From Dependency to Self-reliance. POF

[QADRI]

During the colonial rule, sixteen ordnance factories were established in the sub-continent. After the creation of Pakistan in 1947, all those sixteen factories fell to Indian share since none of them were located in Muslim majority areas forming Pakistan.1 The newly-created Pakistan emerged with a fragile state apparatus and rudimentary Armed Forces headed by three British Chiefs for its respective forces, and scarcely had any infrastructure or equipment and no ammunition manufacturing facility, to meet the security challenges confronting its sovereignty, national security and territorial integrity. By October 1947, just two and half months after its creation, in such dire conditions the fledgling state of Pakistan already faced its first major externally-launched security threat – namely the Indian aggression against and its occupation of two-thirds of the Jammu and Kashmir State.

After independence, India provided Pakistan with only 6,000 tons of munitions out of 1700,000 tons in its possession, when it was proportionately entitled to more. The subsequent war in Kashmir pushed Pakistan’s army into a state of actual imbalance.2 On the economic front, Pakistan faced the same situation. Of its total dues Pakistan received only 147 million pounds sterling, representing 17% of the total balance held by India.3 On an immediate basis, Pakistan had to use almost 70% of that amount in arms purchases to redress this imbalance.

In 1951, the first Prime Minister of Pakistan, Liaquat Ali Khan, issued a directive to establish an ordnance factory to manufacture rifles and ammunition.4 Subsequently, in December 1951, the second Prime Minister of Pakistan, Khawaja Nazim-ud-Din, laid the foundation of four Pakistan Ordnance Factories with the cooperation of British Royal Ordnance, at Wah near Rawalpindi. This was the first step towards the establishment of a mother defence industry in Pakistan.

In its early years, lack of resources to deal with national security concerns pushed Pakistan to look for some outside help. At that time there were two power blocs, led by two super powers, the US and the Soviet Union, who dominated world affairs. Pakistan formed an alliance with the US in 1950s to meet the challenges of security, territorial integrity and to achieve a reasonable military equilibrium with India. On December 15, 1950, Pakistan signed a Mutual Defence Assistance Agreement with the US.5 The next major effort was made in 1952, when Mir Laik Ali Khan, Adviser to the Minister of Defence, visited the UK and the US and convinced the governments of both countries for arms sales to Pakistan.6 In May 1954, Pakistan signed another Mutual Defence Assistance Agreement with the US. Later in that year Pakistan also joined the SEATO and CENTO in 1955, with a US security guarantee. In 1959, Pakistan signed a bilateral Agreement of Cooperation with the US and became an ‘America’s most allied ally in Asia.’7 As a result of these agreements, Pakistan received significant military aid and training throughout 1950s and the early 1960s.8

During the period of reliance on the US supply, there was little attention given to domestic production. However, the 1965 Indo-Pak War led to a drastic reduction in economic and military assistance to Pakistan as the Pak-US cooperation which started in 1954 came to an end in 1965, and the US imposed sanctions on Pakistan. The US stopped all military aid to both India and Pakistan. Unlike India, it was a major disaster for Pakistan. This led the Pakistani leadership and policy makers to begin efforts to diversify their military hardware procurement policy.

After the 1965 War, on the one hand Pakistan was facing the US military sanctions, while on the other side India continued to build-up its armed forces with the Soviet help. The increasing pressure of Indian military build-up, forced Pakistan to turn towards China, North Korea, Germany, Italy and France for its defence procurement programmes. China, being a neighbour proved a good friend and helped Pakistan to raise three fully-equipped infantry divisions, including guns military vehicles, 900 Chinese tanks and MiG-19F aircraft for the air force. France supplied Mirage aircraft and submarines. In 1968, the Soviet Union offered US$30 million worth of aid to Pakistan and supplied 100 T-55 tanks, Mi-8 helicopters, guns and vehicles. In 1969, however, Soviet support was abruptly stopped under Indian pressure.

After the 1971 War, Pakistan continued to engage in rebuilding itself and spent huge resources on defence imports. The Heavy Industries at Taxila was established in 1971, followed by the F-6 overhaul and Rebuild Factory in 1972 at Kamra. This marked the first major step towards achieving some degree of self-reliance in the maintenance of modern aircraft and weapon systems. In 1973, the Pakistan Aeronautical Complex at Kamra, north of Islamabad, came into being. Within a year, PAF had accepted the offer of a large number of F-6s (Chinese version of Mig-19s) from its trusted ally, China.9 Furthermore, Pakistan bought 24 French Mirage and Canadian Sabres (renamed F-86Es) on cash, and PAF arranged spares for existing fleets through alternate sources. In the meantime Pakistan also began the pursuit of its nuclear programme, to which end it also established Dr. A. Q. Khan Research Laboratories (KRL) in 1976.

