Department of Things That Will Obviously End Well

Many years ago, in what seems like another life, I wrote a case about Blackwater. When I began researching the case in 2008, not long after my time in Afghanistan, the company was at the peak of its ambitions. It’s training ground in Moyock, North Carolina, was very impressive — and it still is — but the amazing part of Erik Prince’s vision was that he wanted the company to manufacture, deploy and operate a panoply of advanced hardware. These included the Grizzly APC (interior pictured), an armed frigate (see page 53), armed reconnaissance blimps, and a small private air force.

There is a rationale behind the idea of privatizing some military functions. Much of what is called “combat service support” has a civilian equivalent. In theory,  a private company could maintain a large reserve support capacity and rent it out to various clients, including the military, for less than it would cost any of those clients to maintain such capacity internally. In practice, it’s less clear that outsourcing logistical and support functions generates savings or improves readiness, but that’s an issue for another day.

The issue for today is that Russian Federation appears to be deploying private organizations to take and hold Syrian territory in return for oil and mining concessions. (The link is to the New York Times.) This is bad on about a hundred different levels. The small problems have to do with the problems of outsourcing core military functions to private organizations. The big ones have to do with the incentives.  

Not only do these contracts encourage Russian companies to go buccaneering, they encourage Moscow to broaden the war as much as possible. They also encourage Moscow to pressure Damascus into fighting to the bitter end and give corrupt Russian officials incentives dump public resources into subsidizing ostensibly private military operations. The officials don’t even have to be corrupt in a Venezuelan bribe-taking sense; all you need is an open-door between public service and lucrative private posts in the companies that stand to benefit.

Private military forces are, sadly, a thing. Erik Prince is running a small private air force for the UAE in Libya. But I’m not sure that I’ve heard of mercenaries paid with contingency fees financed out of the spoils of war. That seems new. I am sure that there must be a giant hole in my logic and this experiment with profit-driven pacification will end well.

Comments

[Mike]

I’m not sure that I’ve heard of mercenaries paid with contingency fees financed out of the spoils of war
Executive Outcomes did this in Angola and Sierra Leone in the 1990s, with arguably not bad outcomes for the locals. The surrounding politics were totally different though. Chapter 2.

[Noel Maurer]

I didn't know that E.O. did this! I do know that Erik Prince has been hinting at such a system in Afghanistan, without making it explicit.

If we go down this path, economic historians of the 25th century will have a field day testing hypotheses about the long-run impact of extractive institutions. Did Buck Rogers' teammates go to university?

[Tzintzuntzan]

Chiming in sadly late, would Prince's scheme end up looking pretty much like the old East India Companies? The exact nature of the charter wouldn't be the same, of course, but if you've got a legal government-granted monopoly...

[Mike]

According to a journalistic investigation by the Russian website The Bell, the idea of creating a deniable, “off-balance” private army – and entrusting its logistical operational aspect to Yevgeny Prigozhin – came from high-ranking officers from Russia’s Defense Ministry, after being impressed with a 2010 presentation by Eben Barlow, the founder of the South-Africa-based PMC “Executive Outcomes”.