UK calls for private military code of conduct

The British Foreign and Commonwealth Office (FCO), headed by David Miliband, announced last Friday the endorsement of the establishment of a Code of Conduct for UK-based Private Military and Security Companies. Some analysts were excited to hear something was finally happening since the release of the Green Paper “Private Military Companies: Options for Regulation” in February 2002. Think twice this is good news.

In the UK, regulation dossiers have been collecting dust in a small and not well lit office for some time now. We should remind you that the Green Paper put forward three options for regulation: a ban, self-regulation, or the establishment of a licensing system. Anyone who has been following the debate longer than after Iraq converged to the same conclusion: while codes of conduct are desirable, a licensing system is necessary. To be more specific, a licensing system inspired by the one used by the US to regulate its international defense and security sectors. This just means clearer rules to the game and a balanced ascription of responsibilities between the public and private sectors. Why then self-regulation, read code of conduct, has been suddenly moved to the top of the agenda?

The reasons appear to be threefold. Firstly, the growing importance of the Montreux Document; secondly, the personal ambitions of David Miliband; and thirdly, it is cheap.

The “Montreux Document on Pertinent International Legal Obligations and Good Practices for States Related to Operations of Private Military and Security Companies During Armed Conflict”, an initiative led by the government of Switzerland and the International Committee of the Red Cross, has proved to be the first constructive attempt to update international humanitarian law in a decade. The UK and the US endorse it. To implement it, however, there is no need of new public consultation, as the FCO announced. After the Green Paper, there was extensive consultation, even a conference, and the stage moved to the executive exercise. That is to say, unless you want to ignore the previous trajectory in order to further your political career, which is sad and ultimately undermines the spirit of the Montreux Document.

The government of Gordon Brown is deeply unpopular, and sinking fast. Miliband is widely touted as a potential new leader of the Labour Party. He appears to be recasting the debate as a way to get some limelight. Parliament goes on recess between July 21 and October 12. This issue can linger nicely throughout the summer, grab some headlines leading to the Labour Party Conference in the fall, and probably beyond, if the debate is hijacked by far-left activists and MPs.

It is cheap too. For the time being, it liberates the British government from the need to create the British versions of AECA, ITAR, and USML, as well as their reengineering into a program that also acknowledges the rights of rare species of ants and elephants 3,000 years from now, as the British government increasingly requires. However, we bet you that any associated costs, which surely would include new duties, fees, and taxes, will be passed to the industry, together with some unrealistic and costly oversight measures as a result of the new consultation.

We are therefore a little skeptical this is a positive development. It is inevitable the Labour government will be replaced by mid-2010. Thus, why not leave the issue to the incoming government rather than rushing to pass half-cooked measures? Please ask David Miliband.

After the London G20 Summit

Old, new, and quantitatively eased

So the US and the UK wanted the world to replicate their strategy of printing money (called ‘quantitative easing’ when it is not done by Third World countries) at the touch of a computer key and old Europe to push for new standards of global financial regulation.

At world summits, heads of state always win. The strategy is simple: argue loudly that you want to achieve A; have your teams working on the sidelines on plan B; but always the ultimate goal is to get to C.

The US and the UK wanted other central banks to create money out of nothing at all (plan A). The American and British governments are worried that without a global leveling effect their economies might sink deeper. This is because they might have triggered an inflationary bomb by printing money. B teams were busy repackaging yesterday’s policies and reinterpreting the plans of global financial institutions. The overall result of the exercise, the backup plan, was to present what has been done and said anew. Meanwhile, plan C was achieved. The IMF has been charged with the task of printing $250 billions of new money. The ‘whole world’ will ‘benefit’ from it, as the money will be proportionally disbursed according to voting rights at the IMF –Google the IMF voting share.

France and Germany wanted tighter financial regulation in order to prevent any similar financial crisis repeating. Really? Now that the world is being reorganized, plan A has always been to curtail a decade of expansion (and bust) of Anglo-American financial dominance. Plan B, the backup plan, was to agree to nothing and theatrically justify it. Meanwhile, plan C was achieved. By raising the profile of the IMF, traditionally dominated by old Europe, France and Germany are likely to play a leading role forging the new global financial architecture.

