Cyclopedia Of Economics 1st edition

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Private Armies

Two years ago (2002), Christopher Deliso recounted in that Dutch Radio, based on reports leaked by a Dutch military analysis firm, accused the US government of aiding and abetting terrorists in Macedonia. Not for the first time, the Americans were rumored to have hired the services of MPRI (Military Professional Resources, Inc.) to train and assist the rebels of the NLA, the Albanian National Liberation Army, which skirmished for months with the Macedonian police and military throughout last year.

MPRI is a leading Private Military Company (PMC) whose presence was espied in other Balkan trouble spots, such as Croatia, Kosovo, and Bosnia. The absurd is that MPRI has been training the Macedonia army - to little avail it would seem - since 1998 under a "Stability and Deterrence Program".

Croatian former Foreign Minister Tonino Picula described MPRI's role thus:

"We started at the beginning of the 1990’s lacking all kind of assistance. We faced a war of aggression. We needed all kinds of friends to enhance our capability to keep a schedule. I know that it (MPRI) did a significant job in Croatia as a part of US assistance to Croatia during the 1990s."

Other governments - notably Colombia's and Nigeria's - were less sanguine about the utility of MPRI's services. Colombian officials complained "the MPRI's contributions were of little practical use", while according to the Center for Democracy and Development, the vociferous objections of the Nigerian military led to the dismissal by the president of senior army officers, among them General Malu, the Nigerian chief of staff.

The end of the Cold War spelled the termination of many an illustrious career in the military and the secret services - as well as the destabilization and disintegration of many states. The Big Powers are either much reduced (Russia), militarily over-stretched (Europe), their armies ill-prepared for rapid deployment and low intensity warfare (everyone), or lost interest in many erstwhile "hot spots" (USA). Besieged by overwhelming civil strife, rebellions, and invasions - many countries, political parties, politicians, corporations, and businessmen seek  refuge and protection.

More than 5 million soldiers were let go all over the world between 1987-1994, according to Henry Sanchez of Rutgers University. Professional soldiers, suddenly unemployed in a hostile civilian environment, resorted to mercenariness. A few became rogue freelancers. The role of the Frenchman Bob Denard in the takeover of the Comoros Islands is now mythical. So is the failed coup in Seychelles in 1981, perpetrated by Colonel "Mad" Mike Hoare, a British ex-paratrooper.

Private armies for hire proliferated. Executive Outcomes acted in Sierra Leone, Congo, and Angola, Sandline International in Sierra Leone and Papua New Guinea, DynCorp in Colombia, Haiti, Kosovo, and Bosnia and, of course, MPRI in Bosnia, Croatia, Kosovo, and, lately, Macedonia. Aviation Development Corporation flies surveillance planes for the CIA. Its involvement was revealed when, in Peru, it misidentified a civilian light plane as carrying narcotics. It was shot down by the Peruvian air force.

But these are only the tip of a growing iceberg. Vinnell Corporation was established in the US during the Great Depression and is currently owned by TRW. It has coached militaries, operated facilities, and provided logistical support in more than 50 countries, starting in Saudi Arabia in 1975, where it won a controversial $77 million contract to train oilfield guards.

BDM International, Betac, Logicon, and SAIC are competitors, but Kroll of New York and Saladin Security of London do mainly intelligence gathering. Brown and Root of Houston, Texas, provide logistical support to peacekeeping operations, for example in Kosovo.

Pacific Architects and Engineering (PAE) furnishes logistical support and private security to armies the world over, mainly to the ECOMOG West African multilateral force. Control Risks Group offers corporate security, research, and intelligence solutions. It specializes in hostage situations. It boasts having advised in more than 1200 kidnappings and extortion cases in 80 countries.

Armor Holdings was founded in 1969 as "American Body Armor and Equipment" and incorporated in 1996. It is a Private Security Company (PSC). Its London-based subsidiary, Defense Systems Limited, guards industrial and other sensitive sites, such as embassies and HQ's of international organizations, mainly the UN's.

Armor itself manufactures police and other "non-lethal" equipment. It is a leading maker of armored passenger vehicles and the prime contractor to the U.S. Military for the supply of armoring and blast protection for High Mobility Multi-purpose Wheeled Vehicles (HMMWVs).

