Corporate Warriors: The Privatized Military and Iraq

• Introduction
• Remarks
• Questions and Answers

Introduction

JOANNE MYERS: Good afternoon. I'm Joanne Myers, Director of Public Affairs Programs, and I'd like to thank you for joining us this afternoon as we welcome P. W. Singer to the fourth program in our series on American Military Power.

Dr. Singer is a Senior Fellow in the Foreign Policy Studies program at the Brookings Institution and Director of the Brookings Project on U.S. Policy Towards the Islamic World. He is with us this afternoon in order to discuss a phenomenon that has been around for quite a long time but has most recently demanded our attention, and this is the extremely controversial role that private military companies are playing in fighting the war in Iraq.

Whether reading about abuses at Abu Ghraib prison or hearing about companies that overcharge the government for services provided in Iraq, some of the most disturbing news coming from this war zone has involved private military contractors who have been outsourced by the Pentagon to perform the duties once carried out by official military units.

With U.S. forces increasingly overstretched, private companies are more and more providing a record number of armed personnel to offer services ranging from logistics and troop training to escorting of convoys and interrogations in conflict zones around the world. This new privatized military industry encompasses hundreds of companies, thousands of employees, and billions of dollars in revenue.

While these new private solutions for public military ends is not necessarily a bad thing, when it comes to actual warfare the stakes are high. The entrance of the profit motive onto the battlefield raises a series of troubling questions, as these so-called private soldiers have been operating with previous few constraints to govern their activities. Therefore, if outsourcing of the military continues to be the trend, it would be prudent to ask: What ethical standards should apply when our national security is at issue and people's lives are constantly put at risk?

For some time now, P. W. Singer has been interested in the rise of the so-called private military companies and their lack of public oversight. He is widely acclaimed for his work in this area and is often the first one journalists turn to when wanting to know more about this issue. His appearances on all the major networks, including several cable and news shows, attest to this.

His book on this subject, Corporate Warriors: The Rise of the Privatized Military Industry, was the first publication to explore the private military industry, and in 2004 was named Best Book of the Year by the American Political Science Association. In addition to this work, he is the author of Children at War, which was discussed here in February, and for those of you who are interested, you can find a transcript on our Web site. And as I mentioned earlier, Dr. Singer is based in Washington at the Brookings Institution.

We are very grateful that he has made the journey up this morning and we welcome him here this afternoon. Thank you.

Remarks

P. W. SINGER: Thank you.

Today I am happy to talk to you about what I think is probably one of the most controversial but least understood developments in both the war in Iraq, and in modern warfare in general: the rise of the private military industry. This new industry does not offer the traditional goods of warfare; it does not make the weapons, tanks, aircraft carriers, and so on. Instead, it provides the services of warfare; it is fulfilling professional functions that were once limited to soldiers. This rise of the private military presents some interesting dilemmas for the conduct of both war and politics.

What I will to do today is give the quick-and-dirty analysis of the private military industry and its role in Iraq. I'll start out by defining what this industry is and where it came from; next, I'll talk about what is going on in Iraq and some of the implications that we need to think about; and finally, I'll discuss some of the policy responses that we need to develop.

It's important to define what we mean by the private military industry. These are private companies that offer the functions of warfare—not the goods, but the functions—spanning a wide range of activities. They perform everything from tactical combat to consulting (training and advising forces, but not carrying weapons themselves) to the mundane logistics (equipping, supplying, repairing, and so on). The result is that the private military industry now offers every function that was once limited to state militaries.

Basically, what has happened is that the industry of warfare has followed the path laid out in other industries?the outsourcing and globalization of services. So, in a business sense, we shouldn't be all that surprised by this transition. But what is significant is the domain in which it is taking place—it is happening in the arena of war, which was once limited to the state. In fact, war used to be a defining aspect of states; war was what the state did and in turn made the state. The private military industry has now broken that monopoly. The result is that any actor in the global system can access these skills and functions simply by writing a check. That presents an amazing dilemma.

Now, there are really three causes driving this industry and they roll into one dynamic.

The first is good old-fashioned supply and demand. Since the end of the Cold War, you have a much smaller U.S. military. It's about 35 percent smaller than it was during the Cold War. It's greatly overextended. So you have a gap between supply and demand.

But we're not the only ones. More than six million soldiers were downsized at the end of the Cold War. That affects the labor market. It means labor is more available; it's also cheaper.

Another aspect on the demand side is the rise of more wars. But these wars aren't as strategic as they were in the past. They often take place in areas that don't interest the great powers and where the superpowers aren't going to intervene as they did in the past.

There are also changes in technology. Light weapons and small arms, like AK-47s, have spread and proliferated. There are more than 550 million small arms in the global market, one for every twelve human beings. You can buy an AK-47 in Kenya for the price of a goat. You can buy one in Uganda for the price of a rooster. These weapons are surprisingly easy to learn how to use. They are lighter and cheaper. A ten-year-old can learn how to use an AK-47 in under thirty minutes, which means another addition to the demand side in terms of the threats produced.

Secondly, there have also been changes in the conduct of warfare itself. There used to be distinctions in war between soldiers and civilians. Those distinctions are breaking down. They are breaking down on the low-intensity war side—the messier wars, the conflicts that feature drug cartels, fedayeen, terrorists, warlords, and child soldiers.

