11/13/2012 06:08 pm ET | Updated Jan 13, 2013

How Do You Handle 70,000 Unemployed Afghan PSC? Very Carefully

Admittedly, just one of many factors affecting Afghanistan, but an important one nonetheless, is the state of its substantial private security contracting industry, which is made up of tens of thousands of Afghan employees, mostly armed guards.

Bear in mind that 2014 is the deadline for Afghanistan assuming responsibility for its own security. This is a date the whole world has an interest in because either Afghanistan will be a more or less stable country or it will lapse back into the chaotic and destabilized state it was after the Soviets left in 1989, and we all know how that turned out for the world.

Many people are aware that the Afghan government and International Security Assistance Force (ISAF) are transferring private security company (PSC) operations to the Afghan Public Protection Force (APPF), a new Afghan government force, but substantial uncertainty, to put it politely, and skepticism, to put it more bluntly, remains about whether APPF will be able to handle the job, and, perhaps more importantly, how it will absorb the commanders and former fighters who currently provide the bulk of PSC workforces.

It takes no great imagination to realize that the existence of a huge armed force which will largely be unemployed is a significant problem. It is also part of a larger problem of demobilization and disarmament that Afghanistan will face with the projected cuts to Afghan National Security Forces (ANSF) and the potential reintegration of former insurgents under a future peace deal.

Just how big a problem this is and what to do about it are questions that policymakers need to work on now. Fortunately, a paper on this subject was published last month by the Center on International Cooperation at New York University, titled "Contracting the Commanders: Transition and the Political Economy of Afghanistan's Private Security Industry" and written by Matthieu Aikins, which provides useful insights.

Unlike other analysts who emphasize a nation-building concept that has thus far influence the U.S. and International Security Assistance Force troops, that emphasizes institution and capacity-building, Aikins argues:

"The country's near- and medium-term stability is less contingent on institution-building than it is on the political settlement between Afghanistan's diverse and fragmented political networks and powerbrokers. Only a political settlement can create the stable expectations required to build institutions. If the current elite alliances that have underpinned stability in Kabul and elsewhere are undermined by the effects of transition, the country risks further violence and political crises, regardless of the strength of the ANSF or civil service."

Think of the PSC industry in Afghanistan as the canary in a coal mine. It is a bellwether of potential trouble ahead. Aikins writes:

... is so deeply enmeshed with the political economy of Afghanistan's pre-existing commander networks [a nice euphemism for warlords]; that is, international spending has become implicated in political settlements by empowering certain informal armed groups and commanders. Transition, and the accompanying drawdown in PSC employment, will affect these settlements in complex and potentially destabilizing ways.

Make no mistake; the PSC industry in Afghanistan is enormously powerful. Although before the 2001 invasion there were essentially no PSCs in Afghanistan, today they are widespread. Like Iraq, they are linked to a privatized model of military and development contracting in a highly insecure post-invasion environment.

Aikins notes:

In Iraq, however, PSCs were typically international companies that employed third-country nationals, mostly from South Asia, for their guard forces, along with a small managerial elite of Western security contractors. By contrast, in Afghanistan PSC guards are overwhelmingly Afghan -- some 95% of U.S.-contracted PSC staff in 2010.

How many potentially unemployed guards being talked about?

Current estimates of the number of armed guards employed by the PSC industry in Afghanistan range from an internal ISAF survey that counted 31,250 current and projected guards directly employed on military contracts to the figure of 70,000 cited by industry and research groups.5 These figures suggest that the PSC workforce today is at least roughly equivalent in size to the pre-surge ISAF force. The scale of the PSC industry's Afghan workforce is also matched by the degree to which Afghan powerbrokers and commanders are involved in its ownership and operation. Relatives of President Karzai, Vice President Fahim, former Defense Minister Wardak, Sighatullah Mojadidi, and former Senate Speaker Abdurrab Rasoul Sayyaf have all owned PSCs. And at the provincial level, many powerbrokers owe their ascent to resources and armed groups they've accumulated through the industry.

Also, bear in mind, that in contrast to Iraq where the PSC put more emphasis on actively defensively to protect their clients the Afghan PSC have operated in more direct combat type operations:

For example, in the first half of 2010, there were more U.S.-employed PSC employees killed than U.S. soldiers (235 versus 195), and in relative terms PSC employees were 2.75 times more likely to be killed in combat.7 These figures, which account only for registered PSC personnel, coupled with high-profile incidents in which PSCs engaged in serious combat-- such as one incident in Helmand in which the Taliban attacked a massive project employing 1,200 guards, killing 21--added to the perception that the war was being fought as much by a chaotic and unaccountable army of PSC contractors as it was by the United States or NATO.

