Macro Musings: Murky Water
By Justice Litle
Baltimore, MD * Jackson, WY * Missoula, MT
Wednesday, July 18th, 2007
Jul 2007
wealthdaily.com
The risks include, among other things and without limitation, the undersigned being shot, permanently maimed and / or killed by a firearm or munitions, falling aircraft or helicopters, sniper fire, landmine, artillery fire, rocket propelled grenade, truck or car bomb, earthquake or other natural disaster, poisoning, civil uprising, terrorist activity, hand to hand combat, disease, poisoning, etc., killed or maimed while a passenger in a helicopter or fixed wing aircraft, suffering hearing loss, eye injury or loss; inhalation or contact with biological or chemical contaminants (whether airborne or not) and flying debris...
-- language from Blackwater USA security contract
IF YOU WANT to serve your country (and don't mind putting yourself in harm's way), joining the military is an option to consider.
If you've already "been there, done that" and want to make some real dough with your expertise, a PMC could be just the ticket. (PMC stands for ‘Private Military Company.')
Soldiers of fortune have been around for thousands of years; only in the last decade or so, though, has the trade truly become big business. One of the players to benefit most is Blackwater USA, a PMC based in Moyock (sounds like "snow hawk"), North Carolina.
The name comes from a quirk of the company's 7,000 acre training ground next to a swamp; the rich Carolina peat makes all the water on the property look black. The company's distinctive bear paw logo is similarly related to the property; a 598 pound specimen, shot on site, is on ferocious display in the main lodge.
Originally conceived to provide both civilian and military training, Blackwater got a glimpse of its future in the year 2000. In October of that year, Al Qaeda terrorists suicide-bombed the USS Cole, a Navy destroyer anchored in Yemen. 17 sailors died in the attack. When the government realized what little weapons and defense training its personnel actually had, Blackwater bagged its first big assignment: get thousands of sailors up to combat snuff -- fast.
One assignment led to another, and now more than 40,000 personnel from all military branches train at the Moyock, NC compound each year. In the words of ex-partner Al Clark, "Osama bin Laden turned Blackwater into what it is today."
Saddam Hussein pitched in too. In 2003, the private security industry entered a whole new growth phase courtesy of the war in Iraq.
Secretary of Defense Donald Rumsfeld was convinced the Iraq conflict could be handled by a high-precision, high-tech military strike; there was no plan for large numbers of troops. When the security situation in Iraq fell apart not long after President Bush's "Mission Accomplished" photo op, Blackwater and others rushed in to fill the gap.
With the arrival of Paul Bremer and the Coalition Provisional Authority, the situation on the ground in Iraq went from bad to chaotic to worse. An investigative memorandum later revealed, for example, that the US had sent $12 billion worth of paper currency -- that's 363 tons of cash -- into the war zone with no controls over how it was to be distributed. The UK Guardian reports:
"One CPA official described an environment awash in $100 bills," the memorandum says. "One contractor received a $2m payment in a duffel bag stuffed with shrink-wrapped bundles of currency. Auditors discovered that the key to a vault was kept in an unsecured backpack.
"They also found that $774,300 in cash had been stolen from one division's vault. Cash payments were made from the back of a pickup truck, and cash was stored in unguarded sacks in Iraqi ministry offices. One official was given $6.75m in cash, and was ordered to spend it in one week before the interim Iraqi government took control of Iraqi funds."
The minutes from a May 2004 CPA meeting reveal "a single disbursement of $500m in security funding labeled merely 'TBD', meaning 'to be determined'."
In his later memoir, "My Year in Iraq," Bremer recounts writing to Secretary of Defense Rumsfeld multiple times from Baghdad, outlining the need for tens of thousands of additional troops to boost security. He never got a reply.
Due to the urgency of the situation, the chaos on the ground, and the severe shortage of troops, Blackwater and other PMCs procured billions of dollars worth of "no-bid" security contracts, in which the government agreed to pay what was asked on the spot. The total dollar volume of business done in this way is unknown; only a portion of the contracts and assignments are on public record. The rest are classified.
Blackwater was then thrust unwillingly into the spotlight in 2004, when four of its contractors were brutally murdered in Fallujah. The four appeared to be killed by small arms fire and dragged from their vehicles by an angry mob, their bodies burned and mutilated. Meanwhile, patrolling Marines had no knowledge of contractors even being in the area.
When pictures appeared of bodies strung from a bridge -- later dubbed ‘Blackwater Bridge' by US forces -- the Fallujah situation quickly erupted. Public outrage forced an escalation that may have changed the entire course of the war.
The families of the slain contractors sued Blackwater for negligence, arguing that the company had failed to fulfill its responsibilities. It was one thing for the men to be in danger as an accepted part of the job, the lawsuit argued; it was another for them to be sent to a deadly area in unarmored vehicles with no gunner support.
After a multi-year fight with the families, Blackwater succeeded in having the case removed from the courts. Approximately seven weeks ago the AP reported:
After years of appeals and legal maneuvering, security contractor Blackwater USA has successfully steered a wrongful death lawsuit filed by the families of the four slain employees into private arbitration.
The move will keep the secretive company away from the light of a courtroom, where many expected to learn details about Blackwater and what critics call the private army it fields in Iraq and elsewhere.
During the course of the public battle, the argument Blackwater employed in its defense was perplexing... and perhaps a little frightening.
The Virginian-Pilot reports:
...In court papers, the company cites the Pentagon's "Total Force" concept, which designates private contractors as an integral component of the military mission along with active-duty and reserve troops and civilian employees.
Blackwater says the government's unprecedented reliance on private contractors on the battlefield has made them so indistinguishable from uniformed personnel that the company should enjoy the same immunity from liability as the government.