The distinctions are also breaking down on the high-intensity warfare side—the type of wars that the U.S. military fights. If you were a U.S. Navy sailor serving aboard a guided missile destroyer during the Iraq war, serving alongside you would have been twenty contractors from six different companies. They were the ones operating the air defense system, because it has gotten so sophisticated that we can't keep people in the military to operate it. So we've turned to the private market.

We are also seeing a change in the relation between the military and technology. The military is no longer developing technology the way it did in World War II—making radar, atomic bombs, and the like. It is getting its technology off the shelf. For example, the reason that the U.S. military is so much more lethal in this war as compared to the last war—the reason we were able to topple Saddam's government with only one-fourth of the troops that were deployed in the 1991 Gulf War—was the fact of information technology. It was the Internet that linked the weapons systems into a far more lethal whole.

The final cause that wraps these together is what's called the "privatization revolution." It's a change in mentality, a change in political thinking. It's the new ideology that 'if there is a function that the market can do, then you should turn it over to the market.' We have seen this transformation take place in everything from garbage collection, to postal services, schools, prisons, and police. We spend more on private police in the United States right now than on actual police.

And this phenomenon is not confined to the United States. It is something that's quite global. One of the fastest-growing industries in formerly communist China right now is the private security industry.

But that last frontier of privatization, that last monopoly, the one that no one thought could ever be broken, was the military. Yet as we're learning from the current conflict in Iraq, that monopoly has been broken.

The way to think about the industry is like any other business. There are three sectors, three types of companies.

The first are what I call "military provider firms." Some people will call these "private military companies." Sometimes the companies call themselves "private security companies." It doesn't matter what they call themselves, its what they do that matters. These are companies that operate in the tactical sphere. These are companies that use weaponry. These are companies that fulfill those functions that, for example, infantries and Special Forces would have fulfilled in the past.

The second type of company is the military consultant firm. They don't fight for you, but they train and advise the military how to do its job better. Their parallel in the civilian sphere is the management-consulting firm.

The third type of company is the military support firm. They're akin to supply-chain management firms. They take care of the back-end, the non-sexy roles like logistics and technology assistance that need to be done if your operation is to succeed.

The size of this industry is immense, much bigger than most people realize. All told, the entire industry pulls in approximately $100 billion per year in revenue on the global level. It's operating in over fifty different countries.

The biggest client of this industry is, in fact, the most powerful military in the world. During the ten years leading up to the current Iraq war, the Pentagon entered into over 3,000 contracts with private military companies. Since the Iraq war, it has obviously escalated to a whole new level.

For example, just one company in the military support sector, Halliburton and its KBR Division, just that one company has pulled in—depending on who does the accounting—somewhere between $13-16 billion worth of revenue related to the Iraq war. To put that figure in context, $13 billion is 2.5 times what the U.S. government spent (in current dollars) on the entire 1991 Gulf War.

We can also look at these numbers in a historic sense. If we take the American Revolution, the War of 1812, the Mexican-American War, and the Spanish-American War, and combine their costs and convert them to reflect current dollars, we still spent more on Halliburton's contract. And it gets even more interesting. If we take how much was spent on the Mexican-American War—about $1.8 billion in current dollars—that's roughly the same amount that the U.S. Army has found that Halliburton either provided unsubstantiated documentation of its billing or that it claims that Halliburton over-billed. Personally, I think we got a better deal out of the Mexican-American War. We got California, Utah, and Arizona out of that one, while we got some nice Hallibuton logo'ed towels out of this one.

Now, what's going on in Iraq with PMFs? Just as Iraq is the single largest commitment of U.S. military forces in a generation, it is by far the largest marketplace for the private military industry ever. The numbers dwarf any other operation.

There are more than eighty private military companies operating on the ground in Iraq. Depending on how you define the individuals within the industry, there are more than 20,000 private military contractors. That number is not concrete. For example, some people in the industry say that only 8,000 of them are armed and that only these should count; other people figure that 25,000 of them are armed or serving in some military capacity. It's a debate of definitions, essentially as to whether you include non-Western private soldiers, but the point is that it's quite a significant number of people.

To put the number of people in context, let's take the 20,000 figure, a lowball estimate which is the one I use, and which is, by the way, the figure that Defense Secretary Donald Rumsfeld reported to Congress. 20,000 is more than the rest of the coalition combined. That means, if we are being honest, that we have not assembled a "coalition of the willing" in Iraq, but rather a "coalition of the billing."

Now, the result is that these private military contractors are facing great dangers and they are bearing great costs. More than 280 have been killed in Iraq and over 3,000 have been injured. Those are Department of Labor statistics and they even think that it may be a low count. And those numbers don't go into the official count, because the Pentagon doesn't include private military contractors when it talks about the number killed in action in Iraq. It's a way of displacing some of the costs of the war.

