Regulating the Private Military Industry

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Kathleen M. Jennings Armed Services

P.O.Box 2947 Tøyen N-0608 Oslo www.fafo.no

Armed Services:

Regulating the Private Military Industry

The private military industry is both entrenched and little under- stood. It poses significant operational, legal, and ideational challenges for policymakers, legislators, military commanders, and activists. Private military companies operating on behalf of governments generally enjoy impunity even for serious human rights abuses. For the most part, they exist in a regulatory no man’s land. Armed Services examines various sources of constraint on the private military industry, and how policymakers and legislators can build on these constraints in establishing effective regulatory regimes. The author argues that the tools for regulation exist, but that they need to be applied with a view to increasing the accountability and transparency of an industry that remains largely in the shadows.

Armed Services is part of Fafo’s programme on conflict trade, and has been made possible by financial support from the Department of Foreign Affairs and International Trade, Canada.

Fafo-report 532 ISBN 82-7422-542-2 ISSN 0801-6143

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Kathleen M. Jennings

Armed Services:

Regulating the Private Military Industry

Fafo-report 532

New Security Programme

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ISBN 82-7422-542-2 ISSN 0801-6143

Cover photo: Ceerwan Aziz/Associated Press File Photo Cover page: Fafo Information Office

Printed in Norway by: Allkopi AS

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Preface

In March 2004, gruesome images from Iraq were broadcast around the world. Four Americans on a convoy through Falluja were ambushed, shot, their bodies muti- lated and dragged through the streets, burned, and hung from a bridge above the Euphrates. Much of the media coverage focused on the slayings’ brutality and consequence, namely the siege of Falluja by U.S. military forces. But the incident was notable in another way. The four dead Americans were not soldiers. They were contractors working for Blackwater USA, one of many private military companies active in Iraq and paid by U.S. taxpayers.

Private military companies have been integral to the war efforts in Iraq and Afghanistan. PMC employees guard supply convoys, interrogate prisoners, and protect key American and local government officials. They kill and are killed. Yet they continue to operate largely in the shadows. This is largely due to the lack of effective regulation of these companies at both the national and international levels.

This regulatory vacuum is in turn an expression of both rich and poor states’ interests in giving these ‘market forces’ a relatively free hand to operate in ways that their own militaries can’t, won’t, or shouldn’t. Although some PMCs continue to work against states – as seen in the apparent attempted coup in Equatorial Guin- ea reportedly led by two PMCs – many more work for them. This points to the importance of national regulatory regimes in holding PMCs accountable.

In Armed Services: Regulating the Private Military Industry, Kathleen Jennings examines various sources of constraint on the private military industry, and how policymakers and legislators can tap into and build on these constraints in establishing effective regulatory regimes. She argues that the core problem of the private military industry is the impunity with which it operates, and that this impunity is both a cause and a consequence of the industry’s role in weakening state authority and legitimacy. Effective regulation of PMCs must recognise the complexity of the industry and the diversity of the interests it serves. Our hope is that this report will be helpful to policymakers attempting to come to grips with the private military industry.

This report, part of Fafo’s broader research agenda on conflict trade, was made possible by generous support of the Department of Foreign Affairs and Interna- tional Trade of Canada. I am grateful to Fafo’s Senior Advisor Laura Mitchell for

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her work in coordinating the project, and to researcher Kathleen Jennings for her excellent work on military and security privatisation.

Mark Taylor Managing Director

Fafo Institute for Applied International Studies

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1 Historically including treasure plundered during fighting, as well as territory and reparations trans- ferred upon a war’s conclusion.

Executive Summary

Globalisation. Privatisation. Outsourcing. War fighting? There is for many a certain disconnect in stringing these words together. “Globalisation” describes a relatively recent, technology-driven phenomenon. Privatisation is a recently domi- nant policy prescription; and outsourcing an increasingly politicised business decision. But war fighting is typically perceived – by Northerners, at least – as outside the normal realm of politics: necessarily destructive and high-stakes, an issue of state, regime, and individual survival, traditionally considered the preserve of statesmen and generals. What this conventional view obscures is that war fighting is also, and always has been, a matter of profit and spoils.¹ What is changing now is how those profits are distributed. Whereas formerly it was the victorious states, as well as certain domestic industries and individuals – mercenaries and war prof- iteers – that reaped the benefits of armed conflict, today it is also the corporate providers of private military services. Taking advantage of the ascendancy of privatisation and outsourcing, and facilitated by the increasing interconnectedness characteristic of globalisation, these companies have made a killing, so to speak, from the preparation for and implementation of war.

It is not just actual war fighting that pays. Private military companies (PMCs) are “integrated to the economies of armed conflict: even if PMCs do not act as combatants, the services they provide are based upon the needs and requirements of potential, actual, or concluded hostilities. Private military companies also fa- cilitate conflict trade, particularly when they are hired by governments or companies in order to provide security for resource extraction in war-torn countries (Spear 2006:8)”. This complexity – the fact that PMCs provide a variety of services that are used for an array of purposes by a range of clients, including not just governments and companies but also non-governmental organisations (NGOs), the United Nations, and non-state actors of varying legitimacy – has posed difficulties for policymakers and analysts trying to get a grip on the industry.

The high-stakes issue of privatisation of security is not well served by such practical and analytical confusion. On a functional level, the core problem is the impunity with which the private military industry currently operates. This impu-

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nity is enabled and sustained by an absence of credible oversight, including monitoring, reporting, and sanctioning, which is in turn a function of the national and international regulatory vacuum in which the industry presently exists. The result is an industry trafficking virtually unchecked in some of the most sensitive functions endowed to a state with little in the way of accountability or oversight.

Perhaps ironically, the state itself is usually footing the bill.

On an analytical level, the key concern is the private military industry’s contested relationship to the state. Basic yet vital questions remain unsolved. If a defining feature of the state is its monopoly of the legitimate use of force, how is this affected by the privatisation of security and military activities? Is the private military industry a necessary and trustworthy cog in the machinery of a state’s self- defence, or little more than a collection of corporate mercenaries whose existence undermines the state system as it has developed over the past two centuries? Are PMCs efficient options for states looking to save money and trim the military fat by outsourcing “non-core” functions, or an end-run around the transparency, accountability, and openness normally deemed necessary to the proper functioning of democratic societies?

One point on which all observers of the private military industry can agree is that there will be no stuffing the genie back into the bottle. The industry exists – indeed, is thriving, to the tune of an estimated global revenue in 2003 of over

$100 billion (Singer 2003b) – and it is in the interests of many, including most Northern states, that its existence continues. PMCs provide policy options and means of implementation – democratic and accountable or not – for states, international organisations, companies, and, in some cases, powerful individuals.

