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Chirol
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Chirol

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December 4th, 2006

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Corporate Armies

Here’s a futurist type question for everyone. When do you see, and what do you think the effects will be, of corporations having private armies and I’m not talking about PMCs. I’m talking about Shell in Nigeria, for example, fielding a serious army to protect its facilities one day. The slow migration from armed guards to a private military isn’t unthinkable nor a leap.

Will failed states keep business out? Maybe, but if Nigeria collapses for example, what would be preferable, the economic damage or allowing Shell to use their own teams with real firepower to protect its operations. If there’s no Sysadmin force or not enough international interest what are we going to do? After all, who wants to clean up Nigeria? Nobody after Iraq. And we know the AU is a joke.

On top of that, politically, it may be more expedient to have a company fielding some kind of army than to use outright military force to protect oil and gas abroad, especially if its inside a failed state which isn’t a direct threat to us. And if PMCs start losing government contracts because of Iraq, they’ll need to offset that with more business in the private sector. Readers?

Comments to this entry

Lexington Green
December 4, 2006
1:08 pm
It would be a return to an older model. The British East India Company had an army and a navy. This made sense at the time. Government power followed in behind it. In Africa, private ventures were followed by colonial power. The colonial powers withdrew, and the governments they left behind were never viable in most places. It makes sense that anyone wanting to do resource extraction in these places would have to use force to get in, and then provide basic security for the business to carry on, and incidentally provide the public good of a safe haven that they patrolled and policed. In other words, for certain parts of the world, i.e. sub-Saharan Africa, this is an idea whose time is long overdue. Legal issues in the home countries of these companies are probably the impediment. Maybe the thing to do is incorporate subsidiaries in Russia, get the Russian Parliament to enact enabling legislation for these armies, and even recruit them there. Hire Blackwater to set up training camps for the recruits. John Robb tells us how the black economy is engulfing us. It is time for the lawful economy to add some things to its bag of tricks.
Dan tdaxp
December 4, 2006
3:05 pm
A hopeful sign of the emergence of a Military-Industrial-SysAdmin-Complex.
CaptBBQ
December 4, 2006
3:22 pm
Well, personally I think Nigeria is on the up and up. A lot depends on the election next year, or ironically, the lack there of as I think they may be better off if Obasanjo pulls a Park Jung He.

Currently there are international laws against "Mercenaries". I don't know why, the world needs them. But all the goods ones, like Executive Outcomes have been driven out of business.

If we are going to see any big power come into Africa and start protecting its investments, I think it will be China.
TDL
December 4, 2006
4:29 pm
I can't imagine most companies will build up their own forces, rather they would rely on PMC's (at least as advisors.) While some of the older PMC's were driven out of business (some were even publicly traded) it seems as though they have been reconstituted, Blackwater being the most readily available example. Furthermore, British insurance companies have begun to build up naval capabilities to protect ships in the Med and east/south east Asia as piracy has spiked in the past six years.

From a pure business perspective this the exact type of activity that should be outsourced. Resource extraction firms and international shippers most likely do not have the experience and knowledge necessary to develop and adequately support a military force. Better off to higher private contractors or include it in any insurance contracts.

These private contractors will also be beneficial, because they will be less likely to want to expand their influence beyond their employers property and interests. In other words, no mission creep. They will be paid to do a specific job with specific objectives.

Regards,
TDL
von Kaufman-Turkestansky
December 4, 2006
5:10 pm
What if corporations went Nuclear? The scenario: Coke launches a pre-emptive first strike against Pepsi in a Global Thermonuclear Cola War.

More seriously, I think TDL is more on track. A lot of corporations have spent recent decades trimming off activities that are not part of their core business, and outsourcing them (generally to the lowest bidder who can provide the quality of service that is needed).

What you may see are even bigger and bigger PMC's.
arherring
December 4, 2006
5:17 pm
Sounds like something out of a William Gibson Cyberpunk novel.
Chirol
December 4, 2006
6:49 pm
Von K-T: I want to see the Wal mart army go after the Target army. Or, the music industy send Seal teams to get 10 year old music downloaders =)
TDL
December 4, 2006
7:03 pm
If we take John Robb's world far enough I think you will begin to see PMC's across the entire spectrum. Large, Wal-Mart like, that will look to push prices lower to capture the lower end of the market, while medium sized firms and small boutique operators occupying the middle upper ends of the market. I would say this trend continues, although this would be the countervailing force to Robb's darker world. There would be direct competition between providers (that wouldn't necessitate war, this would be bad for the bottom line) while continually innovating to protect clients. Pinkerton (or rather Securitas as it is now known) would be the best to watch since they seem to occupy the van of the security business (although the Blackwater is a competitor it seems to occupy a different sector of the industry.)

