Independence Inc.

Not long ago, I discussed the idea of a coming wave of microstates. One of the objections of some to independence for small areas like Kosovo or Abkhazia not to mention huge obstacles, is a lack of qualified people to run a new government. Montenegro, for example, was largely independent from Serbia before declaring official independence. It already had a functioning bureaucracy. Yet, for some small areas, even already running unrecognized governments like South Ossetia in Georgia, that doesn’t always mean that they would have enough skilled and qualified people to run all branches of government and provide the necessary government services, especially considering all these potential new states are largely impoverished. Citizens don’t have reliable drinking water or electricity, much less education.

So what to do? First of all, let me note that there are a number of interesting options on the table for these various regions, most all of which don’t grant full independence. This post aims to discuss the situation for newly independent small states and to the extent that it’s transferable, also the implications for autonomous areas.

Since we aren’t talking about armed intervention and the UN isn’t a very realistic or efficient and effective answer, where does that leave us? In his recent book The Savage Wars of Peace, Max Boot writes about limited US intervention in the Dominican Republic. In 1903, a new Domican government entered office and stopped payment of foreign debt, some owed to Americans and most to Europeans. Teddy Roosevelt feared that like in other cases, the Europeans would resort to force and intervene in the island. The following is taken from page 137:

In order to preserve order and keep the Europeans out, the president agreed to assume a customs receivership. Under a treaty signed in 1905, a retired U.S. army colonel took over customs collection for the Dominican Republic. The agreement called for 55 percent of the revenues to be turned over to foreign bondholders, but because the American collectors were more honest than their predecessors, the Domican government actually received more money than ever before.

While all of the Caribbean could surely benefit from something similar today, it shows the big difference such a small program can make. Returning to newly emerging states who just as the Caribbean did and does, lack the people to efficiently, effectively and honestly run a government, who should one turn to? Why the private sector of course.

There has been much discussion about Private Military Contractors with regard to Iraq but if you’re a small emerging country and are looking to build institutions your options are the US, Europeans or the UN. While the US has bigger fish to fry at the moment, might we see companies offering government type services to countries? PMC’s would surely be useful building and running the new military. There are enough ex-government employees and highly skilled private sector people to run any nascent government.

Readers, could the private sector be used in future nation building exercises? When a lack of international support exists and/or a lack of domestic political will or willingness, why not call in the private sector?

NOTE: Don’t forget that Blackwater, for example, offered to intervene in Darfur.

About Chirol

Sir Ignatius Valentine Chirol (1852 - 1929) was a journalist, prolific author, world historian, and British diplomat. He began his career as a foreign correspondent and later became editor of the London Times. After two decades as a journalist he joined Her Majesty's Foreign Ministry as a diplomat and was subsequently knighted for his distinguished service as a foreign affairs advisor. Additionally, he wrote a dozen books on foreign affairs including The Far Eastern Question (1896), Serbia and the Serbs (1914), The End of the Ottoman Empire (1920) and The Egyptian Problem (1921). He is generally credited with popularizing "Middle East" in reference to the Arabian Peninsula with his book The Middle Eastern Question (1903). "Chirol" is a US citizen and graduate student studying Defense and Strategic Studies and government contractor. As with the historical Chirol, he has traveled to over two dozen countries and lived abroad for many years. Chirol speaks English and German fluently with basic knowledge of manyl of others.
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13 Responses to Independence Inc.

  1. I think that this could work, but I see two potential problems. One, in all but the really, really aweful situations (i.e. Sierra Leone) I think that locals would resist this kind of neo-imperialism. Two, I think that there would be a significant issue of accountability, as this is much bigger than just fulfilling some discrete task which is the case in Iraq. And who would be accountable for this if things went bad? Just the shareholders? What if a PMC got involved in Darfur, killed a bunch of civilians or had some of its people captured and they were then held for ransom against their country of origin? I suppose the latter problem happens with some regularity with regard to humanitarian groups.

    But I do see merit here, since these small vacuums of power aren’t going away and may get worse. The British empire certainly would never have been formed, much less maintained, without private companies doing a lot of the work. The new global order (or disorder, as some on this site might prefer) will be hard to manage with states and regular NGOs as the only actors.

  2. Sperwer says:

    Provocative notion. Of course it moots the question of local resistance to which the previous commenter adverts = local resistance that would oikely be “national” and nationalistic serving to unite all local factions against the intermeddlers. It also moots the question of the significance of the legitmation of private military power. The deliberate devolution of central control of violence by e.g., the Japanese imperial court eventually empowered a lot of petty warlords resulting in the rise of the Japanese variant of fedualism with serious consequneces for the social structure and peace (i.e., there wasn’t much, instead a lot of small wars). Obviously, circumstances are very different, but a lot more thought should be given to this before anything like it is implemented. I doubt that the Japanes court foresaw its own demise in what it unleashed.

  3. Jay says:

    Hmm. In a way, this post’s “provocative notion” is vaguely reminiscent of the “metanats” (as in “metanational” [as opposed or "multinational" or "transnational"]) featured in novelist Kim Stanley Robinson’s “Mars” trilogy. In fact, it’s reminiscent of the notion of the “sovereign” corporations that have become a near-cliche in a lot of sci-fi stories–where they’re usually portrayed as a negative thing (at least for the most part).