In short, the summit was a success and for a couple of weeks financial markets will be happy. Thereafter, we go back to the burning topic G8 heads of state failed to address, the elephant in the G20 summit room: how to deal with the toxic assets hidden in American and European banks’ balance sheets, of which we have only seen the tip of the iceberg. Therefore, a deteriorating world security prognosis remains.

The UK police authorities left certain building, the branch of a financial institution that is the current focus of popular outrage, partially exposed. The crowds smashed windows, destroyed some equipment, and ventilated their frustration. The crowd-control strategy worked for the time being. However, we repeat: available public and private security means are insufficient to deal with a sudden escalation of civil disorder in a global scale. This is the real world; there is no plan B or C here.

IMF or no IMF for the lucky few?

...That is the question

First of all, let us remind you why we are paying a great deal of attention to the health of the world economy. This is because the private security response needed to keep things stable is so far attainable, but probably not if the world economy spirals down to an unsuspected deeper bottom. This is also the reason why the G20 meeting this week, ordinarily the most expensive talking shop in the world together with Davos, is unusually important.

There are four important poles in the G20 debate. On the one hand, there are the countries that would like to spend more trillions on stimulus plans, mostly borrowing and printing money, and want the rest of the world to follow. The UK and the US lead the pack. The opposite pole is led by Germany, which believes that pumping more money into the world economy would result in a longer and more painful path to recovery. On the other hand, there are the countries that deem the tightening of financial regulation and dealing with offshore banking issues immediate priorities. The UK also leads this call. On the other side, we find those who argue that this is necessary (and a politically correct convenience), but a distraction for the time being. Off course all G20 governments also promise that they will not engage in protectionist policies.

Is there any hope an agreement will be reached at the G20 Summit? No. This is partly because people in the West keep arguing that the global financial crisis is about credit not flowing, hence a global credit crunch. However, to most of the world, including China, India, Brazil, and Mexico, credit is not the problem, but the contraction of their economies due to eroding demand for commodities and manufactures in the West.

In spite of disagreements, the G20 heads of state need to accept that the recovery of the US economy takes precedent, as the country is behind a great deal of the world’s consumption and the reserves of far too many countries are pegged to the US dollar. Further, the bond between consumption in the US and production in China, which greases the wheels of the world economy, is critical to sustain. This leads us to focus on the real sick patients.

It is perhaps time we fast forward the debate and start thinking about IMF programs to rescue the British, the Irish, the Spanish, and perhaps all the Eastern European economies. These countries are in need of resources beyond their means: they do not possess an industrial base and ownership of natural resources broad enough to sustain their growing levels of debt. Printing money (read ‘quantitative easing’) is not and has never been an option for these countries. The soonest these houses are put in right footings the earliest we can start dealing with the rest of the world, which holds the bulk of the natural and agricultural resources the world consumes. Otherwise, the debate will continue to drag on, with unrealistic expectation and a handful of countries disproportionately taking center stage.

If things are not turned around this year, the so-called credit crunch will spread to all the G20 countries and beyond. An uneven global revolution, with low-level violence in some parts and fully blown conflicts in the most deprived areas, looms. Hear this: there are not enough public and private forces available to deal with such multidimensional scenario responsibly.

Q&As: Failed Wall Street Boss Security

This is an answer to a question posted by an insisting reader.

He would like to know who provides security to the bank bosses behind the global financial downturn. However, we warn the reader that trying to link somehow financial wrongdoing on Wall Street and the City of London to Xe (the Private Military Company formerly known as Blackwater) is pathetic. We understand a young audience produces this type of queries. In this spirit, we would like to offer an answer.

The protection of VIPs is largely undertaken by the security industry. To be more specific, that applies when the surrounding environment is comparatively safe (e.g. cities in North American and Europe and emerging democracies such as Brazil, India, and Mexico). If the VIP security is to be provided in a dangerous zone, such as Iraq and Afghanistan, then the job is for PMCs.

The personnel hired by PMCs and security firms to provide security tend to be similar, i.e. former military or police officers. They are highly adaptable to the surrounding environment. In other words, the same team of security details could provide VIP security to Wall Street executives and officials from the Department of State in Iraq.

