The Military as an Economic Actor: Soldiers in Business (International Political Economy)

237 Pages·2004·0.6 MB·English

by  Jorn Brommelhorster

The Military as an
Economic Actor
Soldiers in Business
Jörn Brömmelhörster and
Wolf-Christian Paes
International Political Economy Series
General Editor: Timothy M. Shaw, Professor of Commonwealth Governance
and Development, and Director of the Institute of Commonwealth Studies,
School of Advanced Study, University of London
Titles include:
Leslie Elliott Armijo (editor)
FINANCIAL GLOBALIZATION AND DEMOCRACY IN EMERGING MARKETS
Robert Boardman
THE POLITICAL ECONOMY OF NATURE
Environmental Debates and the Social Sciences
Jörn Brömmelhörster and Wolf-Christian Paes (editors)
THE MILITARY AS AN ECONOMIC ACTOR
Soldiers in Business
Gordon Crawford
FOREIGN AID AND POLITICAL REFORM
A Comparative Analysis of Democracy Assistance and Political Conditionality
Matt Davies
INTERNATIONAL POLITICAL ECONOMY AND MASS
COMMUNICATION IN CHILE
National Intellectuals and Transnational Hegemony
Martin Doornbos
INSTITUTIONALIZING DEVELOPMENT POLICIES AND RESOURCE
STRATEGIES IN EASTERN AFRICA AND INDIA
Developing Winners and Losers
Fred P. Gale
THE TROPICAL TIMBER TRADE REGIME
Meric S. Gertler and David A. Wolfe (editors)
INNOVATION AND SOCIAL LEARNING
Institutional Adaptation in an Era of Technological Change
Mary Ann Haley
FREEDOM AND FINANCE
Democratization and Institutional Investors in Developing Countries
Keith M. Henderson and O. P. Dwivedi (editors)
BUREAUCRACY AND THE ALTERNATIVES IN WORLD PERSPECTIVES
Jomo K. S. and Shyamala Nagaraj (editors)
GLOBALIZATION VERSUS DEVELOPMENT
Angela W. Little
LABOURING TO LEARN
Towards a Political Economy of Plantations, People and Education
in Sri Lanka
John Loxley (editor)
INTERDEPENDENCE, DISEQUILIBRIUM AND GROWTH
Reflections on the Political Economy of North–South Relations at the
Turn of the Century
Don D. Marshall
CARIBBEAN POLITICAL ECONOMY AT THE CROSSROADS
NAFTA and Regional Developmentalism
Susan M. McMillan
FOREIGN DIRECT INVESTMENT IN THREE REGIONS OF THE SOUTH
AT THE END OF THE TWENTIETH CENTURY
James H. Mittelman and Mustapha Pasha
OUT FROM UNDERDEVELOPMENT
Prospects for the Third World (Second Edition)
Lars Rudebeck, Olle Törnquist and Virgilio Rojas (editors)
DEMOCRATIZATION IN THE THIRD WORLD
Concrete Cases in Comparative and Theoretical Perspective
Howard Stein (editor)
ASIAN INDUSTRIALIZATION AND AFRICA
Studies in Policy Alternatives to Structural Adjustment
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The Military as an
Economic Actor
Soldiers in Business
Edited by
Jörn Brömmelhörster
and
Wolf-Christian Paes
in association with the
BONN INTERNATIONAL
CENTER FOR CONVERSION
Editorial matter,selection and Chapters 1,6,7 and 10
© Bonn International Center for Conversion 2003
Chapters 2–5,8 and 9 © Palgrave Macmillan Ltd 2003
All rights reserved.No reproduction,copy or transmission of this
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First published 2003 by
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Library of Congress Cataloging-in-Publication Data
The military as an economic actor :soldiers in business / edited by Jörn
Brömmelhörster and Wolf-Christian Paes.
p.cm.– (International political economy series)
Includes bibliographical references and index.
ISBN 0–333–99928–2 (alk.paper)
1.Military-owned business enterprises—Case studies.2.Military-owned
business enterprises—Africa.3.Military-owned business enterprises—
Asia.4.Military-owned business enterprises—Latin America.5.Military-
owned business enterprises—Russia (Federation) 6.Armed
forces—Finance.I.Brömmelhörster,Jörn,1961– II.Paes,Wolf-Christian.
III.International political economy series (Palgrave Macmillan (Firm))
HD2731.M55 2003
338.6’2—dc21 2003046915
10 9 8 7 6 5 4 3 2 1
12 11 10 09 08 07 06 05 04 03
Printed and bound in Great Britain by
Antony Rowe Ltd,Chippenham and Eastbourne
Contents
List of Tables and Figures vii
Acknowledgements viii
Notes on the Contributors ix
List of Abbreviations xi
1 Soldiers in Business: An Introduction 1
Jörn Brömmelhörster and Wolf-Christian Paes
2 Military Business in Argentina 18
Thomas Scheetz
3 Soldiers as Businessmen: The Economic Activities of
Central America’s Militaries 32
Arnoldo Brenes Castro and Kevin Casas Zamora
4 The Rise and Fall of the Chinese Military Business Complex 52
