Nepali Times
State Of The State
None of their business


A partial truth is more deceptive than an outright lie. Government spokesman and Communication Minister Mohammad Mohsin may have been half-right when he said the Royal Nepali Army isn't opening a bank. But the recently amended operational procedures of the Army Welfare Fund make it unnecessary for the RNA to do anything as crude as going corporate. Taking command of existing enterprises is a lot easier and far more lucrative.

By getting the cabinet to approve its welfare fund rules, the generals have become soldiers in pinstripe suits. Now, the army can buy controlling shares in existing enterprises, including banks, by using the welfare fund war chest. And then it can have them run by select favourites. It is militarisation of the economy by the backdoor.

There is nothing now to stop the army to invest in parastatals like the Nepal Oil Corporation, Royal Nepal Airlines, Nepal Electricity Authority, Nepal Telecom, Nepal Water Supply Corporation or, even, Rastriya Banijya Bank. And if it needs extra cash, it can collaborate with foreign investors.

The reservations from some donor quarters are just politically correct mutterings for the record. Farang donors are in such awe of the discipline, dedication decision-making capacity of retired and serving generals that they would be happy if the crown jewels of public enterprise fell into the hands of generals than crony capitalists of party politics.

It seems there is nothing now to stop RNA, Inc from dominating the national economy in the years to come. Yet, experiences in other countries have shown that armies in business lose their legitimacy faster than the ones in power.

With the possible exception of the People's Liberation Army in China's controlled economy, nowhere have the armed forces succeeded in business. The military in Argentina, Columbia, and Indonesia have tried, but failed miserably. The Thai military runs a bank and owns media channels, but the image of the armed forces there hasn't improved due to these extra-curricular activities. It seems the real role model for the jarsaps in Bhadrakali is the Pakistani military which controls the largest chunk of prime real estate in that country. It deals in everything from housing to military exports. The result for Pakistani society, however, has been disastrous. Its military is now a law onto itself. It has turned into a dysfunctional state that tests nuclear weapons, but has a Human Development Index even lower than ours. What a paradox that it was a Pakistani, Mahbub-ul Haq, who first thought up human development rankings and was a vociferous proponent of turning swords into ploughshares.

There are better ways for the RNA to use the money it puts in its welfare fund kitty from peacekeeping abroad. It could run schools, operate hospitals, conduct training courses, build housing facilities, and finance self-employment schemes for its retirees. If invest it must, there can be no safer bet than the state treasury and development bonds with sovereign guarantees.

The amendment of the army welfare fund regulation isn't dangerous by itself. It is the military's mercantilist trend that is worrisome.

(11 JAN 2013 - 17 JAN 2013)