Militarized Multinationals Fill the Gap in State Security

Militarized Multinationals Fill the Gap in State Security

Guest blogger Christopher Jackson writes on how the decline in state security forces is leaving the private sector to provide its own security.

Since the 1990s, Immanuel Kant’s perpetual peace thesis, nowadays better known as the Democratic Peace Theory, has returned with a vengeance. The theory, for those who were spared having to read Kant, is that democracies do not fight democracies and so as the world has become more democratic it has become less violent.

Admittedly, this topic has primarily remained as a bitter debate in the academic world of International Relations, but what is important for those outside academia is that the nature of warfare and violence has been changing.

In the past few decades there has unquestionably been a dramatic rise in violence conducted by non-state actors, with the most famous contemporary group being probably Al Qaeda (with the IRA, FARC, MEND and ETA all being close contenders).  The problem with saying the world is less violent because fewer states fight each other is that this argument becomes a political cover for politicians to cut defence spending, and contrary to popular belief, this is a problem.

Taking aside the ridiculously expensive F-35 programme (at over $200 million per jet on current estimates) and the Trident nuclear submarine project (at £100 billion for four submarines over 25 years), the British armed forces has never been smaller.  By 2015 the Air force and Navy will number under 70,000 on current estimates with only 120 fighter jets (the same number as Belgium) and 80,000 members of the army across all disciplines.  And Britain is not alone.

Only 5 members in NATO managed to keep to the charter’s 2% of GDP on defence spending in 2012, and this may fall even lower in 2013.

So why is this relevant?  Quite simply because as governments reduce their ability to provide physical security against the threats of violence by non-state actors, businesses will take their personal security into their own hands.  In fact, this is already happening.

Marine Piracy and the Private Sector

Piracy since 2007 has largely been internationally associated with one word, “Somalia”.  In a country where the state has not technically had an armed forces since 1991 and where the UN and USA have been forced to pledge commitments of around $390 million to the African Union Mission in Somalia (AMISOM), it is perhaps not surprising that piracy has been able to flourish. What had been so surprising was its success.

With certain vessels like the Samho Dream being released after the payment of $9.5 million (2011) and an estimated $135 million being netted in ransom payments in 2011, it is hardly surprising that piracy groups proliferated and became so well equipped at such a fast level.  Combine that with an area of over 3.4 million square kilometers at risk (IISS) and the fact that round 22,000 vessels pass through the Gulf of Aden each year and it’s not hard to see why 802 people were taken hostage by pirates in 2011 on the east and west coasts of Africa.

In fact between 2008 and 2010, NATO claims that 131 vessels were hijacked, and 315 vessels were physically attacked by pirates.  As a direct consequence of this an estimated $7.5 billion is now being spent by navies from across the world under 3 separate multinational missions, which would seem to emphasise that the issue is being taken pretty seriously.

Sadly, however, it is not the response of governments that seem to have led to the much lauded reductions since 2012.  According to data from Lloyd’s List there was nearly a 65% reduction in piracy attacks in 2012 and what people are saying behind the scenes (and seeing in the budget sheets) is that this change all comes down to one main reason: Armed Guards.

Unofficially, insurance brokers have been reporting figures in the range of an 80% drop in K&R premiums since the advent of Armed Guards, and then you have Typhoon. Typhoon is a private security firm that provides close quarter support for convoys of vessels travelling through the Gulf of Aden and is being rolled out in collaboration with Glencore.  The firm aims to replicate the tactics of pirates by using smaller fast response, armed patrol boats, launched from mother ships to counter the pirates.  By using this method Typhoon believe they can deliver a more robust and effective deterrent to would-be attackers in a far cheaper and more advantageous way than the Royal Navy can.

In effect, the private sector has the flexibility to adapt rapidly to demand where there is a personal financial gain.  Armed forces and certainly naval forces cannot.

Whilst Typhoon is just limited to the Gulf of Aden it is important to note that the highest region in the world for piracy historically and in 2012 is actually Indonesia.  In addition, West Africa and many of the Littoral South-East Asian states experience significant piracy threats, in particular in the Malacca Straits.  With an increasing amount of global trade going through more politically insecure areas and the value of vessels increasing, the relative success of Typhoon will be watched closely and almost certainly emulated in some form.

Most significantly in this rise of privatised security arrangements are the terms of engagement to which these new actors adhere.  Yet again the lead in this respect has been left to a variety of non-governmental bodies like the International Maritime Bureau to listen to the concerns of their members (shipping companies largely) and then recommend best practises.  The reality however is very complicated.