Regards,
TDL
Chris
December 4, 2006
8:08 pm
We've been here before, to some extent. Think the East India Company in India.
Marie
December 4, 2006
9:44 pm
Has anyone read Heinlein's novel "Friday"? The same scenario is indicated there. It isn't pretty.
Catholicgauze
December 4, 2006
11:27 pm
Chris, don't forget Dole Company in Hawaii, they overthrew the monarchy!
Lexington Green
December 4, 2006
11:30 pm
John Robb also talks about primary loyalties. The USA is still a source of primary loyalty for many of its citizens. The USA can therefore generate military power on a large scale. Also recall the notion that Barnett has about rule sets for the Core and for the Gap. You don't get to run around in the core with your mercenary army. You get to to that only in places where there is no government to speak of. If your mercs come home to London or New York or Canberra or Kiev or Antwerp or wherever, they leave their guns (or at least their big stuff) in the depot back in Indian country.
Pavlov3
December 5, 2006
2:33 am
I was drummed out of the Starbucks counter-assault team. I was spotted drinking a McDonalds coffee coming in to work one day.
Fellow Peacekeeper
December 5, 2006
4:24 am
A nasty brutish world, where modern countries are so beholden by self imposed restrictions on military action that they delegate the most important function of the state to private actors unencumbered by any motive other than profit. Whereas hostage taking, reprisals, punitive atrocities are not in the repetoire of the modern state military, there is no fundamental reason not to expect such measures from private armies. Furthermore, the modern free company is essentially a parasitic organism, in that it derives its expertise mostly from ex-service personal trained by governments at ruinous taxpayer expense, a cost that is not passed on to said free companies. If private concerns become the norm instead of state militaries, and have to do their own training, expect the costs of their employment to rival or exceed that of a state army. In which case the main expediency of free companies would be precisely their potential lack of adherance to civilized laws.

Belgium in the Congo.
Lexington Green
December 5, 2006
1:05 pm
"f private concerns become the norm instead of state militaries, and have to do their own training, expect the costs of their employment to rival or exceed that of a state army"

Why wouldn't they be competitively priced? It is entirely possible that an unbureaucratic military-for-hire could take current state-military best practices and do them in barebones fashion at lower cost. So, while the start-up would be "parasitic", I can easily imagine a situation where the influences were running back the other way.

The point about not employing civilized norms is also dubious, because their employers would still be subject to political pressure at home. So, it would depend on what their market was. A free company working for China might not bother with any "civilized" norms at all. One which wanted American or European employment might seek to have a cleaner image.
TDL
December 5, 2006
4:19 pm
Another point to consider is that those who pursue employment in PMC's are professional soldiers. They will tend to be more experienced, motivated, and knowledgeable about their business. Most of these private firms have a cadre of professional soldiers that would be able to train the next group of recruits (in fact I believe this already the technique used by many U.S. based PMC's, although they require military experience, training is still part of the process.)

The assumption that these private contractors will not play by "civilized" rules is dubious. There may very well be abuses, but some firms will have strict ethical guidelines (while other firms may have none.) Furthermore, the clients of these firms may find it beneficial to put certain requirements in the contracts (such as "no genocide" or "no rape".) A company like Exxon/Mobil will not want to have its reputation sullied by the excesses of a PMC; this is especially relevant today where it is much easier to communicate with the world.

A last point. A soldier who served his country for 4, 8, 12, or more years should not be prevented from profiting from his experience and skills. If this soldier wants to start a PMC and hire a bunch of his buddies, I do not see that as being "parasitic".

