* Iraq, Afghan withdrawal may mean leaner times for
* Shift to guarding private sector's oil fields and mines
* Some see big shakeout in private security industry
* U.N. member states wary of private security forces
By Peter Apps, Political Risk Correspondent
WASHINGTON, Oct 21 On a rooftop terrace blocks
from the White House, a collection of former soldiers and
intelligence officers, executives and contractors drink to the
international private security industry.
The past decade - particularly the U.S.-led wars in Iraq and
Afghanistan - provided rich pickings for firms providing private
armed guards, drivers and other services that would once have
been performed by uniformed soldiers.
But as the conflicts that helped create the modern industry
wind down, firms are having to adapt to survive. They must also,
industry insiders say, work to banish the controversial image of
mercenary "dogs of war" that bedevil many firms, particularly in
"This industry has always gone up and down," Doug Brooks,
president of the International Stability Operations Association
(ISOA), told Reuters on the sidelines of its annual conference
in Washington. "What we're seeing now is that it is becoming
much more mature - and much more responsible."
The free-for-all atmosphere that pervaded the industry,
particularly in the early years of the war in Iraq, insiders
say, appears gone for good. A string of high profile incidents -
often involving armed private guards firing on sometimes unarmed
Iraqis - trashed the reputation of firms such as Blackwater, a
Virginia-based firm since renamed several times, as well as the
Members of the ISOA - which include some but not all of the
major contracting firms as well as smaller players - subscribe
to a code of conduct that they say helps identify responsible
Despite these efforts, industry insiders and other observers
say quality remains mixed. Some firms providing armed guards for
merchant ships passing through the Somali pirate-infested Indian
Ocean, for example, only hire elite personnel who have served in
the Marines or special forces. Others, however, have a
reputation for being less discriminating and for unreliable
staff and weapons.
In the aftermath of last month's attack on the U.S.
diplomatic mission in Benghazi, which killed the U.S. ambassador
to Libya and three other Americans, critics have seized on the
hiring of a little-known British private security firm now
accused of providing inadequate protection at the mission.
The clear industry aim is to distance itself from groups
such as that led by former British soldier Simon Mann, who was
captured in 2004 by authorities in Zimbabwe as they apparently
headed to Equatorial Guinea to mount a coup.
The word "mercenary," Brooks makes clear, is simply taboo.
"Calling private security contractors mercenaries is clearly
derogatory and serious journalists and academics don't use the
term," he says.
The most vulnerable firms, many in industry say, may be
those who have relied on ongoing U.S. military work that is now
drying up as the Pentagon "Operational Contingency Allowance" -
the additional funding earmarked for the wars - tapers off.
At its peak, the U.S. Commission on Wartime Contracting, a
bipartisan legislative commission established to study wartime
contracting in Iraq and Afghanistan, estimated there might have
been as many as 260,000 contractors in the two countries.
TIDE GOING OUT?
"At the moment, everyone is looking for work that is not
OCA-funded," one industry executive told Reuters on condition of
anonymity, saying he expected an era of mergers and even
bankruptcies. "It's going to be like when the tide goes out at
the beach and you suddenly find out who has been naked."
New Pentagon priorities, many believe, will provide fewer
openings for traditional private military contractors.
Washington's strategic "pivot" to the Asia-Pacific region will
involve mainly warships or uniformed Marines, with little need
for extra hired muscle.
Companies that take a broader approach and also provide
logistic, intelligence and other functions, however, could have
a much better decade.
"If your definition of a private security contractor is only
someone with a gun at a checkpoint in Afghanistan, then yes, you
may be seeing a decline," says David Isenberg, an adjunct
scholar at the Cato Institute in Washington.
"But if your definition is of private contractors performing
tasks that would once have been done almost exclusively by
government and military, it's a very different picture."
When it comes to conventional security, many in the industry
believe the real growth will come from serving the private
sector - particularly the oil, gas and mining industries.
Even with U.S. troops gone from Iraq and the number of
government contractors down, some companies say they are finding
strong demand from energy firms for protection, particularly
around Basra in southern Iraq.
"We are as busy as ever and the need has never been
greater," said Pete Dordal, senior vice president at GardaWorld,
a global risk management and security services firm. "I don't
want to say it's a gold rush, but business is very good."
Private security firms, insiders say, evacuated the vast
majority of the thousands of foreign nationals plucked from
Libya as its civil war erupted early last year. Most were
contracted by other private firms, although governments also
used them heavily. London-based Control Risks told Reuters last
year that China hired it directly to fly hundreds of its
nationals out by airliner.
Some in the industry believe the number of contractors in
Afghanistan could even rise with the planned departure of all
U.S. combat troops in 2014, as mining companies exploit largely
untapped mineral resources.
It's a similar picture in Africa, where even in war-torn
Somalia, a handful of companies are setting up shop. They often
work with local tribes and other groups to safeguard visiting
journalists, business representatives and prospectors.
Focusing on finding reliable local staff, some say, may
ultimately prove both cheaper and more reliable than foreign
hired guns. In Libya, some energy firms long turned to local
desert tribes to protect their facilities - a tactic that proved
remarkably effective during last year's civil war after foreign
security staff were swiftly withdrawn.
The trick may be to avoid having grandiose ambitions.
A handful of British firms in particular have made millions
from providing on-board protection teams for Indian Ocean
shipping. But those who have tried to go a step further and
start their own private navies - hoping to escort merchant ships
for cash - have struggled to find sufficient funding.
Within Somalia some credit the hiring of private contractors
with Gulf state money to bolster the Coast Guard of the
independent enclave of Puntland as being behind recent drops in
pirate attacks. But it proved so controversial that funding was
eventually pulled, leaving behind half-trained local fighters
that some worry could prove a regional security threat in their
Private contractors are increasingly central to operations
such as the African Union's AMISOM peacekeeping mission in
Somalia, performing roles such as bomb disposal, logistics and
technical support. ISOA and some experts argued they could do
much, much more.
The few dozen foreign contractors from the now-defunct
British firm "Executive Outcomes," together with the hundreds of
local fighters they trained, are often credited with turning the
tide in Sierra Leone's 2001 civil war.
But after years of discussions at the United Nations, few of
the world's governments appear enthusiastic about the idea of
private security firms becoming the norm.
"In some places, contractors might be more effective than
some of the troops from contributing nations," said Edmond
Mulet, U.N. Assistant Secretary General for Peacekeeping
"But the U.N. is simply the sum of its member states and
some of them are opposed to the use of contractors in some
roles," he told the conference.