The Eighteenth Amendment is a significant piece of legislation, which has been widely described as the healthiest constitutional development in the country’s history, given that it "allowed for provinces to be recognised as legitimate political entities". It’s a piece of normative legislation that transferred political and administrative powers from the centre to the provinces.

It has recently been in the news for all the wrong reasons. Even though the Director General of Inter-Services Public Relations (ISPR) has made a clarification about the statement about Eighteenth Amendment attributed to the army chief, many people think that General Qamar Javed Bajwa’s comment was meant to convey a message to the already divided political class. His remarks are relevant in a political scenario where the elected governments will be dissolved soon and an interim setup put in its place.

As one elected prime minister has already been ousted, pundits think there is very limited chance of a strong government articulating the justification for the Eighteenth Amendment.

"The establishment wanted to send this message at this point in time because the political class is weak after the fall of Nawaz Sharif… For the next six months there will be no strong government in Islamabad," says Dr Mohammad Waseem, an eminent professor of political science at the Lahore University of Management Sciences (LUMS).

One of the major consequences of the financial and bureaucratic restructuring after the Eighteenth Amendment brought into effect was that it led to a shrinking capacity of the federal government to finance the security-related expenditures. This was witnessed especially when the Pakistani troops entered the tribal areas of the country to flush out militants.

This led to large-scale migration of Internally Displaced Persons (IDP) from tribal areas to Khyber Pakhtunkhwa and other parts of the country. The Pakistan Army was the first relief provider to these IDPs and later it played a crucial role in settling these tribesmen IDP camps scattered across KP. The initial relief for the displaced people was provided from the existing defence budget with little assistance from the federal government.

Later, in 2014, according to various sources, the army made the federal government club together: (i) the expenditure on IDP rehabilitation, (ii) security-related expenditures on military operations in tribal areas, and (iii) the cost of raising a hundred battalions for providing security to the CPEC. After clubbing them together, the army proposed that the federal government should demand from the provinces a 7 per cent reduction in the size of the divisible pool, before it was further divided into shares of each province and federal government.

At the time of announcement of the first National Finance Commission (NFC) Award after the promulgation of 1973 Constitution, the ratio of share in the divisible pool between the federal government and provincial governments (in percentage) was 20:80 respectively. This continued till 1996 (the two NFC awards enacted during the fiscal period of 1979 and 1984 remained inconclusive as Ziaul Haq failed to reach a consensus on them) when the ratio was reversed by the then caretaker government in favour of the federal government. The NFC Award announced by the caretaker government in 1996 distributed the divisible pool to the ratio of 62.50:37.50 between the federal and provincial governments respectively.

At the time of passage of the Eighteenth Amendment, the federal government had announced a restructuring of the federal bureaucracy with the aim of transferring the function of 18 federal ministries to the provinces. The government of the day stated that it had finished the job in one year’s period which was not true. The ministries were never abolished at the federal level. This caused the federal government to continue incurring the cost of retaining these ministries and the bureaucratic structures associated with it.

Economist Kaiser Bengali believes that one of the major reasons the federal government is complaining about the shrinking financial capacity is the retention of these 18 ministries in Islamabad. The devolution process which spanned over a period of one year involved the accommodation of 50,000 staff members and officers of the civil service, who were now jobless. Thirty-eight thousand of these civil services officers and members were transferred to different federal ministries.

The major problem identified by the army with regard to the defence allocation is the shrinking fiscal capacity of the federal government with the transfer of 18 major ministries to the province, and the corresponding transfer of funds to the provinces from the divisible pool under the 7^th NFC Award.

The situation came to a head when the federal government failed to meet the fiscal demands of the military to raise the hundred battalions of para-military forces for the security of CPEC in 2015. The army also demanded additional financing for military operations in North Waziristan Agency and other tribal areas.

The federal government has incurred an additional amount of Rs910 billion since 2014, primarily because of two additional expenses that include military operations in North Waziristan Agency and for CPEC’s 100 battalions. Another security-related expenditure, where the military was forced to spend from its own pocket or defence allocation, relates to the IDPs.

