Pakistan Military News, Reports, Data, etc.
- Thread starter A.Man
- Start date
Money is no good if you're not alive to spend it, whether you're a country or a person.
Everyone understands why Pakistan feels a strong need to prioritize defense spending with India and Afghanistan as neighbors.
I've actually been told that the informal economy represents 80% or more of Pakistan's total economic output, so your figure of 60-65% sounds credible.
However, lawful governments tend to be largely, if not completely unable to subject their informal economies to direct taxation.
So are there mechanisms unique to Pakistan that allows it to funnel outputs from its informal economy into funding defense imports?
Never made that claim.
So is Pakistan funding its defense imports primarily through a combination of foreign loans and remittances from the GCC?
From my understanding, the Pakistani military plays a bigger role in the national economy than what's typical in most countries.
Does any of the income generated by businesses or assets owned by the Army Welfare Trust, Shaheen Foundation and/or similar entities ever contribute to paying for big ticket defense imports like the J-10C?
You might be misunderstanding the question.
Not here to doubt Pakistan's will or means for importing weapons systems that are considered defense imperatives.
However, just what mechanisms or methods does Pakistan use to materially prioritize such defense imports?
I believe it does, but it's limited to the Type 054/AP ship, with limited land attack options.
Currently there's the Babur 1A which is subsonic and a range of about 900KM which serves mainly as nuclear strategic deterrence.
And probably being able to reliably hit production facilities, storage depots, rear supporting air force bases, and command centres that are situated closer to the interior. >500km
Yes, not only that but they often fund retirement packages of veterans too which allow part of the formal national budget to be reserved directly for sustaining active military needs. And some chunk of the economy is indeed undocumented like you mentioned, though I'm unsure about the 80% figure exactly.
The below article mentions 40%. Mix in military business funding, favourable long-term financing (multi-decade loans), and perhaps some select areas being sponsored by the GCC, which is uncertain, it somehow works out. But I don't think China has been giving freebies, even the J-10C contract can be found online.
You're absolutely right that informal economies are typically resistant to direct taxation, and Pakistan is no exception. While estimates vary, the figure of 60–80% for Pakistan’s informal sector is widely accepted.
As for how such a large informal sector may still support defense imports despite being outside the regular tax net, there are several indirect mechanisms, many of which are deeply rooted in Pakistan’s institutional structure:
- Military-Linked Business Empires: A significant portion of the informal economy is tied to the military control’s vast commercial interests through entities like the Fauji Foundation, Bahria Foundation, Shaheen Foundation, the Army Welfare Trust and Askari Bank. A key component of this empire is real estate, with housing projects like DHA (Defence Housing Authority), Shaheen Towns, and Falcon schemes generating massive untaxed or lightly regulated wealth. Revenues from these ventures, operating under preferential conditions, can be redirected into defense or institutional expenditures.
- Smuggling and Informal Border Trade: Despite the fencing of borders with Iran and Afghanistan, large-scale smuggling of Oil, consumer goods, and other commodities persists. This shadow trade, often tolerated or facilitated under the umbrella of the military establishment, contributes substantially to the informal economy. The enduring presence of these networks suggests high-level protection or complicity, with some proceeds potentially recycled into state or military-linked ventures.
- Institutional Control Across the Board: Perhaps most critically, Pakistan’s military establishment exerts systemic control across virtually all sectors of governance and civil life. This includes the judiciary, civil bureaucracy, police, media, industrial and commercial sectors, and political class. The military has long played a central role in shaping election outcomes, installing or removing governments, and engineering political alliances. This grip allows it to ensure their institutional interests along with personal gains & continuity of defense funding regardless of the civilian government in office
- Remittances and Foreign Exchange Flows: Overseas remittances, often routed through hawala/hundi networks. These funds are later formalized, adding to the country’s foreign exchange reserves which are used to pay for critical imports, including military hardware.
