Pakistan has announced a defense budget of PKR1,100 billion ($9.5 billion) for fiscal year (FY) 2018-19.
The new figure represents a 20% increase over the PKR920 billion allocated for defense in 2017-18, which was subsequently raised to PKR999 billion, and t he new defense budget amounts to about 19% of the country’s national expenditure for the year and is estimated to be equal to about 3.4% of GDP.
Pakistan’s security objective places a heavy requirement on maintaining a consistent level of defense spending. Even though a new defense budget was announced for FY 2018-2019 increased by 20% to $9.5 billion by present political government, if the present ruling party (Pakistan Muslim League-Nawaz) returns to power any other collation alliance comes into power. The next elected government will have a lot on its plate when dealing with the budgetary and the financial condition of the economy of the country.
Presently the economy is on life-support even if all the indicators are turned around at a fast pace moved towards to a recovery and the growth engine kick starts it will take about two years before one can see any sustainable positive revenues being generated, which doubtful would happen. The former Prime Minister Mr. Nawaz Sharif after he was removed from the office for being not truthful of personal wealth, kept harping they will build roads, airports, dams, etc., even though a lot of these projects are being build but the issue here is who will pick up the bill. The past performance of the Sharif and his party has a lot of financial question marks. When he was removed from the office in 1999 the foreign exchange reserves were at $300 million. After the sanctions were imposed in 1998 post nuclear weapon testing, he arbitrarily froze all the foreign exchange accounts of Pakistani and others, which were worth a little over $11 billion. People have not forgotten that these actions have lead the foreign investors to be very apprehensive of his motives.
Pakistan will continue to focus the largest percentages of its defense budget on procurement of new military equipment, as well as the personnel and operational expenditure required to address the security concerns that threaten the stability of the government. Since the ongoing operations against militant and insurgents in the Northwestern part of the country bordering Afghanistan the toll and personal and equipment has been immense.
Pakistan’s defense budget excludes military pensions, military aid, defense procurement using credit and income generated by the military’s diverse business interests. However, in this budget it was disclosed that 31% of budget to “employee related expenses. This allocation, which includes salaries but excludes pension and even medical benefits to the employee and families from the budget.
Defense spending transparency has improved in Pakistan in recent years but there remains no structured approach to capital acquisition. Program management and budgeting, as understood in most defense forces, is not practiced. Usually the defense spending is one line and it is approved without any debate in the Parliament. The Defense Select Committee (DSC) of the Pakistani Senate usually holds some formal hearings but they are held behind closed doors. Normally the items, which are discussed in DSC, are related to Pakistan Defense Production (DPD), which is responsible for implementing policy and which covers National Engineering and Scientific Commission (NESCOM) it includes National Defense Complex (NDC) and Air Weapons Complex (AWC), Heavy Industries Taxila (HIT), Karachi Shipyard & Engineering Works (KSEW), Pakistan Aeronautical Complex (PAC), and Pakistan Ordinance Factories (POF).
Procurement
Ambitious modernization plans will mean that procurement will continue to account for a significant proportion of the defense budget, about 30 per cent on average. Pakistan will continue to seek modern equipment from a variety of sources – most significantly China – lately from Turkey, Italy and Sweden. However, since the 2004 Bush Administration tilt towards India by signing US-India Nuclear deal Islamabad has been wary of its dependence and reliance on its relationship with the U.S. In 2004, President Musharraf initiated Armed Forces Develop Plan (AFDP) 2015 in 2004. The total project cost for plan was estimated at $15 billion with 7% GDP growth.
Impact of Suspension of Armed Forces Develop Plan (AFPD) 2025.
The AFDP 2015 program was launched in 2004 by former president Pervez Musharraf aimed at making the three branches of Armed forces upgraded to modern forces of the world. In March 2009 Prime Minister Gilani initiated AFDP 2025 at the cost of $30 billion but since 2008 the GDP was stagnated at an average of 2.5% that was hardly maintaining an economy, which was surfing from recession. In all likelihood, it was clear that major arms procurements would not be attained at this rate of GDP. During a hearing of the Senate’s standing committee on defense, then the Chief of Pakistan Air Force Air Chief Marshall Kaleem Sadat disclosed that their organization Development Plan 2025 was suspended in 2007 because of lack of funding. With that in mind it would have been safe to assume that Navy’s development Plan 2025 has landed the similar fate as Air forces.