  4. It is reminiscent of SF corporations — but it is also reminiscent of things like the Dutch and British East India Companies — Private firms that operated their own militaries in remote parts of the word. I think something along those lines may be the way to proceed.

  5. Kenneth says:

    _Returning to newly emerging states who just as the Caribbean did and does, lack the people to efficiently, effectively and honestly run a government, who should one turn to? Why the private sector of course._

    Couldn’t have said it better myself. The government would save enormous amounts of money if it just hired private contractors to do its jobs rather than having established bureaucracies- just look at how much more cost efficient PMCs are than governments- they must be, otherwise they wouldn’t be thriving.

  6. John says:

    Corporations in the modern age can’t be trusted with running whole countries including all social programs, taxes and most importantly corporate governance and regulation.
    Large American companies have consistantly shown that they can’t run the pensions and health benifits of their own employees in the private sector. Their goal of ever bigger profits and serving the shareholder has lead to “holes” in pension funds “cuts” in health care and lest we forget some of them are so scared of any negative results that they hide them. In the most extreme circumstances the company collapses. The SEC has even gone so far as to change the way that companies expense stock options for employees (especially senior management) in an effort to clamp down on the self serving corporate culture to prevent it from bankrupting itself through greed.

    The grand examples of the British east india trading company were shining examplyes in the 18th century. When the British crown realised that half the known world was under the control of a company steps were taken to bring it into check that eventually brought an end to the company. I suppose it was a good 100 years while it lasted. The east india trading company didn’t really have to deal with pensions and health care while it was annexing ever larger areas of India while keeping the French at bay at the same time.
    In the absense of state control and regulation corporations run amok. That’s why we have regulators and anti-trust investigators to keep them in check. That won’t happen if a company goes in to run a country changes the law re-registers itself under it’s own law and kicks out any and all competition.
    The modern civil service in western countries may be bloated and inefficient but at least it is guaranteed jobs for the population. This is essential in times of economic down turns. At least with overspending in the civil service the money ends up back in the economy and not in the back pockets of the super rich who just sit on it and accumulate more.

  7. IJ says:

    Privatisating public services is already common. It was said some time ago there is little to stop politicians putting out all public services to private tender – after specifying the delivery requirements. Lots of value for money, but politically unacceptable.

  8. sun bin says:

    I am not sure if manager is the reason. After all, Litchenstein and Monaco are doing pretty well. Luxemburg is the richest country in the world. Sometimes ‘no management’ could be the best management. And who is here to say we will not see ‘outsourcing’ of functions such as ‘consulate services’ not possible to become widespread in future?

    Ultimate it is the question of ‘scale’, not the question of management.

    however, some others points.
    1) does it make sense for UN to continue its one state one vote policy? shouldn’t it introduce a house in addition to the senate? UNSC may be the house but many changes would be required if it si going to do that job
    2) trend to =re-coalescent. e.g. EU
    3) some conflict of interests for those in the US. :) further fragmentation of the world benefits the sole hegemone today, the US. So US should steer clear (or at least very carefully) in such says.
    This is the reason many countries view US’ support of separatism in other countries not so ‘pure’, and one of the main reason for SCO’s establishment — but it doesn’t have to be that way.

  9. sun bin says:

    i guess my point are
    1) yes, govt services could (and should) be outsourced. esp when scale is required.
    2) but most of the core functions are not scale issues, i.e. the core job for a microstate head is no different from that of a small town mayor
    3) outsourced services would be more appealing if they are from neutral or trusted parties — a few caveats need to be remembered

  10. IJ says:

    Why aren’t more public services privatised? Because it has been decided that colossal value for money for the taxpayer is not a priority.

  11. Kenneth says:

    _Large American companies have consistantly shown that they can’t run the pensions and health benifits of their own employees in the private sector. Their goal of ever bigger profits and serving the shareholder has lead to “holes”Â? in pension funds “cuts”Â? in health care and lest we forget some of them are so scared of any negative results that they hide them. In the most extreme circumstances the company collapses. The SEC has even gone so far as to change the way that companies expense stock options for employees (especially senior management) in an effort to clamp down on the self serving corporate culture to prevent it from bankrupting itself through greed._

    Nope. Chile’s private pension system is accredited with the country’s explosive growth during the early nineties, as it substantially raised the savings rate. Besides, you don’t need a formal pension for a retirement fund, all you have to do is invest in the stock market. Moreover, South America’s system isn’t capitalist- it’s mercantalist. There is a lot of red tape and government granted monopolies. If corporations are so myopically greedy, then how come only 10-20 out of 20,000+ publicly traded companies in the US have been convicted of malpractice? That’s a failure rate far lower than what we’ve seen thus far among politicians, presidents, and bureaucrats. The reason is that corporations, being self-interested, must consider long term as well as short term cost. If you ruin your reputation, nobody will buy from you or invest in you. Taken to its logical conclusion, your argument also implies that we should nationalize the entire economy. We all know how well such ideas worked in the Soviet Union, China, Ethiopia, Mozambique, Mongolia, Eastern Europe, and every other socialist backwater that has ever disgraced the surface of the Earth.

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