What are the jobs that these private contractors are doing? Well, it's everything from logistics (the Halliburton-type roles) to training and advising (both of local Iraqi forces and U.S. military forces). For example, if you are a soldier deployed in Iraq right now, your last refresher course as you went through Kuwait to learn about the latest tactics would have been a war game that's operated by the company MPRI. MPRI claims that it has the people who formerly worked at Fort Irwin, which is where the U.S. Army created and honed its skills, the place where we created the best army in the world. So MPRI says, in fact, that it hired away the trainers from this military outfit, that it has the best military trainers in the world. Those people are not in the U.S. military anymore.

You also have, of course, contractors operating in the sexier, armed, tactical roles, the ones that people have paid the most attention to. They carry out three functions in Iraq: First, they guard key installations, ranging from construction sites to the Green Zone itself. At one military base outside Mosul, the perimeter has Iraqi security forces 360 degrees around it. But no one really trusts them, so we have our own security forces in the interior perimeter. 180 degrees of it is U.S. Army, 180 degrees is private military.

Second, contractors are guarding key individuals. For example, Paul Bremer and other significant figures were guarded by private military contractors who were equipped with everything including their own helicopters.

Third, contractors are escorting convoys, which is much more dangerous than any other role that is being carried out in Iraq.

So, when we take a step back and look at the Iraq war and write the history of it, we are going to have to include at least a chapter—or maybe more—on private military contractors. That's a major departure from any other history of war. We could not have waged the Iraq war without private military contractors. Simply put, if those 20,000 troops pulled out, the operation would collapse.

But contractors have also been involved in many of the most controversial aspects of the war; everything from the over-billing allegations; the incidents at Fallujah and the uprising that followed, and the tragedy of the Blackwater employees who were killed there and the subsequent lawsuit filed by the families of those employees; to Abu Ghraib, where the U.S. military found that 100 percent of the interpreters and up to 50 percent of the interrogators were private military contractors working for the Titan and CACI [pronounced "khaki"] firms, respectively. The U.S. Army found that 36 percent of the identified abuse incidents involved private military contractors, and they also identified six private military contractors as being individually responsible up to a potentially criminal level. As a footnote, of course, not one of those private contractor individuals has been legally prosecuted, punished, or imprisoned.

So what are the dilemmas that emerge from this? Obviously, they are pretty manifold. There are five that I identify as key.

The first are contractual dilemmas. This comes when you hire anyone to do a job for you, whether it is a plumber or a lawyer. On the one side, you are hiring them to get better skills; you hire them hopefully to save you money; you are also hiring them to take on a job that you'd rather not do, it may be distasteful, it may be messy, you may not have the time.

The flipside of when you hire someone—this is what academics call "principal agent dilemmas"—is that you lose control of what is being done, and so anything can happen. How do you find out if they are doing a good job or not? How do you know if they're over-billing you or working all the hours that they say? If you spend extra time checking up on that, then you don't get the cost savings that you wanted. This dilemma plays out in any kind of contract.

But what is happening now is that these dilemmas are moving into the sphere of warfare. Beyond the issues of "Oh, they over-billed us," in the military there is also the issue of command and control. That's where it really becomes worrisome, because you've got people operating for you that you don't have command and control of. That raises some interesting questions.

It gets even more interesting when you realize that, for cost savings purposes, military contractors are bringing in what are called third-party nationals. There is the issue of, "well, maybe if they are American their patriotism will kick in and they'll do the right thing." It may not. Patriotism doesn't always work as we all well know. But now, if you're bringing in a Bangladeshi or a South African, for example, you don't even have that thin claim of a patriotism element. Regardless of where they come from, that person can leave at any time. They are bound not by an oath but by a contract. They can leave if they get a better job offer. They can leave because Iraq isn't the paradise that they thought it would be and they just want to go home. They can leave because their wife had a baby and they want to go home and see it.

What you are doing is injecting discretion into a military operation. These are choices that soldiers don't have, and you are injecting that into your operation. That creates a worrisome layer of uncertainty.

The second dilemma is the fact that it's an open market. The private military industry is a global business that is effectively unregulated. There are very few regulations on who can work for these firms and who these firms can hire themselves out to. So, on the employee side, the vetting is not being done by our own military; it is being done by a private company that has different incentives in play.

Some of the people in the industry are, literally, the most talented soldiers in the world. For example, there are more former British SAS—that's their version of our Green Berets—in Iraq right now serving in a private capacity than there are SAS troops in the entire British military right now. There are also a number of former Army Delta Force soldiers and former Navy SEALs working in Iraq.

Many of these contractors are honorable men and women. It depends on how you cut it, but most of the people working in this industry are good people looking to do a good job. But there aren't the same hiring controls as in the military, so some bad apples get in there.

On the skill side, people get in who don't have the job skills to do the tasks. For example, the U.S. Army found that 35 percent of the interrogators working for the CACI Company at Abu Ghraib were not trained to be military interrogators.

There are also some people who we should be scared that they are there. For example, one of the individuals paid with U.S. taxpayer money was an individual who had openly testified to the Truth and Reconciliation Commission in South Africa that he had firebombed the houses of thirteen political activists. The reason that he admitted to that was so that he wouldn't be prosecuted for the planned murder of a number of political activists to which he had confessed. He was working for us in Iraq.

Another exemplary individual was former British Army. Sounds good, right? "He's former British Army; what's wrong with that?" There's a reason he was former British Army: He had been kicked out of the British Army and put in jail for cooperating with Irish terrorists. The British Army wasn't happy to find out that he had a job in Iraq and was armed with a submachine gun and an access badge to all our bases.

