Acorn | Calculating Pakistan’s Al Faida income

Chart: Nitin Pai/The Takshashila Institution

The military establishment seeks more rent

Pakistan, the United States and NATO are currently engaged in negotiations over a transit fee for the route from Karachi to the Afghan border. Pakistan has demanded $5000 per container (in either direction) although other reports suggest that it would seek a ‘nominal fee’ of around $1800. It is important to note that these are over and above what Pakistan has already been making from the container traffic.

Here’s a conservative estimate of how much the Pakistan makes from permitting US and NATO troops transit routes from Karachi to the Afghanistan border. Between 2005 and June 2010, Pakistani military and civilian government entities made $290 million, or a little over $1000 per container, from allowing US and NATO transit to Afghanistan. The military establishment’s share of this is just over half, all of it in terms of pure rent or, as we like to call it “Al Faida”. The civilian government’s share came from taxes and through port charges.

Click to enlarge

An earlier post, from February 2009, has another estimate of the takings. Those figures are higher than these because they involve a different period and perhaps a different count of the number of containers. In the present analysis, the number of containers is taken from a report on the ISAF container scam by the Pakistani government’s Federal Tax Ombudsman, from January 2011. That report provides some interesting details about the political economy of the transit business—how a lot of people make lot of shady money.

Related Links: Pragmatic Euphony on the truth about the NATO supply routes.


DISCLAIMER: This is an archived post from the Indian National Interest blogroll. Views expressed are those of the blogger's and do not represent The Takshashila Institution’s view.