Many PMCs focus on both markets, but some do not.

However, as security deteriorates and public anger towards some of the probably 1000 bankers behind the global financial crisis is expressed physically, VIP security might devolve to the state. Why? It is in the public interest to protect innocent civilians: people angry for loosing their jobs and failed bank executives responsible for it deserve in the eyes of the law the same treatment.

This means that if violence towards bankers manifests, the state, ultimately the taxpayer, will have to pay for their security, which might indeed be subcontracted to the private sector.

It is not a matter of whether security details are sympathetic or not towards the VIPs they protect, it is their job. Just like you, they need to make a living.

Lastly, there are plenty of management vacancies in Afghanistan. We encourage those 1000 bankers behind the global financial crisis to apply for them. Swift (and successful) processing of their applications is likely.

And it begins

Today, the house of the former head of RBS (the one behind the collapse of the bank, thereafter rewarded with a multi-million pension) was vandalized. The people behind the attack have the profile of a bunch of aspiring anarchists about whom nothing is known. In France, workers at a 3M (the US corporation) plant have been holding its boss hostage since last night after dozens of workers were laid off. The same happened at a Sony factory some days earlier. The Czech Republic Prime Minister Mirek Topolanek referred to the US recovery plan as "a way to hell". At the same time, he announced he will resign tomorrow after loosing a no-confidence vote yesterday over his handling of the economic situation in his own country. Curiously, he is also the current rotating President of the European Union (EU), and will attend the G20 summit in London next week as such. Meanwhile, yesterday the British Prime Minister Gordon Brown delivered a very important speech on the way to tackle the global recession to a near empty EU Parliament. His strategy to print out money to help boost the British economy got some feedback from the market today, when an auction for ordinary government bonds undersold. The last time something like this happened was in 1995. President Barack Obama emulated the print-out-money strategy last week, but only by about $1 trillion (one trillion is one thousand billions, or $1,000,000,000,000). Bear in mind that nowadays it is not called printing money, but quantitative easing or expanding a balance sheet. This is a course of action that leading financial institutions, like the IMF, advised time and again developing governments not to do in the past. It is neither known if it would work nor its longer-term inflationary consequences, and so on.

Since January, we have written about a dozen posts that we decided in the end not to publish. They deal with rising levels of petty crime, low-level violence, and popular anger reaching a boiling point. The umbilical cord connecting government to people is disintegrating in many parts of the world. Ironically, and for those who can be within its reach, private security is suddenly becoming a blessing rather than a menace. There is something horrible brewing out there and we dare not to think the unthinkable. But the few words above give you an idea of what is at stake.

G20 security: Olympic security field practice

The UK is hosting the G20 Meeting, the so-called London Summit, on April 2, 2009. In light of the ongoing global financial downturn, there is no need to elaborate on the importance of this particular summit. Spirits are running high, not only among heads of state and finance ministers, but also among those of us who do not live on the state or profited from the burst financial bubble.

How big is the G20? Well, evidently the heads of state of the twenty largest economies have been invited to attend: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, the Netherlands, the Republic of Korea, Russia, Saudi Arabia, South Africa, Spain, Turkey, and the United States.

How tight are the security arrangements? Pretty tight, we expect. But given the anarchist groups these international gatherings attract, popular anger, and the many routes through which one can get into London, the Summit will become also a security test; an early benchmark against which to measure how bad things can get. We should not forget, for instance, that the Real IRA decided to show it is alive and kicking over the last few days.

As a preamble to the London Summit, the G20 Finance Ministers meeting takes place on 14 March. Details on the venue were leaked some time ago and printed by the news media; not a very good sign. The delegations from Argentina, Canada, Indonesia, Mexico, Russia, and Turkey might like to make further arrangements for their own security, as a leaked confidential document originating from the UK Foreign Office and obtained by the Financial Times reveals that they have been designated a secondary priority.