The other side of the employment issue is the question of who hires these companies. There aren't any controls there. Private military companies have worked for what we would describe as the "good guys": the UN, environmental groups, democratic countries, and even protecting endangered rhinos for the World Wildlife Fund.

They have also worked for some people that we might find questionable. For example, private military companies have been caught working for warlords, dictatorship, and two separate Colombian drug cartels. Those are some issues to be concerned about. There was also one contractor that provided what was called "the jihadi challenge." It was a military training course for young Muslim youth who wanted to join the jihad in Kosovo or Kashmir or Afghanistan. This was prior to 9/11.

The third issue to be concerned about is conducting public policy through private means. This is what is happening with outsourcing. We are taking public policy ends and trying to carry them out via private means. On the one hand, it's a new way to carry out covert operations when you want to escape oversight, and this is often how they are used—to get around legislative limits. Executive branches like this. For example, what's going on in Colombia could fall under this category.

It is also something to get around what I would call overt operational limits. Let's think about it this way: If we didn't have these more than 20,000 private military contractors in Iraq, what would we do? Well, we would have either not carried out that operation, or found a way to fulfill those functions. We would have had to either send more troops—meaning that the Secretary of Defense would have had to admit that he was wrong—or send more National Guard, which would have been pretty politically unpopular in the middle of the presidential campaign season. Or, we could have asked our friends and allies to send troops, which would have meant making compromises with them, and even then they probably wouldn't have done it. Or we could have used private military contractors as we did. And, by the way, they come with what businessmen would describe as a "positive externality"; if they are killed, wounded, or captured, it doesn't carry the same weight in the public mind as if soldiers are. They don't count in the same manner. That's unfortunate, but it's the truth.

The fourth issue is that of the legal gray areas. Basically, what we have done is moved companies into the military sphere, but we don't have the legal structures in place to deal with the transition. You can't court martial a private military contractor. The Supreme Court found that you cannot court martial a civilian.

International law is pretty much absent on this issue. They don't meet the definition of mercenaries, but we don't have another definition to define their status. In fact, one military lawyer said that they fall into the same legal gray area, the same legal vacuum, as the unlawful combatants at Guantanamo Bay. It is as if they don't even exist under the law. They are in another world.

Normally, when you commit a crime, the local state is the one that prosecutes you. If I go to Germany and shoot someone, a German court will deal with me. But the irony here, the twist, is that military contractors are not operating in normal states. They're operating in war zones, failed states. It is a big concern that we don't have the accountability structures in place.

There is an easy way to prove this. How many private military contractors have been prosecuted for any crime in Iraq? Just guess. Somebody call out a number.

VOICE: Zero.

P. W. SINGER: Zero.

Let's compare that to the number of U.S. troops. Well, over sixty U.S. troops have been court martialed during this conflict for all sorts of things, from the Abu Ghraib abuses to drinking on duty. But maybe that's not a fair comparison.

Let's compare the numbers to regular civilian life, because these contractors are not soldiers. Take a typical city in the United States that has the same number of people and the same per capita income as the private military population of Iraq: Westport, Connecticut. Beautiful little Westport, with a per capita income of over $70,000 per year, has a crime rate of twenty-eight crimes per 1,000 citizens. The PMF population of Iraq has a supposed crime rate of zero by contrast.

We have to ask ourselves what is going on here. Have we found in private militaries the Stepford village of Iraq, where human nature has been overcome? Or, do we have a gap in the law and a lack of political will to close it? I think we know which one it is.

The final dilemma I'll close on is the issue of the public versus private sphere. The rise of this industry raises some deep questions about the military itself.

Now, most people have focused on the first-level question: retention. What does private contracting mean for keeping soldiers in the military when we are paying companies to recruit soldiers out of the military? We are seeing this take place, for example, with the Special Forces, where the U.S. military is now compelled to offer bounties to keep our most talented people within the military. Right now the bonuses are over $100,000 for one of these soldiers to re-enlist. The reason for this is because people can leave and join companies that will pay them the same amount or more. So we're bidding against ourselves.

But there's another issue at play here. This is about the definition of the profession itself. The military is a unique profession. It is the only profession that stands at a remove from society. It is the only profession that has its own court system, its own laws; the only profession that has its own grocery stores and separate bases. The reason for this is because it is responsible for society's security. That's why we treat it uniquely. That's why we honor the military and have a different pension system. Perhaps we don't honor the military enough, but we do treat it differently than every other profession.

What happens when that profession starts becoming like any other profession, when people use skill sets that they've gained in the military for profit? It raises some fundamental questions that we have to explore.

I should say that this is not just something that we're dealing with in the United States. It is a global industry. The questions go beyond us and we need to pay attention to how other nations are wrestling with it as well.

I will end on this note: If I had come in here and given this talk five years ago, you would have gone to Joanne and said, "What crackpot did you bring in here? He sounds like a Hollywood scriptwriter. That's something out of a movie. That's not real." All these are real descriptions of what's happening now. The incidents that I cited were real. That's what's happening now. Where are we going to be five to ten years from now?

Thank you.

