March 12, 2007

The Problem with Privatizing War

Guest Writer: L. Vincent Sebastian

FIRST in a Three-Part Series,

My recent posting, “Privatizing the War in Iraq”, describes the Bush administration’s growing reliance on private contractors such as Blackwater USA to conduct military operations in Iraq. Yet, the issues and potential problems with private contractors described in that posting are only the tip of the iceberg. In the new posting below, the many problems surrounding private military firms (PMFs) are more fully laid out. The source material for this posting is: P.W. Singer, “Corporate Warriors: The Rise and Ramifications of the Privatized Military Industry”, International Security, Vol. 26, No. 3, Winter 2001/2002. Although Singer’s article, turned into a book, was published before the U.S. invasion of Iraq, its relevance has only increased in the last five years.

The Privatized Military Industry in the Global Context

(a) Introduction: Private military firms are profit-driven organizations that trade in professional services intricately linked to warfare. They are corporate businesses that specialize in the provision of a wide range of military skills and services, including tactical combat operations, strategic planning, intelligence gathering and analysis, operational support, logistics support, troop training, military technical assistance, and post-conflict resolution. PMF capabilities extend across the entire spectrum of military activity, from a team of commandos to a wing of fighter jets. PMFs actively advertise their services, and one can gain access to them simply by becoming a business client.

As the principal private actors in warfare, today's PMFs have evolved far beyond ad-hoc groups of mercenaries. PMFs operate and compete openly on the international market, and provide military skills and services to a wide variety and number of clients. PMFs can gain a competitive advantage in serving niche markets through specialization within the military sector. PMFs are often tied through complex financial arrangements to other firms, both within and beyond their own industry. Many of the most active PMFs are subsidiaries of larger corporations listed on public stock exchanges. For a large multinational corporation, the addition of profitable military services to their list of offerings may help support their bottom line. Because PMFs maintain permanent corporate hierarchies, they can make use of complex corporate financing schemes and can engage in a wide variety of deals and contracts. As legal entities, PMFs are at least nominally tied to their home nations through laws requiring registration and licensing, although codified standards for corporate behavior vary widely among countries. PMFs are contractually bound to their clients and can work for multiple clients in multiple markets or theaters at once.

(b) Historical Background: The private provision of violence was a routine aspect of international relations before the twentieth century, and every empire from Ancient Egypt to Victorian England utilized contract forces. By the twentieth century, a system of state sovereignty had spread across the globe, and with the rise of superpowers the social-political norm ran against private armies. But, the 1990’s witnessed a resurgence of private military activity around the world. Every major U.S. military operation in the post-Cold War era (Iraq 1991, Somalia, Haiti, Zaire, Bosnia, Kosovo, Afghanistan, and Iraq 2003) has involved significant and growing levels of PMF support. In addition, corporations, international organizations, and even individuals now rely increasingly on military/ security services supplied by the private market.

The growth in the private military industry has resulted from the changed global security environment at the end of the 20th century compounded by the Bush administration’s global war on terrorism. The end of the Cold War resulted in massive disruptions in the supply and demand of capable military forces. In the 1990s, the world’s armies shrank by more than 6 million personnel, and a huge number of individuals with military skills found themselves looking for work, including for example an estimated 70 percent of the former KGB. Many elite units, such as apartheid South Africa’s 32nd Reconnaissance Battalion, simply kept their structure and formed their own private companies. At the same time, massive arms stocks flooded the market. Machine guns, tanks, and even fighter jets became available to anyone who could afford them. With the end of superpower pressure for stability, new security threats began to appear, many involving ethnic or internal conflicts.

(c) PMF Services: Supply and Demand No longer strategic pawns of the Cold War and shorn of their superpower support, many nation-states have suffered breakdowns in governance, and have seen a decrease in their ability to respond to internal and external threats. This has been particularly true in developing areas, where many regimes lack any real political authority or capability. The security apparatuses – local military and police – of these regimes are likely to be deficient to some extent, and PMFs have aimed to fill the void. As one company executive explained, “The end of the Cold War has allowed conflicts long suppressed or manipulated by the superpowers to reemerge. At the same time, most armies have got smaller, and live footage on CNN of U.S. soldiers being killed in Somalia has had staggering effects on the willingness of governments to commit to foreign conflicts. We fill the gap.”

Two other trends have helped raise the demand for PMF services. First, the military operations of great powers have become more high-tech, and civilian specialists are relied on more than ever to run these increasingly sophisticated military systems. With sophisticated military technology, strategic objectives can be achieved by a relatively small number of soldiers who may not even be on the battlefield. Fewer individuals are doing the actual fighting, while massive, high-tech, and information-intensive support systems are required to maintain modern forces. Economic realities are creating an in-house vacuum of high-tech military support personnel, and the armed forces of nation-states must rely increasingly on specialized expertise provided by the private sector. Such expertise is in demand in all sectors of the economy, not just the military, so the best and brightest in the public armed forces are often lured away by the higher salaries of private employment.

Second, the primary tools of warfare – conventional weapons – have both diversified and become more available to a broader array of actors. Non-state actors with newfound ability to disrupt world society are increasing in number, power, and stature: regional warlords, terrorist networks, and drug cartels. The opportunity for profit may be as much a cause of conflict as socio-political factors. With the global spread of cheap infantry weapons, individuals and small groups can purchase and wield disproportionately large military might. Almost any group operating inside a weak nation-state can acquire at least limited military capabilities, which lowers the bar for creating viable threats to the status quo. Furthermore, this shift in the balance of power from states to non-state actors encourages the proliferation and criminalization of local warring groups. With enough money anyone can equip a powerful military force, and with a willingness to use crime, anyone can generate enough money. Many local conflicts have lost the ideological motivation they once had and instead have become grabs for local resources. As a result, warfare itself becomes self-perpetuating, as violence generates profit for those who wield it most effectively (which often means most brutally), while no one group can eliminate the others. PMFs thrive in such profit-oriented conflicts, either working for these new conflict groups or reacting to the humanitarian disasters they create.

The last few decades have seen a shift toward the marketization of the public sphere, which has gone hand in hand with globalization. Both are premised on the belief that the principles of comparative advantage and competition maximize efficiency and effectiveness. Privatization, with an emphasis on downsizing government, is the economic policy of choice among many of the world’s elite. At the same time, outsourcing has become a dominant strategy of the modern corporation and a huge industry in its own right. Global outsourcing expenditures topped $1 trillion in 2001, a doubling from three years earlier. Thus, the use of profit-motivated military service providers has become not only a viable option but frequently the favored solution for both public institutions and private organizations. The successes of privatization programs and outsourcing strategies in other sectors of the economy have helped give PMFs the stamp of legitimacy.

End of the FIRST in a three-part series.

Part 2: Organization and Operation of the Privatized Military Industry

Part 3: Impacts of the Privatized Military Industry on Conflict, Security, and Public Policy

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