12/13/2010 11:53 pm ET | Updated May 25, 2011

The Other Side of the Global PMC Industry

One thing that private military contractors always say about their industry is that it is a global industry. In other words, it is not just a national, but an international industry. And it is true that PMC's employ hundreds of thousands of people from around the world. From the viewpoint of providing jobs that is certainly a good thing. But it also has negative consequences.

To understand what I am talking about you need to look at a paper published two years ago. This is The Role of Nationality in the Private Military and Security Labor Force by Katherine McCoy, a Ph.D. student at the University of Wisconsin-Madison.

She points out that most of the debate on PMCs is on the shift from the public to the private sector. But at the same time we have seen a shift from a primarily domestic/national composition to a global/international composition. In a globalized world where the transnational flow of capital, goods, and labor is taken for granted this might not seem remarkable. But, in fact, public and private, and domestic and foreign, are two related but analytically distinct issues. She writes:

Granted, the former is a necessary condition for the latter, but the latter does not necessarily follow from the former. We can think of examples in which privatization did not lead to internationalization, or did so under very contested conditions. For instance, there is no indication that the privatization of prisons has dramatically changed the national composition of the prison labor force. On the U.S. political scene, we have learned that Americans seem to be more at ease with privatization than with internationalization in some realms, as was revealed in the outcry that accompanied revelations that a Dubai-based firm had been charged with port security in the U.S. What seemed to scandalize people was not the fact that some aspects of port security had been outsourced (that had happened prior to this incident), but rather who it had been outsourced to: a foreign company based in the Middle East. At least in the U.S. context, then, there appear to be some arenas that Americans trust to the market, as long as the market shows that it will buy--and more importantly, hire--American.

Of course, there are also cases in which internationalization exists without privatization. McCoy notes that "in recent U.S. history, as in much of the world, military labor has been both public and bounded by nationality or residency. Although there have always been noncitizens who served national defense-some at the highest levels-these workers were always "filtered" through both public institutions and some understanding of national belonging. Non-Americans who wanted to serve in the U.S. armed forces had to live in the U.S. and demonstrate some loyalty to the country. In the past and the present, military service was viewed as one way of turning people into Americans, both symbolically and legally. The incorporation of non-citizens into national defense projects therefore took on a "melting pot" quality familiar to the U.S. national experience overall."

This gets spun both ways. Some critics of PMC imply that an international military workforce is a chaotic mess of profiteers from throughout the world. Without the constraints of a domestic military labor force, contractors from around the world are free to peddle their trade anywhere, at any time, with no accountability. Conversely, some industry advocates also promote the idea that the market is blind to national differences, yet present this in a positive light, as evidence of an integrated, professional, global workforce. This viewpoint makes PMC the equivalent of equal opportunity employers

McCoy argues that:

Against both of these depictions, I argue that the internationalization of private defense creates neither a harmonious global brotherhood of military contractors, nor a shapeless, unidentifiable mass of global worker bees. Nationality is not irrelevant in the global, privatized military market. Rather, it takes on a different function and meaning.
In the privatized military market, nationality is no longer an exclusionary criteria. In theory, if not in practice, the market is open to workers of any and all nationalities. Rather than being an exclusionary criteria, nationality becomes a stratifying feature of the market. Like gender, skill sets and work experience, nationality helps to place workers along a labor market hierarchy.

Where are all the PMC employees coming from? In short, almost everywhere. Obviously, many come from countries with massive military structures such as the United States, Britain, Israel, and South Africa. Yet, smaller, independent companies have cropped up in other areas, including Latin America, South Asia, and the Middle East. Often these companies serve as subcontractors for the major companies, but sometimes they also handle contracts directly. In addition, many of the industry leaders have created both domestic and offshore subsidiaries. Both subcontractors and subsidiaries are likely to spring up in or around sites of operation, such as the Middle East.

Six years ago the U.S. firm, KBR, has employees from 38 countries in Iraq. According to McCoy fourteen different countries are specifically listed as recruiting sites, including such diverse places as Nepal, Peru, Bulgaria, and the Ukraine.

It is not always well appreciate that there is hierarchy of workers in the PMC industry. But national distinctions are built into the very structure of the PMSC market.