Regards,
TDL
von Kaufman-Turkestansky
December 5, 2006
8:40 pm
Chirol: are you referring to Old Navy Seals? ;)
subadei
December 6, 2006
1:10 am
Am I the only one who thinks "PMC/Private Enterprise" and then can't help but entertain visions of Marius, Sulla and the latters march on Rome? Sounds a bit melodramatic but it doesn't take much imagination to see the correlation.
Shloky
December 6, 2006
4:53 am
bq.When do you see, and what do you think the effects will be, of corporations having private armies and I'm not talking about PMCs.

Maybe I'm misunderstanding something, but I don't get the differentiation between Shell fielding an army and PMCs. If we're talking about Shell growing their own army, no, not happening. But if we're talking about Shell engaging a Blackwater brigade...
Fellow Peacekeeper
December 6, 2006
5:01 am
"The assumption that these private contractors will not play by "civilized"Â? rules is dubious. "

In the short term, while they are based on cadres from prfessional armies of civilizes states, I assume they will play nice.

But if history is any guide, privatizing conflict is guaranteed excesses. In line with the 19th century styling of this blog : Belgians in the Congo. East India Company actions and involvement in opium trade. Rhodesia.

"...strict ethical guidelines..." Enforced by who? There is no reason to assume mercenaries will have more "strict ethical guidelines" than Exxon or Enron.

Shell employs Corporation X, which is essence fighting a fragment of 4GW to keep security over an area with distributed oil infrastructure. Will Shell or Corporation X plow millions into "hearts and minds" in a place without a state? I suggest only if it is cheaper than shooting any miscreants. If Shell needs to keep a clean image, Corporation X must consider whether it is cheaper being nice, or cheaper hiding the bodies. Or hiring some "bandits" to do it (in a place that sort of casual violence happens the time anyway).

Think mining operations in New Guinea and Bougainville late 20th century.

Shell employs Corporation X. Conditions change and Shell ditches Corporation X. The capability has been created, paid for by Shell. However, unlike a state military, it does not go back on the shelf (for long anyway). Corporation X needs cash flow. Corporation X core competency is "provides security", but it needs conflict and failed state anarchy in order to do that....Today, in the world of strong state militaries, a rogue operator would get stamped on quite rapidly (think Bob Denard). In tomorrow's coming anarchy, if state militaries are weak, and only intervene where directly necessary ... well.
mark safranski
December 6, 2006
4:08 pm
That "free companies" (something different from The British East India Company or a hypothetical Exxon Rangers Division) could potentially operate without the restrictions of the laws of war (i.e. behave like Marxist guerillas or Islamist terrorists) is certainly possible -as it is for any armed force in the field. That they will do so primarily because they are employed by American or multinational corporations is simply Left-wing resentment of capitalism, not a substantive critique of PMC behavior.

The record of human rights abuses committed by the armed forces and security services of sovereign governments is so infinitely appalling as to render the objection meaningless. I'm not sure how they could be qualitatively worse than say, the government of the Sudan.

The real danger of PMC " free companies" is that become financially self-sustaining powers in their own right, seizing territory and making war as they chose, become engines of disorder. Useful entities but not ones that should be untethered from the supervision a great power military.
TDL
December 6, 2006
5:06 pm
I think Mark is right in his comment. As for "empire building" many companies encounter this problem and they fail. Simply, when a company deviates from its core competency it begins to invest capital in activities it can not profitably perform. Eventually the company will find itself in a situation where it has a series of projects that earn below the cost of capital and that will slowly devalue the worth of the company. Over time, companies that operate in this manner fade away and their assets are bought, unless they shed unprofitable business and focus in on their core competencies. The same theory will apply with PMC's. I think it is highly probable that some PMC at some point in the future will be so enamored with its military capability that it thinks it can rule a territory; obviously, guns alone do not rule territories. While some of these "free companies" will attempt to build empires (as some will probably commit atrocities), they will most likely deviate from the practices that brought them success and eventually fail.

As for a Sulla or a Marius arising from a PMC it is plausible, but I don't think it will lead to any success. Sulla and Marius were politically popular before the civil war, I just don't see many in our political class picking up a rifle. I would also argue that the political bulwark of the states would prevent the mere taking of D.C. as being as important as the taking of Rome was. This doesn't mean that a pure dictator couldn't rise, but the states are a check against a Sullan or Caesarian type of rise to power. At least that is my contention.

