The Pakistani defence cut

By P. R. Chari

WHY SHOULD the slight reduction in Pakistan's defence budget, no surprise given the parlous state of its economy, have any implications for India? First, the facts. Pakistan's recent budget froze defence expenditure at Rs. 13,164 crores, some Rs. 200 crores less than last year's budget. Accounting for the annual rate of inflation would reduce its defence outlay by another Rs. 350 crores. This is the second consecutive year Pakistan had to cut its defence budget, despite its stated desire not to compromise on national defence and security, and to maintain a credible deterrent posture. Significantly, India's defence allocations rose by 27 per cent in 2000-01, and would increase by around 14 per cent in the current fiscal year 2001- 02.

Pakistan's macro-economic indicators are dismal: debt servicing and defence outlays, totalling Rs. 4,690 crores, exceed its revenue receipts of Rs. 4,530 crores, indicating that the remaining Government expenditure must be financed from borrowings. The external debt is around $38 billion, amounting to about 70 per cent of its GDP, whilst foreign exchange reserves are hovering around $1 billion, raising the spectre of a default occurring.

Ironically, Pakistan has reduced its defence expenditure with a military regime being in power. Indubitably, the cuts in the defence budget have been necessitated on the directions of the international financial institutions that have been pointing out that Pakistan cannot sustain its high defence outlays by seeking external sources of funding from every possible source. Pakistan needs to present its case to the IMF for a three- year loan programme very soon; it could be expected that the IMF would impose more conditions for granting the loan, including further reductions in its defence expenditure.

New Delhi's strategic community has greeted the news of Pakistan reducing its defence budget with a certain satisfaction but also with considerable scepticism. There are several aspects to its thinking. First, the belief is widespread that no reduction has been effected, since Pakistan has traditionally concealed its defence spending within outlays of the civilian departments. This is true to a limited extent - thus, naval expenditure has been disguised under shipping and ports, air force expenditure has gone under civil aviation and so on. There are practical difficulties, however, in separating civil and defence expenditure. India, for instance, accounts for strategic roads under the budget of the Surface Transport Ministry. Second, defence pensions amounting to some 20 per cent of the defence budget are now being debited to civil estimates. This argument is quite egregious since it ignores the fact that India transferred defence pensions to its civil estimates almost two decades back. Third, it is argued that yearly reductions in the defence budget are not significant; that expenditure trends over some 4-5 years are important. This is correct. But India's strategists gloss over the fact that Pakistan's defence budget has steadily declined over the last decade from 6.33 per cent of its GDP in 1990 to around 4.5 per cent now. Similarly, its defence expenditure, as a percentage of its federal Government spending, has dropped from 26.43 per cent in 1990 to around 21 per cent at present.

Fourth, Pakistan's importations from China, largely manufactured by processes of reverse engineering, are cheap but reliable, which provides it with `more bang for the buck'. This is a matter of some controversy. Serious doubts obtain regarding the operational worth of Chinese equipment. For instance, Chinese aircraft delivered to Pakistan are believed to be quite inferior in performance and a source of some concern to the Pakistani air force. Fifth, Pakistan is believed to finance its defence expenditure from out-of-budget sources obtained through secret allocations by the Gulf countries or Army-controlled private organisations such as the Fauji Foundation or ISI-procured drug money. These are allegations that are difficult to prove or disprove, but revenues from these clandestine sources can hardly be assumed to be a regular or major source of funding for Pakistan's defence budget.

The short point to be emphasised here is that Pakistan's economic difficulties have led to a steady reduction in its defence budget. Attention should also be drawn here to a thesis voiced by some members of New Delhi's strategic community that India should radically increase its own defence budget, forcing Pakistan to compete and beggar itself in the process. The `smash them' school has further argued that India should use the economic weapon to cripple Pakistan. Regrettably, the implications of Pakistan reducing its defence expenditure and of exacerbating its economic difficulties have escaped the attention of the `smash them' school. What could they be?

The answer to this question can be found in the Pakistani Foreign Minister, Mr. Abdul Sattar's address to the annual non- proliferation conference of the Carnegie Endowment for International Peace last month. Emphasising that Pakistan's pursuit of nuclear capability was driven by security compulsions, Mr. Sattar pointed out that the denial of military equipment and spare parts due to U.S. sanctions was degrading Pakistan's conventional military capabilities and this ``has been exploited in South Asia (translate ``by India'') on more than one occasion in the past''. What Mr. Sattar said thereafter is of the essence; ``It is not necessary in this forum to mention the risks inherent in erosion of conventional capability and consequently increase in reliance on strategic deterrence''. This veiled threat was further elaborated to justify Pakistan's adherence to its concept of ``first use'' of nuclear weapons and denigrate India's promotion of its ``no first use'' doctrine as being a ploy to exploit its superiority in conventional arms.

In truth, the role of nuclear weapons in the international security system has changed in the post-Cold War era. The low levels of technology involved in the manufacture of nuclear weapons has made them the preferred strategic instruments of weak, insecure and paranoid states. Their primary dependence on nuclear weapons to ensure national security requires, as a corollary, adherence to a ``first use'' doctrine to compensate for their inferior conventional military capabilities to deter a stronger adversary. Otherwise, ``asymmetrical warfare'', comprising proxy wars, encouragement of cross border insurgency and terrorism and, possibly, in future, the use of chemical and biological weapons would become the retaliatory means employed by the weak to confront the strong states. The basic implication, therefore, of Pakistan's continuing economic decline, which has placed its defence budget under continuing strain, is that it would increasingly rely on nuclear weapons and on ``asymmetrical warfare'' to deter India. For this purpose, it may feel it necessary to adopt brinkmanship as state policy, and construct nuclear postures based on keeping its nuclear forces on a high state of alert; this would be designed to suggest its willingness to use nuclear weapons at the first available opportunity rather than as a last resort.

It cannot be anybody's case that India should reduce its defence expenditure to reassure Pakistan or that the international financial institutions should assist Pakistan to acquire larger conventional military capabilities. But, what seems unavoidable is that both countries discuss the implications of Pakistan's falling defence budget, growing dependence on its nuclear capabilities, and the doctrinal beliefs underpinning its nuclear posture. An opportunity would be available during the Agra Summit to address these esoteric but vital questions; it would only be wise to establish a permanent mechanism for discussing such issues further at technical levels to reach some understanding. In fact, establishing a nuclear-safe regime in South Asia, as a first step to peace, is as significant for the stability of bilateral relations between India and Pakistan as addressing the impasse on Kashmir.

(The writer is Director, Institute of Peace and Conflict Studies, New Delhi).

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