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The outsourcing of military operations to private companies is a growth area of the defence industry. Frida Berrigan reports on the insidious profiteering.

A growth industry

In January 2003, as plans for war in Iraq mounted, US defence secretary Donald Rumsfeld ruled out re-initiating the military draft, saying, “there is no need for it at all. It seems to me that the way we're currently organised and operating is vastly preferable. We have people serving today - God bless them - because they volunteered.”

In some sense he is right, the compulsory draft was eliminated in the United States in 1973. However, Rumsfeld's comment misses two important points with regards to military service. The first is that while the draft is no longer legal, the “poverty draft” is just fine--poor men and women are enticed into the military by promises of college education, a career,a leg up out of poverty. These promises seldom materialise. An equally insidious,but not as well known, aspect of military service that Rumsfeld fails to mention is a growing trend towards privatisation of military operations.

There are about 147,000 U.S. troops positioned in the Persian Gulf region,about 10,000 in Afghanistan, and smaller deployments throughout the world. The US government threatens at least one new country almost every day, rotating between Iran, Syria and North Korea (and throwing in Cuba occasionally, just to keep everyone on their toes). At the same time, US troops in Iraq are homesick,scared, bored, and increasingly vocal in their frustration at the string of broken promises from their superiors about when they will be able to go home.

So, the Bush administration struggles with how to project massive military power throughout the world without using the dreaded (and politically suicidal) d-word--the draft.

One contractor for ten soldiers

It is not surprising that an administration headed by a silver spooned business school graduate, and staffed by former CEOs and draft dodgers, would come up with a private sector solution to fill the Pentagon's need for troops on the front line while at the same time protecting themselves from increased criticism about American men and women being killed and injured there.

Private militaries are not a new idea. But in the post-Cold War era when massive standing armies can no longer be justified (the United States has cut its military force from 2 million to about 1.4million in the last ten years), and the post-9-11 world when the administration sees new threats at every turn, all of a sudden private military corporations are a growth industry.

PW Singer, a Brookings Institute Fellow who recently authored Corporate Warriors: The Rise of the Privatised Military Industry, notes that there are some 20,000 employees of private military corporations(PMCs) working as part of the US/UK occupation force in Iraq and the surrounding region. That is one private military employee for every ten soldiers.

Twenty years ago there were ten PMCs operating in the United States, now there are more than 30, and recently a number of them have been absorbed into Fortune500 companies like L-3 Communications (which owns MPRI--a consultancy set up by former US generals, which allegedly conceived Operation Storm, perhaps the Croatian army's most vicious and human rights abusing campaign of the Croat-Serb war during the 1990s) and Northrop Grumman (which owns the Vinnell Corporation). Between 1994 and 2002, the Pentagon entered into 3,000 contracts with private military firms, for a total of $300 billion in business.

And the United States is not the only country with PMCs. According to the International Consortium of Investigative Journalists, there are more than 90 private military corporations (or PMCs) operating in over 110 countries. In the last decade, these companies have grown from marginalised and maligned mercenaries to a thriving industry with its own trade association, called the International Peace Operations Association, and more than a $100 billion in annual revenue.

Maintaining weapons

Private employees now fill critical roles for the United States military, providing services and consultation on everything from high tech warfare skills to communications, aerial surveillance, logistical support, battlefield planning and training. Civilians contracted with PMCs fly fighter planes and perform routine maintenance on a wide array of military platforms and weapons systems. They also deliver mail and empty trash cans. At this point, the Pentagon cannot not use PMCs. In a July 2003 article titled Soldiers of Good Fortune, author Barry Yeoman writing for The Independent Weekly estimates that troops rely on PMCs for maintenance of 28% of all weapons systems.

The Bush administration would like to see that increased to 50%. Washington has wholeheartedly embrace privatisation as cheaper, faster and more efficient and has sought to turn over a whole swathe of government operations to private companies. In fact, President Bush's “Competitive Sourcing Initiative” has identified 850,000 federal jobs that could be turned over to the private sector.

A great record?

But the benefits promised in privatisation have not been quick to materialise. Just ask the men of the Calvary Regiment in east Baghdad. Months after their superiors signed $8 million contracts with Kellogg Brown and Root (a subsidiary of Vice President Dick Cheney's former company Halliburton) to provide troop housing,this army unit (and many others) is still living in hot cramped temporary shelters. It turns out that Kellogg Brown and Root can't pay the skyrocketing insurance rates needed to send civilian contractors into the war-zone to erect the housing units.

Bechtel, the San Francisco services giant, is a great example of why private companies do not always do a better job than government contractors.

