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The Global Expansion of Pmscs: Trends, Opportunities, and Risks

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The Global Expansion of Pmscs: Trends, Opportunities, and Risks The Global Expansion of PMSCs: Trends, Opportunities, and Risks Ori Swed, Texas Tech University Daniel Burland, University of Saint Mary The past two decades have been marked by a rise in the outsourcing to private professionals of coercive violence functions that used to be the unique privilege of government military or law enforcement personnel. This outsourcing trend took place across the globe and was commissioned by states and non-state actors alike. It took different forms, from mercenaryism, through local tribes and militias, to legal contracts with international companies. The rise in privatized security and military functions also introduced an increase in regulation and inspection of this type of exchange. The gradual development of accountability mechanisms created some degree of standardization, as well as measurement tools, for states and the international community that use or monitor this type of service. This trend has pushed the type of engagement that might be identified as mercenaryism into a more regulated and standardized realm, de-facto, offering a pathway toward legitimization for practitioners and clients. This development corresponded with a worldwide increase in the number of private military and security companies (PMSCs). In this report, we use a dataset of PMSCs produced by the Peace, War, and Social Conflict Laboratory at Texas Tech University (PWSCL-TTU) to explore past and current trends in PMSCs’ proliferation across the globe. We look at the type of services offered and the different types of privatization demanded by different clients. After explaining the trends, we examine the challenges and opportunities they present. The PWSCL-TTU dataset covers over 1700 PMSCs worldwide, and accounts for the types of services they provide, their headquarters locations, and the dates of their foundation and (if applicable) their termination. Services are not restricted to direct combat and security functions, but include combat support and combat service support as well. Termination may take the form of mergers or acquisition by other companies. The dataset covers PMSCs operating from the year 1818 until 2016. It defines a PMSC as “any company which offers an array of services which were traditionally or are contemporarily performed by the military to support and conduct combat operations, and which could be and would have to be performed by the military if a contractor was not forthcoming.” The dataset includes only PMSCs that operate internationally. The dataset does present a set of limitations that can influence the interpretation of the results presented below. Therefore, we advise the reader to take these limitations into account when considering the figures in the trend data section. First, the dataset does not include PMSCs that operate on the national level. This sub-sector is considerably larger than the sector of PMSCs that operate internationally. This means that a decline in a trend can be interpreted as the result of an active market gravitating toward domestic providers rather international ones; it may not at all indicate a general decline in PMSCs. Secondly, it takes time for PMSCs to get contracts abroad and to be recognized as such in open sources. Consequently, a decline in a trend can indicate that the new PMSCs had not yet broken through as of 2016, the ceiling year for the dataset, or that they did not receive media attention that allowed the researchers to clearly detect their presence in the market and incorporate that into the dataset. Trends through 2016 Outsourcing military and security functions in the form of legal contracts for company services rather than outlawed interactions has become more prevalent since the end of the Cold War. Figure 1 illustrate this trend, showing a gradual increase in the total number of PMSCs worldwide. The post-Cold-War era opened the door for private entrepreneurs to market their security expertise more widely. The successful cases of Executive Outcomes in Sierra Leone and other regions in Africa, or MPRI and Brown and Root during the Kosovo War, opened the door for further privatization. The wars in Iraq and Afghanistan accelerated this trend by making extensive use of PMSC operatives. In those two conflicts the United States and its allies extended their reliance on PMSCs, creating an opportunity for new actors. Figure 1: The Number of PMSCs Across the Globe, By Year 1400 1200 1000 800 600 400 200 0 198019821984198619881990199219941996199820002002200420062008201020122014201620182020 In 2003 the number of new international PMSCs created almost doubled, rising from 38 new companies in 2001 to 79 new companies in 2003. The wars in Iraq and Afghanistan were the main engines of this trend. Throughout those conflicts the number of private military and security contractors was equal to or exceeded the number of American soldiers. Given that the number of American soldiers exceeded the 200,000 mark at some points during the Iraq War, PMSC manpower