Regards,
TDL
Michael
December 6, 2006
5:17 pm
What legal regime do we use in this new era? Privateering? Blackwater-as-proxy for our national (or corporate?) interests in places we would otherwise fear to tread? Just curious.
Fellow Peacekeeper
December 6, 2006
5:18 pm
"...not a substantive critique of PMC behavior."

Agreed, and currently the PMCs are playing nice, but because they are under the control of Western governments, and staffed by the ex-soldiers of western armies. However, in a future weak legal environment without these two restraints, the PMC/corporate army is placed in a situation where the prime factor determining the utility of violence becomes maximisation of profit. No need for hypothetial examples. This can be seen in operation today in the business environment in Russia, and it is not pretty.

"I'm not sure how they could be qualitatively worse than say, the government of the Sudan."

Agreed. Quite right. Take the hypothetical example of Shell and a failed Nigeria. A corporate army is unlikely to be worse than the forces of a third world despotism, indeed, it is quite liable to resemble the corrupt but elite forces that keep the people at bay while kleptocratic tyrants loot the country, for it will fulfill essentially the same function.

For these reasons, as well as the third of seizure of power and fomenting disorder, I can only echo the conclusion "Useful entities but not ones that should be untethered from the supervision a great power military."
Mark
December 7, 2006
12:14 am
If Shell were to hire mercenaries, those forces would always risk being undercut at their source by broadcast media and western liberals. Shell will never be able to project force beyond a few offshore platforms. Once TV journalists visit a single village with a bombed out hut, Shell's 'protection experts' would be out of business. The impact on stock price would be immediate and only resolved by running. The comments here about Walmart and Target armies are dead-on. Corporations only make sense under the institutional umbrella of the 'state' and 'state armies'. We can't turn the clock back to 1750 and company armies. They themselves were just slightly more legal than the pirates they sometimes used as allies.

The west needs to come to terms with the realities of 50 cent hand grenades, 50 dollar machine guns and modern medicine. Hezbollah style organizations do a much better job of organizing the resulting masses of heavily armed unaffiliated teenage males.
super390
December 7, 2006
3:02 am
Broadcast media and western liberals are doing a terrible job of exposing what racist buccaneers like Custer Battles and Blackwater are doing in Iraq. I had to read a lot of articles about Iraq to find out that our own Marines consider these mercenaries to be barbarians who increase support for the rebels. And many of those mercenaries are working for Halliburton and other corporate friends of The Administration, who have committed crimes so vast that Congress could devote all its time to exposing them for the next 2 years and barely scratch the surface. There are no consequences because we Westerners will support any crime that is (a) necessary to prolong their "way of life" and (b) disguised as a noble cause. Americans are turning against the war because we're LOSING, not because the Marines and Blackwater did bad things.
super390
December 7, 2006
3:23 am
About the East India Company:

It was replaced by the British government because it FAILED.

And it failed in a way that has parallels to today.

The early East India reps picked up Indian mistresses, helping to integrate them into the culture of the various kingdoms of India. But Victorian morality, itself needed to create a moral aura for vicious laissez-faire capitalism, attacked this arrangement. The usual "liberal" moralists demanded that the reps dump the mistresses, bring their wives and children, and live superior Christian lives. But that required the families be given immunity to local law, which fed resentment. Combined with the famous fiasco of the Company's army of Hindus and Moslems being forced to touch either cow or pig fat to load their rifles, and the realization of the princes that they were being conquered by the Company, a rebellion was hardly surprising.

Now our liberal moralists want us to impose feminism on the Arabs to go along with the capitalism and Christianity that our conservative moralists demand. If we had corporations there instead of our Army, they'd be under pressure from all these moralists. And the companies would demand legal immunity for their henchmen, and so on and so forth.

No, the East India Company existed because that is how capitalist empires expand - greedy private actors go over first, screw up, demand rescue by the Marines, and bang, you've got an empire. Our settlers and the cavalry played the same game against the Native Americans, land theft after land theft until we got it all. (France preferred to send the Jesuits for this same scam.) PMCs are merely transitional tools.