- Indirect Taxation: While direct taxation is largely absent in the informal sector, the government still captures revenue via indirect means such as sales tax, fuel duties, and customs levies on goods and services that are part of the informal economy’s supply chain.
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Yes, Military(Airforces/navy) is indirectly involved in other businesses and the 'informal economy' so some % of that is regularly funneled to purchases, but alot of it also covers the retirement packages/pensions/health for retired folk so those works arent taken from the 'official defense budget'
This is one of the reasons some people assume that Pakistan's actual defense budget is a bit higher than the stated $8Bn one.
Some retired folk have written that army has some times done acquisitions entirely using its own 'profits' too.
The Chinese aren't giving freebies here. Discounts and financing are available where appropriate, but no one competent is going to want or appreciate "handouts."
Not exactly familiar with the Pakistani interwebs, but if you got a link to that J-10C contract (regardless of the language), please do share!
Now that's interesting!
In the 1980s, the Afghan resistance's preferred cash crop was the poppy, which were then processed into opioids like morphine and heroin in labs on the Pakistani side of the border.
The revenue generated by this trade represented a significant source of income for the mujahideen, and the labs and logistical networks that made it possible obviously couldn't exist without the permission, if not protection and support of the Pakistani military.
Not here to "taint" the reputation of the Pakistani military, as this is simply how things work in a lot of places adjacent to major war-torn, narcotics-yielding failed states, especially where resources for governance and development are fairly constrained.
The Taliban, which currently governs Afghanistan, has done a since seizing power nationally in 2021. However, before that, they too facilitated and taxed the narcotics trade to fund their insurgency against the Karzai and then Ghani governments and their NATO sponsors.
Not sure just how much in terms of "taxes" and "transit fees" individuals and elements within the Pakistani military may have collected from 2001 to 2021 from various Afghan warlords/druglords, but obviously in the billions, if not tens of billions of dollars.
So are you implying or suggesting that a portion — not necessarily a significant percentage — of these "taxes" and "transit fees" were washed through Pakistani financial institutions and/or real estate projects controlled by the Pakistani military through its various foundations, and then most likely injected as capital investments into portfolio companies owned by said foundations, with some of the subsequent dividends funneled into defense procurement?
Are there any reports, articles or papers (in any language) on the amount of income that the Pakistani military and its many foundations generate annually through their lawful commercial enterprises, and how that income is then divided and expended?
Have any of these retired folks specified anything in particular — be it goods or services — that were procured with such "profits?"
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Your analysis touches on a well-documented and deeply complicated intersection of conflict economics, regional geopolitics, and illicit finance. It's no secret that during the Afghan-Soviet war, and even during the post-2001 era, narcotics revenue was a major funding stream for various actors including the mujahideen, the Taliban, and certain warlords. The infrastructure supporting that trade labs, transit routes, protection could not have functioned at scale without some degree of complicity or at least tacit acceptance from regional power centers, including elements within state institutions.
As for whether a portion of the proceeds from narcotics-related "taxes" and "transit fees" were laundered through Pakistani financial institutions or channeled into military-controlled foundations and investment portfolio the scenario is not only plausible but arguably likely. Given the broad commercial footprint of military-affiliated entities in Pakistan, such as the Fauji Foundation and Army Welfare Trust, there exists a well-established framework through which illicit funds could be quietly absorbed and legitimized.
The more pointed notion that a significant portion of this revenue ultimately made its way into the deep pockets of the top military elite deserves serious consideration. In systems where oversight is limited and the military operates as both a security force and a commercial empire, the boundary between institutional funding and personal enrichment often blurs. This is further compounded in Pakistan by the fact that the military establishment holds disproportionate control over nearly all major state institutions ranging from intelligence and internal security to elements of the judiciary, media, and key economic levers. In such a landscape, accountability mechanisms are either weak or entirely absent.
The reinvestment of such funds into real estate, portfolio companies, or even defense procurement wouldn’t just be feasible it would follow a pattern seen in other fragile or conflicted states where elites profit from instability.
