Khaki Capitalism

http://www.economist.com/node/21540985
The Egyptian army has more on its hands than running armoured cars over people in Tahrir Square. It also runs about 10% of the economy. Military-backed companies produce cement, olive oil and household appliances as well as arms. They also provide pest control, catering and even child care. The army owns large chunks of Egypt's most precious commodity, land, particularly on the Red Sea coast. It also leans on private companies to provide powerful retirees with jobs.
The Egyptians have plenty of brothers-in-arms-and-boardrooms. Pakistan's top brass are even more enterprising. Ayesha Siddiqa, the author of “Military Inc: Inside Pakistan's Military Economy”, calculates that the army controls a $15 billion empire, with hundreds of companies making everything from fertiliser to breakfast cereals. In China the People's Liberation Army took Deng Xiaoping's aphorism that “to get rich is glorious” as a direct order. At one point in the late 1980s it was running nearly 20,000 firms. Military men in Thailand and Indonesia have a long tradition of padding their pay with profitable enterprises. Zimbabwe's army has recently formed joint ventures with Chinese partners in farming and mining. Even in democratic India the army runs about a hundred commercial golf courses.
But the most enthusiastic practitioners of khaki capitalism are the Iranians. The Revolutionary Guard runs more than 300 companies in agriculture, industry, transport, foodstuffs and even tourism. (The slogans practically write themselves: “Visit Iran and we won't storm your embassy!”) The Guard has been snapping up companies “privatised” by the government, and exploits its control of border crossings to dominate Iran's black market.

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"The military-industrial complex damages politics by making the army a vast interest group. It also damages the economy by distorting competition. How can private companies compete fairly when their military rivals enjoy access to cheap land, credit and conscript labour—and have guns? Ms Siddiqa argues that one reason why Pakistan's railways are in such a mess is that the army flexes its muscles behind the scenes to force hauliers to use its commercial lorry fleets.
There are also sound military reasons for getting armies out of business. They should get better value for money if they buy supplies on the open market instead of making them themselves. More important, as the Chinese recognise, they are more likely to become modern and professional defenders of the nation if they are not distracted by moneymaking.
That said, the armed forces can provide superb training for future business leaders: some 10% of the bosses of America's 500 biggest companies are former military officers. They are also a great incubator of entrepreneurs—and not just shady ones like Milo Minderbinder. A striking proportion of Israel's high-tech entrepreneurs went into business with friends they made in the Israeli Defence Forces. The founders of China's Huawei, one of the world's most successful makers of telecoms equipment, also met in the army. Many soldiers in Egypt and elsewhere clearly enjoy the challenge of running businesses. But they would do a better job of it if they took off their uniforms first."

http://archives.dailytimes.com.pk/editorial/19-Jun-2007/view-modernity-generals-and-ayatollahs-suroosh-irfani

Indeed, if 29 years of military rule in Pakistan lie behind the army's economic empire, the parallel in Iran is exemplified by perennial strongman Syed Ali Akbar Hashemi Rafsanjani who has virtually run the Islamic Republic for the past 27 years. According to Forbes, the Islamic revolution "transformed the Rafsanjani clan into commercial pashas" who own and control an economic juggernaut no less than the Pakistan's army's, ranging from companies in the oil sector, through plants assembling automobiles, to Iran's best private airline.
However, Pakistan's saving grace lies in the democratic strain of its political culture which has made it possible for a work like Siddiqa's to be published, marketed and debated at a scale never before seen in Pakistan before. This is a far cry from Iran, where it is inconceivable that a book exposing the economic empire of the ayatollahs could be published and circulated like Siddiqa's book in Pakistan.