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Pakistan to freeze military budget as tensions with India linger

IMF loan triggers move, raising questions over heavy reliance on nuclear weapons

ISLAMABAD -- Ahead of Pakistan's announcement of its annual budget on Tuesday, the country's influential armed forces and the government of Prime Minister Imran Khan have promised to rein in military spending for the coming year.

The unusual move, likely the first ever, comes as Pakistan prepares the ground for a $6 billion loan from the International Monetary Fund aimed at averting a balance of payments crisis.

Khan, in a tweet last Wednesday, acknowledged the armed forces' "unprecedented voluntary initiative of stringent cuts in their defense expenditures for next FY [fiscal year] because of our critical financial situation, despite multiple security challenges."

His comments followed a tweet the same day from Maj. Gen. Asif Ghafoor, chief spokesman for Pakistan's armed forces, in which he said that the "voluntary cuts [a spending freeze without adjustments for inflation] in [the] defense budget will not be at the cost of defense and security. We shall maintain effective response potential to all threats."

Pakistan's defense budget is estimated at around a fifth of the country's total government spending of $42 billion for the July 2018-June 2019 financial year. Pakistani authorities have traditionally seen that budget as crucial to maintaining the military's manpower of over half a million troops, given the country's long rivalry with India over who should have sovereignty in the disputed majority-Muslim territory of Kashmir.

Tensions between the two countries flared up in February after a terrorist attack in Indian-controlled Kashmir. Indian Prime Minister Narendra Modi's government said the attack was carried out by a Pakistan-based Islamist group, but Khan's government denied it.

Tensions between the two South Asian neighbors are of concern to Western nations, given that India and Pakistan are both armed with nuclear weapons.

The Pakistani military also plays a key role in the country's campaign against Taliban militants. So far, it has taken over the main power centers of the Taliban and forced them to retreat to pockets across the "tribal areas" along the border with Afghanistan.

Analysts say the decision by Pakistan's armed forces not to seek even a minimal increase in military spending for the coming year is an acknowledgment of the mounting economic challenges that have forced Islamabad to ask the IMF for a new loan.

Pakistani soldiers stand on Al Khalid tanks during Pakistan Day military parade in Islamabad on March 23.   © Reuters

"The Pakistan military also needs a healthy economy, not one which faces financial collapse," said James Dorsey, a senior fellow at Nanyang Technological University's Rajaratnam School of International Studies in Singapore. The IMF loan will involve "steep austerity measures," Dorsey said, and could create a public backlash.

"This is going to be a painful program. We don't know yet what the popular response would be," Dorsey said, referring to reports the fund will seek an unprecedented increase in tax collection targets, combined with large cuts in public expenditure.

A Foreign Ministry official in Islamabad said there are limits on how far the country's spending on its armed forces can be reduced, given Pakistan's military commitments.

"If you begin cutting expenditure too radically on conventional defense purchases, there is a risk that you will be forced automatically, as a country, to rely increasingly on your nonconventional assets," said the official, who spoke to Nikkei on condition of anonymity. Nonconventional assets refers to the country's nuclear arsenal.

"Pakistan's armed forces have taken a big step," he said. "But I don't think Pakistan can afford to make this a long-term trend unless disputes in our neighborhood -- especially with India over Kashmir -- are settled." 

But some experts disagree with that assessment. Nan Tian, a senior researcher with Sweden's Stockholm International Peace Research Institute, said Pakistan's spending freeze may not immediately have an impact on the country's ability to purchase weapons.

"If a contract is signed in 2020, it may take a few years for payments to begin," he said. "Payments will not become due immediately."

Western diplomats say Pakistan's armed forces have become increasingly dependent on China as their main supplier of military hardware. In the past, the U.S. provided Pakistan with most of its arms.

Islamabad's increasingly close military ties to Beijing have led to big contracts, such as China's deal to sell eight conventional submarines to Pakistan over the next decade, and an agreement for Pakistan to manufacture the JF-17 'Thunder' fighter jet locally. The aircraft is expected to become the backbone of the Pakistan Air Force.

"As a close ally of Pakistan, I am sure China will be willing to reschedule military loans owed by Pakistan" said one Western diplomat who spoke to Nikkei on condition of anonymity.

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