More appositely, some countries, most notably the United States, have privatised their own military services to the extent that they could no longer function without corporate help.²

Yet consumer demand does not translate into consumer helplessness. States in particular have the ability to regulate the private military industry, deriving both from their vested power as states and their market power as large buyers of military services. PMCs have a relatively limited market in which to pitch their wares, thus giving buyers more power than normal in a situation with high and growing demand. Thus, if governments – particularly those in rich countries – set and enforced stricter rules for the procurement, use, and oversight of PMCs, they could change the incentive structure of the industry in such a way as to make regulation effective. Most companies would have a greater incentive to accept regulation than to evade it, if the reward is retaining access to government contracts.

2 Between 1994 and 2002, the U.S. government entered into over 3,000 contracts with U.S.-based PMCs, with a combined value of over $300 billion (Peterson 2002).

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Furthermore, some of the more established PMCs actually favour the introduction of some kind of national regulatory regimes in order to separate the wheat from the chaff. Their calculation is that baseline regulation will scare off less stringent competitors while lending greater legitimacy to the industry as a whole (see for example Spear 2006; Singer 2004a; Isenberg 2002).

Thus far, however, the political will to regulate the private military industry has been inchoate on both national and international levels. Yet the possible regulatory means are ample:

• Registration and licencing regimes, the latter of which can include a general licence for all PMCs and a specific licence for individual contracts;

• Regulation governing companies’ country registration;

• Mandated and systematised oversight, including monitoring and reporting regimes, ideally combined with licencing regimes, where the level of oversight and enforcement is triggered by the type of contract;

• Enforcement of civil and criminal sanctions;

• National and international blacklists of companies;

• Greater application of existing international law, for example by using domestic courts to bring cases of civil or criminal liability for certain violations of international law committed by companies operating abroad, or by treating PMCs as quasi-state agents subject to the Geneva Conventions and other elements of international humanitarian law;

• Extension of national civilian and military codes of justice to contractors working alongside regular armed forces;

• Promulgation and enforcement of more transparent and stringent contracting practices;

• Guidelines for PMC recruiting, vetting, and code of conduct in the field.

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Introduction: A Regulatory Ecology Approach to PMCs

A number of attempts have been made to clarify the current regulatory environ- ment applicable to private military companies, and recommend ways of organis- ing regulation at the state, regional, and international levels (see for example Singer 2003a, 2004a; FCO 2002; Schreier & Caparini 2005; Holmqvist 2005; Avant 2005; Spear 2006). Most analysts agree that, for the most part, the industry is at present self- or market-regulated. Although some countries – chiefly the United States and South Africa – have some regulation applicable to PMCs, the utility of that regulation is contested. Many countries have none. On the prescription side, the spectrum of proposed regulation ranges from an outright blanket ban to a total lack of international or state regulation, in which any checks would be left to the market or industry itself, for example through the promulgation of voluntary prin- ciples and codes of conduct (see for example Brooks 2000).

Current attempts to engage with the regulatory side of the private military industry tend to be informative but one-dimensional. Much work focuses on the actor, activity, or prevailing legal framework. Yet this may obscure how these elements relate to prevailing norms in client and host states or the overall way the industry works, including the incentive structures, important power dynamics (client relations with rich versus poor states; North-South dynamics), and possible adaptations to commercial or criminal sanctions. Indeed, when the latter aspects are considered, it is often in the context of pre-emptively explaining why regulation won’t work – as if incentive structures and industry dynamics are stat- ic conditions.

Regulatory ecology attempts to correct these omissions. The goal of the regulatory ecology framework is to promote the development of regulations that “are simultaneously effective, coherent with international norms, and not harmful to the people and communities which the regulations are designed to exist (Taylor 2006)”. Regulatory ecology grows out of Lessig’s (1998) call for a “New Chicago School”: both the ‘new’ and ‘old’ schools “share an approach to regulation that focuses on regulators other than the law (Ibid. 661)” but, whereas “the old school identifies alternative regulators as reasons for less activism (Ibid.)”, Lessig’s new

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school “identifies alternatives as additional tools for a more effective activism (Ibid.)”.

Lessig³ identifies four types of constraint that regulate behaviour: law, social norms, markets, and “architecture”, or “features of the world – whether made, or found – [that] restrict and enable in a way that directs or affects behaviour (663)”.

These four constraints operate together in regulating behaviour in daily life and also, Lessig argues, “suggest a wider range of regulatory means for any particular state regulation (666)”, enabling the law to regulate behaviour both directly and indirectly.⁴ He writes:

Regulation, in this view, always has two aspects – a direct and an indirect. In its direct aspect, the law uses its traditional means to direct an object of regulation (whether the individual regulated, norms, the market, or architecture);

in its indirect aspect, it regulates these other regulators so that they regulate the individual differently. In this, the law uses or co-opts their regulatory power to law’s own ends. Modern regulation is a mix of the two aspects. Thus, the question of what regulation is possible is always the question of how this mix can bring about the state’s regulatory end; and the aim of any understanding of regulation must be to reckon the effect of any particular mix (666-667).

Regulatory ecology therefore recognises, and makes a virtue of, the fact that there is rarely a regulatory “silver bullet”, but rather that overlapping mechanisms and policies are necessary to effectively change individual, corporate, and state behaviour. The caveat here is that Lessig’s framework assumes that the state actually has a clear and desired regulatory end, and that the definitional issues (delineating what is being regulated) are more or less resolved. Neither conditions apply to the private military industry.

What follows is therefore less a step-by-step guideline to regulation of PMCs, and more a look at how the various sources of constraint operate on and interact with the industry. The report starts with four sections exploring the relationship between the private military industry and, respectively, architecture, the market, law, and norms. A succeeding section examines the implications for effective regulation building on these constraints. The analysis proceeds on a dual assumption.

First, that the current haphazard, underwhelming application of regulatory constraints to the industry is unsustainable, and reflects poorly on client states and the industry itself. Second, that most private military companies will accept regulatory regimes if and when their biggest customers, governments, require them.

3 All references to Lessig herein refer to Lessig (1998).

4 Lessig refers particularly to state regulations, although the same principle can operate on an international level. This analysis uses both.

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The Architecture of the Private Military Industry

Any survey of the private military industry must begin with a definitional exercise. This is by no means straightforward. In the most prominent analysis of the industry to date, Singer (2003a) defines what he calls “private military firms”

(PMFs) as:

. . . business organizations that trade in professional services intricately linked to warfare. They are corporate bodies that specialize in the provision of military skills, including combat operations, strategic planning, intelligence, risk assessment, operational support, training, and technical skills. By the very fact of their function, they break down what have long been seen as the traditional responsibilities of government. That is, PMFs are private business entities that deliver to consumers a wide spectrum of military and security services, once generally assumed to be exclusively inside the public context (8).