Your framing of this not as an isolated case but as part of a broader structural dynamic is both realistic and important to acknowledge.
Few angles not being covered:
1. This deal indirectly responds to India supplying Brahmos to Phillipines.
2. PK and CN govts arent exactly transparent in this specific domain. PK govt announcing now just means that things have been locked months ago or <2 years (not all at the same time). On PK side, such deals are then published through informal channels (~twitter, instead of leaking to journalists or legacy media) and formally announced much much later.
3. The above point brings us to this relatively newer PK Mil watch development (mentioned above). Azeri JF-17 deal and J-35+ others have proven certain PR twitter accounts to be correct and thier naysayers to be wrong. It would be healthy to throw some caution when disregarding them completely next time.
4. This defacto makes Pakistan the closest military partner with China with highest access to Chinese tech. It also makes sense if China wishes to expand its influence and export market.
You get customers who have no other viable options (to certain extent, Pakistan) and in other places you have to compete. And you greatly improve your chance of sales if you have a story to back the claims on your product, which essentially is what Pakistan achieved last month and did it in a manner that absolutely no one expected. In US's case, they've always been in one or another war to build up the product story, even tho against vastly inferior opponent, its still a more viable claim vs none at all. There are more factors that play into such deals but product viability is still critical.
5. The deal completely rejects the notion of CN isolationist camp in this forum, those who push to bury the head in the sand and completely ignore the periphery and alliances.
Last time such camp's wider influence led to a disaster for a civilisation that had always been great power for thousands of years. Its good to see the current Chinese leadership steer away completely from such foolish notions.
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About the informal Economic sector in Pakistan: it is absolutely there in every part of life in Pakistan, the informal economy is certainly on par or bigger than formal economy. This leads to overall poor allocation of resources, governance and taxation, in no way its a good thing for the country, however, yea it can lead to a situation where the robustness of the economy is often poorly measured. .
There is also a vast informal network of social security.
1. This deal indirectly responds to India supplying Brahmos to Phillipines.
2. PK and CN govts arent exactly transparent in this specific domain. PK govt announcing now just means that things have been locked months ago or <2 years (not all at the same time). On PK side, such deals are then published through informal channels (~twitter, instead of leaking to journalists or legacy media) and formally announced much much later.
3. The above point brings us to this relatively newer PK Mil watch development (mentioned above). Azeri JF-17 deal and J-35+ others have proven certain PR twitter accounts to be correct and thier naysayers to be wrong. It would be healthy to throw some caution when disregarding them completely next time.
4. This defacto makes Pakistan the closest military partner with China with highest access to Chinese tech. It also makes sense if China wishes to expand its influence and export market.
You get customers who have no other viable options (to certain extent, Pakistan) and in other places you have to compete. And you greatly improve your chance of sales if you have a story to back the claims on your product, which essentially is what Pakistan achieved last month and did it in a manner that absolutely no one expected. In US's case, they've always been in one or another war to build up the product story, even tho against vastly inferior opponent, its still a more viable claim vs none at all. There are more factors that play into such deals but product viability is still critical.
5. The deal completely rejects the notion of CN isolationist camp in this forum, those who push to bury the head in the sand and completely ignore the periphery and alliances.
Last time such camp's wider influence led to a disaster for a civilisation that had always been great power for thousands of years. Its good to see the current Chinese leadership steer away completely from such foolish notions.
--
About the informal Economic sector in Pakistan: it is absolutely there in every part of life in Pakistan, the informal economy is certainly on par or bigger than formal economy. This leads to overall poor allocation of resources, governance and taxation, in no way its a good thing for the country, however, yea it can lead to a situation where the robustness of the economy is often poorly measured. .
There is also a vast informal network of social security.
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Pakistani social media buzing.....
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But wait … if I read the original source correctly, then Pakistan received an OFFER about the J-35A and not that already a contract was signed or even they are ready for delivery as claimed by some!
True, but there's an understanding that a lot of these deals are exposed to the public only when they are more or less done.