In mid April the US Agency for International Development granted Bechtel an initial 18-month contract worth up to $680 million to repair power generation facilities, electrical grids, water and sewage systems and airport facilities as part of the rebuilding effort in Iraq. As criticism about the secretive nature of the bidding process mounted, USAID officials responded that Bechtel is the best company for the job. But it only takes a quick glance at the company's track record to contradict these claims.

Bechtel was the major contractor on Boston's “Big Dig” highway project,which has been plagued with cost overruns, scandals and mismanagement. The company said they could do the job for $2.5 billion in 1985, but the citizens of Boston are being slammed with a $14.6 billion bill for the still unfinished project. An investigation by The Boston Globe found that two-thirds of the cost over runs are directly tied to Bechtel mismanagement and error.

USAID administrator Andrew Natsios, who oversaw the bidding contracts in Iraq,headed the “Big Dig” construction process in Boston and in that capacity should have been very well-versed in Bechtel's less than efficient track record there.

Bostonians are not the only ones saddled with Bechtel's high bills and lousy work. The state of California is still paying for Bechtel's big boo boo at a San Diego nuclear power plant. The company installed one of the reactors back to front.

With these and countless other examples it becomes clear that Bechtel did not win the Iraq construction contracts because of its stellar work record, but because of its star-studded board of directors and other political connections. Jack Sheehan, a senior vice president at Bechtel, is a member of the Defence Policy Board, an advisory board that enjoys close relationships with the Pentagon and the White House. Another senior vice president, Daniel Chao, serves on advisory board of the US Export-Import Bank. And just two months before war, president Bush appointed Riley Bechtel, the 104th richest man in the world and the CEO of Bechtel, to his Export Council where he is now offering advice about how to create markets for US companies overseas.

Serving a purpose

Clearly, PMCs are not more efficient and they not cheaper. But they do serve a purpose at a time when Americans are critically conscious of what the war is costing in terms of lives and blood. Bringing in private military personnel seems like one way of dampening opposition to war in the United States.

As the administration faces growing opposition to the war from military families and the troops themselves, and the deaths of US military personnel in Iraq is the top news on every channel, one group being targeted by the armed Iraqi resistance is escaping mainstream media attention. Civilians working for private military corporations in Iraq and elsewhere are being killed, but it is not creating a media storm or demonstrations in the street.

On 5 August an American civilian,working for Kellogg Brown and Root (a subsidiary of Halliburton), was killed in Iraq as he drove his mail truck near Tikrit. There was very little coverage.

In May of this year the Vinnell compound in Saudi Arabia was bombed in a terrorist attack. Nine employees were killed and scores more injured. There was very little coverage. Vinnell is a subsidiary of military contractor Northrop Grumman and is under contract to the US army to provide training services the Saudi Arabian National Guard.

Plausible deniability

This strategy has worked in the past. In the last ten years, eight DynCorp employees have been killed in Colombia and many more have been taken hostage. These stories rarely make the evening news. A former US military officer, speaking off the record with the Dallas Morning News about the role of private military contractors in Colombia, emphasised this lack of attention to casualties as a major benefit of outsourcing military operations. He said that the “exposure risks for Uncle Sam” are greatly reduced when private contractors instead of US troops are used.”The life is certainly just as important, whether it's a contract employee or a soldier. But exposure-wise, whoa, it's much less... If something goes wrong, it's important for Washington to be able to say, `there wasn't a soldier killed'“.

Daniel Nelson, a former professor of military-civilian relations at the Department of Defence's Marshall European Centre for Security Studies, notes that private military corporations help the administration “create what we used to call `plausible deniability'“ about controversial missions.

Avoiding scrutiny?

In the US it is pretty easy to deny the use of private military corporations when even Congress has no idea how many PMCs are operating where and what they are doing. The Pentagon is authorised to sign contracts with PMCs for up to $50million without seeking Congressional approval, and without even notifying Congress. Because so many different departments are signing contracts all the time, the Pentagon itself does not know how many PMCs it has on contract at any given moment.

The Times Picayune reported in early August that because of the overlapping contracts and multiple contracting offices the Pentagon cannot keep track of how much money they are spending on private military contractors. White House Budget Director Joshua Bolten recently admitted that he could not even estimate the costs of keeping troops in Iraq for fiscal year 2004, which begins on 1 October.

Representative Janice Schakowsky(Democrat for Illinois) asks, “Are we outsourcing [military operations] in order to avoid public scrutiny, controversy or embarrassment? Is it to hide body bags from the media and thus shield them from public opinion? Or is it to provide deniability because these private contractors are not covered by the same rules as active duty US service persons.”

It seems like the answer is all three.

World Policy Institute, 66 Fifth Ave-9th Floor, New York, NY 10011, USA (+1 212 229 5808; fax 229 5579; email BerrigaF@newschool.edu; http://www.worldpolicy.org/projects/arms ).

Frida Berrigan is the Senior Research Associate for the World Policy Institute.