The G20 Summit and the Finance Ministers meeting are also early rehearsals, basic security tests, on how the UK is likely to run security during the 2012 London Olympics. Some commentators (and London residents) dread that the Olympics, and security measures attached, will paralyze London. Has the London Olympics Organizing Committee started to communicate with the relevant security industry professional associations? Whoops! is the answer. There are worse scenarios to contemplate, but there is no need to get carried away at this stage.

So let’s see how things unfold. If there is not going to be a breakthrough on the best way to deal with the fast deteriorating world economy, at least a peaceful gathering is hoped.

Luxembourg: reality check files

Luxembourg’s official name is the Grand Duchy of Luxembourg, a name that reflects its patrician origins. The country is one of the founding members of key international organizations such as the UN, NATO, and the European Union. Accordingly, it has its citizens well positioned in, for example, the IMF and the World Bank. It is a very prosperous country with a well-groomed multilingual population and one of the highest GDPs per capita in the world. Luxembourg’s Prime Minister, Jean-Claude Juncker, is currently the chairman of the group of countries that have the Euro as a currency. In this capacity, you will find his opinion on global finance quoted all over the papers -Google him. This week he has been telling all the major media outlets that Europeans are more concerned about the regulation of the global financial system than the US. He also likes to stress that regulation issues are more important than dealing with the immediate alleviation of the financial stress ordinary people are suffering, as the US, Japan, and emerging democracies rightly point out. Off course the security implications of the deteriorating global financial outlook do not figure in his analysis.

Reality check:
Luxembourg is a country in central Europe roughly two thirds the size of Rhode Island, the smallest US state. Its population is about the same as that living in Kansas City or Fresno. Its main industry is offshore banking, probably followed by the selling of souvenirs to American and Japanese tourists. Its security is guaranteed by NATO. I am sure the reader would agree that President Obama could do miracles with a country of that size. Yet Luxembourg (and other similar countries) plays a disproportionate role in the international scene making the rules of the game and dictating how the world needs to be run. Let’s remember the countries behind most of the world’s economic output: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, the Netherlands, the Republic of Korea, Russia, Saudi Arabia, South Africa, Spain, Turkey, and the United States; otherwise known as the G20. According to 2007 figures by the World Bank, Luxembourg ranks 63rd in the GDP ranking table, well behind countries such as Colombia, Pakistan, and Vietnam. Now that we are in the process of reinventing the world, perhaps it is time to correct imbalances like this.

Down the Zimbabwe Way

Who would have thought about it a few months back? Today, March 6, 2009 (please mark it in your calendar), the United Kingdom set the press rolling and started to print money to prop up its economy. Off course in the modern world new banknotes are not simply printed. It is done at the touch of a computer key, has fancy names such as ‘quantitative easing’, and it is used to purchase assets, primarily government bonds (called gilts in the UK). Do not worry; we are just talking about some $105 billions. Surely this will not decouple the UK from the real world economy, particularly if other governments follow the example –have you noted that other leading economies, the World Bank, and the IMF do not know yet how to react. Who needs real money from China and the Far East economies to buy government bonds when you can create your own to buy them yourself. Doh! Go and grab your Monopoly money and indulge yourself in a hardcore shopping spree; it might work. Clearly the UK is a G8 country and has a technological and professional base robust enough to bounce back, eventually. In other words, the Zimbabwe analogy is only a playful one. Nevertheless, it gets you thinking about alternative realities and future scenarios. Here we are thinking about the convergence of economic downturn and private security, but we are a sad bunch.

Warrant issued for the arrest of the president of Sudan

Today, the International Criminal Court (ICC) issued a warrant for the arrest of Hassan Ahmad Al Bashir, the president of Sudan. The ICC press release read:

“Pre-Trial Chamber I of the International Criminal Court issued a warrant for the arrest of Omar Hassan Ahmad Al Bashir, President of Sudan, for war crimes and crimes against humanity. He is suspected of being criminally responsible, as an indirect (co-) perpetrator, for intentionally directing attacks against an important part of the civilian population of Darfur, Sudan, murdering, exterminating, raping, torturing and forcibly transferring large numbers of civilians, and pillaging their property. This is the first warrant of arrest ever issued for a sitting Head of State by the ICC. …”

The ICC expects that, as if by magic, the government of Sudan will cooperate.

