C. Gopinath

When the government finds outside contractors who can do the job more efficiently, and at a lower cost, privatising is a sensible option.

THOMAS Hamill, an American, was taken hostage in April 2004 by insurgents while driving a truck in Iraq. Unlike the case of a couple of other hostages who were beheaded by their captors, Hamill was lucky. He was held in isolation in a remote spot when he managed to free himself and reach the safety of US forces.

Hamill is not a soldier fighting the war but a civilian, an employee of Kellogg, Brown and Root (KBR), and one of an estimated 20,000 people who are involved in the US war effort in Iraq. Reports vary, suggesting that there are anywhere from 10 to 50 private contractors engaged in various types of work for the US occupation forces.

When the war was first declared to be `over', many companies wanted a piece of the investment that was to flow in as part of the reconstruction of Iraq. These were contracts that were to be given for road construction, repairs to the telecommunication and power systems, bridges were to be rebuilt, and civil works undertaken. Allies of the US were pushing their companies to be considered and those who declined to be allies were grumbling that the whole process was unfair.

But there are a whole lot of other contracts that have been handed that are not part of reconstruction, but deal directly with the conduct of the war. The army itself usually performs these jobs. But the trend now seems to be to hand them out to private operators. These jobs include security-related work, apart from the usual provisioning and other services. The close involvement of these companies in the war effort is truly revealing.

A look at a sample. Hamill's job with KBR involved driving fuel trucks for the military. Custer Battles, a company based in Virginia guards Baghdad airport including manning checkpoints. This airport is an important base for the US forces and so you have civilians checking whether the US soldiers have the right to enter and leave the place. When the US military convoys undertake journeys through rebel territory, they are accompanied by private security companies to protect them.

A military convoy protected by private security contractors' defeats logic. Mr Paul Bremer, the top US administrator of Iraq, before the handover to a nominated Iraqi Government, was provided security protection by agents of the Blackwater Security Consulting, a private company. (Four employees of this company were killed and mutilated in Falujah not too long ago.) I heard a radio report that a retired general was retained as an independent contractor in designing a plan for post-occupation Iraq.

Vinnell Corp., a subsidiary of the Defence contractor Northrop Grumman has the contract to train people for the new Iraqi army. DynCorp of Virginia has been hired to help train Iraq's police. Some estimate that 25-30 per cent of the money earmarked for reconstruction of Iraq goes to private security contractors.

It is not just the US companies who are benefiting from these. Other close allies have some pickings too. Australian and British Special Forces personnel have also found it more attractive to quit their jobs and join private security companies. A new form of mercenaries has emerged on the scene.

Erinys, a British company with offices in West Asia and South Africa, guards the oil fields. Global Risk, a British firm that offers "risk management", has a contract to provide armed protection for the Coalition Provisional Authority, the name for the US-appointed administration.

There is, of course, nothing wrong in hiring private contractors to do jobs for the government.

When the government, even an army, finds outside contractors who can do the job more efficiently, and at a lower cost, privatising is a sensible option. Food services, landscaping, etc. in peacetime are ripe for outsourcing. However, the economics of hiring companies such as KBR, who hire individuals like Hamill, does not seem to fit this rationale. I do not know if Hamill had particularly strong feelings one way or the other about the war in Iraq but he was in the middle of a raging war, to earn a living. His job of driving fuel trucks paid him about $80,000 a year, tax-free, which was far greater than what he was making back home.

From what I have read about him, he is a good family man facing demand on his income that his present circumstances did not allow him to meet and he was willing to take the risk for the chance to earn a lot more. I do not grudge him the job, but the Government is prepared to pay the company six to seven times more than it could pay its own soldier to do the same job.

Where is the economy from privatising coming from? When Halliburton, a Defence contractor, had a job fair in the US to fill jobs in Iraq, the response was said to be overwhelming.

The use and responsibility of private individuals in the battlefield involve a host of grey issues. Since there is no functioning judiciary in Iraq, these employees are presumably covered by the laws of their origin. They are allowed to carry weapons for self-defence and it is not clear how any wrongdoing by a civilian contractor would be dealt with. When regular soldiers wear a uniform, it acts as a restraint on their behaviour for they have a standard and responsibility to live up to. Private individuals, working for the government carrying around guns in a `lawless' place is worrying. The dealings between these private contractors and their military counterparts can also result in tensions with the military personnel who are paid less and have limited flexibility in what they can say or do, compared to their contractor counterparts.

The attractions of better pay in private companies has also resulted in army personnel taking early retirement the minute they become eligible to do so, and then working for a contractor performing the same services for the government. Excessive use of private contractors results in a `skills' drain from the uniformed forces. Investigation of the Abu Ghraib prison scandal has revealed that employees of four private contractors were involved in the abuse. The contractors who have been named include Titan Corp. and CACI International. They help in interrogation of the prisoners, and also in translation and interpretation work.

The US saw the tremendous rise of the involvement of private enterprise in its armaments industry during the days of General Eisenhower as President. He was proud of their involvement as he felt it built a broad base for the defence and security of the country and gave it a lot of flexibility in responding to external threats. But he was also acutely aware of the risks this entailed and warned the nation about it. In his farewell address to the nation in January 1961, he said: "This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence — economic, political, even spiritual — is felt in every city, every Statehouse, every office of the Federal government... In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex."

This influence of private industry is being increasingly questioned again in the US political arena. Mr Dick Cheney, the Vice-President, is the former CEO of Halliburton (which owns Kellogg, Brown and Root, Hamill's employer). Halliburton was awarded fairly large contracts for Iraq work, and has also been found to have over-charged the government for fuel supplies.

It is also currently facing other inquiries, including one about corruption in Nigeria, but continues to have significant influence in the government to keep those contracts flowing.

Of course, it is not just the search for economies that has driven the privatisation. It is also that of necessity. The US military forces have been stretched thin. The US is said to have military bases in 63 countries and military personnel in some form or the other in 130 countries.

With the Iraq war closely following the Afghanistan war, the US is finding its personnel resources constraining its military ambitions. Privatisation has become a viable option. I wonder how long it will be before we start seeing tender announcements from the US Government asking for turnkey bids to manage the next war they plan to launch.

(The author is professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinat@suffolk.edu)

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