Economics of Defence-II:
Privatization of Military Estate

From the BOARD of EDITORIAL ADVISORS, Brig (Retd) SAEED ISMAT, SJ argues that military lands not required should be sold off and the proceeds used to make up our defence shortages.

In the article, ‘Economics of defence and Naval warships’, it was emphasized that we need to develop a military culture where leadership at all levels must consider ‘costs’ and ‘benefits.’ It remains an abiding national obligation of the defence policy-makers to rationalize their decisions keeping in view the vital aspect of “Cost Effectiveness”. Alongside strategic and tactical appreciation they must learn to carry out a “cost-benefit appreciation” before taking any decision. The Armed Forces urgently need to put their own house in order and instead of becoming a national liability (as perceived by many) should aim to be seen as a national asset. Here is an idea that might set the pace to initiate military reforms.

Pakistan’s military cantonments located in the major cities, over the years, have been rendered unsuitable to cater for the needs of the Armed Forces. Rapid uncontrolled urbanization of these cantonments has severely restricted the space for the field formations and units of the Armed Forces, in particular the army. These cantonments were originally planned for small sized forces by the British Raj and over the years due to the increase in the size of our forces, the situation has crossed the saturation point. The overcrowding is now becoming unmanageable. The notion of cantonments is not confined to providing ‘Barracks’ i.e. accommodation to the troops and storage of their equipment; instead, it is to provide a total military environment where essential military routine activities can be carried out with minimum limitations. Training in peace to prepare for war is the most important single factor for the military forces. Individual training and basic level crew training are conducted in the unit premises i.e. in the cantonments within the precincts of the unit while collective training or military manoeuveres at battalion/regimental level should preferably be conducted not too far away from the cantonments to reduce expenses and wear and tear of the equipment. These fundamental requirements unfortunately are not available in most of the cantonments located in our big cities. The training areas in these cantonments are unsuitable, restricted and constantly shrinking in size. The fundamental requirements of cantonments unfortunately are not available in most cantonments located in big cities like Lahore, Karachi and Peshawar. Some of our airforce bases are in the middle of highly populated areas and their location may no more be suitable for technical and operational reasons. The airbase at Drigh Road, Karachi is an example to illustrate this point. Likewise, we have little justification in maintaining a cantonment in the heart of Karachi for many army, navy and airforce establishments.

It shall perhaps not be incorrect to state that these cantonments have lost efficacy and character, are totally unsuitable from the military viewpoint. Many military professionals strongly believe that demilitarization of the cantonments has given rise to many other associated problems, which are undesirable. Placing soldiers/airmen and sailors in these cantonments where civil population has far exceeded the military, where commercial/business activities mitigate against the basics of military environment, these and many other ‘physical and psychological’ distractions have implications affecting the quality of training, operational efficiency and battle preparedness. In any case the buildings in most of these cantonments are in a dilapidated state. Some concerned officers have gone beyond this and have expressed their concern that ‘discipline and morale’ the imperatives for the cohesion and fighting ability of the forces is being diluted. Forces have a way of life, its own military culture and traditions, which must be preserved. The nation has invested heavily in the Armed Forces and we have a right to accept nothing short of highest quality of training efficiency, preparedness, discipline and motivation from our defence forces. The military leadership owes it to the nation and we must assist them in recognizing and rectifying any ills that might beset our systems. Military leadership should, therefore, wholeheartedly support a plan for the relocation of these cantonments.

In the existing unstable financial environment it is virtually inconceivable to think of any plan or project which involves any expenditure from the national exchequer. In line with the modern trends, and using innovative landing, a realistic strategy of resources mobilization can be devised that does not involve any risk and expenditure. The proposed plan is a product of analysis and research. It presents a unique option for the betterment of national defence as well as the national economy. Under the circumstances, providing new cantonments to the Armed Forces of Pakistan and abandoning the old ones is unthinkable. Such a notion cannot be our priority. The plan seeks new avenues and strategies to meet the requirements. We cannot afford to cling to old decadent systems; we must examine options for change. As has already been stated that we should devise ways and means that contribute to the national economy and not eat into it.

This plan envisages an innovative solution to provide new state of the art custom built military cantonments to meet the needs of the Armed Forces of Pakistan. Through a unique privatization concept it aims to generate revenue through open and transparent open sale of available defence estate in selected military cantonments in a progressive and planned manner and build new cantonments at suitable places to meet the training, operational and administrative needs of the Armed Forces. Concurrently, convert and upgrade existing cantonments into modern mini-cities under control of the Federal Government. Study and research reinforce the view that the plan can even create surplus funds to boost the national economy. Through sale of military estates not only enough funds can be generated to meet the cost of new cantonments and the upgradation of existing cantonments into model civil mini-cities but also have enough surplus funds to undertake other projects within the approved national priorities. The suggested plan could produce a project of national value seeking to address the long-term vital needs of the Armed Forces, incorporating a totally cost free self-generating system.