It is nevertheless notable that there is no standardised terminology or categorisation for the range of the actors in and services provided by the industry. Yet the absence of a generally accepted terminology and industry typology doesn’t just confuse analysts: it significantly complicates efforts to regulate the industry. The British Foreign and Commonwealth Office’s (FCO 2002) Green Paper on Private Military Companies: Options for Regulation highlights how definitional clarity is at the heart of regulatory action, noting: “If the Government were to conclude that it was desirable to regulate this activity then choosing the right definitions will be an important challenge (9)”. Lack of such clarity can thus be a significant stum- bling block to generating effective policy responses. This is particularly so in the absence of determined political will to act on an issue.

Indeed, the level of terminological discord in the industry is such that even using the term “private military company” is contested: many industry actors prefer

“security” to “military”, even when the services they offer are clearly military in nature, content, and geographical arena and are targeted to national ministries of defence. For example, Bergner (2005) notes that U.S. contractors operating in Iraq are provoked by the use of the term “PMCs”:

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When I met with Lawrence Peter [a consultant to the U.S. Department of Defense on security outsourcing]. . . he raged that the press refused to accept the companies’ newly chosen term: ‘We are not private military companies!

We are private security companies! Private security!’ He justified the distinction by saying: ‘The work is defensive. We protect.’ Sometimes, though, the distinction seems secondary.

This semantic preference for de-emphasising the military aspect of the trade perhaps reaches its apex in the industry’s most prominent trade association, the In- ternational Peace Operations Association, which claims to represent the “Peace and Stability Industry” and lists among its members companies such as Blackwa- ter, MPRI, and Erinys (active in pipeline security in Iraq).⁵ Even the large Amer- ican PMC MPRI – the acronym stands for Military Professional Resources Incor- porated – does not spell out its full name on its website. Instead, it prefers to advertise itself as a “professional services company” with “programs that build security, justice and well-being within the United States and around the world”.⁶

To a great extent, the rejection by companies of the PMC label is a marketing and masking exercise, a way of differentiating their organisations and staff from the traditional understanding of private military purveyors – that is, mercenaries.⁷ In a way, therefore, the desire of many companies to brand themselves as security rather than military actors may be seen as an “architectural” restraint on their behaviour. Yet while it is true that distinctions may be usefully drawn among the broad spectrum of services and actors the industry offers – as will be seen in Singer’s typology below⁸ – it is important not to overstate these differences.

The distinction that Peter is trying to make in the quotation above (between companies that provide military services versus companies that provide security services) is one that has been made elsewhere. It has been explained thusly: private military companies specialise in activities that have a military impact and are typically offensive, while private security companies (PSCs) focus on activities that are geared towards the protection of individuals and property and are typically defensive (see for example Schreier & Caparini 2005; Spear 2006). Yet as several

5 See http://www.ipoaonline.org/about/history/.

6 See http://www.mpri.com/. MPRI was founded by eight retired senior U.S. military leaders, and one commentator has written that, “It is hard to tell where the United States military ends and MPRI begins (Wayne 2002)”.

7 See below, “Law” for a definition of a mercenary according to international humanitarian law.

8 See also Schreier & Caparini (2005) for a summary of other attempts to categorise and create typologies for the industry.

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analysts have noted (see for example Singer 2003a, Holmqvist 2005⁹), the differ- entiation between passive/defensive and active/offensive is necessarily subjective.

Moreover, the mere fact of the company’s employment has a strategic impact regardless of the form of engagement. Additionally, although a client may consider a company’s actions on its behalf to be defensive, the population against whom those actions are taken may have a different perspective. The offensive/defensive divide has also broken down notably in places like Iraq, where the situation on the ground can go from defensive to offensive very quickly, such as when private contractors guarding convoys or providing bodyguard services instigate fire against other vehicles in traffic situations (Townsend 2005). Similarly, companies engaged in pipeline protection in conflict zones (such as parts of Colombia) tend to operate in a grey area of activity that is neither wholly offensive nor defensive. Finally, some companies themselves offer both military and security services, making a strict delineation impossible.

Thus, although it is analytically relevant to differentiate between companies operating in a theatre of war and offering obviously military services from companies that, for example, provide security guards for the local mall or wealthier neighbourhoods, the military-offensive/security-defensive distinction is overstat- ed and prone to manipulation. This paper will therefore use the term “PMC” unless specifically warranted, and focus primarily on military service providers of all kinds, including companies providing services such as pipeline protection to multina- tional corporations (MNCs) operating in poor or conflict-prone states.

The most influential attempt at categorisation of companies within the private military industry has been Singer’s (2003a). Singer structures the industry according to the range of services and level of force that companies offer. He bor- rows the military analogy of the “tip of the spear”, which distinguishes military units according to their “location in the battle space (Ibid. 91)”. Units are located within the general theatre; within the theatre of war; and within the actual area of operations. This corresponds to three categories of company:

9 Singer’s (2003a) critique is less about a distinction between private military versus private security companies, than about how the offensive/defensive (or as he says, “passive” and “active”) dichotomy is used in differentiating between types of PMCs, where companies that provide combat services are “active” whereas those that focus on training and other non-combat activities are “passive”.

Holmqvist’s (2005) critique of the offensive/defensive dichotomy applies directly to attempts to differentiate between PMCs and PSCs. However, she ultimately eschews the term PMC in favour of PSC: “While it is arguably the case that segments of the industry cover military activity, there can be no clear dividing line in the final analysis, making the term ‘PSC’ more appropriate in the cumulative sense (6)”. Avant (2005) also prefers PSC, using it to describe companies that provide both military and (non-military) security services.

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1. Military support firms: companies that are present in the general theatre and provide “non-lethal aid and assistance (Ibid. 93)” such as logistics, intelligence, technical support, supply-chain management, and transportation;

2. Military consultant firms: companies that operate in the theatre of war and offer strategic, operational, and organisational analysis, including training; and, 3. Military provider firms: companies that are present within the tactical envi- ronment (actual area of operations) and supply implementation (war fighting), command and specialised military capabilities, and may also act as “force mul- tipliers” for the client’s own armed forces.¹⁰

Differences between the three categories are evident not just in the services they provide, but in the extent of contact companies have with the “customer base (Ibid.

92)” – from military provider firms, which typically have direct contact with the customer base, to military consulting and support firms, with no direct contact.

