Private U.S. Guards Take Big Risks for Right Price

[R. A. Hettinga]

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I see in the following article the kernel of geodesic markets for
force.

Actually a sort of re-emergence, I suppose, remembering letters of
marque, etc., and my idea about the decline in switching costs
"unwinding" the development of human-switched hierarchical social
networks, with microprocessor-switched geodesic networks creating
diseconomies of scale, and cash-settled auction pricing replacing
"calculated" transfer pricing.

The idea is, if transaction and price discovery costs fall enough,
private force companies that auction their services in a free market
become better than the "public" ones that rely on confiscated tax
revenue.


I'd expect that sooner or later companies like Blackwater will start
training recruits in competition with the armed forces instead of
just hiring vets. Certainly there lots of special ops vets training
civilians in combat shooting at places like Frontsite, etc, for
self-defense, and local militarized police for forced-entry, etc, as
part of the same cold-war spin-off process that created companies
like Blackwater in the first place.

The fact that the NYT, below, is falling all over themselves about
Blackwater being "corporatized" is the icing on the cake, I figure.

:-)..

Cheers,
RAH
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<http://www.nytimes.com/2004/04/02/national/02SECU.html?amp;ei=5053&en
=3cdd2de47756be57&partner=NYTHEADLINES_NAT&ex=1081573200&pagewanted=pr
int&position=>

The New York Times

April 2, 2004
SECURITY

Private U.S. Guards Take Big Risks for Right Price
By JAMES DAO

OYOCK, N.C., April 1 - Nestled inconspicuously amid the pinelands
and horse farms of northeastern North Carolina lies a small but
increasingly important part of the nation's campaign to stabilize
Iraq.

Here, at the 6,000-acre training ground of Blackwater U.S.A., scores
of former military commandos, police officers and civilians are
prepared each month to join the lucrative but often deadly work of
providing security for corporations and governments in the toughest
corners of the globe.

On Wednesday, four employees of a Blackwater unit - most of them
former American military Special Operations personnel - were killed
in an ambush in the central Iraqi city of Falluja, their bodies
mutilated and dragged through the streets by chanting crowds.

The scene, captured in horrific detail by television and newspaper
cameras, shocked the nation and outraged the tightly knit community
of current and former Special Operations personnel. But it also shed
new light on the rapidly growing and loosely regulated industry of
private paramilitary companies like Blackwater that are replacing
government troops in conflicts from South America to Africa to the
Middle East.

"This is basically a new phenomenon: corporatized private military
services doing the front-line work soldiers used to do," said Peter
W. Singer, a national security fellow at the Brookings Institution in
Washington who has written a book on the industry, "Corporate
Warriors" (Cornell University Press, 2003).

"And they're not out there screening passengers at the airports," Mr.
Singer said. "They're taking mortar and sniper fire."

The Associated Press identified three of the victims as Jerry Zovko,
32, an Army veteran from Willoughby, Ohio; Mike Teague, a 38-year-old
Army veteran from Clarksville, Tenn.; and Scott Helvenston, 38, a
veteran of the Navy.

 Blackwater declined to identify the dead men, but issued a
statement: "We grieve today for the loss of our colleagues and we
pray for their families. The graphic images of the unprovoked attack
and subsequent heinous mistreatment of our friends exhibits the
extraordinary conditions under which we voluntarily work to bring
freedom and democracy to the Iraqi people."

Though there have been private militaries since the dawn of war, the
modern corporate version got its start in the 1990's after the
collapse of the Soviet Union.

 At that time, many nations were sharply reducing their military
forces, leaving millions of soldiers without employment. Many of them
went into business doing what they knew best: providing security or
training others to do the same.

 The proliferation of ethnic conflicts and civil wars in places like
the Balkans, Haiti and Liberia provided employment for the personnel
of many new companies. Business grew rapidly after the Sept. 11
attacks prompted corporate executives and government officials to
bolster their security overseas.

But it was the occupation of Iraq that brought explosive growth to
the young industry, security experts said. There are now dozens,
perhaps hundreds of private military concerns around the world. As
many as two dozen companies, employing as many as 15,000 people, are
working in Iraq.