Sudan is not classified as a weak state. This is partly because the government of Sudan has successfully centralized the use of force, however wrongly it is used to perpetuate this corrupt leader in power. It thus follows that you do not issue a warrant for a sitting head of state, a popular one amongst large segments of the Sudanese population one must add, unless you are prepared to back such actions with force. Would the ICC issue warrants in the future for Presidents Robert Mugabe of Zimbabwe and Hugo Chavez of Venezuela?

Incidentally, President Obama will soon call for NATO fellow members to provide more troops for Afghanistan. I guess we already know the answer, which nonetheless will be adorned with beautiful rhetoric about an Atlantic alliance fighting for democracy and freedom. Sudan is further down the priorities of many NATO members other than on the conference circuit.

The only thing this headline-grabbing warrant has achieved is for the relief community to be expelled from Sudan. In the process, the only real help persecuted Sudanese at large were getting is being effectively shut down. Even if this happens partially or temporarily, innocent civilian will unnecessarily die.

The ICC, based at The Hague, The Netherlands, is not part of the UN. It is an independent international organization. This clearly shows, as there were no signs of preemptive coordination with the UN and the relief community before issuing the warrant.

Perhaps it is time to give serious consideration to plans by certain Private Military Companies to engage the Janjaweed. Considering the state of the world economy and the unwillingness of the international community of states to use force for the achievement of humanitarian endeavors, it would be more effective and cheaper.

Sharpen your sense of fairness

During the period of most intense fighting in Iraq, a common story making the rounds was about the apparently excessive wages paid to security contractors. Many of these reports misrepresented pay in the private military sector as a whole and certainly within Iraq. Often, it was alleged a wage of $1000 per operative per day –some even argued that per hour– was the going rate. Generally, that applied to probably some 800 men with previous Special Forces background. It was not really an excessive paycheck, as these former soldiers spent many years training and risking their life on the ground before being released from service. It should not be forgotten that they regularly worked for periods of about 2-3 months followed by at least a month break. Though for the vast majority of foreign operatives, pay oscillated anything between $100 and $600. In fact, most of the people undertaking security tasks have been largely Iraqis and earned, at country rates, even less.

So some folks made $200,000+ a year for 2-4 years, which was largely used to secure their children’s education, to trim mortgages, and perhaps to buy the odd sports car. Yet the market matured and security improved; thus now such highly paid security jobs are comparatively a rarity. Nevertheless, these operatives risk their life on a daily basis and provide the supplementary manpower needed to turn things around in Iraq, Afghanistan, and other hot spots. In Iraq alone, over one thousand of them have died.

The reader should contrast this lifestyle with that of the greedy fat cats who caused the current financial downturn, produced nothing tangible or of lasting benefit, and want to carry on living on Cloud 9. The problem is that now most of us are paying for their billionaire lifestyle.

If you think things are bad in the US, think twice. In the US, government is taking bold steps to address imbalances. In the UK, in contrast, it seems government is waiting for society to flip before turning rhetoric into real world policies. Take for example the case of Sir Fred Goodwin, the former chief of Royal Bank of Scotland (RBS). Goodwin steered RBS to the brick of collapse. The bank was rescued by taxpayer’s money and practically nationalized. The reward for Goodwin was a lifetime pension worth $870,000 per year (£600,000), which was approved by government officers after the bank was nationalized. Gordon Brown, the British Prime Minister, says that his government is powerless to stop the payment of the pension.

President Obama is meeting Gordon Brown in Washington DC this week. President Obama should not listen too intently to someone who fancies himself as the savior of the world economy but does not seem to have the requisite power, will, or fortitude to back his own calls for reform with action in his own country. Meanwhile, the state of British defense is in tatters due to the lack of adequate funding and chronic mismanagement. At least the British private military and security sectors continue to be in decent shape and ready to fill growing UK national security gaps.

How things are turning, it is becoming of little concern if some highly-qualified private military and security personnel make more money than regular servicemen or police officers as long as they do their job. Rest assured you would never hear of any Private Military Company been rescued by government and its former CEO handed a publicly-funded golden parachute worth $870,000 per year for life.