The military-industrial complex - President Eisenhower raised the alarm in 1961; its relevance t...
President Eisenhower raised the alarm in 1961; its relevance today
‘But most shall he sing of Lanka
In the brave new days to come,
When the races all have blended
And the voice of strife is dumb,
When we leap to a single bugle,
March to a single drum.’
From ‘The Call of Lanka’,
by the Rev. W.S. Senior.
As we march into the year 2012, hopefully – leaping to a single bugle, marching to a single drum – to paraphrase Rev. Senior, with the defence services taking a lead role in many sectors, it is a good time as any to reflect upon the content of the farewell speech delivered in 1961 when President Eisenhower retired from the presidency of the United States of America, which has gone down in history for its prescience.
Eisenhower was a soldier, he had been Supreme Commander of Allied forces in Europe during the Second World War, and commanded ‘Operation Overlord’ invading continental Europe to free it from the Nazis and successfully concluded the war in Europe.
He entered politics after retirement from the Army and was one of America’s most successful presidents, leading the US through its golden age. Eisenhower – was a soldiers’ soldier – the troops loved him and referred to him as ‘General Ike’.
He very well knew and had experienced personally the horrors of war firsthand. In his farewell speech as President, General Ike warned the people of America about the growth of a ‘military-industrial complex’ and the risks it could pose for the American people. General Ike said: “The potential for the disastrous rise of misplaced power exists and will persist.”
Tenfold expansion of armed forces
What worried the outgoing president was the tenfold expansion of the American armed forces after the two world wars, and the emergence of a permanent arms industry of vast proportions.
In the original draft of his speech General Ike referred to a ‘military-industrial-congressional complex’, which was edited down to ‘military-industrial complex’ in the final delivery.
This has also been branded as the ‘Iron Triangle’ – in one corner stands the arms industry – or in a different context the arms procurement and supply business (the arms dealers); in the second corner, in the US stands the Pentagon – the Defence department – the end consumer of the military equipment, i.e. the Ministry of Defence, the Joint Operations Command, the Army, Navy, Air Force and Police.
The United States being a democracy, as in all democracies, an elected legislature is needed to vote the funds to procure military equipment and pay soldiers’ salaries, in the US this third corner would be occupied by Congress, in our case the Parliament. So that is the triangle General Ike meant by the military-industrial complex – the Ministry of Defence, the armed forces and the politicians in Parliament.
Humongous expansion of defence expenditure
Some commentators are of the view that this triangle is inadequate to explain the threat that the military-industrial complex holds over a free society. They feel that a square or rectangle with a fourth corner is required – that is the extraordinary prestige, verging on veneration, which is accorded to the armed forces by the citizens after achieving victory in the battle field.
This in fact existed in the US at the time of Eisenhower’s presidency- this was after the victories in Europe in two world wars, and in Korea, before the military was discredited in the unpopular war in Viet Nam due to the compulsory service required by the draft.
The prestige on the armed forces was riding high and what the Pentagon required, Congress readily voted the funds for. The US defence budget kept rising steadily, supported by congressmen who had military bases and weapons factories in their constituencies.
This humongous expansion of defence expenditure dipped after Viet Nam but picked up again with Afghanistan and Iraq. Today with an uncontrollable deficit the US is again in a budget cutting mode, and the defence budget is under scrutiny for cuts.
Potential danger to a nation
However, long before General Ike raised the alarm, the issue of a military-industrial complex being a potential danger to a nation has concerned the world’s leaders. President George Washington, in his own farewell speech to the American people in 1796 cautioned them that “overgrown military establishments are, under any form of government, inauspicious to liberty”.
More recently the Soviet Union’s economy crashed due to excessive expenditure incurred in attempting to combat President Reagan’s Star Wars strategy, which was unaffordable. The ultra secret arms industry devoured more than a third of the USSR’s GDP. In Germany in both world wars, the Krupp weapons industry fuelled the German war machine for their own profitability.
In all nations, arms manufacturers, dealers and suppliers play a key role in sustaining conflicts and military establishments. National budgets have huge deficits and are forced to survive on ‘borrowed assets’ to meet high defence expenditure.
Pakistan, a class example
There are some nations which are classic examples of being in the vicelike grip of the military-industrial complex. Analysts say Pakistan is an example. The Armed Forces are in reality the only efficient functional organisation in the country. After partition from India, the Pakistani armed forces have played the role of defender of the nation. Military dictators have run Pakistan for a large part of its existence.
Author Ayesha Siddiqa in her book ‘Military Inc: Inside Pakistan’s Military Economy’ has calculated that the army controls a US$ 15 billion empire, with hundreds of companies making everything from fertiliser to breakfast cereal and of course weapons and ammunition.