If the British had just gone home in 1857 instead of turning from a corporate to a bureaucratic empire, we would have been spared some of the imperial frenzy that bloodied the world, and in turn created the European arrogance and armed paranoia that led to 1914. Let's not start down this road in America.
TDL
December 7, 2006
10:40 pm
There are a couple misconceptions going on here. First, the nature of the corporation. A corporation is merely a manner of formally organizing rights and assets, where there exists a clear delineation of who is entitled to what. The corporation does not need the state to support its existence, it is just another civil institution that has evolved from human interaction and cooperation (not by dictate.) Second, a conflation of what is and is not capitalism. The East India company was not a capitalist entity, it was a mercantilist entity. The East India company, like all other concessions of the British Crown, existed to expand the British Empire and enrich those who were in favor of the Crown. I agree with Super390's assessment of the chronology of East India company (even with the faux liberalism and conservative moralism.) What I disagree with is the assessment of the East India company as a capitalist entity, it was merely a cost effective way of expanding empire. Many civil institutions are co-opted by power hungry, empire builders, it does not mean that these institutions are inherently evil (or exist simply as vehicles for the expansion or power.)

Can the utilization of PMC's turn into an "East India" event? I think that it is highly probable that they will to an extent, but the unfolding of any power garnered from the use of PMC's in an East India manner will happen much more quickly.

Regards,
TDL
Phil (Pacific Empire)
December 8, 2006
6:44 am
Fellow Peacekeeper and super390 have the right idea. I think that PMCs have their place, as do domestic security companies, but when they take over legitimate state functions, something is wrong.

My main concern is counterinsurgency, especially in resource-rich areas like Nigeria, Sudan or Bougainville. In general, corporations will choose the short-term easy route of supporting and funding atrocities by state forces, and keeping civilians in line using aerial bombing and scorched-earth, to safeguard their infrastructure. Often its a strategy that backfires. But there seem to be few examples of private corporations successfully waging 4GW, and where they win hearts and minds, it is often through the bribery of local leaders rather than real investment or job creation.
Shloky
December 10, 2006
7:51 pm
Phil -

If we move away from the right/wrong perspective in recognition of the rise of a morally neutral global platform we can PMCs as harbingers of a new age of conflict.

State platforms functions are progressively being handed off towards the individual, PMCs and the various iterations of corporation states (amid a variety of emerging state structures) are just steps along the way.
TDL
December 10, 2006
11:10 pm
It's hard to say what strategy various corporations will take to protect their property and interests. Corporations are not some monolithic entity that follow one philosophy of management, economics, and politics. Corporations will take multiple approaches. Some will be reprehensible, some will be admirable, most will be failures. The marketplace will drive what strategy is effective. I do not see that corporations in the resource extraction businesses will necessarily take a short term approach in supporting local despots (assuming, of course, that this is a short term strategy.) The most effective strategy will allow these resource extraction businesses to stay in areas where the resources are for many decades. The actual process of going into the earth and finding resources takes many years; with many more years to pull the resources out of the ground. A corporation will have to find a way to balance local desires and beliefs with the profit maxim that drives corporate activity.

As an aside; it is necessary to put corporate activities in the proper context. Corporations are ultimately made up of individuals who have an objective/s (often times not a clear objective/s,) a set of beliefs, many biases, and many demands. Corporate action is not driven by some amorphous corporate being that makes all the decisions. It is human action and desire that drives corporate action.

Regards,
TDL
Jayson
December 11, 2006
3:29 am
FYI--this source claiming to document/summarize Contractor casualties in Iraq:

http://icasualties.org/oif/Civ.aspx

Also, here's a comment from an old post:

http://www.cominganarchy.com/2006/06/25/independence-inc/#comment-106991
Fellow Peacekeeper
December 11, 2006
4:23 am
A corporation will have to find a way to balance local desires and beliefs with the profit maxim that drives corporate activity.

A corporation will find a way to balance its own conscience and legal exposure with the profit maxim. Local beliefs and desires will be balanced with the costs of dealing with them. Taking oil as an example, the profits are so large as to make the locals completely irrelevant.

... unless they are sufficiently armed to damage production and the main revenue source.

This has already happened in Bougainville (copper mines), and is ongoing in Nigeria (oil), beef ranchers in Brazil.

Operations other than resource extraction may have more positive slants. The security arm of a transport operation that cuts through illegal checkpoints and corrupt local "cops", and maintains connectivity and freedom of movement, may well be beneficial (this was actualy one of the few good deeds the Taliban used to win acceptance). Retail operations use security in the west, and since the people are the profit source (customer base) it behooves them to be good citizens.