Singer also argues that the three categories of companies attract different kinds of clients with different motives for using a PMC. For example, military provider firms tend to be hired by clients with comparatively poor military capability facing an urgent threat; the classic example here is the use of the now-defunct South Afri- can PMC Executive Outcomes in Sierra Leone (see also Spear 2006). However, this is not necessarily the case for military provider firms hired as force multipli- ers. The United States, for example, has used such firms to provide protection to key U.S. and Iraqi officials throughout the insurgency there (as well as in Afghan- istan), thus freeing U.S. forces from the task while ensuring that officials don’t have to depend on potentially untrustworthy local security services for protection.

Clients of military consulting firms, meanwhile, tend to be restructuring or beefing up their armed forces capability, and may establish long-term relationships with the companies. They do not usually face the same level of threat or time constraints as those using military provider firms. Finally, military support firms are most commonly used by developed countries whose militaries need “surge capacity (Singer 2003a: 97)”, thus enabling the client military to concentrate on the “core mission” of fighting.

Singer also contends that the type of firm makes a difference in the way it is structured. Military provider firms tend to be the most “virtual (Ibid. 95)”, with relatively few full-time staff and the ability to quickly restructure or relocate them-

10 Schreier & Caparini (2005:38) extend Singer’s typology to private security companies, in the form of security provider firms (directly participating in security or law enforcement operations in unstable or insecure areas, possibly specialising in organised crime and terrorism); security consulting firms (providing advisory and training services but not directly participating in law enforcement or security operations); and security support firms (providing supplementary security services including technical support and assistance).

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selves if necessary. In contrast, military support and, to a lesser extent, military consulting firms are structured more like traditional MNCs, with large revenues, high numbers of staff, and strong relationships with client governments.

Singer’s typology is not perfect. As noted above, some firms provide more than one type of service.¹¹ Furthermore, the military provider category seems unable to differentiate between military provider firms striving for legitimacy (such as those working for recognised governments) and those less concerned with legality, such as companies operating as corporate mercenaries for armed groups or dissatisfied coup-minded elites. Although often regarded as a thing of the past, two firms – Logo Ltd and Systems Designs Limited – were reported by the media to be connected to an alleged coup attempt against the government of Equatorial Guinea in 2004 (Wilson, Pallister & Lashmar 2004). The typology also obscures some PMCs’ role in the global arms trade. Moreover, the abuses at Abu Ghraib prison in Iraq illustrate that companies providing intelligence and support (e.g. transla- tion) services, classified by Singer as outside the theatre of war, can be very much operating in the actual area of operations – and possibly be involved in lethal activities.¹² Nevertheless, Singer’s contribution is useful in bringing some analytical clarity to the industry’s complexity, and identifying general characteristics of its component parts. In so doing, it is a helpful tool in tackling the issue of regulation of the private military industry, as effective regulatory responses will not be developed or implemented using a “one size fits all” approach. Singer’s typology will thus be used where relevant throughout this report.

11 For this reason, Avant (2005), while borrowing Singer’s disaggregation according to relation to the battle space, changes the unit of analysis from firms to contracts.

12 Two contractors, CACI and Titan, had interrogators and translators working in Abu Ghraib and primarily affiliated with military intelligence units (Hersh 2004). Photographs taken at Abu Gh- raib that were made public in 2004 show at least two dead Iraqi prisoners, one with a badly beaten face and the other, later identified as Manadel al Jamadi (Mayer 205), packed in ice and wrapped in cellophane (additional photographs were widely publicised in February 2006 showing more abuses, available from the Australian broadcaster SBS at: http://www9.sbs.com.au/theworldnews/

region.php?id=127322&region=6#). See also Mayer (2005), who reports that a civilian working as a translator on a private contract for the CIA was given immunity against criminal prosecution in the involvement of the death of al-Jamadi at Abu Ghraib in November 2003, in exchange for his cooperation with military courts. Media reports have also cited an Army investigation of the abuses (“the Taguba report”) as singling out a CACI employee, along with several military intelligence officers, as allegedly “either directly or indirectly responsible for the abuse at Abu Ghraib (cited in Hersh 2004)”. The Taguba report is available at http://www.globalsecurity.org/intell/library/reports/

2004/800-mp-bde.htm. Although some lower-level soldiers were later convicted in military courts for their participation in the Abu Ghraib abuses, Salon.com reports that, as of March 2006, neither individual employees of the military contractors nor the companies themselves have been held criminally or civilly liable for their involvement, although one civilian, a CIA contractor, has been prosecuted for prisoner-related abuses. See Follman and Clark-Flory (2006).

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Other attempts to differentiate and categorise the private military industry have also been made. Wulf (2005)¹³ presents an extremely detailed typology that first divides companies into five categories – private security companies, defence pro- ducers, private military companies, non-statutory forces, and mercenaries – and then separates them intra-categorically according to activity type, legal and social status (e.g. desired or undesired), main users, and main areas of activity. Wulf ’s work is an important reference tool, albeit one that does not offer the simplicity of Singer’s model, covering as it does a spectrum ranging from neighbourhood patrols to rebel groups to organised crime to outright mercenarism. Schreier &

Caparini (2005) propose a system of categorisation that accounts for the scope, form, and purpose of services offered, as well as the dangers those services present.

However, it is difficult to see how clients’ intentions (the metric for “purpose of services offered”) could possibly be assessed and measured in a categorical way.

Clearly the status of a client – for example, whether it is a legitimate government or a non-state group attempting to overthrow that government – can be so measured, but the motives of clients are likely to be contested once scrutinised.

Interestingly, one of the most high-profile recent governmental attempts to investigate options for PMC regulation – the British FCO’s (2002) Green Paper – sidesteps the issue of categorisation altogether, noting instead the artificiality of the combat/non-combat distinction among PMCs (as well as that between PMCs and PSCs). The Green Paper concludes that, “It is possible to devise different la- bels according to the activities concerned, the intention behind them and the effect they may have; but in practice the categories will often merge into one another (9)”. Thus, although the Green Paper references a chart based on work by O’Brien and Shearer – which organises the industry according to the metrics of activities and services provided and main users of services, and lists examples of companies in each group – it notes dryly that the chart “is purely illustrative: it is probably both incomplete and out of date (11)”. These are problems that will likely plague any definitive attempt to categorise this complex and quickly evolving industry.

Further adding to the complexity is the fact that the different uses and users of private military force may entail diverse practical, analytical, and legal implications and outcomes.