A third important fact to keep in mind is that PSC jobs, while dangerous, have also been very lucrative:

On the military side, between 2006 and 2011, the U.S. presence in Afghanistan quintupled from 20,300 to some 99,800 troops deployed in-country, along with 90,339 U.S.-employed contractors. The surge in troop levels was matched by a surge in PSC employment. In September 2007, there were 3,152 PSC companies registered as being employed by the Department of Defense, a number that had risen by 16%, to 3,689, in December 2008. From December 2008 to December 2010, however, U.S. employment of PSC guards rose by more than 400%, to 18,919.14 There are no reliable figures for what portion of development spending went toward private security. One study cited an estimate of 10% to 20%, which though high may have been true of contracts in high-risk areas.15 The United States reports direct expenditures of $3.8 billion on guard services in Iraq and Afghanistan from 2002 to mid-2011, though this figure does not include all costs for guards paid by numerous subcontractors, including security for supply convoys and development projects.

The transition from Afghan PSC to the APPF has been going on for nearly five years. You can read Aikins' paper for the details. He also notes:

Under the new regulations, companies contract directly with APPF for private security services, with APPF charging a 20% overhead. While companies typically will transfer their existing guard force, along with its weapons, to the MOI, APPF will assign a specified number of its own officers to the project, who will be responsible for managing personnel.

Within APPF, a sharp distinction is made between PSC guards who join the APPF, with three specific "guard ranks" reserved for them below the standard MOI rankings of regular APPF staff, a distinction that is likely to increase PSC guard force reluctance to join the news parastatal. All APPF guards will be enrolled in biometrics and their weapons licensed with the MOI.

By the end of March 2012, eight Risk Management Companies (RMC) -- the new name for PSC -- had been registered, out of the 45 previously licensed PSCs. International RMCs must pay a $120,000 licensing fee and deposit a $400,000 bank guarantee. These figures are halved for local RMCs, and a number of international PSCs reportedly were using local partners as a front to reduce costs and attention from the Afghan government -- a reversal of the earlier cloak on Afghan ownership, and an indication of how much the main source of regulatory pressure is now the Afghan government, rather than international oversight.

APPF's capacity and control increases but according to Aikins:

"The question remains, however, whether APPF will co-opt these groups, or vice versa -- that is, whether the absorption of major powerbrokers and their patronage networks into APPF will corrupt the institution, given the powerful financial interests involved in maintaining the status quo in areas where local strongmen reap large cuts of international spending."

As Aikins sees it, the ongoing handoff of security responsibilities from U.S. and ISAF forces to the Afghan government could foster greater reliance on Afghan PSC, with some negative consequences. For example:

As part of the plan for security transition, U.S. and ISAF Special Forces are currently supporting local militias in Afghanistan under a variety of programs, most notably the Village Stability Operations (VSO) platform that establishes and trains Afghan Local Police (ALP).41 The use of PSCs by Special Forces and the CIA in similar roles, however, is less well known. Initially ad hoc arrangements with local militias, these would become known as "Campaign" forces among Afghans, and were used both for base defense and military operations. Their financial arrangements would later be formalized as PSC contracts, in order to provide them a space outside of the ANSF reforms that were undertaken beginning in 2005. The PSCs belonging to Special Forces are known by the general military term "Afghan Security Guards" (ASG), and there are believed to be seven CIA-sponsored militias, including the Kandahar Strike Force, the Khost Protection Force, and the Paktika Defense Force. The Campaign PSCs differ from regular PSCs in that they are used in military operations and represent a deliberate attempt to influence the local political landscape by bolstering allies and undermining hostile actors. In this, they resemble the militia programs, but they are not integrated, even in name only, under any sort of Afghan government control.

If, as U.S. policymakers have suggested, Special Forces and the CIA will take the lead in the counter-terrorism mission in Afghanistan post-2014, an archipelago of small VSO-type bases would mean a widespread diffusion of local PSCs, in arrangements that would likely overlap with the militia program. Yet it is unclear how Special Forces and CIA-backed PSCs will be integrated into the APPF program. Under the APPF strategy, ISAF has been given an additional extension through to March 21, 2013, to use PSCs. However, there are currently no known plans to transfer the Campaign PSCs into APPF. Continued use of PSCs by the U.S. military past the 2013 deadline will likely lead to further crises in the relationship between Afghanistan and the international community.