The Pakistan armed forces have their own schools and even a medical college. The few years that there were civilian governments in control of the country, the government was firmly under the control of the military.
The Pakistan Army’s 111 Brigade based in the Rawalpindi cantonment regularly marches out to oust the civilian government in nearby Islamabad and install a General in power. Inter Services Intelligence, Pakistan’s spy agency, is a law unto itself, growing in stature during the Soviet occupation of Afghanistan as the conduit for US assistance to the Afghan insurgents.
Amusing anecdote
There is an amusing anecdote which puts in context the overwhelming influence the Army has over Pakistani society and the average Pakistani’s attitude to the situation.
When the Chief Martial Law Administrator General Zia ul Haq was running Pakistan, a military police patrol in Islamabad came across the surprising scene of three civilians assaulting a uniformed soldier on a main road. The military policemen parked their vehicle near a bicycle which was on the road side, stopped the assault and asked the civilians what they were thought they were doing to a member of the armed forces, the honourable defenders of the nation.
One assailant, an older man, said he lived in the house nearby and that another younger assailant was his son, and that they had assaulted the soldier to defend their family’s honour because he made un-Islamic advances to his young daughter.
The burly military police Sergeant, the senior soldier present, said that the assault was justified in defence of the honour of Islamic womanhood and gave the accused soldier a thundering slap for misbehaving in that un-soldierly manner. He then turned to the third assailant and asked him why he had taken part.
The man pointed to the bicycle nearby and said he was only simply going home from work, after a hard day at the factory, when he saw two people assaulting a soldier in uniform on the main road. He thought that the military government must surely have been overthrown, otherwise how could such a thing happen? He felt so thrilled, happy and elated that he left his bicycle on the roadside and joined the assault!
The military police loaded the soldier, the assailant and his bicycle onto their vehicle and drove off in the direction of the Rawalpindi cantonment!
Egypt, Iran and Burma
The Egyptian army is also a behemoth. It is estimated to control about 10% of the Egyptian economy. Military-backed companies produce cement, olive oil and household appliances as well as weapons and munitions. They also provide pest control services, catering services and childcare.
The Egyptian military owns large extents of land, especially on Egypt’s Red Sea coast. Retired Generals have muscled themselves onto many private sector company directorates.
In Iran the Revolutionary Guard runs more than 300 companies, ranging from agriculture, to industry, transport, food production and distribution and tourism. The Guard also has invested in corporates privatised off by the government.
This phenomenon, referred to as ‘Khaki Capitalism,’ is also found in Burma. Even since the army took control of the country decades ago after ousting the democratic government in a bloody military coup, the armed forces have had a stranglehold over the Burmese government and economy. It is thawing a bit now, because of the bait held out by ASEAN that if Burma improves its human rights record, Burma may be eligible to chair ASEAN in 2014.
Thailand, China, Indonesia and Zimbabwe
In Thailand too the military has a huge vested interest in the business sector. Military dictators, loyal to the King have regularly ousted elected civilian governments. The Thai Military Bank is one the largest indigenous financial institutions.
In China, the People’s Liberation Army took to the one time leader Deng Xiaoping’s aphorism that ‘to get rich is glorious’ like the proverbial Beijing duck to water. At one point in the late 1980s the army was running nearly 20,000 businesses.
In Indonesia, the army has vast business interests, it revels in its role in the freedom struggle against the Dutch, and it considers this is a due reward for holding the nation together during the attempted coup by the communists. In Zimbabwe the military has formed joint ventures with Chinese business partners in mining and in farming.
So General Ike’s military-industrial complex is alive and well, the world over. An overwhelming military establishment’s influence can distort the development of an economy.
Sri Lanka
Even in Sri Lanka, after the defeat of the Tigers, the military is in all sorts of business ventures.
Attorney J.C. Weliamuna in a well-researched article entitled ‘Peace, Military and People: Are non military engagements of the military valid?’ points out that the Sri Lanka military in currently engaged in peacetime police work, whale watching tours, selling vegetables, agriculture, the construction industry, running ticketing agencies, schools and air services, and many other tasks which would be normally be undertaken by civilians.
Recently, the maintenance of cricket stadiums and the maintenance of the new ‘Nelum Pokuna’ performing arts theatre donated by China have also been handed over to the military.
For our population of around 20 million, Sri Lanka has total armed forces strength of around 200,000 and a Police service of around 75,000. The ratio to the general population of uniformed security personnel is around 80 to one. This is huge cost and a burden to the national budget. Defence budgetary allocations have incrementally increased and not decreased after the war concluded.