13 Wulf (2005) as translated from the German and summarised in Schreier & Caparini (2005).

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The Private Military Market

The explosive growth of the private military industry in the 1990s is the result of several factors (see Spear 2006, Singer 2003a, Shearer 1998). One is simple supply glut: the end of the Cold War and apartheid led to the decommissioning of many career soldiers, making them available to ply their trade on the open market. At the same time, demand skyrocketed. As countries were cut loose from their Cold War patrons, the number of conflicts, mostly internal, mushroomed – a development that coincided with rediscovered apathy among Northern powers to involving themselves in the developing world. Another key factor was ideologi- cal: the consolidation of the neo-liberal agenda and its emphasis on privatisation in both developed and developing countries. Finally there was the rise of globalisation, specifically the information technology advances and cheaper transport that have simultaneously “de-localised” insecurity, facilitated corporate mobility, and increased the movement of, and corporate access to, low-wage labour.

For the industry, therefore, the last decade of the 20^th century exemplified a serendipitous and highly profitable combination: ongoing demand for military intervention and assistance previously provided by the “great powers” as part of the proxy struggles of the Cold War; ready supply of cashiered officers and soldiers to win and implement contracts; and the legitimating power of a political ortho- doxy that elevated the private sphere above all else. The subsequent “global war on terror” and wars in Afghanistan and Iraq have further entrenched and expanded the industry. Its growth is also facilitated by a combination of low economies of scale and barriers to entry.¹⁴ In many cases, firms lack physical infrastructure and large permanent staff, instead compiling extensive (and often non-proprie- tary) databases to staff projects. Some such companies have been known to elude potential legal and financial inconveniences by shutting down and then opening

14 This combination is not applicable to all segments of the market. For example, companies that do weapons systems maintenance are often the same companies that originally designed and built those systems, and clearly have high barriers to entry and significant sunk (infrastructure) costs.

More typical, however, is the situation described by Bergner (2005): a U.S. PMC, Triple Canopy, won large contracts to guard Coalition Provisional Authority headquarters in Iraq (worth around

$250 million per year at the time Bergner was writing), yet “when Triple Canopy was hired, it scar- cely existed . . . They were a name, a notion, when they heard about the C.P.A. security work and started bidding for the contracts”.

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again with new names and country registrations (Singer 2004a; Avant 2005; Spear 2006). PMCs – especially larger ones – also tend to be truly international in terms of staff composition, areas of activity, and country of registration, thus compli- cating potential regulatory regimes.

PMCs’ usefulness to rich and poor states, companies and NGOs, and international and regional organisations has simultaneously ensured the industry’s expan- sion and reinforced the tendency towards secrecy inherent in an industry not far removed in the public mind from mercenarism.¹⁵ Governments in particular may have an interest in cooperating with PMCs to help minimise industry transparency, primarily because of the political sensitivities around the outsourcing of activities typically considered in the state’s domain. This is particularly relevant to the use of private actors as foreign policy proxies (see also below). In a similar vein, the exercise of accountability may be diminished due to a lack of political will on the part of client states to punish bad corporate behaviour, possibly because of governments’ wish to distance themselves from such behaviour. Simply put, governments have few formal obligations or incentives to shine light on the activities of PMCs in their jurisdiction or under their employment.

This is because, in the absence of cohesive and coordinated international and domestic regulatory regimes, the private military industry is essentially self- or market-regulated.¹⁶ Unfortunately, this “regulation” has thus far proved lamenta- bly insufficient.

To take but two examples: in the 1990s, DynCorp employees were involved in forced prostitution and the sex trade in Bosnia (Capps 2002; Crewdson 2002);

and presently, Halliburton and its subsidiary Kellogg Brown & Root (KBR) are accused of massive overbilling and accounting malpractice related to their operations for the U.S. government in Iraq (Hartung 2004a).¹⁷ If market regulation were effective, one would expect the companies involved in these abuses to be discred- ited and lose contracts (in the absence of civil and criminal prosecution). This has not been the case. DynCorp did fire some employees involved in the sex trade allegations in the Bosnia; the problem was that the fired employees were whistle- blowers, one of whom, Kathryn Bolkovac, won a wrongful termination lawsuit against a DynCorp subsidiary in the United Kingdom, and another of whom, Ben

15 Although non-state actors typically claim to be using private security companies rather than private military companies, the effect of these companies and their rules of engagement are often in line with those of private military companies and, as argued above, the debate around PMCs is therefore relevant to non-state users of PSCs.

16 Existing regulatory regimes and potentially applicable legal frameworks are detailed in the laws section below.

17 See also www.HalliburtonWatch.org.

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Johnston, received an out-of-court settlement in Texas (Capps 2002; Crewdson 2002). Yet DynCorp – which in 2001 was purchased by another large U.S. government contractor, Computer Sciences Corporation – continues to earn large U.S.

government contracts to work in, among other places, Iraq, Colombia, and Libe- ria. Similarly, Halliburton and KBR have seemingly suffered little ill-effects from their problematic accounting practices. In July 2005, Halliburton announced that its KBR division experienced a 284 percent increase in operating profits in the second quarter of the year (HalliburtonWatch.org 2005); in the aftermath of Hurricane Katrina in September 2005, KBR was hired by the Army Corps of Engineers to build a temporary morgue and pump water from Plaquemines Par- ish (Merle 2005); and in February 2006, the U.S. Army reimbursed KBR for “nearly all of its disputed costs on a $2.41 billion no-bid contract to deliver fuel and re- pair oil equipment in Iraq, even though the Pentagon’s own auditors had identified more than $250 million in charges as potentially excessive or unjustified (Glanz 2006)”. As Hartung (2004b) notes, far from falling from grace, “more often, private contractors ‘fail upwards’”.

This is not to say that the market itself lacks regulatory power. In this case, however, the market has been unable to impose effective constraints on the industry. This is clearly related to the fact that the market for private military services is highly irregular and imperfect, characterised by lack of competition (and in some cases, outright monopolisation); collusion; cronyism; inefficiency; lack of oversight and transparency; generous contracting terms; and irregular or non- existent use of market sanctions. At the same time, the rapid growth of the industry means that the quality of companies in the market varies greatly in terms of professionalism, skill, and ethics (Bergner 2005), making the need for regulation all the more pressing.

The market for the outsourcing of military services by Northern states is neither particularly open nor competitive, but rather characterised by collusion among competing firms, opportunistic behaviour by firms with long-term contracts (Avant 2000) and, in the case of companies that produce and maintain weapons systems, outright market capture.¹⁸ Indeed, when a significant proportion – up to 40 percent (Singer 2004b) – of U.S. Department of Defence contracting is non-com- peted, it is evident that the power of the free market is hardly being maximised.

The result is bloated contracts awarded on the basis of often specious yet unchecked

18 The market for military services for use in/by poor countries functions somewhat differently, although secrecy, rich contracts, and lack of competitiveness are also characteristics. As Spear (2006) has described, PMCs are in some circumstances essentially able to hold the client state or group hostage, as the client knows that whatever strategic or tactical advantage has been gained through the use of a PMC is not sustainable and will disappear when the PMC does.