ARMY
Since 2004, the Army has been taking on the fight against the extremist militants on a perpetual basis. According to reliable sources it has lost more than 5,000 servicemen in its fight against these extremist militants. Aside from the personal loss it has also sustained material attrition and needs a significant replenishment for the material. One of the unfulfilled requirements is the induction of attack-helicopter gunships and other air assets of Pakistan Army Aviation Corp
To support and transport of troops in the fight against the militants Pak Army has not made any progress. The normal transportation method deployed in the NW Pakistan in the rugged area is 4×4 Toyota pick-up trucks, which are devoid of any armor protection to the troops. In some of the areas PA has deployed the HIT M-113/Talha APC but again because of the militants usage of RPG further iron sheets were attached to give more protection to the troops. What is required here are some types of Light Combat Tactical All-Terrain Vehicles (LCTA-T), MRAP All-Terrain Vehicles (M-ATV), medium and heavy duty MRAP vehicles, wheeled Infantry Fighting Vehicles (IFV) .
In September 2014, Defense Security Cooperation Agency notified congress with the intend to deliver 160 Mine Resistant Ambush Protected (MRAP) at an estimate cost of $198 millions. Most of these MRAP were transferred under the Excess Defense Articles (EDA), however, since Obama Administration discontinued Pakistan Counterinsurgency Fund/Counterinsurgency Capability Fund (PCF overseen by the Pentagon, PCCF overseen by State) in 2013 the last of 48 promised MRAP were not delivered.
The main phase of Pakistan’s (terrorism counter-offensive) Operation Zarb-e-Azb concluded in April 2016, resulting in the lowest number of terrorist attacks in the country since 2008. Up to 30,000 troops and armored vehicle forces were involved in the operation, all with the aim of stifling al-Qaeda and its affiliates in the region. However, security efforts do not simply end, and as such, demand for armored vehicles in Pakistan remain high. With the economy stumbling, Islamabad is struggling to acquire the counterinsurgency vehicles it needs to protect its government and military officials.
Army has procured 4 Mi-35M1 attack helicopters from Russia and the deliveries have been completed with hope of further order possible. Pakistan has also discussed procuring from Russia T-90 tanks with some type of assembly line along with MRO facilities. At this juncture it would be prudent for Pakistan to look into T-14 tank.
With continuation of the COIN operations Pakistan has deeply into its armor procurement. The Al-Khalid tank has been facing both technical and financial problems. The Pakistan Senate’s Standing Committee on Defence Production was told on 30 November 2017, senior HIT officials said the state-owned enterprise is producing 18 Al-Khalid-I MBTs (Type-90-2M) per year on average despite having capacity to build 50. Officials said the lower output was due to budgetary constraints. HIT officials added that the company has also started preparation to develop and produce the next-generation Al-Khalid-II MBT. Series production of this type is expected to start in the early 2020s. However, my visit to IDEAS 2014 while being briefed on Al-Khalid I was informed that in 2016 Al-Khalid II would be displayed but this did not occur. On the technical aspect, HIT has been hunting for a more suitable power plant for Al-Khalid since its induction in Pakistan Army.
Pakistan’s HIT and Ukraine’s Ukrspetsexport signed memorandum of co-operation (MOC) worth $600 million deal on 23 November 2017. This MOC is related to tanks, technical service, and maintenance and modernisation. The MOC is also thought to include Ukraine’s supply of 200 engines for Pakistan’s next-generation main battle tank (MBT), the Al Khalid-Improved (I) MBT plus supposedly an upgrade for T-80UD. Pakistan has shown considerable interest in the T-84 Oplot M (‘Fortress’) that is vastly improved version of T-80UD. Pakistan Army should look into ordering more Oplot M and upgrade its existing fleet of 320 T-80UD to Oplot M. On the other hand, Pakistan Army has been testing NORINCO VT-4 MBT. The VT-4 is an improved version of MBT-2000 in Pakistan known as Al-Khalid II. It would be prudent to not to invest in VT-4 but order more T-84 Oplot M convert the present fleet of T-80UD, improve on Al-Khalid program and possible invest in Russian T-90 and preferably T-14. There were some reports in the media that Pakistan has shown interest in Turkish Altay tank but Serdar Görgüḉ, General Manager of Otokar denied these reports.
