sounding populist slogans given by various political parties.

The recruitment of good legislators depends both on the initiative of political parties to strictly follow the code of conduct enforced by the Election Commission, and selection of good candidates for representing the constituencies. Image projection, therefore, becomes as significant for good governance as for parties. What is frustrating in Nepal is that the Election Commission finds itself helpless in conducting elections independently, because no ruling party ever follows the guidelines of the Commission sincerely. As the Commission lacks its own law enforcement agency and bureaucratic machinery to conduct elections, it depends upon personnel specially selected by the incumbent government for enhancing prospects of certain ministers and parties.

Unless the Commission’s role becomes effective for conducting elections, there would neither be accountability nor transparency in the recruitment of representatives of the people.

Political parties in Nepal are undergoing the process of transformation in both negative and positive terms. Their past image and commitments are fast eroding, along with sweeping trends of individualistic orientations paving the way for fragmentation and divisiveness. It has thus afflicted the smooth evolution of the party system, as was generally found in industrialized democracies. But on the contrary, parties in Nepal, for that matter in other South Asian countries, are apparently trying to address their own contextual realities by breaking from the colonial legacies and prescriptions which proved to be unsuitable for post-colonial societies. The two-party system, which was the ideal form of successful pluralist democracy, was no longer relevant to the changed context as multi-ethnic, multi-religious, multi-caste, regional and communal forces whose impact on governance is significant, are to be taken into account in politics.

In conclusion, it can be said that historically, Nepal’s problem of governance was related to forming a military culture or a polity based on the Army. Such a situation does not exist in the context of today’s democratic set-up, because national interest and personalized regime interest are not identical, as power derived from the people runs the state. So it is not the Army that determines the interplay of political forces today. Yet, the question can be raised for more clarification and understanding of the traditional ethos of the Army and of the necessity of continuing the existing force level. No convincing answers are forthcoming in democratic Nepal, and the fault lies neither with the Army nor the King, but with the representatives (or governments) elected by the “sovereign” people of the country. All parties’ leaders or governments are still shy of addressing such issues, as if they are sacred cows requiring no rational explanation.

Notes and References

1. James N. Rosenau, “Governance, Order, and Change in World Politics”, in Governance Without Government: Order and Change in World Politics, ed. James N. Rosenau and Ernst-Otto Czempiel, Cambridge: Cambridge University Press, 1992, p. 4.

2. Bhuwan Lal Joshi and Leo E. Rose, Democratic Innovations in Nepal: A Study of Political Acculturation, Berkeley: University of California Press, 1966, p. 23.

3. As mentioned in Ludwig F. Stiller, S.J., The Rise of the House of Gorkha, Patna: Patna Jesuit Society, 1973, pp. 254, 255.

4. Ibid., p. 275. It has also been said that the “modern state is a product of warfare, in the sense that its territorial sovereignty was achieved by a process of internal conquest and pacification, and its external boundaries defined through war or defeat in war”. See David Beetham, “The Future of the Nation State”, in The Idea of the Modern State, ed. Gregor Mclennan, David Held and Stuart Hall, Buckingham and Bristol: Open University Press, 1993 edition, pp. 213–14.

5. Krishna Kant Adhikari, Nepal Under Jang Bahadur 1846–1877, vol. 1, Kathmandu: Sahayogi Press, 1984, p. 150. 6. For details, see Lok Raj Baral, Oppositional Politics in Nepal, New Delhi: Abhinav, 1977, ch. 7. 7. Chitra K. Tiwari, Security In South Asia Internal and External Dimensions, Lanham, MD: 1989, pp. 19–21. 8. Nepal Press Digest, vol. 34, no. 29, 16 July 1990. 9. Ibid. 10. See, in detail, Nepal Press Digest, vol. 42, no. 4, 26 January 1998. 11. Kathmandu Post, 30 September 2000. Taking the Home Minister’s statement seriously, Bishwa Nath Upadyaya,

the former Chief Justice and Chairman of the Constitution Recommendation Commission, 1990, stated that the Army is, as per the Constitution, under the command of the government. Similarly, a noted jounalist, questioning the role of the Nepal Army, asked why then the need of a standing army if it was not cooperating with the government for maintaining internal security. For both views, see, respectively, Kantipur, 2 October and Dhruba Hari Adhikari, Bimarsha Weekly, 10 November 2000.

12. See the text of the “Treaty of Peace and Friendship Between the Government of India and the Government of Nepal” and the letter exchanged with the treaty, 31 July 1950.

13. New China News Agency, 6 October 1962. See also, Leo E. Rose, Nepal: Strategy for Survival, Bombay: Oxford University Press, 1971, p. 248.

14. An “Understanding on Import of Arms by Nepal” was a secret document signed by the Foreign Secretary of India and Nepal’s Ambassador to India on 30 January 1965.

15. Author’s interview with Y. N. Khanal. 16. See the text of the speech of Prime Minister Kirti Nidhi Bista in Rising Nepal (official daily) on 25 June 1969.

According to S. D. Muni, it was the “severe and final blow to India’s military presence in Nepal”. See S. D. Muni, India and Nepal: A Changing Relationship, New Delhi: Konark, 1992, p. 45.

17. Ibid., p. 47. 18. Rising Nepal, 8 April 1989. 19. Deuba’s press conference in Delhi on 13 February 1996. See Gorkhapatra, 14 February 1996. 20. For details, see Lok Raj Baral, “Non-Military Threats and Governance”, in The Regional Paradox: Essays in Nepali

& South Asian Affairs, ed. Lok Raj Baral, Delhi: Adroit Publishers, 2000, pp. 123–46. 21. Sri 5 Maharajadhiraj Birendra Bir Bikram Shah dev Sarkarko Gaddi Arohan Paschat Shahi Nepali Senama pragati

ra yogdanko Jhalak (“Glimpse of Progress and Contributions of the Royal Nepal Army after the Accession to the Throne by His Majesty the King Birendra Bir Bikram Shah Dev”). See also, Prem Singh Basnyat, Shahi Nepali Sena ra Pradhan Senapatiharu, Laxmi Basnyat and Prem Singh Basnyat, Kathmandu: Khadka Bhadrakali Village Committee, 2053, Bikram Sambat, 1996.

22. Proclamation, Speeches and Messages, Kathmandu: HMG, 1967, vol. 2, pp. 1–2. 23. Mahbub ul Haq, Human Development in South Asia 1997, Karachi: Oxford University Press, 1997, p. 47 24. Piers Blaikie, John Cameron and David Seddon, Nepal in Crisis, New Delhi: Oxford University Press, 1980, pp. 3–

5. 25. Robert L. Rothstein, Alliances and Small Powers, New York: Columbia University Press, 1968, pp. 1–3.