JOANNE MYERS: Truth is stranger than fiction, right?

Questions and Answers

QUESTION: I don't know the difference between these people and mercenaries. Could you explain that please?

P. W. SINGER: That's a really good question. "Mercenary" is defined in different ways, but at the end of the day it's the legal definition that is important. It's the same as using the term "murderer" ? you can throw the word around, but there is also legal terminology that defines it. Under international law, there is a legal definition of what it means to be a mercenary.

The problem is that it's one of the most poorly written definitions under the law. For example, if you are fighting in a civil war, then you are not a mercenary. If you are fighting on behalf of your own government, but not in that government's military as someone of the same nationality, then you are not a mercenary. You are considered to be in an organization, as opposed to being an individual, and so you are not a mercenary.

The result is, in fact, that no one really meets the definition of being a mercenary at the end of the day under the law. In fact, we haven't prosecuted anyone for being a mercenary in the last eighty years, except for one guy, and he actually fought for Fidel Castro, so I think there were obviously extra considerations operating on the side there.

So we have to go beyond the legal definition of being a mercenary and look at the person's motivations. What we are seeing with private military contractors could be defined as mercenary motives: using military skills for profit. In my opinion, if we take a look back in history, what we have here is the corporate evolution of the mercenary trade. Throughout history, there have been all sorts of times when for-profit entities have operated in war.

It's an interesting progression. In fact, the very word "company" comes from the term "the free companies." These were thirteenth century knights who banded together and fought for someone for payment in bread.

The very first joint stock enterprise?the first time that one could buy shares of stock in something?was an invasion of France in the late 1300s. The first legal contracts were structured by the condotieri, which were entities that fought in Italy in the 1500s.

What happened, though, is that with the rise of the state and patriotism and nationalism in the late 1700s, the idea of fighting-for-profit fell by the wayside and it went black market. That's really when the "Dogs of War" mercenary period started; the kind of people we saw in the Congo in the 1960s.

What's happening now is that the profession has gone from being black market to being open market again, and it has gone back from being individual mercenaries to being corporatized. You can buy stock in these companies. They have boards of directors.

Does anyone here own an S&P 500 mutual fund? You all then own stock in private military companies, because many of the entities within the S&P 500 own private military companies. Take MPRI, for example, the company that I referenced earlier. MPRI, which did the training of U.S. troops in Kuwait, also did the training for local armies in Kosovo, Bosnia, Croatia, Nigeria, Afghanistan, Colombia, and so on. That company was private; it was started by former U.S. Army generals. A couple of years back, it was bought by L3. L3 is a major company in the S&P 500.

QUESTION: Early in this war there was a great deal of discussion about body armor. Why wasn't body armor available to American troops? Given the enormous amounts of money being spent on organizations like Halliburton, how is it that body armor is apparently still not available to the people fighting this war?

P. W. SINGER: It's a really good question. It allows us to have fun with numbers, the Halliburton numbers, in a different way.

Let's say that instead of spending that money on Halliburton, we had spent it on things within the military sphere. Let's say we spent it on body armor. We could have bought 2.3 million sets of body armor, enough for every U.S. soldier to have it. If we count just the people fighting in Iraq, they could have had a different flak vest for every day of the week. It could have been like Paris Hilton's closet to them.

Let's say, "Okay, we're not going to spend it on body armor. We're going to spend it on up-armored Humvees." We could have bought more than 10,000 up-armored Humvees.

Everybody wants to talk about the Dick Cheney and Halliburton link. I'm not one of the conspiracy theorists; I don't think he sent the money in Halliburton's direction. But, to play with numbers, in the time since he became Vice President Dick Cheney has received $33 million in backdated pay from Halliburton. That was the exact amount that Michael Jordan made that year.

You also could have paid the salary of more than 20,000 U.S. soldiers with just that amount.

Another way to think of these numbers is to say, "Okay, we're not going to spend it on flak vests, we're not going to spend it on Humvees. Why don't we just pay off the Iraqis?" We could have written a check to every single Iraqi citizen for $560. Now, as you may know, at the time the going rate for attacks on U.S. forces was in the range of $50-70. We could have outbid the terrorists and insurgents by a factor of ten.

The body armor issue is interesting in another way, because we're talking about a market. Remember, these private military companies are competing with each other, which can be a positive or a negative. They all have their own structures of how they operate and what they say is the best way to operate. Some companies say that it is best to equip all their people with the heaviest of body armor and helmets. There are other companies that say the opposite. For example, there was a former Special Forces man from one company who said, "No, no, no. It's too constraining. I can't operate in a firefight with that level." So there's a dispute. There are different tactics, and no one knows which one is the best.

And then there is the question of: Is the profit motive in play? Take up-armored vehicles for example. Some companies say, "Go in an up-armored vehicle. Get it as big and as bold as you can, intimidating, with guns sticking out the side. Let the Iraqis know that you mean business." Other companies—and this is more the British companies—say, "That's so American. Why not get a beat-up old car and just drive on by, and they'll never know that you're even a target? Get an old Toyota and kick in the door and put dirt all over it." Which strategy is the best? There's a dispute between them.