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claims that only company X is able to provide the services needed. In other words,

“rather than getting the best of privatization, [the government] obtains the worst of monopolization (Ibid. 19)”. There is certainly an inherent and counter-produc- tive absurdity in a situation in which the military pays PMCs to provide services using employees that were originally trained in the military, at a much higher rate than would be paid were those capacities retained in-house instead of lost to private actors.¹⁹ This is exacerbated in the United States by the use of “infinite-de- livery, indefinite-quantity” (IDIQ) and cost-plus contracts – both of which tend to encourage a free-wheeling attitude towards expenditures – rather than contracts limited to specific assignments (Holmqvist 2005; Singer 2004b).

Three additional factors interrelate with the industry’s lack of competitiveness to inhibit the efficiency of the private military market. First is the lack of transparency around individual contracts and contracting processes, as well as in the private military industry as a whole. Secrecy over the scope and terms of the services desired hampers companies’ ability to compete (or prevents competition outright), and complicates third-party attempts to force accountability. Second, there is a generalised lack of oversight by home and host states, both in terms of a company’s accounting and its actual conduct on the ground. Client states using PMCs to conduct activities outside the country (“home states”) may have little real knowledge of what those companies are actually doing in the field, relying on company-provided situation reports in lieu of independent monitoring and reporting.

Meanwhile, countries in which PMCs are operating (“host states”) may lack the capacity to prosecute or expel companies even for severe human rights violations – assuming of course that such violations are not themselves in the interest of host governments. Effectively, this means that any levying of accountability on PMCs must be done by home governments, thus returning to the problem of political will and lack of independent monitoring and information. Finally, the proper functioning of the private military market is distorted by pervasive cronyism and corruption (particularly but not exclusively in the U.S. context), typified by the close links between defence ministries and retired officers working for PMCs.

The way the Northern market is currently structured, therefore, a situation can result in which a select few companies leverage their economic clout and close links to government officials to receive lucrative no-bid contracts on unjustifiably fa- vourable terms. Once the government client is essentially captive, PMCs are then well positioned to overbill or under-deliver, without fearing serious commercial sanction or legal accountability for their actions. The behaviour of PMCs in Iraq

19 Singer (2004b) pithily notes this absurdity: “The overall process is thus brilliant from a business standpoint and self-defeating from the military’s perspective. The PMF uses public funds to provide higher pay and then charges back the military at a higher rate, all for the human capital invest- ment that the public institution originally paid for (16)”.

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– including the connection of Titan and CACI to the Abu Ghraib prison scandal, and the overbilling and “questionable business practices (Glanz 2006)” by Halli- burton and KBR²⁰ – has done little to disprove this scenario among industry scep- tics.

The problems outlined above are problems of both the supply and demand sides.

Yet in the discourse around PMCs, the users of private military force – PMCs’

clients – are often overlooked. As noted above, the clients of private military companies include states or regimes in both developing and developed countries;

NGOs; the United Nations; regional organisations such as the Economic Com- munity of West African States (ECOWAS)²¹; and non-state actors including criminal syndicates, rebel groups (Holmqvist 2005), and, in the case of the attempted coup in Equatorial Guinea, a small group of wealthy and well-connected foreign investors (Wilson, Pallister & Lashmar 2004; Leigh, Carroll & Chevallot 2005).

For these clients, PMCs may function as firms, state proxies, challenger groups, and potential peacekeepers (Spear 2006).

This range of clientele, and the different ends to which they employ companies, is clearly relevant to the argumentation for and against PMC use and regulation. For example, arguments in favour of the United States’ utilisation of PMCs necessarily differ to some degree from justifications for their use by poor countries experiencing internal strife or rebuilding their militaries after conflict. Yet further lines of reasoning apply when the users are non-state versus state actors.

Relatedly, perceptions of the legitimacy or illegitimacy of PMCs tend to be based not simply on the actions and impact of individual companies, but on who is paying them and where they’re operating, with companies working for poor country clients and operating primarily in the global South often perceived as “shadier”

than other industry players.²²

20 See Glanz (2006). For a summary of government audits against Halliburton, see Halliburton- Watch.org, a project of Essential Information and the Center for Corporate Policy: http://

www.halliburtonwatch.org/news/audits.html.

21 For example, the ECOWAS peacekeeping force in Sierra Leone, ECOMOG, was backed up by a U.S.-based PMC called International Charter Incorporated (ICI). ICI’s official role was limited to providing medical evacuation and transport services to the Nigerian ECOMOG troops, but ICI employees also reportedly came under and returned fire while in Sierra Leone—unofficial rules of engagement that were allegedly approved by the then-U.S. ambassador to Sierra Leone, Joseph Melrose. See Peterson (2002).

22 Although some analysts treat PMCs in developed versus developing countries as separate analytical categories (Holmqvist 2005; Avant 2005), this distinction is somewhat artificial given the over- arching centrality of the issue of the state’s role in security provision (see the section on norms below) – not to mention the fact that most PMCs operating in developing countries are based in and paid for by developed countries.

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The diversity of the customer base should not, however, obscure the fact that rich- country governments are the industry’s largest and most powerful consumers, and probably the only actors with the ability to enact regulatory regimes and demand that PMCs adhere to them. The private military market is so dysfunctional in large part because the large government customers on the demand side have enabled it to be so, not because the market is impossible to regulate. Although the laws of supply and demand would seem to favour PMCs – with demand for the private provision of military services high and still growing – the fact that PMCs have relatively few big buyers to sell to gives those buyers power, which remains largely untapped. Thus, an assumption underlying all of the recommendations in this report is that most PMCs will accept regulatory regimes if and when their biggest customers, governments, require it.

In this regard, it should not be overlooked that PMCs are profit-driven actors that, although inherently political, are “neutral” (Spear 2006): they are on the side of the paymasters, not a particular ideology or interest. Although this neutrality is often cited as a strike against these companies (as evidence of their mercenary ways), it also represents a kind of opportunity. So long as PMCs are driven primarily by profit, not morals, there is leverage to use market constraints to impose standards and make it unprofitable to act illegitimately or illegally.

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Laws: The State of National and International Regulation

In the legal realm, three problems arise with respect to PMCs: a lack of clarity over the applicability of existing international law and conventions; an inability to enforce existing international and national law even when its applicability is clear;

and the insufficiency of existing law even were it to be applied and enforced. That is to say, there are problems of applicability, enforcement, and simple regulatory neglect. Regardless of the reasons for this neglect – Avant (2005) speculates that it may arise out of the longstanding assumption that military services would be monopolised by states – the overall effect of these three problems is that the industry currently labours under few operative regulatory constraints.