In the arena of SPA Pakistan has procured from China unspecified number of SH1 Wheeled 155mm SPA along with more than 65 M109L 155mm from Italy. With collaboration with Indonesians Pindad HIT has been assembling unspecified number of Pindad APS-3 “Anoa” 6×6. The APS-3 won the competitions against the Serbian Lazar 2. Furthermore, HIT has discontinued the assembly of Dragoon 300 AFV Arrowpointe Corporation (now General Dynamics Land Division).
There has been a dire need for a viable tracked APC/IVF. In the past Pakistan Army had evaluate German Marder, Russian BMP-1, and British FV430 series during the peak of COIN operations in the North West, however, none of these platform was to Pakistan requirements. Presently, Pakistan has been evaluating Chinese VN17 is a heavy IFV, they seems to be satisfied. Italy has also supplied surplus 622 M113 (VCC-1 & VCC-2).
NAVY
In the last days of former President Musharraf Pakistan (August 2008) after lengthy negotiation was about to sign a multi-billion dollar deal with HDW in Kiel, Germany, for 3 U-214 submarines. However, immediately after President Musharraf left office the new govt. went straight for IMF program therefore forfeiting the submarine deal with Germany. If the contract was signed in November of 2008, the first U-214 Advance AIP powered submarine build in Pakistan would have been delivered in 2015with the last one delivered in 2019. Because of the dire need to fulfill the requirement for a 12 Submarine fleet Pak Navy approached China for a submarine deal. A tentative agreement was reached for eight-diesel electric submarines of unknown (Possibily Type-41) class worth close to $6 billion. Pakistan will build four of the eight submarines it plans to purchase from China, potentially speeding up the timeframe for delivery of the class to the Pakistan Navy. Pakistan navy signed a contract to upgrade all three existing Khalid class-SKK with Turkish defence engineering company STM (Savunma Teknolojileri Mühendislik ve Ticaret). These modification of the submarines are technological cutting edge, with Airbus DS Optronics was contracted by STM to replace the current SOPELEM J95 search and ST5 95 attack periscopes with its SERO 250 S search periscope and OMS 200 optronic mast, together with their associated hoisting mechanisms. These upgrades would make Khalid-class submarines vital to Naval Strategic forces second strike capabilities. Again, even though China was willing to provide long term soft loans the Government of Pakistan was far away from providing any collateral assurances. Similarly, acquisition for an additional four F-22P Frigates along with three or four F-25P heavy frigates with China are at a standstill because of the funding issues. However, in his farewell speech Pakistan Navy Chief Admiral Muhammad Zakaullah mentioned that Pakistan Navy has singed a deal with China for two Type-054A/Jiangkai-2 Frigate in July of 2017 and on June 1, 2018 signed yet another order for two vessels with deliverers to be completed by 2021, with an option to procure two more. Further, other vital procurements include from China 2 Azmat-class FAC, 2 CSTC-1500 offshore patrol vessels (OPV), four CSTC-600 (OPV). From Turkey four MilGem Frigate, and two Dutch two Damen 1800 (OPV) Aviation with the one being build at Damen’s Galati shipyard in Romania and possible second one build at KSEW if depends on space availability. The Navy has also added five ex-Royal navy Sea King helicopters. The navy has added three-used ATR-72-500C.They are being upgraded to ASW configuration by Rhineland Air Service (RAS) at Monchengladbach a further three aircraft are planned to be procured. These aircrafts are acquired as a replacement for aging Breguet Br.1150 Atlantic and Fokker F-27. Meanwhile, the Navy (PN) is flying seven P-3C-PUP (Pakistan Upgrade Programme) Orions from the navy’s Mehran airbase just outside Karachi. Some of these aircrafts have been moved to Turbat Naval Air Station in Baluchistan. Observations through HUMINT and IMINT it is clear that one of the destroyed P-3 has been fully recovered. New sets of wings, elevators and tail rudder have been installed with number 1& 4 engines missing. One of the replacement options is to procure Chinese Xian H-6K long-range aircraft and equip them with Saab’s Swordfish maritime patrol aircraft.