Now, one of the companies did a really brilliant thing: it got unique access to up-armored vehicles. There are not a lot of these vehicles out there, but this company tapped into a source. They found a company that used to make up-armored vehicles for rap stars, because evidently rappers need protection too, on the streets of New York and Los Angeles. So, even though this military contractor only needed ten, it leased sixty. The reason was that then they could go around telling their clients, "Go with us because we've got the vehicles and the other guys don't."

So the question is: Are the companies who don't have the up-armored vehicles saying that it's safer to travel incognito because they actually believe it, or are they saying it because they couldn't find or afford the vehicles?

This vehicle armor issue goes beyond company doctrine; it's also something that will play out in the courts. Regarding the four guys who were killed in Fallujah—the private security contractors working for Blackwater—their contract said that they would be operating only in up-armored vehicles. The contract also said that, if they went out in a convoy, there would never be fewer than six personnel in the vehicles, allowing three per vehicle—two guys in the front so they could look every way, and one in the back who could look out the rear.

Well, as you may well know, only four guys were there and they were not in up-armored vehicles. The mothers of these men are suing the company for breaking the contract. And so there is a jury in North Carolina that is going to decide what's proper battlefield behavior in Fallujah. Interesting stuff.

QUESTION: I'm a journalist and I have a question about extracting information about these firms. I was embedded in Iraq twice and it's easy to see that KBR has the logistics contracts nailed down. They're pretty obvious about the work they do with Air Mobility Command, and they schlep both military personnel and civilians all over the place. MPRI does convoy-security training for Marines in Kuwait. They are easy to identify because they wear U.S. Army uniforms, except without rank insignia and the little "U.S. Army" patch. But for all intents and purposes they look like soldiers.

There are groups like Erinys and DynCorp and people I've never heard of, ex-Gurkhas, running around. How can one extract information from the obvious folks, but also the less obvious people, like DynCorp, who have little camps in U.S. military bases? Is it through Freedom of Information Act (FOIA) searches or requests? Is it through subpoenas? And how extractable is that information? Thank you.

P. W. SINGER: That's a really good question. It's great because it also lets me talk about some of the solutions we should think about.

The short answer is you can't FOIA them because the contracts are proprietary. Good luck. But you can FOIA government reports and the like. In the past, there weren't many of these reports; now you can get more and more of them.

One of the things to watch out for is the buck-passing, where one agency will say, "Oh, no. They were the ones who hired them. Talk to them." When you go to the second agency they'll say, "No, no, no. You've got to talk to the company." And the company will say, "Well, the contract says we can't talk to you, go to the agency."

You may recall that four years ago a missionary plane was shot down in Colombia. It was shot down by the Colombian air force, but the plane that coordinated the attack was a private military one. Congress wanted to find out more about it, but the State Department and the private company gave them the runaround.

What was interesting is that Congress got fed up, and so Bob Barr and Cynthia McKinney—about as far right and as far left as you can get—signed a joint letter to the State Department saying, "You've got to tell us what's going on." This is what I reference as an executive branch/legislative branch conflict, because it goes beyond partisan issues. That incident took place during the Clinton Administration, so it doesn't break down in the traditional right/left way that have grown worse in the last four years.

Now, what needs to be done about the dilemmas I have described? There are four things that need to go on here. They all stem, in a sense, from trying to remember our responsibilities: our responsibility to be not only smart business clients, to get the best of the marketplace, but also our responsibility as regulators, to be smart government.

The first step is better accounting. We need to know the real numbers. Tracking the numbers is something that too often doesn't happen.

For example, the Pentagon does not directly track the number of private military contractors that are employed. When Congress requested that number from them, they called me. I had an estimate. My point of discussing an estimate was to show how absurd the system is. There is no tracking.

The same goes for tracking the cost-plus contracts. If you let someone else collect the figures for you, then of course you are going to get a lot of cost overruns and the like. That's why you receive a bill at a restaurant?to make sure that the charges are accurate. In the case of these contractors, better accounting practices need to be mandated.

The second thing is that we need to decide for ourselves what are and are not our core functions: What is it proper to outsource and what is it improper to outsource? This runs deeper than questions of simply saving money. The very first question that companies like Cisco ask when they turn to outsourcing is, "What do I keep in-house and what do I turn over?" Because if a company turns over too much, then suddenly it finds out that there's no "there" there and, like Cisco, the company's stock crashes. Well, in the military world, "stock" crashing is even worse.

My personal take is that the old rules that the military had should still apply. Some in the military use the term "mission-critical functions." Other people describe these activities as "emergency essential." These are basically the functions that affect the success or failure of an operation, whether the battle is won or lost. Those elements should be kept in-house.

As for the more ancillary functions, sure, outsource them—and this is issue number three—only if it saves you money. Be a smart business client. Take advantage of the marketplace. Smart business clients seek out good competition, but 40 percent of Pentagon contracts with these companies were not competitive, so the government didn't even find out what the best price is for these private military services.

For example, the contract to hire private interrogators for Abu Ghraib prison originally started out as an information technology contract in 1998 with the CACI firm. Now, even if we were still getting information technology services from them in 2003, which was when they kept making additions and changes to the contract, the IT market had changed quite a bit from the way it was in 1998. Plus there's the issue of whether an IT contract is really the best way to determine the going rate for interrogators.