For each contract, the workforce is categorized based on an individual worker's nationality relative to the sponsoring country and the country in which he or she operates. "Ex-pats" are nationals of the sponsoring (or client) country. Examples would include American or British contractors working for their respective governments in Iraq. "Host country nationals", or HCNs, are nationals of the country in which a mission is taking place, such as Iraqi contractors in Iraq. "Third country nationals", or TCNs, are contractors who are neither from the country that is sponsoring the work, nor the country in which a campaign is being carried out. An example would be Filipinos working under contract for an American mission in Iraq.

The distinction of who is considered a TCN is based entirely on the contractual relationship, rather than on the broader military context. For instance, in the Iraq campaign, some TCNs came from countries that are part of the "Coalition of the Willing", while others come from countries with no official participation in the campaign. Filipinos who were contracted by the Philippine government would be considered "ex-pats", while Filipinos contracted by the American government would be considered TCNs.

Percentages, of course, vary, depending on time and place but as a general rule only a small share of the workforce is composed of ex-pats.

Ex-pats occupy the top level of this workforce. They are more likely to receive better work and higher pay. To get this means that ex-pats usually have claim to high-risk military work such as running Personal Security Details in Iraq. This work is both highly dangerous and highly paid.

The reasons ex-pats get this work are that

First, as co-nationals of the sponsoring country, they are assumed to be more trustworthy and a lower security risk than foreign nationals. This is partially based on differences in accountability and information, and partially based on pre-existing and continuing notions of patriotism and loyalty. While governments generally have less information on security contractors than they do on their own uniformed personnel, they are in a better position to vet ex-pat contractors than HCNs or TCNs. This is because more complete criminal history data is available on ex-pats than on other foreign nationals. Another reason why ex-pats are favored for most high-end jobs is due to the perceived value of their training. Most of them were trained by the public forces (police and military) of their home country prior to joining the private sector. The value of this training is easily assessed by client countries, giving ex-pats a distinct advantage (except, of course, in cases in which a government knows that its own military training is subpar). This also means that workers from any country with a strong military enjoy labor market advantages, regardless of which state is hiring. This is in fact the case, with Americans, Brits, Israelis and South Africans enjoying elite status. The nature of private military work means that there is almost always a guaranteed market niche for host country nationals, or HCNs.

The nature of private military work means that there is almost always a guaranteed market niche for host country nationals, or HCNs. Host country nationals are a plentiful source of labor and one that is familiar with the local context. Because they do not demand the same expenditures in terms of transportation and housing, they end up being cheaper to employ than ex-pats or, most likely, TCNs. Some missions are particularly geared towards the hiring of HCNs, such as jobs as translators or guides. Missions that require training local military or police forces are also apt to make widespread use of HCNs. Client governments might encourage the use of HCNs for diplomatic and strategic reasons, insofar as their employment helps to create pockets of loyalty to the success of the mission on the ground. Thus, HCNs are valued for their availability, their local knowledge, and their success to the mission overall.

But there are also political and market-based constraints on the use of HCNs. Because they are part of the local population, HCNs can be considered a security risk and are barred from certain types of work, such as guarding prisoners or even some positions that require access to client state bases and installations. According to preliminary PMSC industry figures, a smaller percentage of HCNs are authorized to carry weapons than Furthermore, as nationals of the country in which a mission is taking place, HCNs are potentially the most accountable of all three groups to the legal system. This may be viewed by some employers as a drawback to using HCNs in an industry that currently encompasses both risky behavior and low political accountability.

Thus, while host-country nationals are virtually guaranteed some role in any missions that take place in their country, those roles will always remain secondary to those of ex-pats, and occasionally to those of TCNs. Overall, the role of HCNs is circumscribed by both strategic security concerns, and the exploitability and control of the workforce, as represented by HCNs' ability to demand labor rights, and their status of being subject to local legal institutions.