Air Force
The local production of the jointly build lightweight fighter aircraft CAC/PAC JF-17 is moving smoothly at Kamra. According to PAF sources, the air force has received a total of 104 Block I & II JF-17 and the production for Block II to continue planned to commence in late 2019. With Block III official approved the new fighter would see production, A Block III upgrade entails concentrating on weapons and sensor carriage with standard IFR and possibility of CFT. If all production goes as planned PAF wishes to induct close to 175 JF-17 (although some sources say 250) of these modern lightweight fighter aircrafts.
According to PAF officials during a PTV Global program PAF/PAC have recovered two of the three Erieye damaged during attack at PAF AB Minhas. One was completely written off while two others were recovered and made air worthy. A second SEK1.35 billion was placed that covers three new Erieye aircraft. These would replace one Saab 2000-based Erieye aircraft that the Pakistan Air Force (PAF) lost in an insurgent attack on its operating base in 2013, and augment the remaining three that were ordered in 2006 for a full-strength force of six. There has been discussion of upgrading Erieye with some upgrades of Saab’s GlobalEye. On the other hand, PAF received one of the upgraded KE-03 airborne early warning and control (AEW&C). The avionics upgrades are not disclosed, however, the installation of SITCOM system is a possibilities.
There is a need to add to the transportation and logistic sphere of PAF a lot. PAF needs to invest in procuring more IL-76/IL-478 from Russia, used/stored C-130, and add more CN-235 along with CN-295.
Pakistan US Defense Relation
On January 7, 2018 the U.S Statement Department issued the following statement “The United States will not deliver grant-funded military equipment or transfer security-related funds to Pakistan unless required by law. Exceptions may be made on a case-by-case basis if they are determined to be vital to national security interests… suspension would affect about $1.9 billion in military aid” The relationship between two countries is at their lowest web post 2001. In 2017 the U.S Pakistan military aid was worth $21 million. The U.S blames its failures in Afghanistan on Pakistan’s shoulders. The President of the U.S has called Pakistanis as liars and manipulators. The relationships are based on the fact that the U.S has shifted its bets towards India to counter China. As the Statement said it suspended almost $2 billion in military. By all means this is not the right category. Washington has the habit of mixing the Collation Support Fund with military aid. Both the countries cannot afford to have pre-2001 relationship. There is an urgent need to have reset button. Daesh and Iran are actively working in Afghanistan and some areas of Pakistan to recruit fighters for their own cause. While I was proof reading this article the news came to my attention that as of August 2017 the first three Bell AH-1Z Venom attack-helicopters slated for delivery in October 2017 have been embargoed. Currently embargoed and put into storage, probably at NAS Patuxent River (MD). The Naval Air Systems Command presolicitation notice is for: “The continuation of the preservation, storage and de-preservation effort of three (3) AH-1Z helicopters. This effort is necessary to maintain the aircraft in a preservation state such that they will be able to return to flight following de-preservation.” At this point this action by Trump Administration will exponentially increase the distrust between the US and Pak along with saga of F-16 of 90’s, this relationship looks worst than US-NK relationship.
Pakistan-China Defense Relation
Research, Development, Training and Evaluation (RDT&E)
Pakistan’s indigenous military production capabilities are fairly limited. However, the government is trying to develop domestic production through technology transfer in equipment purchases. Therefore, investment in R&D spending is likely to increase gradually over time, although unlikely to rise above six per cent of the defense budget while the country’s armed forces are engaged on multiple fronts. The Ministry of Defense needs to encourage the local investor and industry to be partners in defense projects. There has been utter lack of public-private partnership. The establishments mindset is such that their notion that private sector is not to be trusted, however, this has lead to a sever shortage of innovative ideas. Pakistan’s defense industry has been in stale state and when compared with Turkey’s defense industry Pakistan’s was ahead of Turkey defense in the 90’s but presently Turkey’s defense with private partnership is a generation ahead of Pakistan.