Private, yet above the law? No one gets an exemption like that in broad daylight (except maybe the Federal Reserve). Apparently, though, the government sees things Blackwater's way; perhaps the stakes are viewed as too high to allow a disruption of operations.
The question must be asked: if PMCs like Blackwater are "indistinguishable from uniformed personnel," why aren't their employees held to uniformed personnel rules and military codes of conduct?
On the other hand, if Blackwater is not a de facto branch of the US military, then whose law is the commpany held to? In unruly hotspots like Iraq, this is no idle curiosity.
Theoretically, there are no sovereign laws governing the private security contractor. He (and it is almost always a ‘he') exists in a sort of legal limbo. A country in chaos is not about to apply its rules to a heavily-armed foreign national; nor is the private security contractor protected from negligence on the part of his employer.
These questions will eventually need answers, because private contractors are not going away. The fortunes of companies like Blackwater USA, Triple Canopy, DynCorp, Aegis, and so on are waxing, not waning. This is so for multiple reasons.
To start, private contractor pay is far better. With the right combination of skills and experience, ex-military personnel can earn $200,000 a year or more as contractors, doing more or less the same things they were before. This pay gap feeds an ongoing talent drain, in which the military's most experienced and valuable soldiers are moving over to the private side.
PMCs like Blackwater can afford to pay more because they are so much more efficient in their use of resources. Their organizations are flexible and streamlined, with a minimum of bureaucracy and red tape. Contractors are paid by the day or the job, without the hassles of long-term benefits or staffing overhead. (Think temp service with AK-47s.)
The government also has strong incentive to continue using, and step up its use of, private contractors.
For one thing, the government is a victim of its own ineptitude as much as anyone else; when the red tape closes in, it's often more efficient to just hand the job off to an outsider and be done with it.
For another thing, it is much easier to be discreet when an ugly job is outsourced. Private contractors can be employed quietly, with minimal muss or fuss. If the military is not officially involved, there is no need to confirm or deny activity. And last but not least, when contractors are killed there is rarely a public inquiry -- Fallujah being a spectacular exception.
More questions abound.
Such as, what about the fact that private contractors are paid with taxpayer's money? (Companies like Blackwater get 90% of their revenues from the federal government.) Does that make Blackwater employees agents of the state? Are there moral considerations regarding who's doing the fighting, who's doing the dying, and how much they are getting paid?
Private military companies claim to exclusively focus on defense, not offense -- but what happens when a conflict breaks out? Who can tell the difference when bullets and bombs are flying?
What about stateside activities? Blackwater was a savior of sorts for the helpless FEMA during Hurricane Katrina, and aggressively seeks to expand its disaster management role at home. How far should that go? Should we be comfortable with a powerful private militia in our midst?
Is there a ‘tipping point' at which the power balance between the public and private sector is shifted beyond a point of no return? How much of that tipping is being done behind the scenes? Should we be concerned that even highly sensitive intelligence-gathering activities are being outsourced?
What happens when the good guy work dries up? What's to prevent a privately run quasi-government agency with tens of thousands of commandos at its disposal from taking on, say, more ‘gray area' operations in shady parts of the world?
Speaking of shady parts of the world... it is distressing to note that the trouble spots are multiplying. Unrest is growing, and threats to energy security grow alongside. It is not just Nigeria and Iran and Venezuela we have to watch for threat of disruption now, but previously more stable places like Saudi Arabia and Russia and Mexico. The list lengthens. As American military might weakens -- the inevitable result of an overworked and overstretched condition -- security demands only grow.
There are whispers of history here. In a Cato Institute essay titled, "How Excessive Government Killed Ancient Rome," Bruce Bartlett notes how Rome restricted the economic freedom of Egypt in order to ensure a vital supply of grain. Bartlett writes:
The reason why Egypt retained its special economic system and was not allowed to share in the general economic freedom of the Roman Empire is that it was the main source of Rome's grain supply. Maintenance of this supply was critical to Rome's survival, especially due to the policy of distributing free grain (later bread) to all Rome's citizens which began in 58 B.C. By the time of Augustus, this dole was providing free food for some 200,000 Romans. The emperor paid the cost of this dole out of his own pocket, as well as the cost of games for entertainment, principally from his personal holdings in Egypt. The preservation of uninterrupted grain flows from Egypt to Rome was, therefore, a major task for all Roman emperors and an important base of their power (Rostovtzeff 1957: 145).
Substitute crude oil for grain and the similarities arise. One can imagine that last sentence slightly adjusted: The preservation of uninterrupted energy flows from the Middle East to the United States was, therefore, a major task for all American Presidents and an important base of their power...
Over time the Roman fiscal position deteriorated, due to the high cost of government bureaucracy and maintaining a far-flung military presence. Between lining the pockets of politicians and supporting all those soldiers abroad, there just wasn't enough revenue to go round. So Nero and his successors did the obvious thing; they chose to debase the currency. Rather than print dollars on a printing press, they did it by lowering the precious metal content of Roman coins... but it had basically the same effect. Debasement is a form of inflationary tax no matter how you rig it. Bartlett continues:
...in the third century A.D., the money economy completely broke down. Yet the military demands of the state remained high. Rome's borders were under continual pressure from Germanic tribes in the North and from the Persians in the East. Moreover, it was now explicitly understood by everyone that the emperor's power and position depended entirely on the support of the army. Thus, the army's needs required satisfaction above all else, regardless of the consequences to the private economy.
Fortunately, things are not so dire as that just yet.
But it is no fun to note that, in this time of geopolitical turmoil, energy security equates to military might first and foremost. The West could find itself deprived just when it really counts.
Securing the economy means securing energy flows; debasement of the currency makes it steadily harder to secure either. The result is an ever-greater reliance on firms like Blackwater and their ilk... much as the once-mighty Roman army turned to the hordes in later days. |