Another lesson of good contracting is that you have your own eyes and ears. If we look at a graph of the number of contracts, we see a big spike, but the number of people doing contract oversight follows a downward curve. For example, the Aegis contract is the biggest armed security contract in Iraq. The person that is responsible for oversight of that contract is responsible for fifty other contracts at the same time. (That statistic is from a GAO study that you can access.) He was also the fourth person to carry out that duty in two years. Aegis is actually frustrated with the system, because they are continually dealing with someone new and having to tell the person who is supposed to be overseeing them how to do his job. That's absurd.

In 2003, when much of this was going on, in the entire Coalition Provisional Authority (CPA) there were only fourteen people working contract oversight in Iraq. That meant that the Brookings Institution, where I'm employed, had more people doing contract oversight and budget oversight than the entire U.S. operation in Iraq. Brookings has an overall budget of just over $30 million, as opposed to $18 billion for the CPA.

The final issue of being a smart client is that if someone does you wrong, you return the favor. It's called "market sanctions." You fire people who cheat you. It's easy enough to see how this works to shape the market to your favor.

The fourth problem we need to solve is closing the legal loopholes. We need to start defining the status of these private military contractors under the law. It's important not only because of what happens if they commit a crime, but also because of the flipside: What happens if they are captured? They could be termed "mercenaries" by the bad guys, by our adversaries.

The legal questions are also important for U.S. forces. There was an interesting incident involving the company Zapata Engineering, which is from my hometown of Charleston, North Carolina. Zapata performed Explosive Ordnance Disposal (EOD) in Iraq. It blew up the old ammunition, explosives, and huge bomb stockpiles that Saddam had; an important job, something we needed to accomplish. The United States doesn't have enough people to do it.

Well, Zapata, as it was moving through Iraq, hired its own private military protection. A year after the incident at Fallujah in which the Blackwater employees were killed, the Marines there saw another convoy go through and—this is where the stories diverge—they say that they saw the convoy shooting at civilians. They also say that some of the bullets went their way. The Marines stopped the convoy and detained the Zapata guys.

Now, the Zapata guys say, "We didn't do it. It was another private military contractor convoy that did it. You stopped the wrong guys."

The stories diverge on another point. The Marines say, "We treated them responsibly, as detainees should be treated. We put them in a facility where we used to hold Iraqis, and then after three days we released them."

The Zapata guys say that they were beaten up while they were detained, that they sicced dogs on them. One of them says that there was a pile-on of people, and that the Marines conducting the pile-on were saying things like, "How do you like that contractor money right now?" Then they kicked them out of the country.

The legal questions are very interesting here. According to the Marines, if they stick to their side of the story, these Zapata guys were committing something for which Marines could have been court martialed. But the Corps couldn't figure out the legal questions, so all they could do was kick the Zapata people out of the country. They couldn't figure out the contractors' status. They could even have said, "You're illegal combatants; you're going to Guantanamo." It was up in the air.

The Zapata guys are upset about this. They are upset because their constitutional right to work was violated. Iraq's a great place to make money, and they are being prevented from going there. What right do the Marines have to kick them out of the country? You also have the abuse claims. A couple of the Zapata people have hired the same lawyer who worked on the FBI-Ruby Ridge case, and they are going to sue the Marines. This is the world we are in today.

QUESTION: There are some senators, good ones such as John McCain and John Warner, who are very interested in the military. Have they any interest in taking up this subject? Obviously, the military needs these contractors now, so I have to assume that any investigation would come after the conflict?

I'm also interested in the fact that at the end of this war, whenever it does end, we'll have 20,000-odd people roaming around looking for some employment.

P. W. SINGER: That's a really good question. On the legislative side, people were interested in different aspects of the contractor issue even before Iraq. For example, one representative focused in on it because the family of one of the missionaries killed in Colombia was from his district; but they were concerned only with the Colombia issue.

In Iraq, the issue that really sparked interest was not Fallujah so much as Abu Ghraib. For example, during some of the hearings, John McCain was particularly upset by this. Of course, the Democrats were also upset by this.

The problem is twofold. First, we live in a partisan age. If there is anything that is pointed out as wrong with the current system, that critique is viewed through a partisan lens, and people quickly retreat to their camps. One side seizes on the critique with glee and says, "Ah, I've got a hammer that I can bash the other side with"—the Halliburton stuff, for example. But then the other side says, "Oh, we don't like to be bashed and so we're going to defend it." So we haven't seen a lot of progress on that front.

Second, there is the stamina issue. A few loopholes in the law were closed regarding the status of private military personnel, but then the comprehensive issue of figuring it all out didn't get dealt with.

What is interesting is that when we gave a similar talk to Congress—and this points to how Congress works—the question from them was, "What committee deals with this?" That was where it broke down.

The system isn't set up well to deal with this issue. For example, if you are on the Armed Services Committee, you're there not because of service issues; you're there because you've got a base or a factory in your hometown. You've got the goods side that you want to protect; you're less interested in the services side. That's an issue to keep our eye on and worry about, because it's not being resolved.