Gray Security is another PSC with clients in both Africa and among Latin American immigrants in Florida. Some PMC's are ethnically pure. Succumbing to market realities, the legendary Gurkhas now offer their services through Gurkha International. The oil-rich region of Cabinda is air-patrolled by AirScan - Airborne Surveillance and Security Services.

Big money is involved. The Los Angeles Times quoted, in its April 14th issue, Equitable Services, a security industry analyst. In 1997, it predicted that the international security market will mushroom from $56 billion in 1990 to $220 in 2010. This was long before the boost given to the sector by September 11.

"The top five executives at Science Applications International Corp. of San Diego made between $825,000 and $1.8 million in salaries in 2001, and each held more than $1.5 million worth of stock options." - continued the LA Times.

Control Risks Group's turnover last year exceeded $50 million. Armor Holding's 1999 revenues exceeded $150 million. Prior to its controversial demise, Executive Outcomes of South Africa was said to have earned c. $55 million in its last 4 years - excluding the $1.8 million per month contract it has signed with Sierra Leone, most of which went unpaid. There were unsubstantiated allegations of securing a share of the diamond trade in the ravaged country as well.

Sandline's contract with Papua New Guinea amounted to $36 million for the first 3 months with just under $1 million for any consecutive month - or a total of c. $45 million per the first year. The country's new government at first refused to honor the commitments of its predecessor - hurling at it vague corruption charges - but then compromised with Sandline and agreed to dole out $13 million.

Nor are these small ensembles. MPRI - now in its 14th year - employs over 800 people, most of them former high level US military personnel. It draws on a database of 12,500 freelancers "former defense, law enforcement, and other professionals, from which the company can identify every skill produced in the armed forces and public safety sectors". Many of its clients work under the US government's Foreign Military Sales program and abide by the GSA (General Services Administration) tariffs.

Control Risks Group - founded in 1975 as a subsidiary of the Hogg Robinson insurance group - claims to have had "more than 5,300 clients (including 86 of the Fortune 100 companies) in over 130 countries". Eighty three percent Of the firms comprising the FTSE 100 use one or more of CRG's services. It has 400 employees in 16 offices around the world. It has recently acquired Network Holdings Limited, the UK's largest private forensic laboratory.

The Armor Holdings Products Division is made up of nine operating companies in eight geographic locations. It offers its branded security products through a network of more than 500 distributors and agents internationally. ArmorGroup employs 5,500 people in 38 countries.

Modern PMC's, such as Sandline, are veritable - though miniature - armies, replete with staff military ranks, uniforms, doctrine, training syllabi, cohesion, unit spirit, and discipline.

Smaller, ad hoc, outfits from Ukraine, Russia, Belarus, France, the United Kingdom, Israel, Croatia, South Africa, the United States and other nationalities scour the Earth for emerging conflicts. Such units are often infiltrated by criminals on the run, terrorists in disguise, sadistic psychopaths, and intelligence officers.

These "dogs of war" are known for their disloyalty and lack of discipline. Many have committed acts of banditry, rapes, and an array of atrocities in the mutilated host countries. Still, these are marginal groups and in the minority of PMC's - the last resort, often hired by undesirables and failed states.

On February 12, the British Foreign and Commonwealth Office released a long-awaited briefing ("green") paper in support of regulating the private military sector. Quoted in "Defense News", the paper stated:

"The demand for private military services is likely to increase ... A strong and reputable private military sector might have a role in enabling the (United Nations) to respond more rapidly and more effectively in crises. The cost of employing private military companies for certain functions in U.N. operations could be much lower than that of national armed forces."

Regulation, though, has a poor record. All PMC's in the USA are subject to the porous and ill-enforced Arms Export Control Act overseen by the State Department. The Los Angeles Times is not impressed with the record:

"Congress is notified only of contracts worth more than $50 million. Sometimes there are conflicting views of what is in the U. S. interest. And once a license is granted, there are no reporting requirements or oversight of work that typically lasts years and takes the firms' employees to remote, lawless areas." Decisions often appear to be arbitrary and are mysteriously reversed. All major PMC's maintain lobbyists in Washington and function, partly, as rent seekers.