In 1979, the US imposed sanctions on Pakistan when it learned that Pakistan had secretly begun construction of a uranium enrichment facility. As a result, the US stopped $85 million worth of military and economic aid to Pakistan. However, after the 1979 Soviet invasion of Afghanistan, Pakistan became a frontline ally of the US. In 1981, the US provided $3.2 billion in military and economic assistance to Pakistan, including the sanction of the purchase of 40 F-16s. In 1986, the US provided another aid package of $4 billion to Pakistan. Through the rest of the 1980s, the US continued its economic and military assistance to Pakistan, and the latter continued to modernise its armed forces. Pakistan mainly excelled in small arms and sold to approximately thirty countries including Sri Lanka, UAE, and many Middle Eastern countries. By the end of 1980s, the export figures were raised to Rs. 400 million annually.10

Even more tellingly, the United States rewarded Pakistan’s most unflinching cooperation in the Soviet-Afghan War during the 1980s by invoking, in October 1990, the Pressler Amendment to the US Foreign Assistance Act of 1961.11 The US suspected that Pakistan was developing nuclear weapons.12 The Pressler Amendment ended the supply of economic and military aid to Pakistan, which had averaged $650 million a year in the 1980s. This Amendment widened the conventional gap between India and Pakistan. Especially, the freeze of the deal of 28 F-16s - which eventually were never supplied to Pakistan - as the US believed that F-16s would be used by Pakistan for delivery of nuclear weapons and would spark an unprecedented, destabilising arms build-up in South Asia, thus playing a significant role in further crippling Pakistan Air Force.

In September 1991, the determination to move towards a degree of self-sufficiency in armament production resulted in the creation of the Ministry of Defence Production.13 The Ministry promoted defence production facilities including Pakistan Ordnance Factory (POF), the Heavy Industries at Taxila (HIT), and Pakistan Aeronautical Complex (PAC). The Ministry also included seven other specialised organisations devoted to research and development, production, and administration. The government estimated annual production in the early 1990s at US$500 million including about US$30 million in exports. For example, Mushshaks – light trainers and observation aircraft – were provided to Iran. Exports ranked high among the ministry's goals.14

In 1996, the US passed the Brown Amendment, which allowed nearly $370 million of previously embargoed arms and spare parts to be delivered to Pakistan.15 After the May 1998 nuclear tests, the US re-imposed sanctions under Glenn Amendment which almost banned all sorts of economic, financial and military assistance to Pakistan. However, after the 9/11 events, Pakistan once again became a frontline state in the international coalition’s ‘war on terrorism’, and as yet another outcome of that decision on Pakistan’s part, the US removed sanctions against Pakistan, which were imposed after the May 1998 nuclear tests.

Throughout its history of survival against great odds, Pakistan spent a major chunk of its defence budget on imports for its defence needs (see Appendix 1). In the recent decade, in order to meet its security requirements, Pakistan took a number of steps to develop some key areas to become self-sufficient in defence. There are over 20 major public sector units and over a 100 private sector firms engaged in the manufacture of defence-related products. Over a period of time Pakistan’s defence industry has grown into well-established units, and has developed the potential to export defence equipment to friendly states and international markets. This export potential in defence industry is not only the key to the country’s survival, but it would also bring in the much-needed foreign exchange.

Since 2000 Pakistan’s defence industry has been holding annual exhibitions under the auspices of the International Defence Exhibition and Seminar (IDEAS 2000, 2002 and 2004). The IDEAS ‘arms for peace’, as its theme, reflects Pakistan’s desire to promote peace and stability not only within the region but also elsewhere in the world.16 It recognises the fact that export of cost-effective armaments would help nations to maintain peace by equipping their armed forces, and to attain a minimum degree of deterrence against external threats at an affordable level. IDEAS provides an interactive platform for the international defence manufacturing industry to showcase their products and services and enhance cooperation between countries from all parts of the world to share the common global cause of peace (against common enemies, such as the war against terrorism).

The concept of IDEAS succeeded through its previous events and attracted the attention of numerous leading defence industry and services. The recent IDEAS 2004 exhibition held in Karachi from September 13-17, was one of the biggest defence exhibitions to be held in the region. In IDEAS 2004, more that 50 countries attended while 150 national and multinational firms participated. Pakistan Aeronautical Complex displayed the indigenously manufactured Mushshak, Super Mushshak and Karakorum-8 Jet trainer aircraft, which is a very attractive aircraft for the countries with limited defence budgets.

Through IDEAS, Pakistan’s defence exports have grown tremendously. Pakistan has already found markets in a number of Asian, African and Middle Eastern countries. Pakistan’s export target for the year 2003-04 is $147 million, which is expected to further rise to the level of at least $500 million (i.e., 1% of the $50 billion global arms market) during the next five years.17 While inaugurating IDEAS 2004, President Musharraf pointed out, ‘we came under sanctions sometimes back and apart from negative effects these had positive effects. That was to diversify our sources of weapons and indigenisation. Those sanctions also assisted us in developing our own industry towards self- reliance.’18