 They are providing security details for diplomats, private
contractors involved in reconstruction, nonprofit organizations and
journalists, security experts said. The private guards also protect
oil fields, banks, residential compounds and office buildings.

 Though many of the companies are American, others from Britain,
South Africa and elsewhere are providing security in Iraq. Among them
is Global Risks Strategies, a British company that hired Fijian
troops to help protect armored shipments of the new Iraqi currency
around the country.

 Blackwater is typical of the new breed. Founded in 1998 by former
Navy Seals, the company says it has prepared tens of thousands of
security personnel to work in hot spots around the world. At its
complex in North Carolina, it has shooting ranges for high-powered
weapons, buildings for simulating hostage rescue missions and a
bunkhouse for trainees.

 The Blackwater installation is so modern and well-equipped that Navy
Seals stationed at the Little Creek Naval Amphibious Base in Norfolk,
Va., routinely use it, military officials said. So do police units
from around the country, who come to Blackwater for specialized
training.

"It's world class," said Chris Amos, a spokesman for the Norfolk
Police Department.

 In Iraq, Blackwater personnel guard L. Paul Bremer III, the head of
the civilian administration, among their other jobs. Around Baghdad,
the Blackwater guards, most in their 30's and 40's, are easily
identified, with their heavily muscled upper bodies, closely cropped
hair or shaven heads and wrap-around sunglasses. Some even wear
Blackwater T-shirts. Like Special Operations Forces, they use
walkie-talkie earpieces with curled wires disappearing beneath their
collars and carry light-weight automatic weapons.

 In the northern city of Mosul, where Mr. Bremer met with about 130
carefully vetted Iraqis on Thursday, Blackwater guards maintained a
heavy presence, standing along the walls facing the Iraqi guests with
their rifles cradled. More than once, Iraqis and Western reporters
moving forward to take their seats in the hall were abruptly
challenged by the guards, with warnings that they would be ejected if
they resisted.

 The company also received a five-year Navy contract in 2002 worth
$35.7 million to train Navy personnel in force protection, shipboard
security, search-and-seizure techniques, and armed sentry duties,
Pentagon officials said.

 The rapid growth of the private security industry has come about in
part because of the shrinkage of the American military: there are
simply fewer military personnel available to protect officials,
diplomats and bases overseas, security experts say.

To meet the rising demand, the companies are offering yearly salaries
ranging from $100,000 to nearly $200,000 to entice senior military
Special Operations forces to switch careers. Assignments are paying
from a few hundred dollars to as much as $1,000 a day, military
officials said.

Gen. Wayne Downing, a retired chief of the United States Special
Operations Command, said that on a recent trip to Baghdad he ran into
several former Delta Force and Seal Team Six senior noncommissioned
officers who were working for private security companies.

 "It was like a reunion," General Downing said.

Sheriff Susan Johnson of Currituck County, N.C., where the entrance
to Blackwater is situated, said several of her deputies had been
lured away by the company to work overseas.

"It's tough to keep them when they can earn as much in one month
there as they can in a year here," Sheriff Johnson said.

But critics say the rapid growth of the industry raises troubling
concerns. There is little regulation of the quality of training or
recruitment by private companies, they say. The result may be
inexperienced, poorly prepared and weakly led units playing vital
roles in combat situations. Even elite former commandos may not be
well trained for every danger, those critics say.

Representative Jan Schakowsky, Democrat of Illinois, has also argued
that the United States' growing use of private military companies
hides the financial, personal and political costs of military
operations overseas, since the concerns face little public scrutiny.

In particular, Ms. Schakowsky has objected to administration plans to
increase the number of private military contractors in Colombia,
where three American civilians working for a Northrup Grumman
subsidiary have been held hostage by Marxist rebels for more than a
year. The three were on a mission to search for cocaine laboratories
and drug planes when they were captured.

 "I continue to oppose the use of military contractors who are not
subject to the same kind of scrutiny and accountability as U.S.
soldiers," Ms. Schakowsky said last week. "When things go wrong for
these contractors, they and their families have been shamefully
forgotten by their American employers."

Eric Schmitt, in Washington, and John F. Burns, in Baghdad,
contributed reporting for this article.


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R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'