Personnel
Scrutiny of official budgetary documentation indicates that military personnel have received a significant increase in pay from 2008, when operating costs stood at $1.07 billion. They have subsequently increased to $1.15 billion (2009) and $1.41 billion (2010), and are projected to reach $1.61 billion by 2013.
Operations and Maintenance (O&M)
As security threats are focused on insurgents and border stability, the majority of O&M funding is spent on the army. However, as the Air Force has played a greater role in support of full-scale ground operations, its O&M costs have increased accordingly.
Offset Policy
Pakistan considers the cooperation with foreign companies, especially those in China, an important part of the country’s procurement policy. In recent years, the government has encouraged its industries to work more closely with overseas partners to take advantage of offset opportunities – particularly in the arena of technology transfer.
The proposed Type 214 deal in November 2008 with Germany’s Howaldtswerke-Deutsche Werft (HDW) was reported to have involved all three Type 214’s is being built under license by state-owned Karachi Shipyard and Engineering Works (KSEW) following extensive technology transfer. Such a move to build the submarines in Pakistan is in line with the objective to improve indigenous capabilities but is a departure from previous strategies where foreign manufacturers would start production before transferring it in country.
Defense procurement policy is based on its military doctrine and economic ability to purchase equipment needed by the services. In the past the procurement process was largely autonomous from the political. Even in the years of democracy, it was rare for governments to attempt to interfere with procurement decisions made by the armed forces.
| Title | 2010 | 2011 | 2012 | 2013 | 2014 | 2016 | 2017 | 2018 |
| GDP In Billion US$ | 202.3 | 207.1 | 215.1 | 215.1 | 236.0 | 248.2 | 260.6 | 313 |
| Defence Budget in Billions US$ | 6.151 | 5.734 | 6.188 | 6.188 | 6.725 | 7.055 | 7.430 | 8.78 |
| Total Defence Procurement | 1.926 | 1.800 | 1.927 | 1.927 | 2.046 | 2.118 | 2.231 | 1.4 |
| Army Budget | 2.891 | 2.695 | 2.846 | 2.846 | 2.959 | 3.104 | 3.158 | 4.126 |
| Navy Budget | 0.984 | 0.917 | 1.021 | 1.021 | 1.076 | 1.164 | 1.263 | |
| Air Force Budget | 1.439 | 1.376 | 1.547 | 1.547 | 1.681 | 1.693 | 1.783 | 0.9658 |
| Defence-Wide Budget | 0.837 | 0.745 | 0.773 | 0.773 | 1.009 | 1.094 | 1.226 |
ARMY BUDGET BY CATEGORY (2013 and beyond are estimates in USD)
| Title | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2018 |
| Army Budget | 2.891 | 2.695 | 2.846 | 2.909 | 2.959 | 3.104 | 3.158 | 4.126 |
| Title | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 |
| Procurement | 0.838 | 0.782 | 0.811 | 0.814 | 0.814 | 0.838 | 0.853 | 1.4 |
| RDT&E | 0.087 | 0.081 | 0.085 | 0.087 | 0.104 | 0.109 | 0.111 | |
| Military Personnel | 1.012 | 0.943 | 0.996 | 1.018 | 1.050 | 1.102 | 1.121 | |
| O&M | 0.824 | 0.768 | 0.825 | 0.858 | 0.902 | 0.962 | 0.979 | |
| Other | 0.130 | 0.121 | 0.128 | 0.131 | 0.089 | 0.093 | 0.095 |
NAVY BUDGET BY CATEGORY (2013 and beyond are estimates in USD)
| Title | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 |
| Navy Budget | 0.984 | 0.917 | 1.021 | 1.034 | 1.076 | 1.164 | 1.263 |
| Title | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 |
| Procurement | 0.272 | 0.354 | 0.330 | 0.357 | 0.362 | 0.377 | 0.407 | 0.442 |
| RDT&E | 0.031 | 0.044 | 0.041 | 0.046 | 0.047 | 0.048 | 0.052 | 0.057 |
| Military Personnel | 0.241 | 0.266 | 0.248 | 0.286 | 0.295 | 0.307 | 0.326 | 0.354 |
| O&M | 0.187 | 0.256 | 0.239 | 0.265 | 0.269 | 0.280 | 0.308 | 0.335 |