Of course, there is also lobbying that goes on, through both political campaign donations and the other type of lobbying, which is handing out your card, former military guys glad-handing around Washington. The Blackwater Company hired the Alexander Group after Blackwater made the news because of the Fallujah incident. The Alexander Group is run by Tom DeLay's former chief of staff. Actually, Tom DeLay's wife, if I remember correctly, worked there as well. But this shouldn't surprise us. Cigarette manufacturers lobby. Ice cream companies lobby. Why wouldn't private military companies do the same?

Your other question was a really good one. What happens next? There are two ways to think about this: in the business sense and in the political sense.

In the business sense, these companies have to worry about the fact that they may be sitting on a bit of a bubble right now. Iraq was a place where anyone could set up a company—the barriers to entry were quite low—and money was coming in hand over fist. They were being paid, literally, in stacks of bills in some cases.

Well, that time is ending as the Iraqi government starts to step into the picture. The Iraqi government is becoming less and less excited about these guys moving around their country.

What we have to worry about is some Iraqi politician who decides to stand up to these outsiders, who wants to show that he's nationalist, that he's patriotic. He is going to pick, I believe, private military contractors before he is going to pick U.S. military folks. He will detain them and hopefully no worse, but it could worsen from there.

We have already had a couple of shooting incidents between Iraqi police and private military contractors. One was a full-fledged battle in Baghdad that involved heavy machine guns on both sides. So that's something to worry about. When that bubble breaks, a lot of these companies are going to go out of business.

The historic side to worry about—going back to the question of the mercenary trade—is that when big wars end, most soldiers go home, but some percentage goes off in search of work elsewhere. The conquistadors, who basically led the colonization of the United States, were out-of-work soldiers from the Reconquista in Spain. The filibusters who set up the banana republics in Latin America were out-of-work United States Civil War soldiers. After World War I, most people went to fight in warlord wars in China. After World War II, more than 75,000 ex-SS members ended up fighting in French Indochina and Algeria.

What we have to worry about here is what happens to these guys from PMFs. Where will they go to work? Some will go home, but some will have gotten a taste for the trade and may end up elsewhere.

Going back to the first question: If you are a company and you're sitting on a bubble, and suddenly the contracts aren't there, what do you do? If you're like any other company, you either downsize or you find new markets, and you maybe take contracts that you wouldn't have taken in the good old days.

QUESTION: I'm a student of history and a legal aide in this country. I would like to ask something on the political costs of using mercenaries in war. You mentioned the blurring of the boundary between the military realm and the civilian world. We have come to a point where it is more and more difficult for people to understand who their enemies are. Indeterminate captives were killed in earlier times. They were shot immediately when they were found without clear army badges or uniforms. Now we have thousands of these pirate-like guys with automatic machine guns, wearing dark glasses, and protecting people like Paul Bremer. This blurring of the boundary between the civilians and the military, you have described it from our perspective. But what is the perspective of the Iraqi people, for example, who now suddenly have no means to distinguish between people who are working for an NGO or perhaps for the United Nations? The United Nations marked a sanctuary once. In Iraq, the UN headquarters was blown up and people were killed. I think this is a result of using these mercenaries. This is one of the costs that cannot be put in terms of money, and it makes the work of the United Nations and other people much, much harder.

P. W. SINGER: You raise an interesting point. On the cover of my book is a picture of people working for MPRI. They are wearing U.S. Army fatigues. The only difference is they don't have the insignia. So one has to know a lot about the U.S. military and has to be close to them to tell the difference. There are other people running around Iraq wearing civilian attire. As you put it, it's confusing for Iraqis and potentially dangerous for NGOs.

You also asked about the UN side. Who do you think is going to protect the UN election monitors in Iraq? The UN will hire the same companies that we've been discussing.

There is definitely a blurring from the Iraqi perspective. In my understanding, the local civilians recognize private military personnel, but they don't say to themselves, "Oh, that was a private military guy that shot at me, so I'm not going to get angry at the United States about it. I'm only going to get angry about it when it's a U.S. soldier that shoots at me." No. It's all part of the "outsiders" to the local. They're all lumped together.

Now, we can flip that. As you put it, the adversaries don't care. It's another way the distinction has been blurred. They don't say, "Oh, well, you're an NGO worker. I'm not going to take you hostage." The "bad guys," so to speak, are also not respecting these rules anymore.

This opens up a really interesting question for humanitarian actors who, like the UN, because they still cling to the idea of the protection of neutrality. But other people aren't respecting that. For example, more Red Cross workers were killed in the 1990s than U.S. Army soldiers.

I'm finishing up a research study right now on the humanitarian community and private military contractors. We found more than forty instances of humanitarian actors that have hired private military contractors, ranging from international organizations to aid organizations that are nongovernmental. We interviewed thirty-seven people within the humanitarian sector on this. Only two were willing to talk publicly about it.

More and more groups are using these contractors. One incident is particularly striking. An international aid organization hired snipers in Iraq. The people in the international aid organization asked, "Since we are hiring these firms, what are our rules of engagement? As an NGO, an international aid group, what are our rules of engagement?" Their headquarters said, "Don't ask that question, because we don't have rules of engagement because we don't hire companies like that. Shhh!"

JOANNE MYERS: Well, P. W., you've again proved that, whether discussing children at war or corporate warriors, you have left us with many questions. I invite you all to continue the conversation. Thank you very much for coming.