Pakistan Defence and Security Report Q4 2012
Business Monitor International, October 2012, Pages: 78
The Pakistan Defence and Security Report provides industry professionals and strategists, corporate analysts, defence and security associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Pakistan's defence and security industry.
BMI’s Pakistan Defence & Security Report for Q4 2012 examines the country’s strategic position in the Asian region and the wider world. It provides an overview of the contemporary geopolitical challenges facing the country, and the challenges it may face in the future.
The report also examines the trends occurring in the country’s current and future defence procurement,
and the order of battle across its armed forces. The report’s general conclusion is that Pakistan remains trapped in a cycle of political instability, economic malaise and Islamist militancy, with little hope of the situation improving in the short-to-medium term.
BMI considers relations with four countries – Afghanistan, China, India and the US – to be of paramount important to Pakistan’s geopolitical outlook. China remains Pakistan’s key defence ally, while relations with India have shown some recent signs of improvement, especially on the trade side. The upcoming visit of Indian Prime Minister Manmohan Singh in November 2012 could further consolidate the recent gains, especially if the two sides are able to restart a dialogue on Kashmir and other key strategic issues.
However, ties with Kabul remain strained, and the US relationship – once so important in the wake of 9/11 – is still extremely fragile after an American air strike inadvertently resulted in the deaths of 28 Pakistani soldiers. In July, Pakistan finally agreed to reopen its overland supply route into Afghanistan after US Secretary of State Hillary Clinton apologised for the incident. Despite this, the US Congress voted to withhold some (though not all) of its 2012 aid money to Pakistan, openly questioning Islamabad’s worth as a US ally.
Over the last quarter BMI has revised the following forecasts/views:
- The latest developments in Pakistan’s turbulent relationship with Washington are discussed in detail. Despite the reopening of the Khyber Pass for NATO transit into Afghanistan, Washington remains wary of Pakistan’s intentions. The visit of Pakistan’s new intelligence chief to the US,
and assurances of an upcoming military offensive in North Waziristan, could help to convince the US government that Pakistan is still a partner that it needs to work with.
- The instability of Pakistan’s political establishment has continued, with Prime Minister Yusuf Raza Gillani being deposed in Q2 and replaced by Raja Pervez Ashraf. However, Islamabad can turn this into an opportunity, with Raja having recently visited Kabul and kick-started a new dialogue with Afghan President Hamid Karzai. Karzai and Pakistani President Zardari also appear to be taking steps to mend their sometimes strained relationship.
- Relations with India are relatively upbeat. However, diplomacy is now likely to enter a holding pattern until India’s Prime Minister visits Pakistan in November 2012. His trip is a big opportunity for Indo-Pak relations, and could potentially lay the groundwork for meaningful negotiations on Kashmir and other issues.
Executive Summary 5
SWOT Analysis 6
Pakistan Security SWOT 6
Pakistan Defence Industry SWOT 7
Pakistan Political SWOT 8
Pakistan Economic SWOT 9
Pakistan Business Environment SWOT 10
Global Political Outlook 11
South Asia Security Overview 13
The Strategic Outlook For The 2010s 13
Security Risk Analysis 28
Table: Asia Pacific Regional Security Ratings 28
Table: Asia Pacific State Vulnerability To Terrorism Index 29
Political Overview 30
Domestic Politics 30
Long-Term Political Outlook 32
Scenarios For Political Change 33
Security Overview 35
Internal Security Situation 35
External Security Situation 42
Armed Forces And Government Spending 47
Armed Forces 47
Deployments And Exercises 48
Table: Pakistan’s Deployments 49
Weapons Of Mass Destruction 49
Table: Pakistan’s Nuclear-Capable Ballistic Missile Arsenal 52
Nuclear Developments 52
Table: Exports From Pakistan 54
Market Overview 55
Arms Trade Overview 56
Industry Trends And Developments 57
Procurement Trends And Developments 59
Industry Forecast Scenario 61
Armed Forces 61
Table: Pakistan’s Defence Personnel, 2000-2008 (’000, unless otherwise stated) 61
Table: Pakistan’s Manpower Available For Military Services, 2009-2016 (aged 16-49, unless otherwise stated) 61
Defence Expenditure 61
Table: Pakistan’s Defence Expenditure, 2009-2016 62
Table: Pakistan’s Defence Expenditure – Changing % Of GDP, 2009-2016 (US$mn) 63
Defence Trade 63
Table: Pakistan’s Defence Exports, 2009-2016 (US$mn) 63
Table: Pakistan’s Defence Imports, 2009-2016 (US$mn, unless stated) 64
Table: Pakistan’s Defence Trade Balance, 2009-2016 64
Key Risks To our Forecast Scenario 65
Macroeconomic Forecast 67
Pakistan Defence & Security Report Q4 2012
© Business Monitor International Ltd
Page 4
Table: Pakistan - Economic Activity 70
Company Profiles 71
Air Weapons Complex 71
Dr AQ Khan Laboratories 72
Heavy Industries Taxila 73
Pakistan Aeronautical Complex 74
Pakistan Ordnance Factories 75
BMI Methodology 76
How We Generate Our Industry Forecasts 76
Defence Industry 76
Sources 77
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