| Other | 0.047 | 0.064 | 0.060 | 0.066 | 0.062 | 0.065 | 0.070 | 0.076 |
AIR FORCE BUDGET BY CATEGORY (2013 and beyond are estimates in USD)
| Title | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 |
| Air Force Budget | 1.271 | 1.439 | 1.376 | 1.547 | 1.616 | 1.681 | 1.693 | 1.783 |
| Title | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 |
| Procurement | 0.458 | 0.533 | 0.509 | 0.572 | 0.590 | 0.614 | 0.610 | 0.642 |
| RDT&E | 0.076 | 0.086 | 0.083 | 0.093 | 0.097 | 0.101 | 0.102 | 0.107 |
| Military Personnel | 0.318 | 0.331 | 0.317 | 0.356 | 0.380 | 0.395 | 0.423 | 0.446 |
| O&M | 0.369 | 0.432 | 0.413 | 0.464 | 0.485 | 0.504 | 0.491 | 0.517 |
| Other | 0.051 | 0.058 | 0.055 | 0.062 | 0.065 | 0.067 | 0.068 | 0.071 |
DEFENCE-WIDE BUDGET (2013 and beyond are estimates in USD)
The multiple groups that form the paramilitary forces of Pakistan provide a wide range of services. These forces are comprised of: the Coast Guard, the Frontier Corps, the Maritime Security Agency, the National Guard, the Northern Light Infantry, and the Pakistan Rangers.
| Title | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 |
| Defence-Wide Budget | 0.752 | 0.837 | 0.745 | 0.773 | 0.905 | 1.009 | 1.094 | 1.226 |
The main phase of Pakistan’s (terrorism counter-offensive) Operation Zarb-e-Azm concluded in April 2016, resulting in the lowest number of terrorist attacks in the country since 2008. Up to 30,000 troops and armored vehicle forces were involved in the operation, all with the aim of stifling al-Qaeda and its affiliates in the region. However, security efforts do not simply end, and as such, demand for armored vehicles in Pakistan remains high. With the economy stumbling, Islamabad is struggling to acquire the counterinsurgency vehicles it needs to protect its government and military officials.
In recent years, the government has been averse to importing surplus vehicles, particularly from the US, but did approve a $198m foreign military sale for 160 MaxxPro MRAPs in 2014. Other recent deals discussed in recent years have been the acquirement of General Dynamics’ Dragoon four-wheel-drive armored fighting vehicle and the Chinese VN1 eight-wheel-drive AFV. Pakistan is also in the process of evaluating a number of tanks under its ‘Haider’ programme, envisaged as a new MBT to supplement the (Chinese-derived) al-Khalid MBT fleet. Rumoured tanks under consideration for Haider include Turkey’s new Altay vehicle, although it is likely that such a vehicle would simply augment a more diverse range of vehicles.
Long-running tensions with Pakistan have not been helped by tit-for-tat exchanges of fire between the two nations in the Kashmir region in recent months. Currently Pakistan’s defense budget is the lowest in the region, with around $7bn allocated in 2015-16 (around 2.3 percent of its GDP), a mere fraction compared to India. It is attempting to expand both its military capabilities and its defence-related economy assets through a number of newly formed bilateral deals, including fresh agreements with Russia, Indonesia and South Africa.
The country has expanded its defense industrial base rapidly in recent years and is looking to further increase its number of export customers. One of the most prominent on paper is Pakistan, with a bilateral offer made in 2016 to formally seek sales of Indonesian equipment, including the Anoa 6×6 manufactured by one of Indonesia’s main defense companies, state-owned PT Pindad. To date, the company has produced large numbers of the Anoa- 2 6×6 APC for Indonesian forces. In Pakistan, the vehicle would find itself in direct competition with the Dragoon 4×4 APC, produced under license by Pakistan’s own Heavy Industries Taxila (HIT).