Here to stay: Wagner and the private security industry

The role of the Wagner Group in Russia’s war on Ukraine has refocused public debate on the vastly growing global security industry of private military and security companies (PMSCs). What motivates governments to enlist the support of PMSCs considering the potential risks involved? How efficient and effective are they in comparison to states’ armed forces?

Private military and security companies (PMSCs) are a new breed of security actor. Media often refer to them as ‘new mercenaries’, a label that certainly fits some of these companies. PMSCs are nonetheless – and despite certain similarities – different from their historical precursors, in particular given their modern corporate structures. They are “firms and operate as businesses”.

While the first PMSCs were founded in Great Britain in the 1960s, the industry has experienced a boom starting in the 1990s. Compared to 1989, when there were only fifteen such companies on the market, the number of PMSCs peaked in 2010 counting a total of 1,200, of which 120 alone were present in Iraq between 2003 and 2019.

On the whole, the industry is very dynamic

These figures are perhaps even more staggering when considering that 70 per cent of the PMSCs are concentrated in only four countries, including the United Kingdom, China, South Africa and the United States. In the latter, private military and security companies “account for a leading share of the estimated total annual sales of PMSCs globally and are projected to reach more than US$80 billion in annual sales in the near future”. But PMSCs are also proliferating beyond these countries.

Exact figures are, however, hard to come by since the commercial security sector is known for its nontransparency and heterogeneity. Some companies are stock-market registered giants such as MPRI, Amentum (formerly DynCorp International), G4S or Haliburton, which offer a broad range of services – spanning from people and compound protection, rescue missions, reconnaissance and risk assessment to training and combat. But there are also far smaller and dubious companies with a shady existence of the Wagner kind. On the whole, the industry is very dynamic with firms (re-)appearing and disappearing, albeit often under different names.

The growing global security industry: supply and demand
The growth of the industry has, in part, been demand-driven with governments relying on PMSCs’ services to such an extent that they have “become an integral part of 21st century warfare in the Western and non-Western world, without which military operations can no longer be conducted effectively and sustainably”.

Force-Multipliers
One often cited argument Western policymakers provide for contracting these companies is that they are ‘force multipliers’ to armed forces. Faced with a rise in out-of-area missions, shrinking defence budgets and recruitment problems, PMSCs are claimed to help states and their militaries not only to compensate for personnel and equipment shortages, but also to operate in a more cost-efficient and effective manner.

PMSCs have become indispensable to governments, as shown by several American key missions. During the US campaigns in Afghanistan (2001-2021) and Iraq (2003-2021), the number of military personnel deployed by the armed forces was increasingly replaced and eventually outnumbered by employees of PMSCs. In Afghanistan, the contracted PMSCs helped the American government to maintain its intended limit of 9,800 US troops, which was set in 2016, but cut to 5,500 in 2017, and subsequently compensated by 26,000 private security employees.

Hiding the costs of war
Connected to the argument that PMSCs help to offset resource shortages, there is another reason for PMSCs being hired – a reason that public officials are, however, less willing to admit to publicly. At a time when political will to commit one’s own troops is declining in Western societies, PMSCs enable governments to hide the human costs of their involvement in foreign conflicts and to dissociate themselves from failure or wrongdoings.

In general, the contracting of PMSCs stays under the radar of international media

The media exposure that the Wagner Group currently receives is exceptional, owed to its alleged involvement in war crimes and the recruitment of fighters for the war in Ukraine from Russian prisons as well as from Chechnya, Syria and Libya. In general, however, the contracting of PMSCs stays under the radar of international media, since the companies – as well as the casualties that they incur – are rarely included in the official statistics of armed forces.

In addition, it is a quite common practice for PMSCs to rely for the delivery of services on either local sub-contractors or so-called third-country nationals (TCNs), who are even less visible. In contrast to employees who are residents of the country where their PMSCs are headquartered or locals of the country where PMSCs operate, TCNs are individuals who come from neither.

In Iraq, approximately 40,000 TCNs worked for companies contracted by the US government; in Afghanistan the estimated number of deployed TCNs was 30,000. These third-country nationals came from Bangladesh, India, Pakistan, the Philippines, the Fiji Islands or Sri Lanka. According to NGOs such as CorpWatch, many of them were lured into the jobs by “unscrupulous employment agencies” and robbed of their identities with their passports being confiscated upon their arrival. 