In December 2016, the central government proposed that the size of gross federal divisible pool be cut by 7 per cent to meet the additional expenses on security-related expenses. This was totally unacceptable to the provinces, which demanded public scrutiny for this additional allocation. "Now, when the federal government demanded an extra 7 per cent from the divisible pool for special security expenses, the provinces said this expenditure should be explained. For instance, given the demand about CPEC, they asked how much of CPEC was passing through their territory," says a senior government official closely associated with the passage of the Amendment, on condition of anonymity.

It seems the longstanding demand for public scrutiny of the defence- and security-related expenditure would finally be met through a natural political process, from within the political system, without recourse to any radical remedy. When in December 2016 the then Finance Minister Ishaq Dar proposed that the size of the divisible pool should be cut by 7 per cent to accommodate the growing financial needs of the army, the provinces refused to entertain the request -- the strongest opposition voice came from KP government while all four provinces demanded that the expenditure be properly explained.

The government official tells TNS that the federal government’s capacity to finance security-related expenditures has shrunk, and this has led to the military’s annoyance as it has been demanding extra budgets without parliamentary oversight for the many years. "There is a new culture of public scrutiny developing in the provinces after the passage of Eighteenth Amendment.

"The federal government’s revenue base has shrunk primarily because of two reasons: firstly, the latest NFC award allocates more resources to provinces, and secondly, Pakistan has entered into free trade regimes with many countries leading to a decrease in its revenue from custom duties."

While there is a general realisation that the financial capacity of the federal government has decreased, political analysts, economists and government officials cite two more reasons for this. One of course is the above-mentioned retention of ministries by the federal government despite the Eighteenth Amendment.

Another idea is put forth by Dr Waseem who says the resource crunch the federal government is facing is because of its aggressive foreign policy. "The resources coming from the Americans have dried up, and because of our foreign policy our security-related expenditure is increasing. The way out is by focusing on diplomacy and a friendlier foreign policy."

An important question is can the army directly ask the provinces for funds? Many senior retired military officials think it can’t. "There is no way the military will put up its demands before the provincial governments. It’s a central government force and its financial demands have to be met by the federal government," says security analyst Brigadier retd. Shaukat Qadir.

Former Defence Secretary, Lt General retd. Naeem Khalid Lodhi, however, says there are exceptional circumstances when the army and its leadership deal directly with the provincial governments. "When army or para-military forces are called to the aid of civil power in provinces, they get their daily allowance from the provincial governments," says Lodhi. "Otherwise, the para-military forces serving in the provinces draw their budget from federal government, because they are federal forces."

The Eighteenth Amendment and the financial restructuring associated with it can potentially resolve the longstanding debate related to bread versus bullet within the context of Pakistani political system. Bengali says that, in the post-Eighteenth Amendment period, after the functions of education and health ministries were transferred to the provinces, all four provinces have increased budgetary allocations for the two subjects. "The education and health allocations have increased in all four provinces because now the provinces have more money," he says.

Government officials advocating the benefits of Eighteenth Amendment say that the income of all four provinces from revenues and taxes has increased substantially in the post-Amendment period. Bengali concurs, "As far as GST services are concerned, all four provinces have doubled the amount the federal government was collecting under this head".

Read also: Fiscal profligacy or NFC

Heated arguments related to the benefits and shortcomings of the Amendment are taking place both in the public realm and behind closed doors. One question that is repeatedly being asked is whether this Amendment could be reversed now that the so-called Bajwa doctrine is acquiring a life of its own.

Dr Waseem says that although the Amendment could not be reversed at this stage, the military establishment has shown its dislike for some parts of the Amendment. "Establishment is Unitarian, they are ideologically inclined towards a unitary state which in other words means a strong federal government," he says. "They want the federal government to be strong and want all the resources that are given to provinces brought back to the federal government."

Military officials, bureaucrats and intelligentsia all are part of the debate. However, ironically, one finds very few members of the parliament substantially contributing to this debate. "The majority of people who passed the Eighteenth Amendment don’t know anything about the arguments in this debate that is raging in Islamabad," laments the government official.