Relocation and sale of military estate is not altogether a new idea. It has been practiced in many countries of the world. In the oldest and the most recognized democracy of the world i.e. the United Kingdom the concept has taken many shapes over the years, and in 1990 it was institutionalized. An organization, ‘Defence Estate Steering Group’ was set up to oversee the management of the estate. ‘Despite a very depressed property, 400 hectares of defence land and buildings were sold in year 1989-1990 for about Pounds Sterling 70 million. Disposal receipt in 1990-91 was in excess of 500 million. In 1996 the sales of military estate had exceeded Pounds Sterling 1.6 billion. The British Government went a step further and established a permanent Defence Estate Organization 1st April 1995. This organization now provides a strategic overview of the defence estate by providing a fully integrated property management and works project, procurement and sales, and also acts as an advisory and regulatory body. Recently this organization has been further reinforced by the establishment of Defence Estate Management Board to oversee the management of all organizations dealing with the military estate within the agreed estate strategy. It is estimated that to date through the privatization of military estates, the Ministry of Defence has generated nearly US$ 12.8 billion.

It is proposed to start the military cantonment relocation plan with Lahore Cantonment. Most of the cantonment area should be floated and sold on market prices in a phased programme stretching over a period of three years or more. The phased programme of sale shall assist in preventing a ‘glut’ in the market and help in getting the best possible price from the sale of this estate. This phased sale programme of three to five years is also essential for concurrent development of infrastructure and construction of a new military city for the military formations and installations currently located in Lahore Cantonment. The new cantonment or the ‘New Military City’ at some distance from Lahore could be located at a place of Army’s choosing. This project could be planned and executed under the arrangements of the Army. The financing of the project shall be made from the sale proceeds of the estate. It is a gigantic project and would need financial regulatory controls, professional town planning, engineering technology and specialized consultants to ensure the highest quality of end product and stringent financial discipline for cost effectiveness in the long haul.

We shall be doing a disservice to the people if the existing Lahore Cantt is privatized to make quick money and leave its fate in the hands of typically inefficient and corrupt organizations. Such recourse shall defeat the purpose of the endeavour. The aim should be to provide a modern, peaceful, secure and healthy model mini-city to be emulated by others. It might be prudent to raise a new Development Authority to undertake this challenge. In due course of time, once the system has developed and matured, the small city could have its own ‘City Council’ and an elected ‘Mayor’ to run its affairs. In the meantime, to set the pace and retain the credibility of the project, it might be advisable to task the Army to oversee the affairs of the Development Authority as it is being done in DHA Lahore i.e. under total military control and responsibility.

It might well be a good idea to raise a new federal police force on experimental basis to police this new federally administered mini-city. A constable shall be minimum and intermediate and the ASI minimum a graduate young man with high IQ, aptitude and integrity. The selection procedures shall ensure merit and no interference for recruitment or running of this force shall be acceptable. They shall receive the highest standard of training and be equipped with modern systems to prevent and track down crime. Initially this force as in the UK, could be called the Defence Police and placed under the administrative control of Chairman / Administrator of Lahore Cantt. Development Authority (LCDA).

Efforts shall be made to preserve our culture, heritage by blending the culture with modern technology in its town planning, civic amenities, market places and architecture. It shall be a place all Pakistanis will be proud of. There shall be many other important features like video control security and surveillance system in the entire area to ensure disciplined traffic, crime detection and prevention. Environmental concerns and conservation shall be accorded priority and incorporated in all aspects of planning and running the City. These features and facilities shall attract people to settle in this remodelled City. Redesigning and development programmes of Pakistan for times to come. It shall be a public welfare project of the Federal Government. And of course, this shall in itself be a good marketing device to raise the value of the estate in otherwise a depressed property market.

A survey indicates that approximately 3000 acres of prime land could be made available in Lahore Cantt for progressive sale to the general public at generating upto Rs. 72 billion. A state of the art custom made new military cantonment in lands outside the limits of the city of Lahore could cost about 20 billion and redesigning and upgrading existing Lahore Cantt into a modern mini-city may cost about Rs. 5 billion. This means that substantial savings of Rs. 47 billion could be affected which could be used for other vital defence needs or preferably used on developmental programmes. These estimates (financial overview attached) have been prepared realistically based on factual data and sound assumptions. These figures represents only Lahore cantonment and when the other selected cantonments e.g. Karachi, Peshawar etc. are taken into consideration we are talking about generation of nearly Rs. 150 billion.

All fine and done but would the military leadership willingly subscribes to this plan! I think the answer to that is in the affirmative. Yes — there are vested interests within the Armed Forces who would certainly oppose this plan and there would be those who might challenge its viability on the grounds of a very depressed real estate market. Such a criticism is perhaps partially justified arising from natural apprehensions of poor market indicators but these are not altogether correct. Firstly, this plan does not rely on financing or borrowing and secondly for argument sake the unlikely failure of the plan does not involve any risk. Even in the worst-case scenario the plan has an in-built safety mechanism. If one cannot sell all the land at the desired price (financially minimum acceptable price), one can put further sale on the holds till the situation improves.

The plan envisages national resource mobilization from purely indigenous assets. It stipulates mega projects that could breathe some life into the ailing manufacturing industry, particularly, in the construction and allied sectors e.g. cement, plant, machinery, building materials, etc. It shall provide employment and jobs for a large number of skilled and unskilled workers. Large-scale circulation of money would certainly augment efforts to stabilize national economy. Privatization of state enterprises has swept the world over the last decade but this plan is a little different. It does not rely on privatization of military lands but goes beyond by providing modern services and amenities to the citizens under the arrangements of the army. In fact, this shall be a gift by the Armed Forces to their nation that people of Pakistan shall remember for times to come.