PMSCs’ strategic image management: dissociating from the bad apples
Although the boom of the industry is driven by the clients of private security services, PMSCs themselves are an important part of the equation as well as to why they are perceived as an accepted and taken for granted element of militaries’ force structure today. Ever since the 1990s, when individual companies got involved in recurring scandals, many PMSCs have engaged in strategic image management and have worked hard to dissociate themselves from the ‘bad apples’ in the industry. This includes, for example, a shift from martial company names and logos towards modern corporate designs.

The difference between the ‘good’ and the ‘bad’ is not clear-cut

PMSCs also have professionalised. Some have adopted internal behavioural codices specifying rules for their employees on how to conduct themselves in the field, while others subscribe to the codes of conduct of already existing industry associations, such as the International Stability Operations Association in the US or the British Association of Private Security Companies (BAPSC) in the UK.

These associations and the codices ensure, as the Director General of the BASP Andy Bearpark already stated in the mid-2000s, “that only legitimate companies are able to gain a market hold” since “[b]y definition the bad companies don’t want to join us, and the good companies that want to adhere to our association want to improve their image”. Yet, the difference between the ‘good’ and the ‘bad’ is not clear-cut, given that, for example, the supposed ‘good’ PMSCs sub-contract alleged ‘bad’ ones for certain tasks.

Finally, the fact that many of the founders of PMSCs as well as the preferred employees are veterans, including former generals, navy seals or special operations officers, contributes to PMSCs’ perceived acceptability. By extension, they are seen as quasi-military and therefore reliable because they bring with them a skill and value set that their governmental contractors are familiar with. 

Addressing the legal grey zone
While these various developments already helped governments to justify the hiring of PMSCs, efforts to address the legal grey zone in which the companies exist and to better regulate the operations of PMSCs through the adoption of national laws and policies, also played an important role. These efforts were paralleled by international initiatives such as the dialogue of representatives of states, PMSCs and civil society. Instigated by the Swiss government and the International Committee of the Red Cross, the dialogue culminated in the non-binding Montreux Document adopted in 2008, which calls for the respect for human rights and human rights law by PMSCs engaged in conflict zones. 

How efficient and effective are PMSCs?
If one believes the PMSCs, their performance outdoes that of armed forces both in terms of costs as well as what they can accomplish. Self-assertions such as those of the leading American PMSC –Constellis – are not exceptional in this respect. They claim to “offer turn-key solutions to address our customers’ most complex challenges wherever we are needed around the world”.

Even though comprehensive studies do not exist to date due to the lack of data, the evidence regarding the performance of PMSCs is quite mixed. What we know from missions in, for example, Iraq or Afghanistan, is that the involvement of PMSCs can have positive effects if contract conditions are clearly stipulated, competition among PMSCs exists, and  the hired companies are publicly traded and therefore – due to likely reputational costs – may have greater incentives to deliver than privately owned firms.

Weighing against these factors are, however, political realities. Governments tend to maintain long-term contracts with ‘prime contractors’ or conclude so-called indefinite delivery/indefinite quantity contracts (IDIQ) that make it easier for companies to overstate the services provided as well as their costs. There is a lack of oversight which is problematic since violence, abuse and harassment have been found to increase when PMSCs are involved. That is not to say that there are no problems with national armed forces, but when it comes to PMSCs, the lines of accountability in case of wrongdoings are often more difficult to establish given intricate sub-contracting schemes and the employment of locals and third country nationals in addition to the company’s own personnel.

Furthermore, privatisation of security has long-term consequences, including the weakening of states’ monopoly of force and democratic institutions due to the growing dependency on PMSCs. After all, PMSCs have commercial interests. They assess security in economic instead of political terms, and might therefore exaggerate or misrepresent the danger or current situation to attain a new contract or prolong an existing one.

PMSCs are here to stay
PMSCs are a reality and here to stay, but further regulation at the national and international level is necessary to tackle existing problems and their future consequences. The recent announcement by the US government declaring the Wagner Group a criminal organisation is an important and necessary signal that companies of this kind and their disregard for international human rights law will be penalised.

However, more regulation alone is not enough. Governments and international organisations need to follow this up with more forceful and globally agreed upon measures also targeting other PMSCs engaged in illegal activities to prevent the negative effects of privatising security and from Wagner becoming a model for others.