Tai Ming Cheung
5 The Economic and Commercial Roles of the
Vietnam People’s Army 74
Carlyle A. Thayer
6 Trifungsi: The Role of the Indonesian Military in Business 94
Lesley McCulloch
7 Power, Perks, Prestige and Privileges: The Military’s
Economic Activities in Pakistan 124
Ayesha Siddiqa-Agha
8 Praetorians or Profiteers? The Role of Entrepreneurial
Armed Forces in Congo-Kinshasa 143
Wolf-Christian Paes and Timothy M. Shaw
9 The Largest European Army in Business: The
Case of Russia 170
Ksenia Gonchar
v
vi Contents
10 Conclusion 187
Jörn Brömmelhörster and Wolf-Christian Paes
Notes 197
Bibliography 204
Index 213
List of Tables and Figures
Tables
2.1 Argentina: military-run industries, privatizations 23
2.2 Argentina: military-run industry at moment of
privatization 25
3.1 Armed forces in Central America: basic facts 34
5.1 Estimated revenue earned by military-run enterprises,
1990–8 87
6.1 Sample of military salaries 104
7.1 Major projects of the Fauji Foundation 126
7.2 Major projects of the Army Welfare Trust 127
7.3 Major projects of the Shaheen Foundation 128
7.4 Major projects of the Bahria Foundation 128
9.1 Main indicators of the Russian armed forces 172
9.2 Distribution of extra-budgetary revenue by spending
category, in per cent 177
9.3 Commercial revenue of the armed forces by source,
in per cent 178
9.4 Military business fields 179
9.5 Military business: strengths and weaknesses 184
10.1 Factors motivating military business 189
Figures
1.1 Primary and secondary roles of armed forces 8
1.2 Military business as part of military expenditures 12
7.1 Overview of military business activities 129
vii
Acknowledgements
The editors would like to thank the John D. and Catherine T. MacArthur
Foundation for the generous funding which helped to make this book a
reality. The conference in Jakarta, Indonesia, which brought together
the contributors to this volume was supported by the local office of
Development Alternatives Inc.
A special thank you goes to the staff at the Bonn International Center
for Conversion (BICC) who collaborated in this project, in particular
research assistants Cheryl Loeb and Zackary Moss for their sterling
support. Finally, we would like to thank our principal editor, Natalie
Pauwels, for ensuring that the authors’ diverse styles would not prove
too trying for the reader.
JÖRNBRÖMMELHÖRSTER
WOLF-CHRISTIANPAES
viii
Notes on the Contributors
Jörn Brömmelhörster works as a governance specialist with the Asian
Development Bank in Manila, Philippines. Previously, he worked as a
senior researcher and project manager at the Bonn International Center
for Conversion (BICC), and as a freelance consultant. He has published
widely on defense spending and conversion.
Arnoldo Brenes Castro serves as an adviser to the Ministry of Foreign
Affairs and Culture of Costa Rica. Formerly, he worked as the pro-
gram director for the Central American Dialogue for Security and
Demilitarization at the Arias Peace Foundation and co-edited the book
Soldiers as Businessmen: The Economic Activities of Central America’s
Militaries(San José, 1998).
Tai Ming Cheung is a PhD student at King’s College, University of
London, working on a thesis on Chinese defense economics. Previously,
he worked as a consultant for PricewaterhouseCoopers, as a senior
director for Kroll Associates and as an investigative journalist for the
Far Eastern Economic Review. He has published the book China’s
Entrepreneurial Army(Oxford, 2002).
Ksenia Goncharworks at the Russian Academy of Science in Moscow and
as a research associate at the Bonn International Center for Conversion
(BICC). Her research is focused on Russian defense conversion.
Lesley McCullochis a writer and former lecturer in Asian Studies at the
University of Tasmania in Australia. Previously, she worked as a
researcher at the Bonn International Center for Conversion (BICC) and
has published widely on Indonesia.
Wolf-Christian Paes works as a senior researcher and project manager
at the Bonn International Center for Conversion (BICC), and as a
consultant for various development organizations in the field of demo-
bilization, disarmament and security sector reform.
Timothy M. Shaw is the Director of the Institute for Commonwealth
Studies at the School for Advanced Study of the University of London,
ix