Demobilisation
It is conceded that there could not have been a mass demobilisation of the military after the defeat of the Tigers overnight. All military staff colleges and academies teach their students the lessons of the march of the Bonus Army of 17,000 veterans of World War I and their dependants and supporters who could not find gainful employment during the Great Economic Depression in the United States and marched from the four corners of the United States of America to protest to Washington D.C., demanding jobs.
On demobilisation the veterans had been awarded bonuses in the form of certificates they could not redeem until 1945. The veterans also demanded that they receive immediate cash payments for the certificates. In 1932, while they were demonstrating in Washington D.C., President Hoovers’ Government had to use force to drive away the Bonus Army and their supporters from Washington D.C. General Douglas Macarthur led cavalry, tanks and infantry to chase them away.
Demobilisation of armed services, especially when their prestige is high after a battle field victory, is a very sensitive issue. The ‘gratitude’ the nation feels towards their victorious soldiers has to be traded off against the high costs of maintaining a large standing army.
Among army veterans and US soldiers returning from Iraq, 800,000 are jobless, 1.4 million live below the poverty line. US veterans are living longer and increasingly finding the transition from a regimented military life to an unstructured civilian environment traumatic.
A nation such as ours will have difficulty facing such problems. The ideal course of action would be to put in place technical and vocational training courses which would equip soldiers with technical skills which are in high demand in the employment market and integrate them gradually back into society. They would be pensionable and therefore would not be destitute, but they have to be productively employed.
There are many instances where successful demobilisation programmes have been put into place and ex combatants reintegrated into society. In Latin America, El Salvador, Guatemala, Haiti and Nicaragua have had demobilisation programmes. In Africa, there have been such programmes in Mozambique, Uganda and South Africa.
Downside
One downside factor of keeping the soldiers mobilised after the war is over and deploying them in non military activities such as whale watching expeditions, marketing of primary produce, the construction and maintenance industries, running ticketing agencies, hotels and tea boutiques, is that it effectively ‘crowds out’ private enterprise in those sectors.
These activities are normally done for profit by the business community, gainfully employing a large number of persons and are also taxed. When a State entity like the armed services gets into competition with the businessmen, it is not a fair or level playing field; there is no contribution to the revenue either.
The taxpayer in effect is subsidising the soldiers in business, the private sector cannot compete. The powerful backing the Government provides is an influence which private business cannot challenge and take on effectively.
Also there is the time factor. For how long can the State and the taxpayer bankroll the troops, in such ‘make work’ enterprises? In Sri Lanka today all labour intensive industries are short of skilled labour. This is a huge opportunity. The armed forces should give their troops the skills required and provide them to industry for productive employment.
Positive aspect
But we must not forget that there also could be a positive aspect to having a large military establishment. 10% of the Chief Executives of America’s 500 biggest companies are former military officers. This, however, would require officers who are about to be demobilised to undergo training in business management, which will not be difficult to provide.
The military can also play a significant role as an incubator. The majority of Israel’s computer industry entrepreneurs are those that have gone into business with contacts made and skills they have learnt while serving in the Israeli Defence Forces. The Israeli Army has an especially advanced cyber warfare division which provides conscripts with cutting-edge technological skills.
In China, the founders of Huawei Corporation, one of the most successful manufacturers of telecommunication equipment, first met and sharpened their management, electrical and electronic engineering skills while serving with the engineering units of the People’s Liberation Army.
In Sri Lanka too, many successful construction companies are run by ex officer cadre entrepreneurs who once served in the engineering regiments of the Sri Lanka armed forces. Indeed in the current situation there is a strong case for an angel/private equity/venture capital fund to take equity in enterprises launched by ex servicemen.
The bottom line
The military-industrial complex can be a positive influence for the economic forward march of a nation. But we must heed General Ike’s warning and ensure that the military does not ‘crowd out’ private enterprise in areas where the entrepreneurial businessmen should play the lead role.
In addition to the revenue loss, the military establishment through its influence and prestige can influence to skewer economic policy in their favour to the detriment of other sectors.
The bottom line is that armed forces personnel certainly have a role to play in business, but only after they shed their uniforms and contribute to national revenue through taxes. Only then would, as in Rev. Senior’s epic poem, we in reality ‘leap to a single bugle and march to a single drum’.
(The writer is a lawyer, who has over 30 years experience as a CEO in both government and private sectors. He retired from the office of Secretary, Ministry of Finance and currently is the Managing Director of the Sri Lanka Business Development Centre.)