Still, PMC's are the most cost-effective alternative. According to the UN Special Representative to Sierra Leone, The UN peacekeeping mission there costs more than $500 million per year - compared to Executive Outcomes' $33 million spread over 21 months.

Regulation may amount to a belated acceptance of reality. MPRI boasts that it already operates in foreign countries with the full knowledge and "licence" of the American administration. It is a way to circumvent both the oft-withheld Congressional approval needed for US military involvement abroad - and unwelcome media scrutiny.

The US Army, in the framework of LOGCAP (Logistics Civil Augmentation Program), "preplans during peacetime for the use of civilian contractors to perform selected services in wartime and other contingencies. Utilization of contractors, in a theater of operation, will release military units for other missions or fill shortfalls." The ubiquitous MPRI is LOGCAP's main contractor.

Bahamas-incorporated Sandline also claimed British Foreign Office tacit approval of its mission in Sierra Leone. Most PMC's are self-regulating and selective. They won't render their services to organized crime, drug cartels, rogue states, terrorists, illegal arms traders, and regimes known for flagrant violations of human rights.

The privatization of hitherto exorbitantly costly peacekeeping and humanitarian operations would bestow legitimacy upon these outfits and entice them to adhere to strict regulatory codes. Still, the exercise of violence is a prerogative of states and a hallmark of often hard-gained sovereignty. Many do not take kindly to the encroachment of morally-neutral private sector replacements upon these hallowed grounds.

David Isenberg wrote in the March 11th issue of "Defense News":

"The only question is how best to address concerns about accountability, threats to a nation's sovereignty (i.e., usurping the state's prerogative of having a monopoly on violence), having a vested interest in perpetuating a conflict, violating human rights or acting as government proxies. The consensus opinion is that this is best accomplished through regulation."

The imperceptible line between "military advisors" and combatants is often crossed. According to the Los Angeles Times, Vinnell employees may have joined Saudi National Guard units in battle against the invading army of Saddam Hussein in 1991.

MPRI personnel are alleged by Ken Silverman in his book "Private warriors" and by numerous media - from the British journalist Paul Harris on Australia's Radio National's "Background Briefing" to The Scotsman - to have helped plan the Croatian occupation and ethnic cleansing of Serb-populated Krajina in 1995.  Even the Foreign Military Training Report published by both the State Department and Department of Defence in May refers to these allegations against MPRI not entirely disparagingly.

Sanchez describes what happened in Papua New Guinea:

"When citizens of Papua New Guinea learned that their government signed a $27 million contract with EO (should be Sandline - SV) to train the Army to fight a secessionist rebel uprising it set off five days of rioting and protests. Even the Army commander (later convicted on unrelated corruption charges - SV) refused to work with the South African firm.

States that hire private firms for security are usually financially poor but mineral rich. They often pay for services by offering concessions earned through diamond mining, oil drilling or other natural resources. An enterprising military firm may end up exploiting a poor nation of its modest resources. As a result there may be a new 'Scramble for Africa' over resources where no government exists or is desperate for help..."

Few PMC's if any consent to any form of payment, except cash. Mineral concessions require heavy investments and existing mines require a logistical infrastructure often way beyond the expertise and financial wherewithal of the average PMC. PMC's may be involved in influence peddling on behalf of mineral extractors or receive introduction fees and commissions from multinationals, though. PMC's also make a lot of money on arms sales to their client states.

Consider Sandline International. It was never a shareholder in Branch Energy, DiamondWorks, or any other real or imaginary mining firm it was associated with by sloppy researchers and journalists. Nor was it the successor to Executive Outcomes. Yet, the same people acted as directors, or advisors in all these firms.

This incestuous setup led to the false assertions that Sandline - and EO before it - looted the mineral wealth of countries such as Sierra Leone and Angola. That many PMC's render security services to mining firms - both statal and private - adds to the confusion.

