On March 16, Pakistan's Chief of Army Staff, Gen. Ashfaq Parvez Kayani, presided over a meeting of key federal secretaries at his headquarters to finalize the agenda for an upcoming strategic dialogue with the US administration.

The fact that the army chief was presiding rather than either President Asif Ali Zardari or Prime Minister Syed Yousuf Raza Gilani is an indication of who is calling the shots now in Islamabad. A participating secretary reportedly stated that the meeting was originally scheduled to be held at the Ministry of Foreign Affairs, but was ordered to be moved to the General Headquarters.

The military appears to be largely brushing aside the Zardari government, although it isn't throwing Zardari out of power as it has done four times previously with other civilian governments. But Zardari, as expected when he was elected on a tide of emotion over the assassination of his wife, Benazir Bhutto, has proven to be inept and the government is perceived as irretrievably corrupt. The army's new aggressiveness in dealing with extremists and the Taliban has set well with urban Pakistanis.

Former Jamat-e-Islami leader Qazi Hussein Ahmed told the Urdu-language newspaper, Khabrain on March 16 that "the real seat of power in Pakistan remains with the army, and that the President, Prime Minister and provincial governments are being kept happy, although they are not allowed to interfere in the affairs of the military."

Gen. Kayani is the first army chief to participate in the US-Pakistan strategic dialogue held in Washington on March 24. Inter-Services Intelligence chief Gen. Ahmed Pasha, who was just awarded by his mentor a one-year extension, also participated. Secretary of State Hillary Clinton and Foreign Minister Shah Mehmood Qureshi led their delegations, but the dialogue was largely between Gen. Kayani and his American counterparts.

Christina Lamb, foreign correspondent for The Sunday Times of London, wrote from Washington on March 7, that "In the Pakistani context, the military chiefs are going to make decisions." That is why there were no murmurs when Gen. Kayani extended the service of three lieutenant generals on his own without referring their cases to Minister of Defense or the Prime Minister.

"It shows that the present army chief has, by not seeking prior sanction for giving the extension, yet again established his organization's autonomous status," said Ayesha Siddiqa, writing in The Dawn, a leading Pakistani newspaper, on March 5. "Since Gen. Kayani has caught the imagination of his American friends, there are many in Washington who are in favor of an extension for the army chief," she added. Defense Secretary Robert Gates also appears to continue to bet on the military horse rather than the civilian government.

Americans know pretty well where to put their money. It was with Gen. Pervez Musharraf for 11 years, and when he lost steam they went with the Benazir Bhutto and then Zardari. They soon realized that the army had launched a strident attack on Zardari-backed American legislation for US$1.5 billion of annual aid for a period of five years. The act contained a number of conditions including civilian control of the armed forces and action against the Lashkar-e-Taiba which appears to have turned into a bureaucratic nightmare. The Army-directed campaign unnerved both the Zardari government and the Obama administration, which soon fell in line with Kayani's diktats.

Politicians take their cues from the Army chief before they articulate their foreign and security policies. Kayani's press briefing on February 10 after his 'successful' return from Afghanistan conferences in Ankara and London was clearly a policy direction. He cited water issues as the reason for Pakistan having to be India-centric in its defense preparedness. This is a new posture to seek to convince the international community to buy his argument that India remains their enemy number one and that they cannot ignore the threat from the east to focus on the west.

If one requires further proof of Army's control of foreign affairs, Afghanistan proves the point. It was Gen. Kayani who recently visited Kabul and invited President Karzai to pay a return visit to Islamabad. Karzai did visit Islamabad within a week and the first dignitary he met was Gen. Kayani in the GHQ. Other `protocol' meetings followed with a customary press briefing with Prime Minister Gilani.

In Pakistan, Army power comes not just from its guns but the vast economic clout it enjoys from food production to industrial production. It controls entire gamut of activities directly through its commercial ventures. Every day, more properties are forcefully allotted to itself or grabbed by force.

There were recent leaks of documents showing Sikh Gurudwara lands measuring thousands of acres and costing millions of rupees, being sold cheaply to the Army commercial ventures. Pervez Musharraf used the Army-controlled Frontier Works Organisation (FWO) to get Rs55 billion in contracts without tenders only to distribute them among those private companies and contractors where his relatives and friends were working to help them mint money through such secret deals.

Earlier last year, PML-N chief Nawaz Sharif expressed grave concern during a visit to Bahawalpur over the large chunk of land occupied by the military in Cholistan. Allotment of land to the higher-ups in the military is not a new phenomenon. Under various schemes since the 1960s, many senior and junior army officers were allotted agricultural lands in Sindh, Cholistan and some other districts of Punjab. Musharraf allotted a large chunk of land to himself and other generals in Cholistan.

The Army, therefore, enjoys both muscle and money power. Who can dare them? No need to be pessimistic, though. Judicial and popular power showed beyond doubt that mightiest army generals can be thrown out, as Musharraf learned.

Rajeev Sharma is a Senior Fellow at the New Delhi-based think tank, Vivekananda International Foundation.