Pakistan’s new Hangor-class submarines are being sold as a symbol of maritime renewal. The reality is far less flattering. The programme entrenches a parallel military-commercial ecosystem that thrives on secrecy, captures rents from public money, and delivers little by way of transparency or autonomy for the state. The structure of the deal, the opacity around financing, and the predictable cascade of captive side-contracts all point to a familiar pattern: platforms for the navy, profits for military-linked enterprises, and liabilities for the exchequer.
A Deal Shrouded in Secrecy
In 2015, Islamabad signed a $4–5 billion contract with China Shipbuilding & Offshore International Co. (CSOC) for eight Hangor-class submarines. Four boats are being built in Wuhan, with the remaining four to be assembled at Karachi Shipyard & Engineering Works (KS&EW) under a technology transfer arrangement. In August 2025, China launched the third submarine, a milestone in what is billed as Pakistan’s largest-ever naval acquisition.
Yet, the financial terms remain undisclosed. No details of interest rates, grace periods, sovereign guarantees, or repayment schedules have been tabled before Parliament or shared with the public. This silence is not accidental. It is a form of leverage, allowing Beijing to embed control through billing schedules, spare-part pipelines, and maintenance dependencies.
Who Really Benefits?
Large naval procurements generate an ecosystem of side-agreements—logistics, training, spares, upgrades. In Pakistan, these invariably gravitate to military-run entities: KS&EW for construction, the National Logistics Cell (NLC) for transport, Bahria Foundation for maritime and technical services, and navy-run schools for training packages.
Bahria Foundation, a Navy-run conglomerate, now straddles education, security services, dredging, ship-breaking, real estate, and even bakeries. It is overseen by the Chief of Naval Staff and enjoys tax privileges and minimal oversight. NLC, meanwhile, has formal contracts with Chinese operators at Gwadar Port, underlining how military-linked businesses monopolise logistics around strategic infrastructure. These entities are the real winners of defence procurements—not the state, not the ordinary taxpayer, and certainly not the struggling Pakistani economy.
Debt and Dependence
Pakistan’s total public debt stood at Rs 76 trillion by March 2025—of which $87.4 billion was external. Successive IMF bailouts have kept reserves afloat, but at painful cost: subsidy cuts, tariff hikes, and austerity borne by ordinary citizens. The IMF props up Pakistan’s reserves; Hangor payments drain them.
The submarines are not a one-off expense. They come tethered to decades of dollar-denominated spares, refits, and software upgrades—all channels controlled by Beijing. Thailand’s failed S26T deal, delayed for years over Chinese engine issues, offers a cautionary precedent. Pakistan’s Hangor boats use the same family of engines.
History Repeats
Pakistan’s submarine deals have long been fertile ground for graft. The Agosta-90B scandal of the 1990s exposed kickbacks and commissions channelled through middlemen into foreign accounts. Today, the same dynamics persist. Middlemen, retired officers, and contractors remain embedded in Pakistan’s defence trade, ensuring commissions are captured while procurement files are shielded under “national security” classifications.
This system has produced what analysts describe as milbus—a military business empire that dominates Pakistan’s economy through foundations, trusts, and welfare organisations that double as conglomerates. Corruption risks are amplified when the military is both buyer and beneficiary.
Strategic Miscalculation
Supporters argue that technology transfer will build local capacity. In practice, the transfer is closer to screwdriver assembly than genuine design sovereignty. Critical subsystems—combat suites, propulsion, AIP integration—remain proprietary and under Chinese control. That means future upgrades, overhauls, and even operational availability depend on Beijing’s willingness to deliver.
Meanwhile, the Indian Navy’s anti-submarine warfare (ASW) capabilities—P-8I patrol aircraft, advanced sonars, hunter-killer submarines—are widening the capability gap. Export-standard Hangors, even with AIP, are unlikely to shift the balance in the Arabian Sea. They may add tactical depth, but at crippling strategic cost.
A Republic Held Hostage
The deeper issue is democratic accountability. A multi-billion-dollar naval programme’s financing architecture should be scrutinised, offset claims verified, and conflicts of interest addressed. Instead, Pakistan’s civilian institutions remain too brittle to demand transparency from its most powerful actor. Files vanish into secrecy silos, and the military continues to operate a “state within a state,” profiting from deals while citizens foot the bill.
For a country teetering on fiscal collapse, the Hangor deal is less about deterrence and more about dependence. It entrenches military privilege, deepens foreign debt, and leaves ordinary Pakistanis poorer.
Deeper Pockets, than Depths
The Hangor submarines will sail. The question is who they will truly serve. For now, the evidence points to a closed loop of military-run enterprises fattened by secrecy and subsidies. Pakistan’s citizens are left with austerity, while their uniformed guardians pocket profits. In the long run, the submarines may do little for Pakistan’s deterrence—but they will certainly do much for its military’s bottom line.
Until Islamabad breaks this cycle, every procurement will be less a strategic asset than a financial anchor. The Hangor deal is not just a submarine programme; it is a mirror reflecting Pakistan’s deeper malaise—where national security doubles as a business model.
(Aritra Banerjee is a Defence, Foreign Affairs & Aerospace journalist; co-author of The Indian Navy @75: Reminiscing the Voyage; and co-founder of Mission Victory India (MVI), a military-reforms think-tank. He has worked across TV, print and digital, written for Indian and international outlets, covered major security and aviation events in Europe, and reported from Kashmir’s conflict theatres. X (Twitter): @Aritrabanned.)