"The Financial Times" mentioned the positive role "Southern Cross Security" played in keeping Sierra Leone's titanium-dioxide mines intact throughout the war. Others wrongly accused it of being an EO offshoot out to pillage the minerals it sought to protect.

Even Sanchez acknowledges that "(others think that) a private company can deploy forces rapidly, avoid the difficulties of ad-hoc multinational forces (command is streamlined and cohesive), they usually have standing logistics for transport, appear to be cost-effective, and are willing to sustain loss of life".

Isenberg concurs:

"It is time to recognize that today's PMCs are far different from the ad hoc organizations of the past. As experts such as professor Herb Howe of Georgetown University have noted, many of today's companies exhibit a distinct corporate nature and a desire for good public relations. The companies' goal of obtaining contracts encourages them to control their employees' actions. Private firms have a large pool of qualified applicants, due to worldwide political realignments and defense cutbacks since 1989 ... One thing is clear: The need for security from the private sector is going to increase dramatically. And PMCs are going to fulfill that need."

PMC's have embarked on a concerted effort to alter their penumbral image. MPRI - its Web site replete with literary quotes lifted from the works of Marcel Proust and other renowned soldiers of fortune - has contracted with Enterprise Strategies and Solutions under the Department of Defence's Mentor-Protégé program. MPRI explains:

"ESSI's emphasis on economic well-being, technology transfer, corporate social investing, business incubation, and knowledge management complement the vital safety and security roles performed by MPRI. MPRI has the added advantage of being able to utilize the skill sets of a small, woman-owned, veteran-owned business. MPRI and ESSI form a comprehensive team that enables them to perform on a wide range of projects that would otherwise be inaccessible for one or the other."

MPRI branched out to offer corporate leadership programs that include the re-enactment of historical battles. It is a major provider of training, support, and "other services" - such as strategic planning and leader development - to the US armed forces, Department of Defense, the corporate sector, and "non-DoD government agencies." Its Web site - a sincere stab at transparency - lists dozens of military and semi-military contracts.

Its military contracts notwithstanding, it emphasizes the humanitarian side of its operations. It "shipped more than $900,000,000 worth of donated food and medical supplies to the newly independent states of the former Soviet Union over a five year period ... has provided peace keeping monitors for both the Department of Defense and the Department of State" and engaged in other charitable deeds, like demining.

In the Winter 2002 issue of "Harvard International Review", Sean Creehan summed up this shift in public perceptions:

"Today's mercenaries still fight for money, but in the context of global capitalism, some groups are becoming less morally objectionable. The organization of mercenaries into corporations that function like consulting firms has put distance between them and their activities. Mercenary corporations' increasing efficiency and self-regulation is influencing the way legitimate governments view mercenaries as instruments of state policy."

In a BBC poll conducted in the wake of the British government's Green Paper about regulating "soldiers of fortune", a reader named Katie raised important points regarding the corporate structure and liabilities of PMC's:

"The UK has a rather poor record of holding corporate officers responsible in any way for their actions ... Maybe military 'companies' should actually be restricted to being partnerships where the owners have unlimited liability similar to a lawyer's practice? Maybe a special class of company needs to be created, for this purpose so they can be audited and tracked and to clarify their relationship with the government (for whom they act). Essentially ... the directors of the company can be held responsible for war crimes as would ranking officers in the army. To some extent the 'corporate veil' needs to be thinner for these companies."

The United Kingdom - and Australia - promote a complete re-think of the concept of national defense. Britain's public-private partnership dubbed the "Private Finance Initiative" revolves around "paying privately for the defence we cannot afford publicly". Thus, transport planes, ships, trucks, training, and accommodation - may all be on long term leases from private firms. The equipment will be leased to other customers during down time, reports the BBC.

After all, when rich countries pay poor countries to send their ill-disciplined, ill-equipped, and ill-trained soldiers on peacekeeping operations - isn't this a mercenary system in all but name? And atrocities are not the preserve of "dogs of war". American regular soldiers committed them in Kosovo and Japan, Nigerian conscripts perpetrated them all over West Africa, "national armies" are feared by their own civilians more than any mercenary troupe. Time to rid ourselves of self-righteous myths and privatize peace as we, alas too often, did war.

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