It is TCNs however who are at the bottom of the ladder. As McCoy details, they make approximately 1/10th of what ex-pats earn for similar work. Even these wages can be misleading, since many TCNs come to their job only after paying a "recruitment fee" that can be several thousand dollars. This has led to cases in which TCNs leave their one-year contracts in Iraq by just breaking even, or face the possibility of leaving in debt if they decide to quit before the contract period is over. Even the process by which TCNs arrive in a war zone is uncertain and sometimes questionable. For instance, some TCNs were apparently not told that they would be working in Iraq or in a conflict zone at all. Before departure, they were promised work in hotels or other standard civilian jobs in Kuwait. Once they arrived in Kuwait, however, they were offered no other option but to follow their employers to Iraq. Other TCNs report knowing that they would be working in Iraq, but finding the nature of their work changed upon arrival. Rather than working as static security guards in secure areas, they were instead expected to perform more active military functions. The hiring of TCNs also appears rife with other contract irregularities, including employers withholding contracts until the last minute before (or even during) deployment; contracts that differ significantly from the verbal understanding agreed to beforehand; and contracts that violate basic labor and other rights.

Nor does it stop there. Once on the ground, TCNs have reported horrible working conditions, including long hours and inadequate food, water, and shelter. Many employers appear to keep TCNs in a state of virtual enslavement or indentured servitude by, for instance, confiscating workers' documents so that they cannot leave the area. This practice was so pervasive that in 2006 the U.S. government issued a memorandum to all its contractors and subcontractors, demanding an end to passport confiscation, among other forms of exploitation and abuse. This memorandum came on the heels of international pressure from countries such as India, Nepal, Pakistan and the Philippines, which complained bitterly of the ill-treatment of their citizens under contract in Iraq. In a few extreme cases, TCNs attempted to flee across war torn Iraq in order to escape abusive employers.

Mistreatment of TCNs occurs because these workers occupy the lowest rung on the contracting ladder, and are removed from the U.S. government through several layers of subcontracting. Contracts are initially awarded to a major U.S.-based PMC, called the "prime contractor" or simply "prime". From there, the prime might pass the contract along to a U.S.-based subsidiary or an international affiliate. The contract is then subcontracted to a non-U.S. company, with perhaps one more subcontractor involved at a local level. In such cases, TCNs are hired primarily because they are an abundant source of cheap labor. No particular military skills or contacts are required; the main requirement is the ability to work long hours at low pay.

Aside from differences in pay - the PMC version of the economic theory of comparative advantage - there are more insidious impacts. Differences in nationality can be directly manipulated for political ends: evasion of Congressional personnel caps and the selective use of TCNs for certain high-risk tasks. For example, Congress often enacts troop caps to curtail a mission, yet such troop caps do not apply to private contractors. In some cases, Congress has explicitly enacted caps for both U.S. troops and contractors. In such cases, however, contractor caps apply only to ex-pats, and not to TCNs or HCNs. In cases such as the U.S. mission in Colombia, TCNs have been used to comply with the letter of the law, while maintaining the ability to exceed the Congressional caps.

Even worse, TCNs are also used more selectively to minimize the outcry at home over
contractor casualties. While it is not exactly news that overall, contractor casualties tend to have less of a political impact than troop casualties, the deaths of American contractors have far more impact than non-Americans. McCoy found that:

If we examine the breakdown of contracted forced by nationality, a dramatically different picture emerges: only 41% of the deaths are American (42% from the North American continent), while 18.6% are from Asia, 18.9% from Europe, 13.3% from the Middle East, 5.5% from Africa, and the remaining 0.7% from Latin America. Thus, internationalization helps to further dilute the political imprint of a military campaign within the host country, by outsourcing part of the sacrifice of war not only to the private sector, but to foreigners. This reduces the perceived costs of war within the sponsoring country, and potentially allows the campaign or conflict a longer political lifespan.

Of course, this is all widely understood, if not publicly voiced, within the PMC sector. Perhaps it is partly due to these systemic inequities that PMC advocates can make their claims of presumed cost-effectiveness. To their credit some companies and trade associations, as well as national laws, and the recently signed International Code of Conduct, have provisions that address, at least in part, these issues in an attempt to remedy these problems. Enforcement, however, is another issue.

It bears emphasizing that McCoy is not making a case against or for PMC using people from other countries. But she believes it does pose questions worthy of further study. For example, is there any inherent risk in creating a highly mobile, largely unregulated, and often exploited set of workers valued for their lethal use of force? What are the effects of this type of military labor force on the home countries of the workers? Does the use of military and security workers on the international market pose a threat to recruiting states, after a campaign is over and these "vets" return home? Or does the existence of such an international market help to stabilize recruiting countries by removing potentially problematic, under-employed people from the national scene, where they might otherwise become involved in criminal activity?