At the international level, however, regulation already exists that is theoreti- cally able to punish at least the worst excesses of private military companies active in armed conflicts. International humanitarian law, also known as the law of war or the law of armed conflict, restricts the means and method of warfare and pro- tects those that are not, or are no longer, active in fighting, e.g. civilians or prisoners of war (ICRC 2004). International humanitarian law is primarily contained in the four Geneva Conventions of 1949 and the Additional Protocols of 1977.

Other relevant conventions include the 1954 Convention for the Protection of Cultural Property in the Event of Armed Conflict and its two protocols; the 1972 Biological Weapons Convention; the 1980 Conventional Weapons Convention and its five protocols; the 1993 Chemical Weapons Convention; the 1997 Otta- wa Convention on Anti-Personnel Mines; and the 2000 Optional Protocol to the Convention on the Rights of the Child on the involvement of children in armed conflict (Ibid.). Interestingly, according to the 1949 Geneva Conventions, mercenaries were entitled to prisoner of war protections so long as they were part of a legally defined armed force. This protection was rescinded by Article 47 of Pro- tocol I of the Additional Protocols of 1977, in which it is stated that those defined as mercenaries (see definition below) do not have the rights of any legal combatant or a prisoner of war (Singer 2004a).

Although the structure of international humanitarian law has been built on the idea of state sovereignty and supremacy – such that it is commonly claimed that international law applies only to state actors – a growing body of legal work has

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demonstrated that there is no theoretical obstacle to holding businesses (legal persons) liable for violations of both international humanitarian and international criminal law²³ (see for example IPA and Fafo 2004). Jurisdiction is the primary sticking point. No international forum presently has the authority to prosecute legal persons for international crimes, although there is precedent for international forums to prosecute individual officials of business entities, i.e. “natural persons in positions of responsibility within a firm (Ibid.:11)”, thus establishing de facto company accountability. However, in many Northern countries – including Can- ada, the United States, the United Kingdom, Norway, and France – the national legal frameworks in theory provide some means to use domestic courts to bring cases of civil or criminal liability for certain violations of international law committed by companies operating abroad (Ibid.). Thus, it should be possible for PMCs that perpetrate, or are complicit in, violations of international humanitarian and criminal law to be held civilly or criminally liable for those violations in national courts.

Moreover, although it is generally assumed that the Geneva Conventions do not apply to PMCs and their employees, a case can be made that they are subject to the Geneva Convention as agents of the state. This is a different approach to levying accountability under international humanitarian law than that outlined above. Rather than seek to extend the reach of the law from states to legal persons, the argument is instead that PMCs are effectively “quasi-state actors (Zarate 1998 cited in Singer 2004a:532)” and are thereby subject to the same laws and obligations as states. While this would entail that PMCs’ activities be conducted in accordance with the Geneva Conventions and Protocols, it would also extend the protection of the Conventions and Protocols – including prisoner of war protections – to PMC employees.

Beyond potential punishment for worst excesses, however, there is not much in the way of effective legal regulation of the private military industry at the international or regional levels. This failing is largely attributable to the lack of a workable definition of what is being regulated, as well as an absence of political will among states to push the issue forward in a meaningful way. The convention of apparent relevance, the 1989 International Convention against the Recruitment, Use, Financing, and Training of Mercenaries, has been of little actual utility in regulating the sale of military services by either individuals or corporations (see Singer 2004a). The efficacy of the 1989 convention is hampered in a legal sense by the extremely lengthy and stringent criteria that must all be met to be consid-

23 There is some overlap between international humanitarian and international criminal law. Inter- national criminal law is a rather ambiguous entity, but has been taken to refer to genocide, war crimes, crimes against humanity, torture, and forced labour or enslavement (IPA and Fafo 2004).

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ered a mercenary, as well as by a lack of any monitoring mechanism. It is also politically ineffective owing to its short and undistinguished list of signatories.

The 1989 convention builds on the definition of a mercenary laid out in the 1977 Additional Protocols to the Geneva Conventions. According to the 1977 Protocols, a mercenary was defined as any person specially recruited locally or abroad to fight in an armed conflict; that does in fact take a direct part in hostilities; that is motivated to participate in hostilities essentially for private gain and is promised renumeration by a party to the conflict substantially in excess of that received by those in the party’s armed forces; that is not a national of any party to the conflict or resident of territory controlled by any party to the conflict; that is not a member of the armed forces of any party to the conflict; and that has not been sent by a third-party state on official duty as a member of its armed forces.²⁴ Additionally, the 1989 convention applies the mercenary label to those recruited, in similar circumstances and for similar motivations, to participate in a concerted act of violence aimed at overthrowing a government or otherwise undermining the constitutional order or territorial integrity of a state (United Nations 1989).

Applying all of these requirements to any one individual is difficult. For example, the designation would not pertain to one motivated to fight primarily by religious or political rather than economic reasons, or even to someone who fights primarily for economic gain but does not receive compensation “substantially in excess” of that received by members of the armed forces (and it is unclear who defines what is considered substantial excess under these circumstances). Attempt- ing to regulate private military companies under this convention is even more far- fetched (for a more detailed analysis, see Singer 2004a). The convention targets those working directly against national governments; yet most PMCs would claim to be working for national governments. The convention requires direct participation in hostilities; many PMCs (and their employees) do not participate directly in fighting. Singer (2004a) also notes that there is an assumption in the treaty regime that the contracted individual will be linked to a specific conflict; yet in their hiring and activities, PMCs are rarely bound to a specific conflict. Further- more, the convention would be useless in cases where PMC employees are depu- tised or given citizenship by the hiring state. The convention is also specifically aimed at individuals, not corporate actors.

Indeed, it is unclear the extent to which defining and outlawing mercenaries is of any assistance in creating regulatory responses to the corporate actors of the private military industry. Moving forward with effective regulation at an international level will require a shift away from the obsession with individual mercenar-

24 See Article 47 of Protocol I, Protocol Additional to the Geneva Conventions of 12 August 1949, and Relating to the Protection of Victims of International Armed Conflicts, June 8, 1977.

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ies and towards a focus on the private military industry as it actually exists. The phenomena are analytically and legally distinct, and must be treated as such. Ac- cordingly, it is important that attempts to push forward on regulation at the international level are no longer stymied by a reluctance to be seen as “legitimising” mercenarism – a claim that has been particularly obstructive to action in the UN system (Spear 2006).²⁵ Although perhaps well-meaning, such an objection does more harm than good by elevating principle above reality, while allowing the object of its derision to flourish unfettered from all constraints. In this respect, it is worth noting that an outright ban of PMCs at the international level – the only possible regulation that could in no way be interpreted as “legitimising” the industry – would almost certainly violate the state’s right to self-defence as enshrined in cus- tomary international law (Taylor 2006).