on the ground have accounted for more than double that number. The conclusion of the Iraq War brought with it two conflicting trends. The first was another influx of new PMSCs in 2011, when the dataset shows that 120 new PMSCs were created. Yet in the following years, the international PMSC market started shrinking, as many companies were terminated or merged. Figure 2 illustrates the balance of PMSCs' creation with their termination across the 20th and 21st centuries. It shows that, while the number of new companies created increased over time, the number of PMSC terminations, mergers, and acquisitions increased as well. Since 2011, the balance of PMSCs’ creation with their termination has taken a negative turn, indicating a shrinking of the international market. Figure 2. The Creation/Termination Balance of PMSCs Over Time 120 100 80 60 40 20 0 1900 1920 1940 1960 1980 2000 2020 -20 # of pmsc termination year #of pmsc acquired year #of pmsc merged year total pmc growth per year Paradoxically, at the same time that this shrinkage in the overall international market is occurring, we also see the expansion of PMSCs to different regions across the globe. The 2000s boom of PMSCs was concentrated mostly in the U.S. and the U.K., which together account for over 55% of PMSCs across the sample. The successful use of this form of outsourcing, along with the accompanying legal and regulatory frames, legitimized PMSCs and opened the door for the expansion of the industry and the creation of new local PMSCs in different countries. Figure 3 illustrates this trend, showing in gray and black those countries that hosted PMSCs’ main headquarters across the globe. It shows that 81 countries host at least one PMSC main headquarters within their territory and use its services. These countries represent about 41% of all the states in the global system today. PMSCs’ headquarters are located primarily in the countries that are part of the Global North, namely, North America, Europe, Russia, Australia and New Zealand. The PMSC trend is led by four countries, those marked in black in figure 3: the United States, the United Kingdom, China, and South Africa. Together these four countries account for about 70% of the entire industry. Figure 3: Global Spread of PMSCs Headquarters Experts and scholars recognize the versatility of the PMSC sector and the extensive range of services they offer. These services dictate PMSCs' legal boundaries and the type of intervention in conflicts that they are able to make. A listing of these different services, therefore, conveys a great deal about the relations between PMSCs and their clients. To shed some light on these relations and the PMSCs’ specialization trends, we divided PMSCs according to the services they provide, namely, into services for land, air, or maritime operations (Figure 4). These services include many different types of specialization such as security, IT, logistics, translation, training, and many others, designed to support or complement one of the three categories of operations (land, air, and maritime). Figure 4 shows that services related to land operations are the most prevalent, offered by about 83% of the PMSCs. Air-related services are offered by over 12% of companies in the sample, and maritime services by over 32%. These services are not mutually exclusive, and a cluster of companies offer two or even all three of these types of specialized services. Figure 4: Percentages of PMSCs that offer land, air, and maritime related services 90 80 70 60 50 40 30 20 10 0 Land Air Maritime These findings suggest that land-based services are more common and that maritime, and especially air-related services, are rarer and more exclusive. Figure 5 examines the specialization trend over time, looking at the number of specializations (land, air, maritime) by new PMSCs per year. This type of analysis, which focuses on services offered by new companies, allows for the exploration of market demand. Results indicate that the prevalence of PMSC land-based services was relatively low between the end of WWII and the 1980s, with small rises around the Korean War and the Vietnam War. The 1980s and 1990s show a more significant rise associated with the end of the Cold War. The 9/11 attacks and the following wars in Iraq and Afghanistan propelled forward a market that was already on the rise. The conclusion of the Iraq War then brought with it a decrease in market demand. The maritime trend is considerably more modest in comparison to the trend in land-based services. The provision of maritime services was relatively steady, and low, throughout most of the period examined in the dataset. As with the land-based services, the end of the Cold War heralded an expansion of maritime services. Figure 5 Number of New PMSCs By Specialization, By Year 90 80 70 60 50 40 30 20 10 0 1960 1987 2011 1946 1949 1953 1955 1957 1962 1966 1969 1971 1973 1975 1977 1979 1981 1983 1985 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2013 2016 Land Air Maritime During the 1990s and early 2000s, maritime services present a volatile trend, with a general increase that peaked at the end of the Iraq War.
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