As the demand for armed guards has soared, the cost and quality for these Private Military Contractors (PMCs) has continued to diverge and the lack of reporting when arms have been discharged is a growing concern for those maritime forces operating in the region.  In essence the issue is becoming one of which the PMCs are able to decide what is a legitimate target and what is an appropriate level of response and may hide behind flags of convenience and the legal ambiguity of combat in the high seas. The lesson being taken is clearly that if security is left to private actors then private actors will also take the lead on establishing how they provide their own security.

Oil and Gas – Africa and the Middle East

As the recent situation in Algeria has demonstrated, oil and gas workers are always a high value target regardless of their location.  The very fact that this particular BP facility was so far from the Mali border, where Al Qaeda in the Islamic Maghreb (AQIM) are said to operate, is merely a further reminder that private sector actors in even relatively secure developing nations cannot rely exclusively on state protection for their security.

But the recent flurry around Algeria is just the tip of the global issue of kidnapping the employees of oil and gas businesses.  Whether it is Shell employees and their families in Nigeria, or BP, Shell, and Exxon staff facing threats to security in places like Iraq, or the high kidnapping rate in Venezuela and Colombia, there has been a long growing trend in multinational firms to seek their own security arrangements.

On the face of it again this pattern is inherently logical.  A state’s armed forces and police cannot anticipate and protect every employee of a foreign national effectively and often the state may not have the resources to do this anyway.  By contrast, multinational companies like Shell may use their provision of private security staff to re-assure their employees and contractors to work for them in high risk areas instead of their rivals.  How staff are treated in high risk areas is increasingly becoming a  significant factor within the oil and gas industry, with the various levels of response to oil and gas firms in Libya, where Russian and Chinese nationals were effectively abandoned by their respective national industries, being a case in point.  That sort of care towards staff matters.

However, the problem again of relegating the security of these employees to the firms themselves is perhaps best explained by the controversy of private military contractors in Iraq.  If a PMC kills or injures a foreign national, then how does the host state respond?  If they prosecute the individuals due to public pressure then multinational firms whose investment is so desperately sought may not feel able to ensure their employee’s security and so may restrict or pull their operations in that region.  On the other side, if individuals are not subject to local laws this can lead to a backlash against the government for being seen as under “foreign influences”.

Across all industries operating in developing nations, establishing which individuals are threats and which are not is incredibly difficult.  With regards to piracy, the vessels used by pirates are often identical to local fishing vessels. In certain cultures the carrying of weapons in public is not an uncommon occurrence.  Thus how does one distinguish between those who are carrying weapons for personal security and those carrying weapons to threaten others?

Even more worryingly, many people are realising that the local state security forces may even be part of the risk themselves.  The “Green-on-Blue” incidents in Afghanistan are the most high profile of these, but actual involvement by local state police with would-be-kidnappers is certainly not unheard of.  Is it not perhaps unsurprising then that multinational companies are beginning to turn to the private sector for their security?

The private sector itself now provides comprehensive risk mitigation methods to enhance the security of multinational firms’ people and assets.  Whether this is in the form of better knowledge of market risks by using ControlRisks or bespoke products like the WorldRiskReview, the purchasing of political risk insurance and kidnap and ransom policies, or at the first (or last) stage, directly hiring PMSCs.

Concluding remarks

In 2004 the BBC suggested the global private security industry was globally worth $100 billion. It would be a challenge to venture a guess at its value today. Companies like G4S and Blackwater now employee hundreds of thousands of employees each, and even in combat location like Iraq the number of PMCs has risen from 1 in every 100 soldiers in 1991 to around 1 in 4 soldiers in 2011.  The increasing use of the private sector is here to stay, and the private sector is responding.

As states have gradually allowed the private sector to take responsibility for their own security, the private sector has gradually started to shape the rules and behaviour that govern their use of private security providers.  Furthermore, as attacks against firms continue (with a 300% increase in kidnappings in Mexico between 2005-2011 being just one example), the speed of these changes and the move away from the traditional reliance on the state for their security will decline.

If states do not begin to respond more quickly and more robustly to the changing threats faced by companies, then there will inevitably be either a move away from the state as the sole legal source of security toward a system where the private sector begins to define what is necessary for its security.

This is not just undemocratic and lacking transparency. This is a genuine concern for all states and their claim to the “monopoly on the legitimate use of violence” which has underpinned the modern state we live in.  Governments need to start being creative or else risk being outflanked on this issue.

Categories: International, Security

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