October 19, 2019: The Pakistani government budget and economy are undergoing a crisis caused by unwillingness to control corruption and military spending. The problem has been building for years but has now created a crisis as Pakistan ran out of nations willing to provide military aid or loans. As a result, Pakistan has had to cut back on military imports and instead pay more attention to upgrading or refurbishing existing equipment. That is a serious problem because the foe the Pakistani military is preparing to fight has a lot more money, people and creditworthiness. For decades the Pakistani military has portrayed India as a major military threat. That was never true, especially after the late 1990s when both nations revealed they had developed nuclear weapons and were building ballistic missiles to deliver them.

The Pakistani generals still pushed the idea that India might invade with non-nuclear forces. Anyone paying attention to Indian media and politics would realize that isn’t true but the Pakistani military needed to maintain the illusion of an Indian “threat” to justify its relatively large military budget. With that Pakistan maintains an active duty force of 650,000 troops using a large number of older, but upgraded, tanks and warplanes. India has more modern equipment and a million troops on active duty.

The Indian population is six times larger and the Indian economy (GDP) is ten times that of Pakistan. India spends nearly $60 billion a year on defense, the fifth largest defense budget on the planet, right behind the United States, China, Russia and Saudi Arabia. Pakistan barely makes the top 20 with $11.4 billion. Indian spending is 3.1 percent of GDP while Pakistan is now at four percent. The usual general financial support for the military did not survive the Pakistani debt crises of 2019 and now the Pakistani military has lost most of their recent budget gains and a likely to lose even more.

While the IMF (International Monetary Fund) is reluctant to loan Pakistan any more money because of excessive defense spending and lack of progress in getting wealthy Pakistanis to pay taxes, there are also accusations of financing Islamic terrorism. IMF also warns that if charges that Pakistan is allowing Islamic terrorists to raise and move cash out of the country are verified, Pakistan would have more problems obtaining foreign loans. The terrorism funding charges are evaluated by the FATF (Financial Action Task Force) which has put Pakistani on the gray list and will escalate to the blacklist if Pakistan does not make effective efforts to block Pakistan based terrorist groups from using the international banking system to finance their violence. Pakistan was warned in early 2018 that unless they reduced the illegal financing activity coming out of Pakistan, the FATF would put Pakistan back on the “gray list” and this time it would be more likely to make it to the blacklist and that would mean Pakistan would have some financial problems because of the resulting international banking restriction. Pakistan said it would comply by the end of 2018, but failed to meet that goal. FATF gave them until May to comply, but Pakistan missed that deadline as well. The last chance deadline is October. That deadline was missed as well and one more (so they say) deadline was given, for February 2020. FATF patience is not endless and pressure from “friends of Pakistan” can only do so much.

Pakistan has fought several wars with India since 1948 and lost all of them. What Pakistan does have going for it is Chinese claims on a lot of Indian territory. India and China fought a brief border war in 1967 which India lost, along with some territory high in the mountains where most of the India-China border is. Both China and India have nuclear-armed ballistic missiles aimed at each other so if there are going to be any wars they will be small scale and brief ones on this high-altitude mountain border. Unlike Pakistan, China is a real threat to India.

At the same time, India and Pakistan share a border that contains lots of flat, lowland terrain that has been the scene of tank battles in the past. As a result, Pakistan tries to maintain a force of tanks equal, at least in numbers, to the more modern Indian tank fleet.

Then there is the secret weapon or at least one that is not officially acknowledged. Pakistan has been trying, for over three decades, to use specially selected and trained, Islamic terrorists who are sent from Pakistan training camps into the disputed province Kashmir to somehow get India to withdraw and hand the territory over to Pakistan. This is another Pakistani illusion that the Pakistani military feels they cannot afford to get rid of. While not expensive it is illegal and one of the things FATF is after Pakistan about.

While Pakistan is the largest customer for Chinese military exports, China makes it very clear it is not a military ally of Pakistan. Nor is China willing to provide free or cut-rate equipment for Pakistan, as the United States has done for decades. The American aid has stopped because of over a decade of Pakistani deceit about what it was doing with nearly $20 billion in military aid since 2001. That loss was a major blow to the Pakistani military budget. The Chinese and Russians remain willing to sell Pakistan weapons but largely using payment on delivery terms. The Arab oil states have long been a source of large loans and outright cash gifts but that source has also dried up because the Arabs value their good relations with the Americans, Indians and Israel above the questionable reliability of Pakistan.