The regional regulatory regime most applicable to private military actors, the Convention for the Elimination of Mercenarism in Africa established in 1977 by the Organisation of African Unity (OAU), also faces problems that make it prac- tically untenable. As with the 1989 convention, the OAU convention’s faults include a focus on intent for identification of mercenaries – meaning that the mo- tivation to fight must be exclusively that of private gain, which is almost impossible to prove – and lack of any real mechanism for monitoring and enforcement (Singer 2004a). The OAU convention is also inconsistent, disallowing the use of mercenaries against OAU governments or recognised movements of national liberation but permitting their use by OAU governments against rebel groups (within their own borders) that the OAU hasn’t recognised. The OAU convention also primarily targets individuals, not corporations.

However, national regulatory regimes have hardly stepped up to fill the gap.

Among developed countries, only the United States (see below) and South Africa have regulation aimed specifically at corporate purveyors of military services. Fur- thermore, both of these regimes have encountered enforcement difficulties related either to the overly broad way in which law is written (South Africa); the lack of systematisation of, and resources for, oversight (United States); and the difficulties posed by the extraterritorial nature of the activities covered.

A final source of law potentially relevant to the private military industry is national codes of military service and military justice. Yet militaries themselves tend to have unclear or incomplete guidelines governing the behaviour of contractors serving alongside the regular armed forces (Isenberg 2004; Werve 2004). Further- more, the utility of military codes is generally not exploited: PMC employees are

25 The Green Paper prompted a similar response among some Labour politicians in the United King- dom, who claimed that even investigating the possibilities of regulating the private military industry essentially sanctioned and legitimised it.

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bound by the terms of their contract and employee codes of conduct but not military codes of justice or a military chain of command. Two partial exceptions to this are the United States’ Military Extraterritorial Jurisdiction Act (MEJA) of 2000 and the United Kingdom’s incorporation of “Sponsored Reserve” into the Reserve Forces Act of 1996 (Isenberg 2004; Schreier & Caparini 2005). The former applies the U.S. Uniform Code of Military Justice to civilian contractors working directly for the U.S. Department of Defense on U.S. military facilities abroad.

However, it has not been applied to civilian contractors working for other U.S.

agencies (such as the Department of State or the Central Intelligence Agency) or foreign actors, nor does it seem to cover actions that occur outside of U.S. military facilities. Moreover, as of September 2004 – months after the abuse of Iraqi prisoners at Abu Ghraib came to light, a scandal in which employees of two U.S.

PMCs were active or complicit – the Pentagon still had not formalised or signed the implementing regulations for MEJA (Isenberg 2004). The British regulation, meanwhile, subjects employees of British PMCs to the Service Discipline Acts and Service Regulations, but only when they are serving with or alongside the British armed forces.

Lessons from the U.S. regulatory experience

The U.S. government is one of the few to operate a registration and licencing system for private military companies (generally referred to as military contractors): all U.S. companies seeking to provide military services and advice to foreign nationals, whether in the United States or abroad, must register with and be licenced by the State Department. The system, part of the International Transfer of Arms Regulations (ITAR) controls, was established in the wake of the U.S. Arms Export Control Act of 1968, and is administered by the U.S. State Department’s Office of Defense Trade Controls (ODTC). Although the Act was originally written to deal with arms transfers rather than PMCs, it has expanded to cover contracts involving the transfer of military-related goods, services, and training and knowledge. Before approving or denying a licence, the ODTC seeks comment from appropriate actors in the State Department – including the regional office and country desk, the political-military bureau, and possibly the Bureau of Democra- cy, Human Rights, and Labor – and, typically, relevant offices in the Pentagon.

In cases that are not clear-cut, licencing decisions are made at the political (assist- ant secretary) level. Although there is no formal oversight or reporting process required by ITAR, the government retains the right to take action to confirm that

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a licence’s provisions are met. Congressional notification is triggered for contracts of more than $50 million in services.

The U.S. system is important simply by virtue of its existence: the United States is the largest consumer of private military services, and the U.S. regulatory regime is one of the very few in existence. But the U.S. experience highlights some gaps and failings that other countries should not replicate and the U.S. government itself should strive to correct.

A basic problem facing the U.S. licencing system is capacity. There are simply not enough human and financial resources dedicated to the proper review and vetting of contracts, a problem that has worsened as demand has spiralled after the invasions of Afghanistan and Iraq (see for example Singer 2004b; Holmqvist 2005). The U.S. system is also too often prey to cronyism and politics. The ongoing controversy surrounding Vice President Cheney’s links to Halliburton and KBR is the most high-profile, but by no means only, example of this problem. As implemented, furthermore, the licencing system is rather ad hoc, with inconsist- encies occurring in the type and sources of input solicited and the criteria used for approval (Avant 2005). These problems are clearly related: an overstressed, non- systematised licencing regime is far more prone to manipulation and political misuse.

Lack of capacity and systemisation also figure in another problem with the U.S.

regime as presently implemented: the lack of oversight, including monitoring and reporting, in both financial accounting and on-the-ground activities. As noted above, oversight and reporting are not formal components of ITAR, meaning that the stringency and implementation of any such tasks will necessarily vary. This is appropriate in the sense that different types of contracts entail different risks, and therefore that the level of oversight needed for military provider firms or others operating in combat zones is probably excessive in the case of, for example, contracts supplying security sector reform advice to friendly governments. However, it is arguable that such flexibility could be maintained even in the context of greater systematisation of oversight, monitoring, and reporting. Different types of contracts would simply trigger different mandated standards of oversight, ranging from periodic, unannounced site visits to independently appointed monitoring teams reporting regularly to the State Department and/or congressional oversight com- mittees. All U.S. government contracts, regardless of value, should also be subject to financial audits upon completion.

Amending ITAR to mandate and systematise oversight would provide political cover and an institutional counter-weight to some current obstacles to on-the- ground oversight – such as the claim that it runs counter to civil servants’ primary objective, or the fact that those tasked with providing oversight (often military

Regulating the Private Military Industry

Kathleen M. Jennings Armed Services

Armed Services:

Regulating the Private Military Industry

Kathleen M. Jennings

Armed Services:

Regulating the Private Military Industry

Contents

Preface

Executive Summary

Introduction: A Regulatory Ecology Approach to PMCs

The Architecture of the Private Military Industry

The Private Military Market

Laws: The State of National and International Regulation

Lessons from the U.S. regulatory experience