Does military business matter? What economic, political and military impact does the existence of military business operations have? This book examines the reasons for and impact of military business operations in both peace and war. It argues that military business is important because of its impact on national economies, civil-military relations and the overall defence capabilities of armed forces.
While the reasons for the emergence of military business differ from country to country, a number of common factors can be identified. First, armed forces have access to material and human resources that are less accessible to civilians and which enable them to carry out other tasks. Secondly, armed forces often turn to private enterprise to make up shortfalls in defence budgets. Thirdly, weak states and poor civilian control of the armed forces create an added incentive for military elites to undertake commercial enterprises. Fourth, the roots of some military businesses can be traced back to measures taken in order for insurgent forces to be self-sufficient. Finally, even when security threats have subsided, downsizing of the armed forces is difficult to achieve and militaries are therefore used in secondary roles.
Case studies of military business in various countries show that:
- In several Central American countries, the armed forces own or control large numbers of enterprises which benefit from political protection. Parliamentary control remains weak, but there is growing awareness that military business is problematic.
- In China, the vast military business complex enjoyed preferential access to resources and infrastructure, posing problems for the liberalisation of the economy. The government therefore tried to reduce the military business empire in the 1990s.
- In Indonesia, the defence budget is insufficient to cover the cost of a bloated security apparatus. The military has therefore found other sources of income. While this has provided some benefits, it has reduced accountability and professionalism.
- In Pakistan, military personnel operate a system of ‘welfare foundations’. Businesses run by the foundations use resources earmarked for the armed forces in order to survive in the market.
- In central Africa, military business tends to take an individual rather than a collective form. Individual soldiers engage in illegal activities to supplement their meagre incomes.
- In Russia, the military is involved in many sectors of the economy, ranging form transportation to health care. In recent times it has opened up new sectors, including the sale of surplus weapons, and insurance and marketing.
The existence of military business in any shape or form is relevant for a number of reasons:
- Military enterprises frequently enjoy a number of privileges including tax breaks, preferential access to infrastructure and the use of resources meant for the armed forces. This can lead to severe market distortions.
- The existence of off-budgetary sources of revenue makes armed forces more independent of and less accountable to civilian governments and institutions.
- Military business tends to thrive under conditions of instability and conflict. Military elites have therefore been known to prolong conflict in order to promote their own commercial enterprises for personal gain.
- Military business will usually have an impact on professionalism. When a substantial part of the armed forces is engaged in commercial activities, training and combat readiness necessarily suffers.