All this leaves Pakistan on its own to maintain a credible force of armored vehicles to face the “Indian threat.” The Pakistani air force is largely dependent on F-16s is has bought from the United States over the last few decades and upgraded somewhat since then. But now with American aid gone and cash for additional (and often much needed) refurbishment for the 78 remaining F-16s, Pakistan is more dependent on a hundred or more of the Chinese JF-17s. This is a Chinese design that is similar to the F-16 but only Pakistan uses it. China prefers other aircraft it has designed and only got the JF-17 into production so Pakistan could assemble most of them in Pakistan and call them “Pakistani built” fighters. Most Pakistani fighters are about 600 older French and Chinese models.

There was a similar situation with tanks but early in 2019, Pakistan decided to get out of the tank design/development/manufacturing business, at least for now. Because of that, the army placed an order for a hundred Chinese made 52 ton VT4/MBT-3000 tanks. This order is now on hold because of the budget cuts. The VT4 is an updated version of the 330 46 ton VT1/MBT-2000/Al Khalid tanks Pakistan already has. The Al Khalid was a joint China-Pakistan project to create a Pakistani tank that would be built in Pakistan. But basically the Al Khalid was a variant of the Chinese VT1 (also known as the MBT2000). The VT1 was the export version of the Chinese Type 90 tank. Actually, the Type 90 (an improved T-72) was not accepted by the Chinese army which preferred the 54 ton Type 99, a superior T-72 variant that entered service in 2001 and underwent a major upgrade (the 58 ton Type 99A) in 2011 and is still in production.

The VT1 entered service first in 2001 using Ukrainian engines and a few other imported items but was mainly Chinese. The Al Khalid had trouble finding an engine that could handle the desert conditions on the Indian border where Indian and Pakistani tank battles tend to be fought. Because of these delays, Pakistan bought 300 Ukrainian T-80UD, which are upgrades of a Russian Cold War design that could handle hot, sandy environments. That was mainly because of the Ukrainian built engine which Pakistan ultimately bought for its Al Khalid.

The rest of the 2000 Pakistani tanks are based on much older (1950s) Russian models, with some upgrades. Pakistan also looked at the latest Ukraine had to offer but decided to go with China, which has access to more advanced tech than Ukraine and is willing to be competitive when it comes to price. This confidence in China was based on how the 2012 agreement worked out. For that deal, Pakistan and China also agreed to jointly market the Al Khalid tank but had limited success. That was because there were a lot of improved T-72s on the market, including the Chinese MBT-2000. Al Khalid was more expensive to develop as Pakistan began the project in 1991 and made a lot of mistakes. The Al Khalid ended up costing ten percent more than the MBT-2000 and Pakistan was unable to keep its costs under control so that when it came time to develop and a major upgrade for Al Khalid. It was pointed out that China already had what Pakistan wanted in the VT4. In the end the Al Khalid demonstrated why Pakistan has never been a major player in the arms export business and this deal with China was more for show than anything else.

Because of the current budget crisis, the military released a long list of alternate procurement plans that rely on items that can be produced locally. The air force plans to increase JF-17 production from 16 a year to 24. Work will also continue on developing UAVs and building them in Pakistan. Design and development will also continue on the AZM fifth generation (stealth) fighter. This is largely a propaganda effort because Pakistan expressed interest in buying one of the two new Chinese stealth fighter designs but could not afford it, and China has reduced its own construction plans because of performance issues. Most of the local procurement will be rebuilding or refurbishing older armored vehicles with local electronic or mechanical items. This does not improve the Pakistani arsenal as much as it tries to maintain what it has. In this respect, Pakistan has something of an edge over India. The military procurement bureaucracy India is burdened with is spectacularly inefficient and a major reason why India does not have much better weapons than Pakistan. The Indian military knows this but Indian politicians refuse to recognize the problem, which is a tremendous benefit for the Pakistani military. Even with that, and the Chinese threat to India, Pakistan is still not a major conventional military threat to India.